Colorado § 40-3-102 - Regulation of rates - correction of abuses.

§ 40-3-102. Regulation of rates - correction of abuses.

The power and authority is hereby vested in the public utilities commission of the state of Colorado and it is hereby made its duty to adopt all necessary rates, charges, and regulations to govern and regulate all rates, charges, and tariffs of every public utility of this state to correct abuses; to prevent unjust discriminations and extortions in the rates, charges, and tariffs of such public utilities of this state; to generally supervise and regulate every public utility in this state; and to do all things, whether specifically designated in articles 1 to 7 of this title or in addition thereto, which are necessary or convenient in the exercise of such power, and to enforce the same by the penalties provided in said articles through proper courts having jurisdiction; except that nothing in this article shall apply to municipal natural gas or electric utilities for which an exemption is provided in the constitution of the state of Colorado, within the authorized service area of each such municipal utility except as specifically provided in section 40-3.5-102.

Source: L. 13: p. 469, § 14. C.L. § 2925. CSA: C. 137, § 15. CRS 53: § 115-3-2. C.R.S. 1963: § 115-3-2. L. 83: Entire section amended, p. 1552, § 1, effective June 17.

Cross references: For definition of a public utility, see § 40-1-103; for penalties for violation, see article 7 of this title.

ANNOTATION

Law reviews. For article, "Coal Mining a Public Utility", see 12 Dicta 267 (1935). For article, "Retail Competition in the Electric Utility Industry", see 60 Den. L.J. 1 (1982).

Commission has two duties. The commission has been charged with the duty to carry out its mission in two areas, to wit: To protect the public and to prevent destructive rate-making which could result in nonavailability of the service to the public. Consol. Freightways Corps. v. Pub. Utils. Comm'n, 158 Colo. 239, 406 P.2d 83 (1965).

Duty of commission to protect public interest. Under the Colorado statutory scheme, the public utilities commission (PUC) is charged with protecting the interest of the general public from excessive, burdensome rates. Pub. Utils. Comm'n v. District Court, 186 Colo. 278, 527 P.2d 233 (1974).

The commission has a general responsibility to protect the public interest regarding utility rates and practices. City of Montrose v. Pub. Utils. Comm'n, 629 P.2d 619 (Colo. 1981).

A primary purpose of utility regulation is to insure that the rates charged are not excessive or unjustly discriminatory. Cottrell v. City & County of Denver, 636 P.2d 703 (Colo. 1981).

Preferential rate-making restricted. Although the PUC has been granted broad rate-making powers by art. XXV, Colo. Const., the commission's power to effect social policy through preferential rate-making is restricted by § 40-3-106 (1) and this section, no matter how deserving the group benefiting from the preferential rate may be. Mtn. States Legal Found. v. Pub. Utils. Comm'n, 197 Colo. 56, 590 P.2d 495 (1979).

Right of utility customer to receive service is not absolute right, but is a qualified right. The right is dependent upon payment for the service and product provided. The continuation of service during a dispute is dependent upon either the posting of what is, in effect, an indemnity bond or the assertion of a well-founded claim that would justify the customer's refusal to pay for the service which was rendered. Denver Welfare Rights Org. v. Pub. Utils. Comm'n, 190 Colo. 329, 547 P.2d 239 (1976).

Commission's power to impose accelerated depreciation on utility. The PUC not only has the power but also the obligation to impute a method of depreciation which will reasonably permit a substantial saving to ratepayers. Colo. Mun. League v. Pub. Utils. Comm'n, 172 Colo. 188, 473 P.2d 960 (1970).

Power of the commission as to rates under this section is not confined to regulation of those which are discriminatory or preferential, but extends to those which are unreasonable; that upon any such complaint the commission is authorized to fix a reasonable rate of charge to be thereafter observed by the carrier. Consumers' League v. Colo. & S. Ry., 53 Colo. 54, 125 P. 577, (1912).

