# Appendix — Colorado-Ute Electric Ass'n v. Public Utilities Commission > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385017_0865%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Appendix - **Published:** January 1, 1989 - **Citation:** 489 U.S. 1061 ## Text IN THE Supreme Court of the United States OCTOBER TERM, 1988 COLORADO-UTE ELECTRIC ASSOCIATION, INC., et al., Appellants, THE PUBLIC UTILITIES COMMISSION OF THE STATE OF COLORADO, et al., Appellees. On Appeal from the Supreme Court of Colorado APPENDIX TO JURISDICTIONAL STATEMENT (Volume 1 of 2) William H. Burchette (Counsel of Record) 1025 Thomas Jefferson St., N.W. Suite 700 Washington, D.C. 20007 Carol A. Curran John R. McNeill 1010 South Cascade Ave. James H. Delman Suite D P.O. Box 1149 Montrose, Colorado 81401 Montrose, Colorado 81402 Counsel for Appellants December 14, 1988 LTTE AOE AAS TO ERD AERIS ARE ITN ROOM A AT AN a TABLE OF CONTENTS VOLUME 1 Opinion of Supreme Court OE Gee = Wee BE, Fee ww ee ce Decision of Montrose District ee ee ws 5 ve eves VOLUME 2 PUC Decision C83-1176 - July 26, 1983 ..... PUC Decision C83-1392 ek i wt awe ee PUC Decision C83-1561 I IY x v6 ata 0g eon haem oe Order of Supreme Court denying Petition for Rehearing - August 15, 1988 ....... Notice of Appeal to Supreme Court of United States - November 1, 1988 ..... Colorado-Ute’s Petition for Rehearing Re ae ee ee Colorado-Ute Members Petition for Reheanng - July 25, 1966 2... ww ees A-1 SUPREME COURT, STATE OF COLORADO CASE NO. 86SA244 JULY 11, 1988 COLORADO-UTE ELECTRIC ASSOCIATION, INC.; DELTA-MONTROSE ELECTRIC ASSOCIATION; EMPIRE ELECTRIC ASSOCIATION, INC.; GRAND VALLEY RURAL POWER LINES, INC.; GUNNISON COUNTY ELECTRIC ASSOCIATION, INC.; HOLY CROSS ELECTRIC ASSOCIATION, INC.; INTERMOUNTAIN RURAL ELECTRIC ASSOCIATION; LA PLATA ELECTRIC ASSOCIATION, INC.; SANGRE DE CRISTO ELECTRIC ASSOCIATION, INC.; SAN ISABEL ELECTRIC ASSOCIATION, INC.; SAN LUIS VALLEY RURAL ELECTRIC COOPERATIVE, INC.; SAN MIGUEL POWER ASSOCIATION, INC.; SOUTHEAST COLORADO POWER ASSOCIATION; WHITE RIVER ELECTRIC ASSOCIATION, INC.; YAMPA VALLEY ELECTRIC ASSOCIATION, INC., Petitioners-Appellieces, THE PUBL” UTILITIES COMMISSION OF THE STATE OF COLORADO; SHELL OIL COMPANY; ATLANTIC RICHFIELD COMPANY; EXXON COMPANY, U.S.A.; CITY OF DELTA, COLORADO, Respondents-Appellants, and A-2 ATLANTIC RICHFIELD COMPANY and EXXON CORPORATION, Petitioners-Appellees PUBLIC UTILITIES COMMISSION OF THE STATE OF COLORADO; COMMISSIONERS EDYTHE S. MILLER, RONALD L. LEHR, AS SUCCESSOR TO FORMER COMMISSIONER DANIEL E. MUSE; ANDRA SCHMIDT, AS SUCCESSOR TO FORMER COMMISSIONER CLARENCE RAYMOND CLARK, III, Respondents-Appellants, and COLORADO-UTE ELECTRIC ASSOCIATION, INC., Respondent-Appeliece. Appeal from District Court, Montrose County Honorable Richard J. Brown, Acting District Judge EN BANC JUDGMENT REVERSED IN PART, AFFIRMED IN PART, AND CASE REMANDED WITH DIRECTIONS A-3 Robert T. James Colorado Springs, Colorado Attomey for Delta-Montrose Electric Association; Grand Valley Rural Power Lines, Inc.; Gunnison County Electric Association, Inc.; Holy Cross Electric Association, Inc.; intermountain Rural Electric Association; La Plata Electric Association, Inc.; Sangre De Cristo Electric Association, Inc.; San Isabel Electric Association, Inc.; San Luis Valley Rural Electric Cooperative, Inc.; Southeast Colorado Power Association; White River Electric Association, Inc.; Yampa Valley Electric Association, Inc. Carol A. Curran John R. McNeill Montrose, Colorado Attomeys for Colorado-Ute Electric Association, Inc. Gorsuch, Kirgis, Campbell, Walker & Grover William Hamilton McEwan Joseph B. Wilson Denver, Colorado Attomeys for Empire Electric Association, Inc. A4 Miller, Schmidt & Lehr Duane Woodard, Attommey General Charles B. Howe, Chief Deputy Attomey General Richard H. Forman, Solicitor General Eugene Cavaliere, Deputy Attorney General Denver, Colorado Attomeys for Public Utilities Commission of the State of Colorado JUSTICE ROVIRA delivered the Opinion of the Court. JUSTICE ERICKSON concurs in part and dissents in part; JUSTICE LOHR and JUSTICE VOLLACK join in the concur- rence and dissent. A-5 SUPREME COURT, STATE OF COLORADO CASE NO. 86SA246 JULY 11, 1988 COLORADO-UTE