The Colorado Public Utilities Commission on Oct. 24 discussed Public Service Company of Colorado’s proposed distribution system plan and how much of roughly $3 billion in planned 2026–2028 distribution investments should be recovered through a new grid modernization adjustment clause.

The deliberations focused on how the legislature’s new law — cited at the hearing as Senate Bill 24-218 and Colorado Revised Statutes §40-2-132.5 — should shape both the substance of the five‑year DSP and what spending the PUC allows to flow to customers via the GMAC rider. Chair Eric Blank said he was “struggling to find that the company made its case” that accelerated recovery of about $1 billion per year through the GMAC “affordably and strategically advances the statutory goals.”

Why it matters: the DSP would fund capacity expansion, equipment replacement and other distribution investments the utility says are needed to serve load and support statewide electrification. Whether, and how much, customers pay now through a rider rather than later in base rates affects near‑term residential bills and the economics of electrification programs.

Advisors described three possible approaches. One is to evaluate GMAC eligibility category‑by‑category (capacity, asset health and reliability, new business, mandates, etc.). A second is to adopt a single revenue cap on GMAC recovery. A third is a hybrid: classify categories as eligible or subject to performance conditions, then apply an affordability constraint. Commissioners signaled support for a category‑by‑category review while seeking guardrails to limit short‑term bill impacts.

Staff proposed a $25 million annual revenue cap on GMAC recovery (roughly supporting $250 million of capital investment under staff’s conversion assumptions); the company and some settlement parties oppose a cap, saying the statute did not set one. Chair Blank told colleagues he preferred a middle course that mirrors the legislature’s near‑term retail rate cap language — one option he floated was a $30 million revenue requirement for 2026 and a 1.25% retail rate impact cap for 2027–2028 — but he did not present a final vote.

Commissioners discussed the company’s two internal categories, “type 1” (projects the company says “strategically benefit” statutory priorities) and “type 2” (projects that might be eligible only under a performance framework). Commissioners expressed particular skepticism about allowing broad asset health and reliability spending into the GMAC without clearer demonstration of reliability benefits and measurable performance commitments.

Several commissioners said they were willing to allow most capacity expansion projects into GMAC recovery on a provisional basis because parts of the distribution system are already constrained, but they asked advisors and counsel to propose specific ways to limit or phase recovery so the PUC can protect affordability while addressing urgent capacity shortfalls. Commissioner Gilman said the record showed “missed opportunities” (for example, limited use of hosting‑capacity maps, interconnection reforms and data sharing) that reduced the commission’s confidence that all proposed capacity spending is strategic.

The PUC did not adopt final caps or line‑item exclusions during the session. Instead, commissioners asked advisory staff and counsel to present options and recommended language so the PUC can return to unresolved GMAC questions at a follow‑up deliberation. Advisors said a hybrid, category‑by‑category approach with an affordability constraint would be workable and that further detail on how to implement a performance framework is needed.

Commissioners also discussed implementation mechanics: the company proposes the GMAC rider be effective Jan. 1, 2026, with an annual advice‑letter true up; advisors recommended a symmetric carrying charge on over/under balances at the company’s currently approved WACC consistent with a plain‑text reading of the statute. Commissioners asked staff and counsel to propose a limited preview process for the November advice‑letter filings (designed to reduce litigation and surprise) and to develop options on how to handle costs currently recovered in the transmission cost adjustment (TCAD) and in the equipment‑to‑advanced distribution activities (EADA) mechanism.

The chair and advisors stressed the PUC must balance the statute’s call for proactive distribution planning and timely cost recovery with concern about accelerating customer bills before the benefits of the investments can be demonstrated. Advisors will return with drafting options and timeline proposals for the PUC to consider at a later deliberation.

Taper: commissioners set next procedural steps rather than final policy at this meeting; unresolved GMAC design elements — including any cap, the boundaries of “type 1” recovery, and performance metrics — will be reconsidered after advisors prepare options and a preview process for the November filings.