Colorado § 40-3-111 - Rates determined after hearing.

§ 40-3-111. Rates determined after hearing.

(1) Whenever the commission, after a hearing upon its own motion or upon complaint, finds that the rates, tolls, fares, rentals, charges, or classifications demanded, observed, charged, or collected by any public utility for any service, product, or commodity, or in connection therewith, including the rates or fares for excursion or commutation tickets, or that the rules, regulations, practices, or contracts affecting such rates, fares, tolls, rentals, charges, or classifications are unjust, unreasonable, discriminatory, or preferential, or in any way violate any provision of law, or that such rates, fares, tolls, rentals, charges, or classifications are insufficient, the commission shall determine the just, reasonable, or sufficient rates, fares, tolls, rentals, charges, rules, regulations, practices, or contracts to be thereafter observed and in force and shall fix the same by order. In making such determination, the commission may consider current, future, or past test periods or any reasonable combination thereof and any other factors which may affect the sufficiency or insufficiency of such rates, fares, tolls, rentals, charges, or classifications during the period the same may be in effect, and may consider any factors which influence an adequate supply of energy, encourage energy conservation, or encourage renewable energy development.

(1.5) (a) If the commission considers environmental effects when comparing the costs and benefits of potential utility resources, it shall also make findings and give due consideration to the effect that acquiring such resources will have on the state's economy and employment, including, but not limited to, the effect on the mining, electric, natural gas, energy efficiency, and renewable resource industries.

(b) If the commission considers factors which encourage renewable energy development, it shall also make findings and give due consideration to the effect of such factors on the utility's ability to recover its capital and operating costs.

(2) (a) The commission has the power, after a hearing upon its own motion or upon complaint, to investigate a single rate, fare, toll, rental, charge, classification, rule, contract, or practice, or the entire schedule of rates, fares, tolls, rentals, charges, classifications, rules, contracts, and practices of any public utility; and to establish new rates, fares, tolls, rentals, charges, classifications, rules, contracts, practices, or schedules, in lieu thereof.

(b) As part of any inquiry or investigation into rate structures of regulated electric utilities undertaken on or before July 1, 2009, the commission shall consider whether to adopt retail rate structures that enable the use of solar or other renewable energy resources in agricultural applications, including, but not limited to, irrigation pumping.

Source: L. 13: p. 475, § 23. C.L. § 2934. CSA: C. 137, § 24. CRS 53: § 115-3-11. C.R.S. 1963: § 115-3-11. L. 81: (1) amended, p. 1914, § 1, effective July 1. L. 93: (1.5) added, p. 202, § 1, effective March 31. L. 94: (1) and (1.5) amended, p. 611, § 3, effective April 8. L. 2008: (2) amended, p. 1793, § 9, effective July 1.

Cross references: For the legislative declaration contained in the 1994 act amending subsections (1) and (1.5), see section 1 of chapter 102, Session Laws of Colorado 1994.

ANNOTATION

I. General Consideration.

II. Investigation of Rates.

III. Establishing Rates.

I. GENERAL CONSIDERATION.

Law reviews. For article, "May Regulated Utilities Monopolize the Sun?", see 56 Den. L.J. 31 (1979). For article, "Retail Competition in the Electric Utility Industry", see 60 Den. L.J. 1 (1982).

General assembly provided procedural structure. The general assembly clearly intended to place the primary duty and responsibility for the determination of just and reasonable utility rates in the public utilities commission (PUC) and provided a complete procedural structure for the commission to follow in discharging its function. Pub. Utils. Comm'n v. Nw. Water Corp., 168 Colo. 154, 451 P.2d 266 (1969).

The commission has the duty to examine proposed rates and to determine whether such rates are unjust, unreasonable, discriminatory, or preferential, or in any way violate any provision of law, and if so, to set just and reasonable rates. CF&I Steel, L.P. v. Pub. Utils. Comm'n, 949 P.2d 577 (Colo. 1997).

The commission in investigating a rate is not confined to technical rules of procedure, and, as an investigator, its duty was to ascertain the facts so important and basic in reaching its conclusion. Ohio & Colo. Smelting & Ref. Co. v. Pub. Utils. Comm'n, 68 Colo. 137, 187 P. 1082 (1920).

Review. If the rate of return allowed is just and reasonable, and there is competent evidence to support the finding of the PUC, then a reviewing court may not substitute its judgment for that of the commission. Peoples Natural Gas Div. of N. Natural Gas Co. v. Pub. Utils. Comm'n, 193 Colo. 421, 567 P.2d 377 (1977).

Section 40-6-111 applicable even where existing rates unjust. Section 40-6-111 is to be applied in proceedings in which a tariff for a new rate is filed, even where existing rates are unjust under this section. Peoples Natural Gas Div. v. Pub. Utils. Comm'n, 197 Colo. 152, 590 P.2d 960 (1979).

Applied in Denver & S. Pac. Ry. v. City of Englewood, 62 Colo. 229, 161 P. 151 (1916).

II. INVESTIGATION OF RATES.

This is the exercise of a very grave and dangerous power and should be asserted with the greatest caution, and the commission by means of every instrumentality at its command should determine with reasonable certainty that the rate fixed in the contract injuriously affects the public welfare. Ohio & Colo. Smelting & Ref. Co. v. Pub. Utils. Comm'n, 68 Colo. 137, 187 P. 1082 (1920).

Exclusion of evidence. Where telephone company offered evidence that customers suffered no excess charges because of purportedly increased costs of doing business, evidence was properly excluded by commission in ordering refund for period during which rate erroneously approved by commission was in effect. Mtn. States Tel. & Tel. Co. v. Pub. Utils. Comm'n, 180 Colo. 74, 502 P.2d 945 (1972).

The provisions of subsection (1) allow the commission to consider test year data but does not require the consideration of such data. Office of Consumer Counsel v. P.U.C., 752 P.2d 1049 (Colo. 1988).

III. ESTABLISHING RATES.

Final test is whether rate is just and reasonable and includes the constitutional question of whether the rate order has passed beyond the lowest limit of the permitted zone of reasonableness into the forbidden reaches of confiscation. Pub. Utils. Comm'n v. Nw. Water Corp., 168 Colo. 154, 451 P.2d 266 (1969).

Test of whether value of any given property shall be included in rate base of a public utility is whether it is used and useful in supplying the commodity or service that the utility has undertaken to furnish: If it is used and useful, it is properly included; if not, it must be excluded. Glenwood Light & Water Co. v. City of Glenwood Springs, 98 Colo. 340, 55 P.2d 1339 (1936).

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).

It is within power of the commission to pierce corporate structures of corporations which also operate nonutility divisions or subsidiaries to impute a capital structure for the utility operation that reflects 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).