ELECTRIC ASSOCIATION, INC.; DELTA-MONTROSE ELECTRIC ASSOCIATION; EMPIRE ELECTRIC ASSOCIATION, INC.; GRAND VALLEY RURAL POWER LINES, INC.; GUNNISON COUNTY ELECTRIC ASSOCIATION, INC.; HOLY CROSS ELECTRIC ASSOCIATION, INC.; INTERMOUNTAIN RURAL ELECTRIC ASSOCIATION; LA PLATA ELECTRIC ASSOCIATION, INC.; SANGRE DE CRISTO ELECTRIC ASSOCIATION, INC.; SAN ISABEL ELECTRIC ASSOCIATION, INC.; SAN LUIS VALLEY RURAL ELECTRIC COOPERATIVE, INC.; SAN MIGUEL POWER ASSOCIATION, INC.; SOUTHEAST COLORADO POWER ASSOCIATION; WHITE RIVER ELECTRIC ASSOCIATION, INC.; YAMPA VALLEY ELECTRIC ASSOCIATION, INC., Petitioners-Appellees, Vv. THE PUBLIC UTILITIES COMMISSION OF THE STATE OF COLORADO; ATLANTIC RICHFIELD COMPANY; EXXON CORPORATION; SHELL WESTERN E&P, INC., Respondents-Appelilants, and ATLANTIC RICHFIELD COMPANY and EXXON CORPORATION, Appellants | EE A-6 v. PUBLIC UTILITIES COMMISSION OF THE STATE OF COLORADO; COMMISSIONERS EDYTHE S. MILLER, RONALD L. LEHR, AS SUCCESSOR TO FORMER COMMISSIONER DANIEL E. MUSE; ANDRA SCHMIDT, AS SUCCESSOR TO FORMER COMMISSIONER CLARENCE RAYMOND CLARK, III; COLORADO-UTE ELECTRIC ASSOCIATION, INC.; SAN LUIS VALLEY RURAL ELECTRIC COOPERATIVE, INC.; YAMPA VALLEY ELECTRIC ASSOCIATION, INC.; INTERMOUNTAIN RURAL ELECTRIC ASSOCIATION; WHITE RIVER ELECTRIC ASSOCIATION, INC.; SAN ISABEL ELECTRIC ASSOCIATION, INC.; SANGRE DE CRISTO ELECTRIC ASSOCIATION, INC.; GRAND VALLEY RURAL POWER LINES, INC.; DELTA- MONTROSE ELECTRIC ASSOCIATION; HOLY CROSS ELECTRIC ASSOCIATION, INC.; EMPIRE ELECTRIC ASSOCIATION, INC.; SAN MIGUEL POWER ASSOCIATION, INC; GUNNISON COUNTY ELECTRIC ASSOCIATION, INC.; LA PLATA ELECTRIC ASSOCIATION, INC.; SOUTHEAST COLORADO POWER ASSOCIATION, Appellees. Appeal from District Court, Montrose County Honorable Richard J. Brown, Acting District Judge EN BANC JUDGMENT REVERSED IN PART, AFFIRMED IN PART, AND CASE REMANDED WITH DIRECTIONS A-7 Robert T. James Colorado Springs, Colorado Attomey for Delta-Montrose Electric Association; Gunnison County Electric Association, Inc.; Holy Cross Electric Association, Inc.; Intermountain Rural Electric Association; La Plata Electric Association, Inc.; Sangre De Cristo Electric Association, Inc.; San Isabel Electric Association, Inc.; San Luis Valley Rural Electric Cooperative, Inc.; White River Electric Association, Inc.; Yampa Valley Electric Association, Inc. Carol A. Curran John R. McNeill Montrose, Colorado Attomeys for Colorado-Ute Electric Association, Inc. Holland & Hart Robert M. Pomeroy, Jr. Timothy M. Rastello Denver, Colorado Attomeys for Atlantic Richfield Company and Exxon Corporation A-8 Jones, Meiklejohn, Kehl & Lyons Edward T. Lyons, Jr. Denver, Colorado Attomeys for Shell Western E&P, Inc. Miller, Schmidt & Lehr Duane Woodard, Attomey General Charles B. Howe, Chief Deputy Attomey General Richard H. Forman, Solicitor General Eugene Cavaliere, Deputy Attorney General Denver, Colorado Attomeys for Public Utilities Commission of the State of Colorado JUSTICE ROVIRA delivered the Opinion of the Court. JUSTICE ERICKSON concurs in part and dissents in part; JUSTICE LOHR and JUSTICE VOLLACK join in the concurrence and dissent. A-9 These two cases concem a judgment of the Montrose County District Court which set aside orders promulgated by the Public Utilities Commission of Colorado (PUC or Commission) involving the design of electric power rates to be charged by Colorado-Ute Electric Association (Colo-Ute). We reject Colo-Ute’s claim that this appeal is moot. We further hold, contrary to the district court’s order, that the PUC possessed statutory authority to determine whether the tariffs filed by Colo-Ute were just and reasonable. Moreover, the PUC’s order that Colo-Ute’s proposed all-energy rate should be replaced by a seasonally-differentiated demand-energy rate is supported by adequate findings of fact and substantial evidence. We do, however, affirm the ruling of the district court setting aside that portion of the PUC’s order which allocated $24,084,126 of generation fixed costs to the energy component of the demand-energy rate design. Accordingly, we reverse in part, affirm in part, and remand for further proceedings consistent with this opinion. I. Colo-Ute generates and transmits electrical power on