Rates set by commission for interLATA access charge and intraLATA toll rates do not unreasonably discriminate against resellers and result in "price squeeze". When establishing an intraLATA toll rate, the commission is under no obligation to require a Bell operating company to impute to itself an access charge similar to one imposed on resellers. Wholesale rates approved by commission and charged to resellers for intraLATA toll services are not discriminatory, even though in some mileage bands and at some times of the day such rates exceed the retail rates charged by the Bell operating company to its own customers. Consumer Counsel v. P.U.C., 786 P.2d 1086 (Colo. 1990) (decided under the "Intrastate Telecommunication Service Act", §§ 40-15-101 et seq., as it existed prior to its 1987 repeal and reenactment, which act provided that intraLATA toll services were governed by the doctrine of regulated monopoly and which did not provide for a prohibition against discriminatory charges).

Although the commission has broad power to accomplish its legislative and constitutional purpose, its powers are restricted by the statutory provisions governing utilities, and the commission's delegated powers do not extend generally to adjudicatory matters. Colo. Office of Consumer Counsel v. Mtn. States Tel. & Tel., 816 P.2d 278 (Colo. 1991).

Making of rates to govern public utilities is legislative and not judicial function; in this state, that legislative function has been delegated to the PUC. City & County of Denver v. People ex rel. Pub. Utils. Comm'n, 129 Colo. 41, 226 P.2d 1105 (1954); Mtn. States Tel. & Tel. Co. v. Pub. Utils. Comm'n, 176 Colo. 457, 491 P.2d 582 (1971); Pub. Utils. Comm'n v. District Court, 186 Colo. 278, 527 P.2d 233 (1974); City of Montrose v. Pub. Utils. Comm'n, 629 P.2d 619 (Colo. 1981); Office of Consumer Counsel v. Pub. Serv. Co., 877 P.2d 867 (Colo. 1994); Pub. Serv. Co. v. Pub. Utils. Comm'n, 26 P.3d 1198 (Colo. 2001).

Judiciary must refrain from any semblance of rate-making. Pub. Utils. Comm'n v. District Court, 186 Colo. 278, 527 P.2d 233 (1974).

Commission has exclusive jurisdiction over claims concerning the enforcement of tariffs. District court lacked subject matter jurisdiction over breach of contract case where the essence of the plaintiff's contract claims involved the enforcement of defendant utility's tariffs filed with the commission. Dev. Recovery Co., LLC v. Pub. Serv. Co. of Colo., 2017 COA 86, 410 P.3d 1264.

Federal courts are prevented from intervening in state rate-making process even though the matter might be repugnant to the federal constitution, unless the remedy in state courts is inadequate, by the so-called Johnson Act of 1934, 28 U.S.C. § 1342 (4). Mtn. States Tel. & Tel. Co. v. Pub. Utils. Comm'n, 345 F. Supp. 80 (D. Colo. 1972).

Municipality furnishing electricity to its citizens has sole power to fix rates. Where a municipality as the owner of a public utility furnishes electricity to its citizens within the municipal limits, the city itself, through its proper officers, possesses the sole power of fixing the rates to be charged for such utility. City of Lamar v. Town of Wiley, 80 Colo. 18, 248 P. 1009 (1926).

Plant owned and operated by consumers can never become monopoly, nor can it be instrument of oppression; hence there is no room for the exercise of the police power. Town of Holyoke v. Smith, 75 Colo. 286, 226 P. 158 (1924).

Where people are dealing with privately owned public utility, there is good reason for a commission which shall act in the interest of the public, to avoid the possibility of oppression. Willison v. Cooke, 54 Colo. 320, 130 P. 828 (1913).

Commission has power to fix rates of municipally owned utility furnishing services beyond territorial boundaries. When a municipality, whether in its operation of its own public utility it acts in its municipal or governmental, or in its proprietary, or quasi-public, capacity, or partly in one and partly in the other, and as such furnishes public service to its own citizens and in connection therewith supplies its products to consumers outside of its own territorial boundaries, the function it thereby performs, whatever its nature may be, in supplying outside consumers with a public utility, is and should be attended with the same conditions and be subject to the same control and supervision that apply to a private public utility owner who furnishes like service. City of Lamar v. Town of Wiley, 80 Colo. 18, 248 P. 1009 (1926).

