Xcel Energy's recently approved Clean Heat Plan in Colorado allocates over $440 million over three years to transition homes to electric heating, aiming to cut annual emissions by 725,000 tons.
The plan focuses on electrification and energy efficiency, primarily incentivizing customers to switch from gas heating to electric heat pumps, with one-fifth of the funding dedicated to low-income households.
Projected outcomes include a 14% decline in gas sales by 2028 and a significant increase in heat pump installations, targeting nearly 100,000 conversions by the end of 2026.
This initiative is part of Colorado's broader Clean Heat Law, which mandates a 4% reduction in greenhouse gas emissions by 2025 and 22% by 2030 from gas distribution utilities.
While electricity rates are expected to rise by 1.1% and gas rates by 7% over four years, advocates argue that the long-term climate benefits justify the costs.
Xcel's approach may serve as a national model for decarbonizing gas distribution systems, with the utility required to report progress by 2026.