Colorado § 40-3-106 - Advantages prohibited - graduated schedules - consideration of household income and other factors - definitions.

§ 40-3-106. Advantages prohibited - graduated schedules - consideration of household income and other factors - definitions.

(1) (a) Except when operating under paragraph (c) or (d) of this subsection (1), a public utility, as to rates, charges, service, or facilities, or in any other respect, shall not make or grant any preference or advantage to a corporation or person or subject a corporation or person to any prejudice or disadvantage. A public utility shall not establish or maintain any unreasonable difference as to rates, charges, service, facilities, or between localities or class of service. The commission may determine any question of fact arising under this section.

(b) Repealed.

(c) A local exchange provider, as defined in section 40-15-102 (18), may enter into a contract, when necessary, specifying non-cost-based rates and conditions particular to that contract with one or more purchasers of services for applications of interactive video technology for purposes of distance learning, video arraignment of defendants in criminal cases, or examination, diagnosis, or treatment of patients in the course of medical practice. When an application is subject to a bidding process by the end user of the service, the local exchange providers offering component elements of interactive video technology pursuant to this paragraph (c) shall offer the component elements relating to a specific application to a specific end user to all bidders, including themselves, if bidding, at the same rates, terms, and conditions. This exception shall not apply to any other regulated service. A provider other than a local exchange provider may offer such interactive video services if such services are provided under the same terms and conditions as specified in this paragraph (c). Each contract entered into under this paragraph (c) shall be filed with the commission for information only.

(d) (I) Notwithstanding any provision of articles 1 to 7 of this title 40 to the contrary, the commission may approve any rate, charge, service, classification, or facility of a gas or electric utility that makes or grants a reasonable preference or advantage to income-qualified utility customers, even if the reasonable preference or advantage applies on a year-round basis, and the implementation of such commission-approved rate, charge, service, classification, or facility by a public utility shall not be deemed to subject any individual or corporation to any prejudice, disadvantage, or undue discrimination.

(II) As used in this subsection (1)(d), an "income-qualified utility customer" means a utility customer who the department of human services, created in section 26-1-105; the organization defined in section 40-8.7-103 (4); or the Colorado energy office, created in section 24-38.5-101, has determined:

(A) Has a household income at or below two hundred percent of the current federal poverty line;

(B) Has a household income at or below eighty percent of the area median income, as published annually by the United States department of housing and urban development; or

(C) Otherwise meets the income eligibility criteria set forth in rules of the department of human services adopted pursuant to section 40-8.5-105.

(III) When considering whether to approve a rate that makes or grants a reasonable preference or advantage to income-qualified utility customers, the commission shall take into account the potential impact on, and cost-shifting to, utility customers other than income-qualified utility customers.

(IV) A commission-approved gas or electric utility rate, charge, service, classification, or facility that makes or grants a reasonable preference or advantage to income-qualified utility customers may apply to income-qualified utility customers on a year-round basis.

(2) Nothing in articles 1 to 7 of this title 40 prohibits a public utility engaged in the production, generation, transmission, or furnishing of heat, light, gas, water, power, or telephone service from establishing a graduated scale of charges subject to this title 40; except that, for rates resulting from a rate design change approved by the commission on or after September 1, 2020, the commission shall require utility revenue or billing adjustment mechanisms to ensure that a utility's change in rate design results in a revenue-neutral outcome. In adopting new rate designs for residential customers, the commission shall evaluate the potential for higher bills due to changes in rate design. Rate designs that disproportionately negatively impact low-income residential customers compared to other residential customers of the utility are presumed to be contrary to the public interest.

(3) Nothing in this section shall prevent the commission from revoking its approval at any time and fixing other rates and charges for the product or commodity or service as authorized by articles 1 to 7 of this title.

(4) The commission shall order a fixed public utility, except a municipally owned utility, to increase its rates only to its customers in a municipality by adding a surcharge to recover the amount such fixed public utility pays to that municipality as a cost of doing business within that municipality under a franchise or pursuant to a license or occupation tax levied by the municipality, so long as the increase in rates by such fixed public utility is pursuant to a method of surcharge approved by the commission. Occupation tax as used in this subsection (4) does not include the employer and employee tax imposed by a municipality for the privilege of employment within that municipality.