Commission has no jurisdiction where charter gave city control of rates prior to home rule amendment. When a city has adopted a charter which gives that city control of the rates to be charged by public utilities within its limits, before the passage of the home-rule amendment, the state commission has no control of rates within that city. City & County of Denver v. Mtn. States Tel. & Tel. Co., 67 Colo. 225, 184 P. 604 (1919); City of Pueblo v. Pub. Utils. Comm'n, 68 Colo. 155, 187 P. 1026 (1920); Atchison, T. & S. F. Ry. v. Pub. Utils. Comm'n, 68 Colo. 92, 188 P. 747 (1920); City of Ft. Collins v. Pub. Utils. Comm'n, 69 Colo. 554, 195 P. 1099 (1921).

Commission has no jurisdiction where charter gives city control of rates subsequent to home rule amendment. The state PUC has no authority to regulate telephone rates in a city, which, after the passage of the home rule amendment, adopted a charter giving it control of the rates to be charged by public utilities within its limits. City of Ft. Collins v. Pub. Utils. Comm'n, 69 Colo. 554, 195 P. 1099 (1921).

Commission has power to permanently fix rates to be charged by private owner for furnishing public utility, regardless of any contract entered into between the parties as to such rates. Denver & S. Pac. Ry. v. City of Englewood, 62 Colo. 229, 161 P. 151 (1916); Ohio & Colo. Smelting & Ref. Co. v. Pub. Utils. Comm'n, 68 Colo. 137, 187 P. 1082 (1920); City of Lamar v. Town of Wiley, 80 Colo. 18, 248 P. 1009 (1926).

PUC is clothed with general powers to regulate and control carriers for hire within state. Lane v. Pub. Utils. Comm'n, 152 Colo. 335, 381 P.2d 818 (1963).

In the area of utility regulation, the commission has broadly based authority to do whatever it deems necessary or convenient to accomplish the legislative functions delegated to it. City of Montrose v. Pub. Utils. Comm'n, 629 P.2d 619 (Colo. 1981).

General assembly has vested commission with considerable discretion in its choice of the means used to fix rates. Colo. Ute Elec. Ass'n v. Pub. Utils. Comm'n, 198 Colo. 534, 602 P.2d 861 (1979).

General assembly has declared necessity and duty and left to commission determination of rate that is fair to the public and sufficiently compensatory to the utility to insure a fair return on its investments. Consol. Freightways Corps. v. Pub. Utils. Comm'n, 158 Colo. 239, 406 P.2d 83 (1965).

Commission unlawfully delegated its rate-making obligation to utility when it conferred upon it the discretion to determine whether or not a developer should receive a refund of the underground component of its cash advances and whether to charge underground customers higher rates. Baca Grande Corp. v. Pub. Utils. Comm'n, 190 Colo. 201, 544 P.2d 977 (1976).

Rate-making is not exact science, but a legislative function involving many questions of judgment and discretion, and that judgment or discretion must be based upon evidentiary facts, calculations, known factors, relationship between known factors, and adjustments which may affect the relationship between known factors. Colo. Ute Elec. Ass'n v. Pub. Utils. Comm'n, 198 Colo. 534, 602 P.2d 861 (1979); City of Montrose v. Pub. Utils. Comm'n, 629 P.2d 619 (Colo. 1981); Consumer Counsel v. P.U.C., 786 P.2d 1086 (Colo. 1990); Integrated Network Servs. v. PUC, 875 P.2d 1373 (Colo. 1994); Pub. Serv. Co. v. Pub. Utils. Comm'n, 26 P.3d 1198 (Colo. 2001).

Commission not bound by prior decisions. Because of the legislative character of rate-making, the commission is not bound by its prior decisions or by any doctrine similar to stare decisis. Colo. Ute Elec. Ass'n v. Pub. Utils. Comm'n, 198 Colo. 534, 602 P.2d 861 (1979).

Commission functions in "zones of reasonableness". The fixing of rates is a matter largely of prophecy, and because of this fact, the commission in carrying out its functions necessarily deals in what are called "zones of reasonableness", the result of which is that it has some latitude in exercising this most difficult function. Mtn. States Tel. & Tel. Co. v. Pub. Utils. Comm'n, 345 F. Supp. 80 (D. Colo. 1972).