a wholesale basis to 14 member rural electrical cooperatives (co- ops), which in tum market the electrical power on a retail basis to electrical consumers. The co-ops are consumer owned and have representatives on the board of directors of Colo-Ute, a non-profit corporation. In December 1981, Colo-Ute filed Advice Letter No. 45 with the PUC. The purpose of the filing was to increase Colo- Ute’s wholesale electric power rates and thus increase annual revenue from the co-ops by approximately $11,120,603. At the time Advice Letter No. 45 was filed, Colo-Ute’s pricing A-10 scheme for its member co-ops was on a "flat" or “all-energy" rate basis.’ This pricing method had been approved by the PUC in February 1981. To reach its desired revenue increase, Colo-Ute proposed increasing its all-energy rate by a uniform 12.157 percent. A revised rate schedule became effective on January 15, 1982. As a result of a statutory provision adopted by the legislature in 1981, which is central to a resolution of the jurisdictional issue in this case, the Commission is without authority to suspend the effective date of tariff changes filed by cooperative electric associations. See § 40-6-111(4)(a), 17 C.R.S. (1984). The PUC, assuming that this statutory provision relating to suspension had no effect on its authority to investigate rate filings, on January 12, 1982, initiated Case No. 6076 for the purpose of investigating the reasonableness of the tariffs filed by Colo-Ute, and set the matter for hearing. A number of parties intervened and participated in Case No. 6076. Intervening parties included the co-ops, as well as customers of the co-ops: Union Carbide Corporation, Shell Oil Company, Exxon Company, USA (Exxon), Atlantic Richfield Company (ARCO), and the City of Delta, Colorado. At the hearings, Colo-Ute and some of the co-ops presented evidence both in support of the revenue increase and in the continued use of a flat or all-energy rate. The PUC’s staff offered evidence generally supporting a revenue increase, but recommended abandoning the continued use of the all-energy rate, which the staff asserted was not "cost tracking," and therefore, no longer appropriate for Colo-Ute.? In its place, the staff recommended a seasonally-differentiated demand-energy rate.” The intervening customers concurred in_ the recommendations of the Commission’s staff. A-11 The Commission approved the revenue increase sought by Colo-Ute. However, it disapproved the continued use of the all-energy rate, and ordered Colo-Ute to file "demand energy rates for its wholesale electric customers with seasonally differentiated demand charges and an annualized energy [charge] on a uniform kwh basis." Decision No. C83-1176. Intervenors ARCO and Exxon, while in general agreement with the PUC’s ultimate findings regarding the revenue increase and the substitution of the demand-energy ate, objected to that part of the PUC’s decision which allocated over $24 million in generation fixed or demand costs to the energy component of the demand-energy rate design. Thereupon, ARCO, Exxon, Colo-Ute, and the co-ops filed application for rehearing, reargument, and reconsideration. In Decision No. C83-1392, the Commission denied the application of Colo-Ute and the co-ops and granted the application of ARCO and Exxon in part. Decision No. C83-1176 was modified as a result, but such modifications are not at issue.‘ Colo-Ute and the co-ops sought judicial review in the Montrose County District Court. The appeal was assigned Case No. 83CV218. They challenged the authority of the PUC to commence an investigation conceming the rate increase on its own motion. They also claimed that the Commission’s orders with respect to rate design were arbitrary, capricious, unconstitutional, an abuse of discretion, and not in accordance with the law and the evidence. Finally, they moved for a stay Or suspension of the Commission’s decisions, pending final determination by the district court of their challenge. This motion was granted. ARCO and Exxon sought judicial review in the Denver District Court of that portion of the PUC’s decisions which A-12 allegedly had misclassified certain demand costs as energy costs. Given the similarities of the