2021 Colorado Code
Title 40 - Utilities
Article 5 - New Construction - Extension
§ 40-5-101. New Construction - Extension - Compliance With Local Zoning Rules

1. 1. A public utility shall not begin the construction of a new facility, plant, or system or the extension of its facility, plant, or system without first obtaining from the commission a certificate that the present or future public convenience and necessity require, or will require, the construction or extension. For purposes of this subsection (1), the present or future public convenience and necessity does not include the consideration of land use rights or siting issues related to the location or alignment of the proposed electric transmission lines or associated facilities, which issues are under the jurisdiction of a local government's land use regulation. Sections 40-5-101 to 40-5-104 do not require a corporation to secure a certificate for the following:
      1. An extension within any city and county, city, or town within which it has already lawfully commenced operations;
      2. An extension into territory, either within or outside of a city and county, city, or town, contiguous to its facility, line, plant, or system and not already served by a public utility providing the same commodity or service; or
      3. An extension within or to territory already served by the corporation, as is necessary in the ordinary course of its business.

   2. If a public utility, in constructing or extending its line, plant, or system, interferes, or is about to interfere, with the operation of the line, plant, or system of any other public utility already constructed, the commission, upon complaint of the public utility claiming to be injuriously affected, after hearing, may prohibit the construction or extension or prescribe just and reasonable terms and conditions for the location of the lines, plants, or systems affected.

2. Whenever the commission, after a hearing upon its own motion or upon complaint, finds that there is or will be a duplication of service by public utilities in any area, the commission may issue a certificate of public convenience and necessity assigning specific territories to one or to each of said utilities or, by certificate of public convenience and necessity, otherwise define the conditions of rendering service and constructing extensions within those territories and may order the elimination of the duplication upon such terms as are just and reasonable, having due regard to due process of law and to all the rights of the respective parties and to public convenience and necessity.
3. Except as otherwise provided in section 29-20-108, C.R.S., a public utility shall not construct or install a new facility, plant, or system within the territorial boundaries of a local government unless the construction or installation complies with the local government's zoning rules, resolutions, or ordinances. Nothing in this subsection (3) prohibits a local government from granting a variance from its zoning rules, resolutions, or ordinances for such uses of the property. Nothing in this subsection (3) grants the commission any additional authority to restrict a siting application. For purposes of this section, “local government” means a county, home rule or statutory city, town, territorial charter city, or city and county. Nothing in this subsection (3) restricts the right of a public utility or power authority to appeal to the public utilities commission a local government action under section 29-20-108, C.R.S.
4. 1. A public utility is entitled to recover, through a separate rate adjustment clause, the costs that it prudently incurs in planning, developing, and completing the construction or expansion of transmission facilities for which the utility has been granted a certificate of public convenience and necessity, or for which the commission has determined that no certificate of public convenience and necessity is required. The transmission rate adjustment clause is subject to annual changes, which are effective on January 1 of each year.
   2. To provide additional encouragement to utilities to pursue the construction and expansion of transmission facilities, the commission shall approve current recovery by the utility through the annual rate adjustment clause of the utility's weighted average cost of capital, including its most recently authorized rate of return on equity, on the total balance of construction work in progress related to such transmission facilities as of the end of the immediately preceding year. The rate adjustment clause shall be reduced to the extent that the prudently incurred costs being recovered through the adjustment clause have been included in the public utility's base rates as a result of the commission's final order in a rate case.

History. Source: L. 13: P. 481, § 35. L. 17: P. 418, § 1. C.L. § 2946. CSA: C. 137, § 36. CRS 53: § 115-5-1. L. 61: P. 628, § 2. C.R.S. 1963: § 115-5-1. L. 2005: (3) added, p. 1355, § 1, effective August 8. L. 2007: (4) added, p. 267, § 3, effective March 27. L. 2012: Entire section amended,(HB 12-1312), ch. 101, p. 339, § 2, effective April 12. History. Source: L. 13: P. 481, § 35. L. 17: P. 418, § 1. C.L. § 2946. CSA: C. 137, § 36. CRS 53: § 115-5-1. L. 61: P. 628, § 2. C.R.S. 1963: § 115-5-1. L. 2005: (3) added, p. 1355, § 1, effective August 8. L. 2007: (4) added, p. 267, § 3, effective March 27. L. 2012: Entire section amended,(HB 12-1312), ch. 101, p. 339, § 2, effective April 12.

