Colorado § 40-3-114 - Cost recovery - prohibitions - reporting - penalties - definitions.

§ 40-3-114. Cost recovery - prohibitions - reporting - penalties - definitions.

(1) The commission shall ensure that regulated electric and gas utilities do not use ratepayer funds to subsidize nonregulated activities.

(2) A utility shall not recover the following costs from its customers, whether as part of proposed base rate costs, a rider, or other charges:

(a) More than fifty percent of annual total compensation or of expense reimbursement for members of the board of directors of the utility;

(b) Tax penalties or fines issued against the utility;

(c) Investor-relation expenses;

(d) Advertising and public relations expenses that do not directly relate to a purpose or program that is required or authorized under statute or commission rule or order. Advertising and public relations expenses for which cost recovery is prohibited include:

(I) Communications to promote or improve the utility's brand;

(II) Expenses for the purpose of influencing public opinion about the utility; and

(III) Expenses intended to create good will toward the utility from the general public.

(e) Expenses for lobbying or other activities meant to influence the outcome of any local, state, or federal legislation, ordinance, resolution, or ballot measure;

(f) Charitable giving expenses, including contributions to organizations qualified under section 501 (c)(3) or 501 (c)(4) of the federal "Internal Revenue Code of 1986", 26 U.S.C. sec. 501, as amended;

(g) Organizational or membership dues, or other contributions, to any organization, association, institution, corporation, or other entity that engages in lobbying or other similar activities intended to influence the outcome of any local, state, or federal legislation, ordinance, resolution, rule, ballot measure, or other regulatory decision;

(h) Contributions to political candidates, campaign committees, issue committees, or independent expenditure committees or similar political expenses;

(i) Travel, lodging, food, and beverage expenses for the utility's board of directors and officers;

(j) Entertainment or gift expenses;

(k) Expenses related to any owned, leased, or chartered aircraft for the utility's board of directors and officers; or

(l) Expenses related to marketing and administration or customer service for unregulated products or services provided or sold by the utility or the utility's affiliates.

(3) Subsections (2)(g) and (2)(h) of this section shall not be construed to apply to a utility employee's or contract worker's activities resulting from any voluntary dues deductions that are processed through standard payroll processes.

(4) (a) Notwithstanding penalties set forth in article 7 of this title 40, if the commission determines that a utility improperly recovered costs pursuant to subsection (2) of this section, the commission may assess a nonrecoverable penalty against the utility.

(b) In addition to assessing a nonrecoverable penalty against a utility pursuant to subsection (4)(a) of this section, the commission shall order the utility to refund the amount improperly recovered pursuant to subsection (2) of this section, plus interest, to customers.

(5) The commission shall require a utility to file an annual report with the commission to ensure the utility's compliance with this section. The report must include the purpose, payee, and amount of any expenses associated with the costs and activities that are not permitted to be recovered from customers pursuant to this section.

(6) As used in this section, unless the context otherwise requires:

(a) (I) "Advertising" means the act of publishing, disseminating, soliciting, or circulating written, online, video, or audio communication intended to induce a person to patronize a product, service, business, or industry; promote a business's brand; otherwise emphasize desirable qualities about a product, service, business, or industry; or influence public opinion with respect to legislative, administrative, or electoral matters.

(II) "Advertising" does not include:

(A) Advertising required or authorized by law, regulation, or order;

(B) Advertising directly related to a purpose or program regarding income-based service, special rates, pilot programs, energy conservation, energy efficiency, beneficial electrification, renewable energy, transportation electrification, or other consumer education information;

(C) Advertising regarding service interruptions, safety measures, or emergency conditions; or

(D) Advertising concerning employment opportunities with the utility.

(b) "Aircraft" has the meaning set forth in section 41-2-101 (1).

(c) "Base rate" has the meaning set forth in section 40-3-102.5 (1)(d)(I).

(d) "Electric utility" means an investor-owned electric utility in the state.

(e) "Expenses" means any payment made in the form of compensation that a utility pays to an external firm, a corporate affiliate, or an employee of the utility.

(f) "Gas utility" means an investor-owned gas utility in the state.

(g) "Lobbying" means directly, or through the solicitation of others, communicating with a person that is in a position to make a policy decision in order to influence the outcome of local, state, or federal legislation.

(h) "Rate case" means a formal hearing of the commission to determine if the base rates of an electric utility or gas utility are just and reasonable pursuant to section 40-3-101.

(i) "Rider" means a charge added to a utility bill to recover a specific cost that is not part of the base rate.

(j) "Utility" means an investor-owned electric utility or gas utility in the state.

Source: L. 93: Entire section added, p. 2062, § 13, effective July 1. L. 2023: Entire section amended, (SB 23-291), ch. 163, p. 712, § 3, effective August 7. L. 2025: (4)(b) amended, (SB 25-300), ch. 428, p. 2458, § 64, effective August 6.