parties in the Denver and Montrose District Court actions, and the presence of common quesions, the Denver District Court ordered the case transicrred to the Montrose District Court, pursuant to C.R.C.P 98(f)(1), where it was assigned Case No. 84CV7. Subsequently, the court consolidated the two cases for hearing. The only issue in Case No. 84CV7 concems the PUC’s decision to shift substantial demand costs onto the energy portion of the demand-energy rate. With respect to Colo-Ute’s claims in Case No. 83CV218, the district court held, inter_alia, that: (1) The PUC does not possess statutory authority, in the absence of a complaint, to investigate and modify the rate design of an_ electric cooperative association, such as Colo-Ute; (2) The PUC’s orders conceming rate design amount to an _ unwarranted intrusion into the management prerogative and discretion of Colo-Ute; (3) The Commission’s findings are conclusory in nature and are not supported by substantial evidence.* The district court thereupon set aside that part of Decision No. C83-1176 which required Colo-Ute to file rates and tariffs ordered by the Commission. In Case No. 84CV7, the district court concurred in the arguments presented by ARCO and Exxon, finding that the decision of the Commission to allocate over $24 million of demand costs to energy costs was not supported by substantial evidence or adequate findings of fact, was arbitrary and Capricious, and resulted in an unjust and discriminatory rate. The court set aside that portion of Decision No. C83-1176 which allocated $24 million of the demand costs to the energy costs and further held that if this court (supreme court) were to find lawful the Commission’s imposition of the demand-energy A-13 rate, the PUC would be directed to allocate demand-energy costs in accordance with the staff's cost-of-service study, as contained in Exhibit No. 84.° On appeal the Commission raises the following issues: (1) Whether the Commission possesses statutory authority to institute on its own motion a proceeding to determine whether tariffs filed by Colo-Ute are just and reasonable; (2) Assuming that it possesses such authority, is the Commission’s decision relating to rate desigr vumnwarranted intrusion into the management prerogative ui Colo-Ute, and do adequate findings of fact and substantial evidence exist to support its decision; and (3) Whether there is substantial evidence to support the findings that $24 million in generation fixed costs should be allocated to the energy component of the demand-energy rate.’ Il. Before considering the substantive issues raised in the appeals, we first address the claim of Colo-Ute, raised in its answer brief, that these appeals are moot and should therefore be dismissed. In support of its position, Colo-Ute states that in October 1986, five months after the decision of the district court, it filed a new wholesale rate tariff governing electric power sales to the co-ops which became effective by operation of law on December 1, 1986. The tariff represented a 5-percent decrease in the all-energy rate it charged the co-ops. Colo-Ute contends _ that since the tariff supersedes the tariff which is the subject of Case No. 6076 and these appeals, the issues raised in the instant case are "purely academic." The PUC, ARCO, Exxon, and Shell Westem E&P, Inc. argue to the contrary and urge us not to dismiss on the ground of mootness. A-14 We have previously stated that a case is not moot where interests of a public nature are asserted under conditions that may be immediately repeated. Page v. Blunt, 126 Colo 324, 327, 248 P.2d 1074, 1075 (1952). Under our latest formulation of the mootness test, we have held that a case is not moot where the controversy is one "capable of repetition, yet evading review." ke v f itutions, 198 Colo. 407, 410 n.5, 603 P.2d 123, 124 n.5 (1979) (quoting Roe_v. Wade, 410 U.S. 113 (1973)); Star Journal Publishing Corp. v. County Court, 197 Colo. 234, 236, 591 P.2d 1028, - 1029 (1979). This case is not moot because the issue of proper rate design survives the most recent tariff filing. Colo-Ute’s 1986 rate filing retains the same flat-energy rate structure which the Commission found objectionable, and which is at