Regulatory agency has some flexibility in fixing rate of return — its decision being subject to existing economic conditions. Mtn. States Tel. & Tel. Co. v. Pub. Utils. Comm'n, 345 F. Supp. 80 (D. Colo. 1972).

Reasonable rate determined by result reached. It is the result reached, not the method employed, which determines whether a rate is just and reasonable. City of Montrose v. Pub. Utils. Comm'n, 629 P.2d 619 (Colo. 1981).

Rate of return can be reasonable at one time and too high or low at another depending on economic conditions. Mtn. States Tel. & Tel. Co. v. Pub. Utils. Comm'n, 345 F. Supp. 80 (D. Colo. 1972).

Rate of return is ratio. The rate of return involved in public utility rate proceedings is the ratio between net operating revenues and rate base. Mtn. States Tel. & Tel. Co. v. Pub. Utils. Comm'n, 182 Colo. 269, 513 P.2d 721 (1973).

Rate of return and ratio are criteria for determining what is or is not confiscation of a company's property. Mtn. States Tel. & Tel. Co. v. Pub. Utils. Comm'n, 182 Colo. 269, 513 P.2d 721 (1973).

Rates which have turned out to be less than commission's projections are not per se confiscatory. Mtn. States Tel. & Tel. Co. v. Pub. Utils. Comm'n, 345 F. Supp. 80 (D. Colo. 1972).

Cost of capital must be given attention as one of the factors in determining what is the appropriate rate of return. Mtn. States Tel. & Tel. Co. v. Pub. Utils. Comm'n, 182 Colo. 269, 513 P.2d 721 (1973).

Portion of capital structure included in calculating rates. It is proper and within the PUC's authority to include only that portion of the capital structure which finances the rate base in the calculation of just and reasonable rates. Peoples Natural Gas Div. of N. Natural Gas Co. v. Pub. Utils. Comm'n, 193 Colo. 421, 567 P.2d 377 (1977).

Commission's duty to avail ratepayers of economies ignored by management. When management abuses its managerial discretion to the detriment of its customers, the regulatory commissions have a duty to declare the abuse and make such orders as will give to ratepayers the advantage of those economies of which management has failed to avail itself. Colo. Mun. League v. Pub. Utils. Comm'n, 172 Colo. 188, 473 P.2d 960 (1970).

Gas cost adjustment authorized. The PUC has authority to permit cost adjustments such as the gas cost adjustment as part of its wide discretion to govern and regulate the rates of public utilities in this state. Pub. Serv. Co. v. Pub. Utils. Comm'n, 644 P.2d 933 (Colo. 1982).

Such adjustment did not constitute retroactive rate making. Colo. Energy Advocacy v. Pub. Serv. Co., 704 P.2d 298 (Colo. 1985).

Because the commission explicitly considers the heating content of natural gas when setting rates, a deceptive trade practice claim concerning a utility's alleged misrepresentations about the heating content of natural gas is within the commission's exclusive jurisdiction, and the plaintiff's failure to exhaust its administrative remedies mandates dismissal of the claim. City of Aspen v. Kinder Morgan, Inc., 143 P.3d 1076 (Colo. App. 2006).

Public utilities law forbids estoppel of public utility from collecting established rate. Goddard v. Pub. Serv. Co., 43 Colo. App. 77, 599 P.2d 278 (1979).

Utilities law applies to contracts entered into by public utility corporation with municipality as well as with individuals and private corporations. City of Lamar v. Town of Wiley, 80 Colo. 18, 248 P. 1009 (1926).

Commission has the power to initiate investigations into excessive charges and to award reparations under this section, and § 40-6-119 concerning complaints made to the commission, including a statute of limitations therein, is not applicable to complaints by the commission on its own motion. Peoples Natural Gas Div. v. P.U.C., 698 P.2d 255 (Colo. 1985).

Commission is empowered to fashion remedy to correct a statutory violation of the requirement that a utility receive commission approval prior to the transfer of utility's assets. Mtn. States Tel. & Tel. v. P.U.C., 763 P.2d 1020 (Colo. 1988).

