CO SB074

Creates new statute section 40-2-122.5 to allow investor-owned electric utilities to capitalize all or a portion of long-term, fixed-price natural gas supply contracts for Colorado-based production as capital costs eligible for rate of return recovery.

Declares a perverse disincentive exists against utilities developing electric generating capacity using natural gas instead of coal, and establishes it as public policy to correct this disincentive.

Directs the Public Utilities Commission to commence a rule-making proceeding on or before July 1, 2010 to determine how much of natural gas supply contract costs may be capitalized.

Limits capitalized natural gas supply costs to an amount not exceeding what the PUC approves for Public Service Company of Colorado's Comanche III coal-fired power plant.

Requires that capital cost recovery for natural gas generation include a rate of return on fixed and variable costs associated with natural gas generation, including the capitalized supply costs.