issue in the instant appeal. Colo-Ute may have changed the level of its rates with its most recent filing, but the level of rates has never been a matter of dispute. In fact, the issue which has given rise to these appeals -- the authority of the PUC to prescribe the demand-energy rate for Colo-Ute -- presents no less a controversy now than when the PUC first set Case No. 6076 for hearing. The lawfulness of the Commission’s orders with respect to Colo-Ute’s rate design remains a viable legal controversy. See New England Tel Public Utilities Comm’n, 329 A.2d 792, 806 (Me. 1974) (rejecting mootness argument based on new rate filing where important issues remain to be decided); Milwaukee & Suburban Transport Corp. v. Public Utilities Comm’n, 268 Wis. 573, 68 N.W.2d 552, 556, cert. denied, 350 U.S. 877 (1955) (controversy presented in review proceeding not moot where issue over method of computing depreciation of utility property remains a continuing controversy). A-15 In addition, Colo-Ute’s argument, if accepted, would operate to insulate much of its activity from judicial and/or Commission review. With the addition of section 40-6- 111(4)(a), 17 C.R.S. (1984), the PUC no longer possesses the statutory authority to suspend the date on which a tariff filed by a cooperative electric association becomes effective. As a result, any new or revised tariff filed by a cooperative electric association such as Colo-Ute becomes effective by operation of law after the expiration of the 30-day notice period specified in section 40-3-104, 17 C.R.S. (1984). But it takes longer than 30 days for the Commission to review a rate tariff filed by Colo-Ute, to say nothing of the time necessary for an appeal of a Commission decision to work its way through the judicial system. If a cooperative could render an appeal moot merely by filing a new tariff while an appeal is pending, the Commission’s authority to regulate cooperative utilities would be undermined. Moreover, ARCO, Exxon, and Shell Western E&P, Inc. seek an order from this court directing Colo-Ute to pay refunds to customers who might have over paid under the all-energy rate scheme. Refund amounts would be based on the difference in payments made under the all-energy and demand- energy rates. If ARCO, Exxon, and SWEPI are entitled to refunds, an issue we do not decide, this would preclude dismissing the instant case On mootness grounds. It is generally the law that claims for damages or other monetary relief automatically avoid mootness, so long as the claim remains viable. Wright, Miller & Cooper, Federal Practice & Procedure: Jurisdiction Second § 3533.3 at 262 (1984). Other courts have rejected mootness claims in analogous circumstances, where, addressing the customer’s complaint regarding damages, they first require | _— — _ A-16 a resolution of other issues on their merits. See, eg. Memphis Light, Gas & Water Div. v. Kraft, 436 U.S. 1, 7-8 (1978) (although injunctive relief from utility’s termination of service had been mooted, customer’s claim for damages saved case challenging termination procedures from the bar of mootness); Meyers v. Jay Street Connecting Railroad, 288 F.2d 356, 358 (2d Cir.), cert. denied, 368 U.S. 828 (1961). Finally, Colo-Ute cites in support of its position Air Pollution Control Comm’n_ y. Colorado-Ute Electric Ass’n, 672 P.2d 993 (Colo. 1983). In that case, Colo-Ute challenged the validity of an air pollution control commission regulation setting forth conduct necessary to obtain an emission permit. Although Colo-Ute cites the case for the proposition that "when the issues in a case have been changed by subsequent events, this court has not hesitated to find that the case has been mooted," Colo-Ute has glossed over the particular facts in that case. We held in Air Pollution Control Comm’n that the question of whether the regulation had been validly adopted was moot, because the regulation had subsequently been repealed. 