2021 Colorado Code
Title 40 - Utilities
Article 3 - Regulation of Rates and Charges
§ 40-3-101. Reasonable Charges - Adequate Service

1. All charges made, demanded, or received by any public utility for any rate, fare, product, or commodity furnished or to be furnished or any service rendered or to be rendered shall be just and reasonable. Every unjust or unreasonable charge made, demanded, or received for such rate, fare, product or commodity, or service is prohibited and declared unlawful. Rates and charges demanded or received by any public utility for gas transportation service furnished or to be furnished shall not be deemed to be unjust or unreasonable so long as said rate or charge is no greater than a maximum rate and no lower than a minimum rate determined by the commission (or, in the case of a municipal utility, by the governing body of the municipal utility in accordance with sections 40-3-102 and 40-3.5-102) to be just and reasonable, and the provision of such gas transportation service at such rates or charges shall not constitute per se unjust discrimination or the granting of a preference. Nothing in this subsection (1) shall limit or restrict the commission's authority to regulate rates and charges, correct abuses, or prevent unjust discrimination.
2. Every public utility shall furnish, provide, and maintain such service, instrumentalities, equipment, and facilities as shall promote the safety, health, comfort, and convenience of its patrons, employees, and the public, and as shall in all respects be adequate, efficient, just, and reasonable.
3. 1. If a retail cooperative electric association, in conjunction with the payment of an applicable charge, withdraws from membership in a wholesale electric cooperative, as defined in section 40-2-136 (3)(c), that withdrawal is deemed to be a matter of statewide concern, and, in relation to such withdrawal:
      1. The wholesale electric cooperative will act in accordance with the obligation of good faith and fair dealing in implementing the withdrawal and shall not require or impose commercially unreasonable contractual terms on the retail cooperative electric association in relation to the withdrawal; and
      2. The wholesale electric cooperative shall, upon request from the withdrawing retail cooperative electric association, facilitate the retail cooperative electric association's transition from native load to a firm service transmission customer without diminishing the withdrawing retail cooperative electric association's native electric load priority for accessing firm transmission capacity.

   2. The commission has the authority to adjudicate complaints about the terms on which a wholesale electric cooperative implements withdrawal pursuant to this subsection (3).

History. Source: L. 13: P. 468, § 13. C.L. § 2924. CSA: C. 137, § 14. CRS 53: § 115-3-1. C.R.S. 1963: § 115-3-1. L. 91: (1) amended, p. 1417, § 9, effective April 19. L. 2020: (3) added,(HB 20-1225), ch. 94, p. 373, § 4, effective March 27. History. Source: L. 13: P. 468, § 13. C.L. § 2924. CSA: C. 137, § 14. CRS 53: § 115-3-1. C.R.S. 1963: § 115-3-1. L. 91: (1) amended, p. 1417, § 9, effective April 19. L. 2020: (3) added,(HB 20-1225), ch. 94, p. 373, § 4, effective March 27.

1. For hearings on rate schedules, see § 40-6-111; for reparation for excessive charges, see § 40-6-119.
2. For the legislative declaration in HB 20-1225, see section 1 of chapter 94, Session Laws of Colorado 2020.

Analysis

• I. GENERAL CONSIDERATION.
• II. REASONABLE CHARGES.
• III. ADEQUATE SERVICES.

Law reviews. For article, “Trying to Get the P.U.C. to Let You Run a Truck”, see 7 Dicta 4 (Oct. 1930). For article, “Coal Mining a Public Utility”, see 12 Dicta 267 (1935). For article, “Generation and Transmission Loan Policy Under the Rural Electrification Act”, see 43 Den. L.J. 269 (1966). For article, “A Price Squeeze Theory for Implementation of Federal Power Commission v. Conway Corp.”, see 50 U. Colo. L. Rev. 459 (1979). 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). For comment, “Municipal Utilities in Colorado -- Can They Charge Their Nonresident Customers More Than They Charge Their Resident Customers Just Because the Nonresident Lives on the Wrong Side of the Boundary?”, see 60 U. Colo. L. Rev. 357 (1989).

The department of corrections is not a public utility and therefore not subject to review or regulation by the public utilities commission (PUC) pursuant to this section with respect to inmate telephone system. Powell v. Colo. Pub. Utils. Comm'n, 956 P.2d 608 (Colo. 1998).

Applied in Colo. & S. Ry. v. State R.R. Comm'n, 54 Colo. 64 , 129 P. 506 (1912); Consumers' League v. Colo. & S. Ry., 64 Colo. 502 , 172 P. 1064 (1918); Denver & Salt Lake Ry. v. St. Clair, 94 Colo. 67 , 28 P.2d 340 (1933); Colo. Mun. League v. Pub. Utils. Comm'n, 198 Colo. 217 , 597 P.2d 586 (1979); City of Montrose v. Pub. Utils. Comm'n, 629 P.2d 619 (Colo. 1981). Colo. Mun. League v. Pub. Utils. Comm'n, 687 P.2d 416 (Colo. 1984).