(5) Repealed.

Source: L. 13: p. 473, § 18. C.L. § 2929. CSA: C. 137, § 19. CRS 53: § 115-3-6. C.R.S. 1963: § 115-3-6. L. 69: p. 932, § 15. L. 81: (4) and (5) added, p. 1912, § 1, effective July 1. L. 83: (5) repealed, p. 1555, § 3, effective June 17. L. 84: (1) amended, p. 1039, § 5, effective July 1. L. 86: (1)(a) amended, p. 1155, § 2, effective September 1. L. 89: (2) amended, p. 1526, § 8, effective April 12. L. 90: (1)(a) amended, p. 1849, § 51, effective May 31. L. 91: (1)(a) amended, p. 1925, § 57, effective June 1. L. 95: (1)(a) amended and (1)(c) added, p. 245, § 1, effective April 17. L. 2000: (1)(b) repealed, p. 217, § 3, effective March 29. L. 2002: (1)(a) amended, p. 1033, § 70, effective June 1. L. 2007: (1)(a) amended and (1)(d) added, p. 319, § 1, effective April 2. L. 2008: (2) amended, p. 1792, § 6, effective July 1. L. 2010: (1)(d)(II)(A) amended, (HB 10-1422), ch. 419, p. 2124, § 181, effective August 11. L. 2013: (1)(a) amended, (SB 13-194), ch. 89, p. 289, § 2, effective April 1. L. 2020: (2) amended, (SB 20-030), ch. 148, p. 639, § 3, effective June 29. L. 2021: (1)(d)(II) amended, (HB 21-1105), ch. 488, p. 3496, § 3, effective September 7. L. 2022: (1)(d) amended, (HB 22-1018), ch. 109, p. 499, § 3, effective April 21.

ANNOTATION

Law reviews. For article, "Coal Mining a Public Utility", see 12 Dicta 267 (1935).

Section 25 of article V of the Colorado constitution, which prohibits special legislation, is not violated by the provisions of subsection (4) even though this subsection exempts municipally-owned fixed public utilities and privately-owned nonfixed public utilities from its coverage. City of Montrose v. Pub. Utils. Comm'n, 732 P.2d 1181 (Colo. 1987).

Section 38 of article V of the Colorado constitution is not violated by subsection (4) as this statute does not alter a public utility's obligation to pay franchise fees to a municipality which has granted the public utility a franchise. City of Montrose v. Pub. Utils. Comm'n, 732 P.2d 1181 (Colo. 1987).

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).

Specter of discrimination would be raised contrary to subsection (1) if providers of call transfer services that allow a subscriber to place intrastate telephone calls outside of the subscriber's local calling area without incurring long-distance toll charges were allowed to purchase from an exchange tariff rather than an access tariff. Avicomm, Inc. v. Colo. Pub. Utils. Comm'n, 955 P.2d 1023 (Colo. 1998).

Reasonable interpretation of state utility law would require a public utility to charge and collect full established charge for transportation of oil from any person liable for the charge and would prevent the utility from canceling the original charge in consideration of a new and different promise to pay. Empire Petroleum Co. v. Sinclair Pipeline Co., 282 F.2d 913 (10th Cir. 1960).

Utility regulation is arguably designed to protect against unreasonably low rates. Cottrell v. City & County of Denver, 636 P.2d 703 (Colo. 1981).

Additional charges are proper when additional service rendered, see Consumers' League v. Colo. & S. Ry., 64 Colo. 502, 172 P. 1064 (1918).

Cannot make flat charge that applies through service unrendered. A rule, under this section, eliminating all distinctions between shipments over the line of the carrier, and switching charges, prescribing a uniform rate for all cases, regardless of whether switching is performed or not, is improper and will be condemned. Consumers' League v. Colo. & S. Ry., 64 Colo. 502, 172 P. 1064 (1918).