1. For the acquisition of public utilities by cities and towns, see § 40-5-104.
2. For the legislative declaration contained in the 2007 act enacting subsection (4), see section 1 of chapter 61, Session Laws of Colorado 2007. For the legislative declaration in the 2012 act amending this section, see section 1 of chapter 101, Session Laws of Colorado 2012.

Analysis

• I. GENERAL CONSIDERATION.
• II. CERTIFICATION.
• III. POLICE POWERAND DUE PROCESS.

Law reviews. 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 comment on Western Colo. Power Co. v. Pub. Utils. Comm'n, 159 Colo. 262 , 411 P.2d 785, appeal dismissed, 385 U.S. 22, 87 S. Ct. 230, 17 L. Ed. 2d 21, reh'g denied, 385 U.S. 984, 87 S. Ct. 500, 17 L. Ed. 2d 445 (1966), appearing below, see 38 U. Colo. L. Rev. 626 (1966). For article, “May Regulated Utilities Monopolize the Sun?”, see 56 Den. L.J. 31 (1979).

This section is constitutional. People ex rel. Hubbard v. Colo. Title & Trust Co., 65 Colo. 472 , 178 P. 6 (1918); Pirie v. Pub. Utils. Comm'n, 72 Colo. 65 , 209 P. 640 (1922).

Extensions and improvements are not to be made without approval of public utilities commission (PUC). If such improvements are found unprofitable, the company must be loser. It will not be permitted to charge the loss to the public. Ohio & Colo. Smelting & Ref. Co. v. Pub. Utils. Comm'n, 68 Colo. 137 , 187 P. 1082 (1920).

Showing that existing sources are inadequate and unavailable required. Under this section, it is incumbent upon the applicant to “tip the scales” in the direction that duplication will not result from its proposed action. In doing this, it must show that there is a need for the additional construction which necessarily involves showing that the existing sources are not, and will not be, reasonably adequate and available. Pub. Serv. Co. v. Pub. Utils. Comm'n, 142 Colo. 135 , 350 P.2d 543, cert. denied, 364 U.S. 820, 81 S. Ct. 53, 5 L. Ed. 2d 50 (1960); W. Colo. Power Co. v. Pub. Utils. Comm'n, 159 Colo. 262 , 411 P.2d 785, appeal dismissed, 385 U.S. 22, 87 S. Ct. 230, 17 L. Ed. 2d 21, reh'g denied, 385 U.S. 984, 87 S. Ct. 500, 17 L. Ed. 2d 445 (1966).

This burden of demonstrating that the proposed system is within the interest of public convenience and necessity embraces a showing not only that the proposed services will not duplicate existing services, but also that existing service is substantially inadequate to meet the public need. Contact-Colorado Springs, Inc. v. Mobile Radio Tel. Serv., Inc., 191 Colo. 180 , 551 P.2d 203 (1976). Pub. Serv. Co. of Colo. v. Shaklee, 759 P.2d 774 (Colo. App. 1988), rev'd on other grounds 784 P.2d 314 (Colo. 1989).

Substantial evidence necessary to justify need for proposed extension of service does not depend upon the number of witnesses produced. Kuboske v. Pub. Utils. Comm'n, 187 Colo. 38 , 528 P.2d 248 (1974).

Fact of existing lines of only one utility in area is prima facie proof that utility is adequately meeting the needs of the area, and the PUC gave proper recognition to this by granting such areas to the utility actually rendering service. Pub. Utils. Comm'n v. Home Light & Power Co., 163 Colo. 72 , 428 P.2d 928 (1967).

First in field should be given opportunity to supply any needed service before any other is given the privilege of competing with it. Pub. Serv. Co. v. Pub. Utils. Comm'n, 142 Colo. 135 , 350 P.2d 543, cert. denied, 364 U.S. 820, 81 S. Ct. 53, 5 L. Ed. 2d 50 (1960).