Commission's use of cost of service study prepared by commission's staff was supported by substantial evidence. The commission did not act arbitrarily and capriciously in accepting the staff's study under circumstances where the experts' opinions were varied and presented irreconcilable differences. In the absence of evidence that the staff study was inherently unsound, commission's decision should not be abandoned. Consumer Counsel v. P.U.C., 786 P.2d 1086 (Colo. 1990).

Rates set by commission for interLATA access charge and intraLATA toll rates do not unreasonably discriminate against resellers. 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).

PUC is entrusted with supervision and regulation of all public utilities, including rates and regulations established by previous contract. Denver & S. Pac. Ry. v. City of Englewood, 62 Colo. 229 , 161 P. 151, (1916), writ of error dismissed, 248 U.S. 294, 39 S. Ct. 100, 63 L. Ed. 253 (1919).

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).

Rates to protect investor and consumer interests. The PUC must set rates which protect both: (1) the right of the public utility company and its investors to earn a return reasonably sufficient to maintain the utility's financial integrity; and (2) the right of consumers to pay a rate which accurately reflects the cost of service rendered. Pub. Serv. Co. v. Pub. Utils. Comm'n, 644 P.2d 933 (Colo. 1982).

Determination as to what is fair, just, and reasonable rate is matter of judgment or discretion. Mtn. States Tel. & Tel. Co. v. Pub. Utils. Comm'n, 182 Colo. 269 , 513 P.2d 721 (1973). Consumer Counsel v. P.U.C., 786 P.2d 1086 (Colo. 1990).

Basis for determination. The judgment or discretion on the part of the PUC in determining what is a fair, just, and reasonable rate must be based upon evidentiary facts, calculations, known factors, relationship between known factors, and adjustments which may affect the relationship between known factors. Mtn. States Tel. & Tel. Co. v. Pub. Utils. Comm'n, 182 Colo. 269 , 513 P.2d 721 (1973).

Utility is entitled to reasonable return on value of property which is used and useful to the rendering of its service to the public. Peoples Natural Gas Div. of N. Natural Gas Co. v. Pub. Utils. Comm'n, 193 Colo. 421 , 567 P.2d 377 (1977).

Historic test-year procedure as basis for rate fixing is not inherently unsound, but rather, the use of the most recent test year available is a reliable guideline in fixing rates to be charged for telephone service. Mtn. States Tel. & Tel. Co. v. Pub. Utils. Comm'n, 182 Colo. 269 , 513 P.2d 721 (1973).

Relationship between costs, investment, and revenue in historic test year is generally constant and reliable factor upon which a regulatory agency can make calculations which formulate the basis for fair and reasonable rates to be charged. Mtn. States Tel. & Tel. Co. v. Pub. Utils. Comm'n, 182 Colo. 269 , 513 P.2d 721 (1973).

Public utilities law was designed to permit adjustment of rates in order to prevent the hazard of risk of an increase in taxes and to make savings for the ratepayers in case of a decrease in taxes. Colo. Mun. League v. Pub. Utils. Comm'n, 172 Colo. 188 , 473 P.2d 960 (1970).

Out-of-period adjustment involves change which has occurred or will occur or is expected to occur after the close of the test year. Mtn. States Tel. & Tel. Co. v. Pub. Utils. Comm'n, 182 Colo. 269 , 513 P.2d 721 (1973).

Out-of-period adjustments may be used to test reasonableness of requested rate increases. Mtn. States Tel. & Tel. Co. v. Pub. Utils. Comm'n, 182 Colo. 269 , 513 P.2d 721 (1973).

Commission may not question reasonableness of rate authorized by federal agency. Where the rate or acquisition cost is subject to federal regulation and authorized by a federal regulatory agency, the PUC may not question its reasonableness. Pub. Serv. Co. v. Pub. Utils. Comm'n, 644 P.2d 933 (Colo. 1982).

Telephone company's proposed use of projected costs or budget estimates for future period would be an unreliable guideline for setting rates to be charged, as it would not be in the public interest to fix rates on pure conjecture. Mtn. States Tel. & Tel. Co. v. Pub. Utils. Comm'n, 182 Colo. 269 , 513 P.2d 721 (1973).

Rate of return on common equity of telephone company of 11.4%; is not unlawful as being in violation of this statute. Mtn. States Tel. & Tel. Co. v. Pub. Utils. Comm'n, 182 Colo. 269 , 513 P.2d 721 (1973).

Review of rate by court. 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).

Finding required before new common carrier service justified. No finding of public convenience and necessity for new common carrier service is justified unless present service offered in the area is inadequate. Colo. Transp. Co. v. Pub. Utils. Comm'n, 158 Colo. 136 , 405 P.2d 682 (1965).

Test of service is not perfection. When a common carrier renders services to numerous customers in a wide territory undoubtedly some dissatisfaction will arise and some legitimate complaints result; but for a new service to be authorized in the area already served by a common carrier, inadequacy of the present service must be shown to be substantial. Colo. Transp. Co. v. Pub. Utils. Comm'n, 158 Colo. 136 , 405 P.2d 682 (1965).