Order directing utility to reacquire assets transferred without required commission approval was appropriate and will be given great deference in light of the commission's special expertise in regulation of utilities. Mtn. States Tel. & Tel. v. P.U.C., 763 P.2d 1020 (Colo. 1988).

Inclusion of a merger savings adjustment and an adjustment reflecting the transition from one accounting method to another was within the commission's authority under this section. Pub. Serv. Co. v. Pub. Utils. Comm'n, 26 P.3d 1198 (Colo. 2001).

It is within power of commission to pierce corporate structures of corporations which also operate nonutility divisions or subsidiaries to impute a capital structure for the utility operation, which is reflective of the capitalization actually backing the utility operation. Peoples Natural Gas Div. of N. Natural Gas Co. v. Pub. Utils. Comm'n, 193 Colo. 421, 567 P.2d 377 (1977).

Although the commission has broad power to issue declaratory orders and to initiate various types of proceedings, where a declaratory order is in essence a rule, the commission is bound by the procedural requirements pertaining to rule-making proceedings. Colo. Office of Consumer Counsel v. Mtn. States Tel. & Tel., Co., 816 P.2d 278 (Colo. 1991).

One of purposes of this article is to prevent unjust and unreasonable charges and to have the commission investigate such a complaint, and the commission can certainly make a decision, order, or requirement with reference thereto under the express provisions of this section. Consumers' League v. Colo. & S. Ry., 53 Colo. 54, 125 P. 577 (1912).

Public utility must have adequate revenues for operating expenses and to cover the capital costs of doing business. Pub. Utils. Comm'n v. District Court, 186 Colo. 278, 527 P.2d 233 (1974).

The revenues must be sufficient to assure confidence in the financial integrity of the enterprise, so as to maintain its credit and to attract capital. Pub. Utils. Comm'n v. District Court, 186 Colo. 278, 527 P.2d 233 (1974).

Regulation of information included in billings. The commission has authority to regulate the information which public utilities include in their customer billings. City of Montrose v. Pub. Utils. Comm'n, 629 P.2d 619 (Colo. 1981).

Earnings of stockholders are not prime consideration in rate cases. Mtn. States Tel. & Tel. Co. v. Pub. Utils. Comm'n, 182 Colo. 269, 513 P.2d 721 (1973).

Establishment of mandatory measured service rates for resellers but allowing other business customers a flat rate option not in violation of this section. Although cost of providing service is the same, the reseller customers are not similarly situated to other business customers because they are in competition with the provider. In addition, because rate is based on actual use, the resellers are not being asked to subsidize other customers. Integrated Network Servs. v. PUC, 875 P.2d 1373 (Colo. 1994).

Commission's discretion whether to award attorneys' fees in own proceeding. The commission has broad constitutional and statutory discretion to determine when attorneys' fees should be awarded in its own proceedings. Colo. Ute Elec. Ass'n v. Pub. Utils. Comm'n, 198 Colo. 534, 602 P.2d 861 (1979).

Commission's standard for determining attorneys' fee or costs award has three criteria: (1) That the representation and expenses incurred relate to general consumer interests; (2) that the testimony, evidence and exhibits provided materially assist the commission in reaching its decision; and (3) that the fees and costs incurred are reasonable. Colo. Ute Elec. Ass'n v. Pub. Utils. Comm'n, 198 Colo. 534, 602 P.2d 861 (1979).

Commission has jurisdiction to award reasonable attorney's fees and expenses to successfully protesting municipal league from interest accruing on amount to be refunded to customers. Mtn. States Tel. & Tel. Co. v. Pub. Utils. Comm'n, 180 Colo. 74, 502 P.2d 945 (1972).

Applied in Shoemaker v. Mtn. States Tel. & Tel. Co., 38 Colo. App. 321, 559 P.2d 721 (1976); Mtn. States Tel. & Tel. Co. v. Pub. Utils. Comm'n, 195 Colo. 130, 576 P.2d 544 (1978); City of Loveland v. Pub. Utils. Comm'n, 195 Colo. 298, 580 P.2d 381 (1978); Pollard Contracting Co. v. Pub. Utils. Comm'n, 644 P.2d 7 (Colo. 1982).