Under regulation existing suppliers are entitled to serve all desiring service, whether they be existing or potential customers. W. Colo. Power Co. v. Pub. Utils. Comm'n, 159 Colo. 262 , 411 P.2d 785, appeal dismissed, 385 U.S. 22, 87 S. Ct. 230, 17 L. Ed. 2d 21, reh'g denied, 385 U.S. 984, 87 S. Ct. 500, 17 L. Ed. 2d 445 (1966).

Expansion into contiguous territory permitted when necessary. The general assembly sought to permit extensions without further application outside certificated territory which is contiguous to certificated territory, when the extensions are necessary in the ordinary course of business. W. Colo. Power Co. v. Pub. Utils. Comm'n, 163 Colo. 61 , 428 P.2d 922 (1967).

Only limitation placed on expansion of its contiguous territory by certificated public utility is that it not expand into an area theretofore served by a public utility of like character. Pub. Serv. Co. v. Pub. Utils. Comm'n, 142 Colo. 135 , 350 P.2d 543, cert. denied, 364 U.S. 820, 81 S. Ct. 53, 5 L. Ed. 2d 50 (1960).

Where utility has not expanded actual service into contiguous territory, that territory remains open for certification by usual standards. W. Colo. Power Co. v. Pub. Utils. Comm'n, 163 Colo. 61 , 428 P.2d 922 (1967).

Commission is authorized to issue certificates of public convenience and necessity when material, competent, and sufficient evidence is presented to support the conclusion that the public convenience and necessity requires the proposed service. Contact-Colorado Springs, Inc. v. Mobile Radio Tel. Serv., Inc., 191 Colo. 180 , 551 P.2d 203 (1976).

The commission may issue a retroactive certificate of public convenience and necessity if the issuance of such certificate is in the public interest. City of Boulder v. Colo. Pub. Utils. Comm'n, 996 P.2d 1270 (Colo. 2000).

Doctrine of regulated monopoly does not permit a customer to pick and choose between utilities. The doctrine is designed to protect the interests of the public as a whole, not to protect the needs of the individual consumer. Pub. Serv. Co. v. P.U.C., 765 P.2d 1015 (Colo. 1988).

The consent of both the municipality and the PUC is necessary to operate a public utility within a home rule city, but neither the general assembly nor the PUC is empowered to grant a franchise to a public utility to use the streets, alleys, and public places of a home rule municipality without the municipality's consent. City of Greeley v. Poudre Valley R. Elec., 744 P.2d 739 (Colo. 1987), appeal dismissed for want of a properly presented federal question, 485 U.S. 949, 108 S. Ct. 1207, 99 L. Ed. 2d 409 (1988).

The PUC cannot authorize a power company operating pursuant to a certificate of public convenience and necessity in an area annexed by a home rule municipality to expand its system and use city streets without obtaining a franchise from such municipality. City of Greeley v. Poudre Valley R. Elec., 744 P.2d 739 (Colo. 1987), appeal dismissed for want of a properly presented federal question, 485 U.S. 949, 108 S. Ct. 1207, 99 L. Ed. 2d 409 (1988).

Court of appeals erred in reversing district court decree in condemnation and order for immediate possession as Public Service Company was not required to seek certificate of public convenience and necessity in order to institute condemnation proceedings. Pub. Serv. Co. v. Shaklee, 784 P.2d 314 (Colo. 1989).

This section makes mandatory proof of public convenience and necessity prior to the construction of any new plant or system, subject to certain exceptions. Pub. Serv. Co. v. Pub. Utils. Comm'n, 142 Colo. 135 , 350 P.2d 543, cert. denied, 364 U.S. 820, 81 S. Ct. 53, 5 L. Ed. 2d 50 (1960); W. Colo. Power Co. v. Pub. Utils. Comm'n, 159 Colo. 262 , 411 P.2d 785, appeal dismissed, 385 U.S. 22, 87 S. Ct. 230, 17 L. Ed. 2d 21, reh'g denied, 385 U.S. 984, 87 S. Ct. 500, 17 L. Ed. 2d 445 (1966).

Applied in Greeley Transp. Co. v. People, 79 Colo. 307 , 245 P. 720 (1926).