Preferential rate-making restricted. Although the public utilities commission (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 this section and § 40-3-102 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).

May compel operation of trains over particular routes. Under this section, the commission has power to direct the railroad company to operate passenger trains over its line to one city, so that any disadvantage imposed upon the inhabitants of another city by the railroad company abandoning its line between that point and yet another city will be removed; provided, of course, the company can not justify its action in abandoning that portion of its road. Colo. & S. Ry. v. State R. R. Comm'n, 54 Colo. 64, 129 P. 506 (1912).

May reopen abandoned lines. If the carrier operates its trains over such routes, by reason of a link in its line being abandoned, that unnecessary delays are occasioned, it is not transporting shipments with that degree of diligence which the act requires, and the commission is empowered to direct that it transport freight over the abandoned part of its line, when by so doing shipments will be greatly facilitated, and burdens imposed upon shippers removed, unless the railroad can justify its action in abandoning such part of its line. Colo. & Samp;. Ry. v. State R. R. Comm'n, 54 Colo. 64, 129 P. 506 (1912).

This section was intended to apply to intrastate traffic the same wholesome rules and regulations which congress applied to commerce between the states, and to cut up by the roots the entire system of rebates and discriminations in favor of particular localities, special enterprises, or favored corporations, and to put all shippers on an absolute equality. Union Pac. Ry. v. Goodridge, 149 U.S. 680 (1893).

Limiting the discretion of the PUC in determining how a privately-owned fixed public utility will be allowed to recover the cost of franchise fees, pursuant to subsection (4), is not a matter within the domain of local self-government and does not fall within the scope of protection of § 35 of article V of the Colorado constitution. City of Montrose v. Pub. Utils. Comm'n, 732 P.2d 1181 (Colo. 1987).

Constitutionality of subsection (4). Subsection (4) does not impermissibly impose a new liability upon a city's residents in violation of § 12 of article XV of the Colorado constitution as this section does not require that municipal customers be surcharged for the amount surcharged to and paid by rural customers for franchise fees prior to adoption of this section, and an increase in surcharges after the statutory enactment is not a new liability within the meaning of § 12, article XV. City of Montrose v. Pub. Utils. Comm'n, 732 P.2d 1181 (Colo. 1987).

Subsection (4) does not affect either a home rule city's ability to negotiate and grant franchises and to collect franchise fees or a fixed utility's obligation to pay to a municipality the entire amount of the franchise fee negotiated and, therefore, does not violate §§ 4 and 6 of article XX or article XXV of the Colorado constitution. City of Montrose v. Pub. Utils. Comm'n, 732 P.2d 1181 (Colo. 1987).

Subsection (4), which requires that a fixed public utility be ordered to increase rates charged customers in a municipality by adding a surcharge to recover the amount paid to the municipality under a franchise or license, does not violate article XXV of the Colorado constitution as said section is a legislative restriction on the authority of the commission as authorized by article XXV. City of Montrose v. Pub. Utils. Comm'n, 732 P.2d 1181 (Colo. 1987).

Subsection (4) does not violate the equal protection of the laws. City of Montrose v. Pub. Utils. Comm'n, 732 P.2d 1181 (Colo. 1987).

Using the rational basis analysis, the general assembly could have reasonably concluded that subsection (4) would be a disincentive for municipalities to negotiate inflated franchise fees since such a fee will ultimately be paid for by the residents of the municipality. City of Montrose v. Pub. Utils. Comm'n, 732 P.2d 1181 (Colo. 1987).

The right of home rule cities to grant franchises is not unconstitutionally interfered with by subsection (4), which results in the customers within a municipality which has granted a franchise to pay the cost of the franchise fee as part of the rates for the service. City of Montrose v. Pub. Utils. Comm'n, 732 P.2d 1181 (Colo. 1987).

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).

Applied in Shoemaker v. Mtn. States Tel. & Tel. Co., 38 Colo. App. 321, 559 P.2d 721 (1976).