On June 1, 2023, Colorado Governor Jared Polis signed HB23-1161 into law after it was approved by both chambers of the Colorado General Assembly. The bill encompassed sweeping appliance efficiency changes that have a significant impact on water heaters that would be shipped into the state after the beginning of 2026. Perhaps most notably, the law would effectively ban the shipment of all non-ENERGY STAR®-certified propane water heaters into the state.

The law implements stringent nitrous oxide (NOx) emissions limits to all residential and commercial gas-fired water heater products that do not meet federal ENERGY STAR criteria. These standards are similar to emissions regulations that have existed for over two decades in other portions of the country, most notably in certain areas of the State of California. However, in all those other jurisdictions there is no exemption for ENERGY STAR products, but there are exceptions for all residential propane water heaters.

The reason propane water heaters are exempt elsewhere is because there are no residential propane water heaters on the market today that can satisfy the emissions requirements that have been established by the state. As a result, the implementation of HB23-1161 will, unfortunately, leave limited options for the individuals and families who reside in the over 100,000 Colorado homes that rely on propane for water heating when their current product reaches the end of its life. Once the current supply of these products in the state is depleted, these homeowners will be compelled by the state to pursue one of two options, both of which may result in significantly increased costs.

The first option would be for the homeowner to replace their propane water heater with its more expensive ENERGY STAR counterpart, assuming one exists. This tradeoff often comes with significant, additional, installation costs for the homeowner that are largely related to modifying the vent system needed for the new water heater. For those not wanting to go the ENERGY STAR route, the second option would be to fuel switch to an electric water heater. However, this option often comes with significant, increased installation costs as well. These costs typically range in the thousands of dollars if electric panel upgrades or additional electrical wiring in the home are necessary. In either case, homeowners utilizing propane in Colorado could be left paying significantly more out-of-pocket to replace their water heater than they would have last year.

On Jan. 14, 2026, the Colorado General Assembly officially gaveled back into session, giving state lawmakers an opportunity to revise this law to exempt propane water heaters from the state’s NOx emissions standards. This would make the state’s law more consistent with all other laws and regulations like it around the country. If you know homeowners in the state that utilize propane, or are simply concerned about the impact this law will have on individuals and families in Colorado, click here to reach out to lawmakers in the state and make your opinion known.

If you have any questions about this matter, or any others related to government and regulatory affairs in our industry, BWC’s Government and Regulatory Affairs team would like to speak with you. Also, if you know of any legislative or regulatory activity in your community or state that would impact our industry, please do not hesitate to contact us at BWCGovReg@bradfordwhite.com.