Objective of section is to avoid duplication of sources of power in public interest. The law, therefore, subjects proposals for new, or expanded, construction to the judgment of the commission and in such cases the applicant must make an affirmative showing that the purpose of this section will not be defeated. Pub. Serv. Co. v. Pub. Utils. Comm'n, 142 Colo. 135 , 350 P.2d 543, cert. denied, 364 U.S. 820, 81 S. Ct. 53, 5 L. Ed. 2d 50 (1960); W. Colo. Power Co. v. Pub. Utils. Comm'n, 159 Colo. 262 , 411 P.2d 785, appeal dismissed, 385 U.S. 22, 87 S. Ct. 230, 17 L. Ed. 2d 21, reh'g denied, 385 U.S. 984, 87 S. Ct. 500, 17 L. Ed. 2d 445 (1966); Town of Fountain v. Pub. Utils. Comm'n, 167 Colo. 302 , 447 P.2d 527 (1968).

Generally, certificate to service region creates right to service customers in that region, unless it can be shown that the company is not ready and able to provide the services requested. Rocky Mt. Natural Gas Co. v. Pub. Utils. Comm'n, 199 Colo. 352 , 617 P.2d 1175 (1980); City of Greeley v. Poudre Valley R. Elec., 744 P.2d 739 (Colo. 1987), appeal dismissed for want of a properly presented federal question, 485 U.S. 949, 108 S. Ct. 1207, 99 L. Ed. 2d 409 (1988).

If original certificate does not encompass proposed new service. The general rule that a certificate to service a region creates a right to serve customers in that region does not apply where the original certificate does not encompass the proposed new service. Rocky Mt. Natural Gas Co. v. Pub. Utils. Comm'n, 199 Colo. 352 , 617 P.2d 1175 (1980).

Interruptible service not a substitute for firm service. Where municipal utility not willing and able to provide firm natural gas service to industrial customers within municipality, commission had authority to issue a certificate to a privately owned gas utility to provide firm service to those customers. City of Fort Morgan v. Pub. Utils. Comm'n, 159 P.3d 87 (Colo. 2007).

Local permit not a condition precedent. This section does not prohibit the commission from issuing a certificate to a utility that has not received a local permit. City of Fort Morgan v. Pub. Utils. Comm'n, 159 P.3d 87 (Colo. 2007).

Where no lines exist in territories and there apparently is no present demand, such areas should not be certificated until such time as demand for service makes it economically practical for the utility or utilities near the area to file new applications for certificates. Pub. Utils. Comm'n v. Home Light & Power Co., 163 Colo. 72 , 428 P.2d 928 (1967); Pub. Serv. Co. v. Pub. Utils. Comm'n, 174 Colo. 470 , 485 P.2d 123 (1971).

Utility does not have exclusive property right to expand in the future into uncertificated territories which would forever bar another public utility from being certificated in such contiguous uncertificated territory if a later certificate was granted, and if the certificated utility had not yet expanded into that uncertificated area. W. Colo. Power Co. v. Pub. Utils. Comm'n, 163 Colo. 61 , 428 P.2d 922 (1967).

Utility having a prior certificate covering neighboring territory has legal authority to expand into unserved and uncertificated territory. Pub. Utils. Comm'n v. Home Light & Power Co., 163 Colo. 72 , 428 P.2d 928 (1967).

Exclusivity of a utility's certificate only precludes competition from other public utilities operating under the jurisdiction of the commission, and does not prevent a municipality from providing public utility services within its boundaries. Union Rural Elec. Ass'n v. Town of Frederick, 629 P.2d 1093 (Colo. App. 1981).

Showing necessary to permit certification of another utility in area. Once an area has been certificated by the commission to one public utility, the commission may not certificate another public utility to serve that area until a showing is made that the certificated utility is either unwilling or unable to serve an existing or newly developing load. Union Rural Elec. Ass'n v. Town of Frederick, 629 P.2d 1093 (Colo. App. 1981), aff'd, 670 P.2d 4 (Colo. 1983).

Intruding utility may not claim area already adequately served. Where a utility not subject to regulation builds lines into an area which is already completely and adequately served by another utility, the intruding utility may not later, upon becoming subject to regulation, claim the territory as its own and should be limited to serving its existing customers in such areas. W. Colo. Power Co. v. Pub. Utils. Comm'n, 163 Colo. 61 , 428 P.2d 922 (1967); Pub. Utils. Comm'n v. Home Light & Power Co., 163 Colo. 72 , 428 P.2d 928 (1967); Town of Fountain v. Pub. Utils. Comm'n, 167 Colo. 302 , 447 P.2d 527 (1968); Pub. Serv. Co. v. Pub. Utils. Comm'n, 174 Colo. 470 , 485 P.2d 123 (1971).

