Appliance Requirements & Incentives

Section 1 of the bill, on and after January 1, 2027, prohibits the sale and distribution of certain air conditioners that are manufactured on or after January 1, 2027, (covered HVAC) unless the covered HVAC complies with certain technical standards (technical standards).

On or before January 1, 2029, and again on or before January 1, 2034, the executive director of the department of public health and environment (executive director) must assess compliance with the technical standards. On or before February 1, 2029, and again on or before February 1, 2034, the executive director must prepare a report of the assessments.

Before January 1, 2027, the executive director must establish a secure process that allows an individual to make an anonymous report of a violation of the technical standards. In the case of the first 2 violations of the technical standards, the executive director must send a warning letter to the alleged violator. In the case of a third or subsequent violation, the attorney general may bring a civil action to seek a civil penalty of no more than $2,000 per ton of cooling and certain other remedial actions.

Section 3 , on or before January 1, 2026, and every other January 1 until January 1, 2034, requires the Colorado energy office (energy office) to conduct a market study or literature review to estimate the average cost difference for certain income-qualified households and income-qualified housing providers between installing a covered HVAC that meets the technical standards and installing a covered HVAC that does not meet the technical standards (study).

On or before January 1, 2027, the energy office shall establish a program to offer certain financial incentives to certain income-qualified households and income-qualified housing providers to cover the average cost difference described in the energy office's most recent study.

For income tax years commencing on and after January 1, 2024, but before January 1, 2034, section 4 creates a refundable, assignable state income tax credit that a home builder or an HVAC contractor that installs certain cold-climate heat pumps or ground-source heat pumps (eligible heat pump) can claim in the tax year that the eligible heat pump is placed into service. The amount of the tax credit is $5,000 per installation of an eligible heat pump, but the amount claimed may be increased based on certain criteria. A home builder or an HVAC contractor must provide certain verification information to the department of revenue to qualify for the tax credit. Section 5 :

• Makes certain changes to definitions;
• Changes the state income tax credit amounts that may be claimed for the installation of certain other heat pumps; and
• Requires the energy office to post information about the tax credit on the energy office's website.

Section 6 makes certain changes to definitions. Section 8 , on or before April 1, 2025, requires a public utility that provides electricity to submit to the public utilities commission a proposal for a specific voluntary rate or rates for electricity supplied to residential customers who utilize a heat pump as their primary heating source. Section 9 requires, on and after January 1, 2025, recipients of state financial assistance for new building construction projects that include energy-consuming products covered by the Energy Star program (covered energy-consuming products) to use covered energy-consuming products certified by the Energy Star program (requirements).

On and after January 1, 2025, a state agency that provides or administers state financial assistance for a new building construction project (state agency) must include certain requirements in the state agency's criteria for receiving state financial assistance and request an affidavit signed by the recipient of the state financial assistance that declares that the requirements have been or will be followed or that the recipient is requesting a waiver from the requirements. A state agency may issue a waiver from the requirements based on certain evidence and an attestation from a licensed professional engineer or design professional. On or before December 1, 2024, the energy office must distribute and periodically update certain guidance and forms related to the requirements.

If the attorney general has probable cause to believe that a recipient of state financial assistance has violated the requirements, the attorney general may bring a civil action to seek a civil penalty of up to the total amount of state financial assistance received by the violator.

Current law prohibits a person from selling or leasing new residential windows, residential doors, and residential skylights in the state on and after January 1, 2026, unless the product satisfies certain criteria under the Energy Star program. Section 10 changes current law to require new residential windows, residential doors, and residential skylights to instead satisfy certain standards in the International Energy Conservation Code.
(Note: This summary applies to this bill as introduced.)