Colorado needs more energy, literally and figuratively. The Public Utilities Commission has a chance to make both happen.

Colorado’s economy is facing a mounting series of challenges. Its migration rate has slowed, meaning fewer workers for business growth, hinting at waning popularity as a destination for movers from other states. Locally, businesses face ever higher costs from a combination of materials inflation, wage inflation and regulatory growth. “Sluggish” is not the word we would like to associate with our state, but nearing the end of 2025, it’s not inaccurate.

Energy is not simply important within this context, but critical, as it’s the lifeblood of economic development. Businesses depend on reliable, affordable energy to operate and grow, and households need the same to keep their budgets balanced. Environmental policies must, therefore, be designed as part of the solution, ensuring that they support economic stability and environmental progress rather than adding burdens.

The state’s energy regulatory body, the Public Utilities Commission, is considering whether to cap the state’s electrical grid. Colorado developers have requested roughly 5,000 megawatts of new load capacity through 2031 to power projects ranging from airport expansions to manufacturing facilities. The commission, however, has indicated it might only approve 200 to 600 megawatts — a small fraction of the projected need.

The stakes could not be higher: if Colorado doesn’t expand its grid, it will not only fail its consumers, but also risk losing the very industries that drive growth, jobs and opportunity in our state.

The economic cost of that shortfall is massive, according to a recent report from the Common Sense Institute. Analysts took a close look at what could happen to Colorado’s economy given each of those respective caps.

If the Public Utilities Commission were to limit growth to 200 MW, projections show it would create a devastating economic ripple effect. That 200 MW cap would cause 17,800 fewer jobs by 2031, $21.8 billion of lost state GDP, $36.7 billion in lost output, and $12.5 billion in lost personal income.

The failure to expand to anticipated energy needs will hit all economic sectors, but some will feel it more sharply. Construction, retail, professional services, and utilities each depend uniquely on robust energy access.

This is not simply a matter of expansion for its own sake. Colorado, like the whole world, is undergoing a pivotal technological and cultural transition in the mid-2020s that will dictate its economic fortunes for the next several decades.

Like it or not, people do not find Colorado as attractive as they did in the middle of the last decade. Interstate relocation is slowing, according to another Common Sense Institute report and the state demographer’s office. The Denver metro’s migration compared to talent competitors such as Nashville, Miami, Salt Lake City, or Phoenix is softening. Our in-state talent pipeline cannot alone bring the kind of growth needed to let Colorado surge back to its top-tier place as one of the nation’s economic hotspots.

Part of that failure to maintain robust immigration is related to Colorado’s expensive cost of living, some of which is the fault of energy regulations.

As a result of greenhouse gas emissions regulations, households will spend an extra $390 to $504 annually by 2030, and all households combined will spend $1 to $1.25 billion more per year. By 2040, cumulative costs are projected to reach up to $9,280 per household, $60,200 per commercial customer, and more than $1 million per industrial customer.

Policies have taken a toll: Since 2009, environmental and emission-reduction mandates have cost Colorado $18.3 billion in GDP, $13.8 billion in personal income, and $32 billion in output. Since 2021 alone, households and businesses have paid $791 million more for electricity because of policy choices made in recent years.

Colorado businesses are struggling with higher costs and a tighter labor pool. Grid restrictions risk turning these pressures into a long-term drag on economic growth.

Moreover, emerging industry concerns are as important as developed ones, and artificial intelligence is a case in point. AI infrastructure requires immense, reliable energy loads. Data centers, which are the backbone of AI development, consume far more power than traditional office buildings.

Colorado had been aggressive in courting emerging tech businesses in the early 2010s and is gunning for the same with the explosive growth in AI. If it cannot guarantee adequate electricity, however, AI companies will, understandably, invest in other states.

A lack of energy would add to challenges stacking up against future AI growth in Colorado. On a related but separate note, in 2024 the state approved an AI law that imposes costly burdens across industries who both develop and use AI. Adding grid scarcity on top of regulatory hurdles is not the best means to court industry growth.

It’s not just businesses, either. Consumers are shouldering the cost of Colorado’s aggressive energy policies.

Electricity prices are projected to grow three times faster than inflation, and 13 times faster than they did from 2010–2020. Families will pay thousands more in the coming decades, while rising bills ripple through the economy. By 2030 alone, Common Sense Institute estimates elevated prices will cut GDP by $2.6 billion, cost 25,000 jobs, and reduce disposable income for a family of four by nearly $1,400. In other words, business competitiveness and household affordability are two sides of the same coin. A weaker grid and higher prices hurt everyone.

Colorado energy policies should reflect its competitiveness, its ability to retain workers and attract new ones, and its capacity to lead in the industries of tomorrow. Each new megawatt approved represents real projects, jobs and opportunity. We must move beyond the false divide that pits the health of our environment against the promise of growth.

The two are not adversaries but companions, each flourishing when the other is nurtured. Prosperity is secured not by choosing one over the other, but by recognizing that lasting economic strength depends on responsible stewardship, and that protecting our natural resources ensures the stability and competitiveness with which markets thrive.

Colorado has always succeeded when it matched ambition with opportunity, and this is just another example of expanding that tradition beyond the immediate horizon, of seeing growth not only in what we build today, but in the foundations we lay for tomorrow. That forward-thinking attitude kept our economy thriving in the last decade and positioned us as leaders in the sustainability space.

With signs of stagnation popping up in crucial metrics, now is the time kickstart that same spirit. The Public Utilities Commission should expand capacity so the state can unleash its potential for growth and creative problem solving, and as a consequence, keep Colorado competitive for businesses, workers and families.

Andy Klein is founder and managing principal of Westside Investment Partners. Harold Smethills is founder and chairman of Sterling Ranch.