Where area is divided between two or more utilities and where lines are “hopelessly intermingled”, the area is to be awarded to the utility having the most existing service in the area (the so-called “predominant utility”). Pub. Utils. Comm'n v. Home Light & Power Co., 163 Colo. 72 , 428 P.2d 928 (1967); Pub. Serv. Co. v. Pub. Utils. Comm'n, 174 Colo. 470 , 485 P.2d 123 (1971).

As to division of areas where existing lines of competing public utilities are in close proximity to each other, where the commission has divided the areas in an attempt to allow each utility to maintain its present customers and to have its fair share of any expansion room that still remains, while this may not be entirely satisfactory to all parties, it is not an abuse of discretion. Pub. Serv. Co. v. Pub. Utils. Comm'n, 174 Colo. 231 , 483 P.2d 1337 (1971).

Areas served almost exclusively by one utility, and yet virtually completely surrounded by lines of another utility (so-called “enclaves”) are to be certificated to the utility actually rendering service to the enclaves, with the surrounding territory certificated to the utility actually rendering service there. Pub. Serv. Co. v. Pub. Utils. Comm'n, 174 Colo. 470 , 485 P.2d 123 (1971).

Test to determine which utility will serve contested facilities. Where the electricity is used at a facility located solely within a utility's exclusive area, the facility is not physically interconnected with a facility outside the exclusive territory, and the facility was previously served by the utility in whose area it is located, the doctrine of regulated monopoly requires that the point of use test be applied to protect the rights of the certificated utility against encroachment. Pub. Serv. Co. v. P.U.C., 765 P.2d 1015 (Colo. 1988).

Utility's right to serve within its defined area constitutes property right which cannot be taken except by due process of law. W. Colo. Power Co. v. Pub. Utils. Comm'n, 163 Colo. 61 , 428 P.2d 922 (1967); W. Power & Gas Co. v. Southeast Colo. Power Ass'n, 164 Colo. 344 , 435 P.2d 219 (1967); Mtn. View Elec. Ass'n v. Pub. Utils. Comm'n, 167 Colo. 200 , 446 P.2d 424 (1968); Town of Fountain v. Pub. Utils. Comm'n, 167 Colo. 302 , 447 P.2d 527 (1968); Pub. Serv. Co. v. Pub. Utils. Comm'n, 174 Colo. 470 , 485 P.2d 123 (1971). City of Greeley v. Poudre Valley R. Elec., 744 P.2d 739 (Colo. 1987), appeal dismissed for want of a properly presented federal question, 485 U.S. 949, 108 S. Ct. 1207, 99 L. Ed. 2d 409 (1988).

Certificate holder must be afforded adequate notice and right to be heard whenever its authority to serve under a certificate is affected, or may be affected, by any grant of authority by the P.U.C. Pub. Utils. Comm'n v. DeLue, 175 Colo. 317 , 486 P.2d 1050 (1971).

Due process requirements are held to have been satisfied if there is substantial evidence in the record to support a finding that the certificated utility is unwilling or unable to serve its certificated area, and that public convenience and necessity require the change. Town of Fountain v. Pub. Utils. Comm'n, 167 Colo. 302 , 447 P.2d 527 (1968); Pub. Serv. Co. v. Pub. Utils. Comm'n, 174 Colo. 470 , 485 P.2d 123 (1971).

Public utilities subject to regulation in exercise of police power. The activities of public utilities in rendering service to the public are subject to reasonable regulation in the exercise of the police power. Western Power & Gas Co. v. Se. Colo. Power Ass'n, 164 Colo. 344 , 435 P.2d 219 (1967).

Violation of “due process” will not stay reasonable exercise of police power. Where there is a seeming conflict between an assertion that one is deprived of his property without “due process of law” on the one hand, and a reasonable exercise of the police power on the other, the latter takes precedence and a violation of “due process” cannot be asserted to stay the legitimate exercise of police power. W. Power & Gas Co. v. Se. Colo. Power Ass'n, 164 Colo. 344 , 435 P.2d 219 (1967).