Labor Requirements For Energy Sector Construction

In 2019, the general assembly adopted an apprenticeship utilization law (apprenticeship utilization law) that requires the general contractor for a public project that does not receive federal money, and that is in the amount of $1,000,000 or more, to submit, at the time a mechanical, electrical, or plumbing subcontractor is put under contract, certain documentation regarding the contractors that will do the work to the contracting agency. At the same time, the general assembly also adopted a prevailing wage law (prevailing wage law) that requires any contractor who is awarded a contract for a public project by an agency of government for $500,000 or more and that does not include federal money, and any subcontractors working on the public project, to pay their employees a prevailing wage at weekly intervals.

The act creates a new category of public projects defined as "energy sector public works projects", and requires these projects to comply with the requirements of the apprenticeship utilization law and the prevailing wage law. An "energy sector public works project" is any project that:

• Has the purpose of generating, transmitting, or distributing electricity or natural gas to provide energy to Colorado individual consumers and businesses, is built by or for a public utility, and is funded in whole or in part by the state or utility customer funding; or
• Has the purpose of generating or distributing electricity or natural gas for the purpose of providing energy to Colorado individual consumers and businesses from utility customer funding as approved by a cooperative electric association.

With certain exceptions, the act requires that a contract between public utilities, cooperative electric associations, or independent power producers and lead contractors for an energy sector public works project include provisions that expressly require that all work performed under the contract comply with the apprenticeship utilization law and the state prevailing wage law if the project is an electric power generation project with a nameplate generation capacity of one megawatt or higher or if the project is a project other than an electric power generation project with a total cost of one million dollars or more. All contracts with subcontractors on the project are also required to include such provisions. If the contract for an energy sector public works project does not include such provisions, the project will not be eligible to receive state funding or to receive required authorizations or approvals from the public utilities commission (PUC).

For projects funded in whole or in part by the state, the requirements to comply with the apprenticeship utilization law and the prevailing wage law apply only when the project is a power generation project with a nameplate generation capacity of one megawatt or higher or an energy storage system with an energy rating of one megawatt of power capacity or 4 megawatt hours of useable energy capacity or higher and the aggregated public assistance from the state is $500,000 or more. For other projects, the apprenticeship utilization law and the prevailing wage law apply only when the total project cost is one million dollars or more and the aggregated public assistance from the state, funding from a public utility, or funding from a cooperative electric association is $500,000 or more.

The requirements to comply with the apprenticeship utilization law and the prevailing wage law do not apply to a project that is covered by a project labor agreement, work on an energy sector public works project performed by employees of a utility company, work on an energy sector public works project put out to bid on or after January 1, 2024, that is qualified for and claims the increased federal production tax credit or investment tax credit amount by having satisfied federal "Inflation Reduction Act" requirements, a utility-incentivized demand-side management or electrification program, a utility or state-funded building energy efficiency program, service agreements that were entered into on or before March 1, 2023, projects that involve an electric distribution line with a specified capacity, and projects that involve pipelines with a specified minimum yield strength.

The lead contractor for an energy sector public works project is required to prepare certified payroll records for workers directly employed by the contractor, obtain certified payroll records from all contractors and subcontractors on the project, and submit the records to the public utility or other owner of the energy sector public works project weekly. The lead contractor is also required to prepare a quarterly craft labor certification that attests that the lead contractor and all subcontractors are compliant with the apprenticeship utilization law and the prevailing wage law. The public utility, cooperative electric association, independent power producer, or other owner of an energy sector public works project is required to maintain the records for all craft labor certifications and is required to either provide copies quarterly to the department of labor and employment or require the lead contractor to provide such copies.

The state auditor's office is required to conduct an audit of the PUC's approval of energy sector public works projects no later than January 1, 2029, and at least 5 years thereafter. The purpose of the audit is to establish oversight and accountability for compliance with the "best value" employment metrics for electric resources acquisition and the employment, training, wage, and apprenticeship requirements specified in the act.

Violations of the requirements for energy sector public works project contracts are subject to the penalties described in the apprenticeship utilization law and the prevailing wage law.

In lieu of compliance with the apprenticeship utilization law and the prevailing wage law, a public utility, cooperative electric association, or independent power producer may incorporate a project labor agreement requirement for an energy sector public works project. The PUC is prohibited from denying approval of an energy sector public works project solely because it uses a project labor agreement.

The act specifies which provisions of the apprenticeship utilization law for public projects apply to energy sector public works projects.

Regarding "best value" employment metrics that the PUC is required to consider when it evaluates electric resource acquisitions and requests for certificates of public convenience and necessity for construction or expansion of generating facilities, the act requires the PUC to promulgate rules requiring utilities, when submitting annual progress reports for an electric resource acquisition, to collect and provide to the PUC information concerning the implementation of "best value" employment metrics and requires the PUC to report annually to committees of reference of the general assembly concerning the information that is reported.

The act adds enforcement mechanisms for the existing mechanical, electrical, and plumbing apprenticeship utilization requirements for gas demand-side management projects and beneficial electrification projects. In addition, the act requires that projects undertaken pursuant to specified existing state laws comply with the state mechanical, electrical, and plumbing apprenticeship utilization law and the state prevailing wage law.

For the 2023-24 state fiscal year, the act appropriates $108,401 from the general fund to the department of labor and employment for use by the division of labor standards and statistics to implement the act.

APPROVED by Governor May 23, 2023

EFFECTIVE January 1, 2024

NOTE: This act was passed without a safety clause.
(Note: This summary applies to this bill as enacted.)