672 P.2d at 997. By comparison, Colo-Ute’s all- energy rate is still in use and thus an issue which gave rise to the present controversy remains unresolved. Having determined that Colo-Ute’s mootness claim is without merit, we now address the substantive issues raised by this appeal. Ill. In holding that the PUC lacked jurisdiction to investigate Colo-Ute’s rate filing, the district court focused upon a provision of the public utilities law which provides, in pan: "Upon complaint filed by any member or customer of a A-17 cooperative electric association or by any affected ‘public utility, the commission shall determine whether the rate, charge, rule, or regulation in question is contrary to this section, section 40- 3-106(1), or section 40-3-111." § 40-6-111(4)(a), 17 CRS. (1984). Although the court made reference to a number of other provisions in the public utilities law granting the Commission the authority to investigate rates either upon the filing of a complaint or upon its own motion, it concluded that section 40-6-111(4)(a): [Pjermits that authority only upon the filing of a complaint by any member or customer of a cooperative electric association or by any affected public utility. Subparagraph (4)(a) removes the power of the PUC to suspend rates, fares, tolls, rentals, charges, classifications, practices, rules or regulations pending a hearing, and does not provide that the PUC, of its own motion, may hold such hearings. Although other statutory provisions concem public utilities in general, the court stated that section 40-6-111(4)(a) is a "specific statutory provision relating to cooperative electric associations, and must be followed." The district court relied on a maxim of statutory construction that "where specific and general statutes conflict, the provisions of the specific statute prevail." In other words, section 40-6-111(4)(a) trumps all other provisions in the public utilities law which give the PUC the authority to investigate rates upon the filing of a complaint, Or upon its Own motion. The cour concluded that the PUC does not have the authority pursuant to section 40-6-111(4), without complaint, to change the rate design of an electric cooperative such as Colo-Ute. A-18 We have stated on numerous occasions that where a statute - is capable of more than one interpretation, it must be construed in light of the apparent legislative intent and purpose. Among the guidelines to be considered are the ends the statute was designed to accomplish, and the consequences which would flow from an altemative construction. If separate clauses in the same statutory scheme may be harmonized by one construction, but would be antagonistic under a different construction, we should adopt that construction which results in harmony rather than that which produces inconsistency. Mooney _v. Kuiper, 194 Colo. 477, 479, 573 P.2d 538, 539 (1978); Travelers Indemnity Co. v. Bames, 191 Colo. 278, 283, 552 P.2d 300, 303 (1976). Two statutes conceming the same subject matter are to be read together to the extent possible so as to give effect to legislative intent. Peoples Natural Gas Div, v. Public Utilities Comm’n, 698 P.2d 255, 263 (Colo. 1985). Further, we will presume that the legislature intended a just and reasenable result when it enacted a statute. Allen v, Charnes, 674 P.2d 378, 381 (Colo. 1984). See also § 2-4- 201(1)(b), 1B C.R.S. (1980) ("the entire statute is intended to be effective"). The maxim of statutory construction relied upon by the district court is, however, wholly irrelevant where the specific Statute itself -- section 40-6-111 -- expressly vests the PUC with authority to investigate rates, and therefore, raises no conflict with other provisions of the public utilities law. If the district court had applied proper principles of statutory construction, it would not have ignored the remainder of section 40-6-111, particularly subsection (1), and other pertinent provisions of the public utilities law, all of which confirm the Commission’s power and duty to investigate tariff changes involving utilities such as Colo-Ute. The district court should have read section 40-6-111(4)(a), 17 C.R.S. (1984), together A-19 with other relevant statutory provisions, including sections 40- 6-111(1), 40-6-108(1)(b), and 40-3-102, 17 C.R.S. (1984), in light of the apparent legislative intent and purpose. The General Assembly added subsection (4) to section 40- 6-111 in 1981. See “An Act Concerning the Public Utilities Commission," ch. 482, sec. 2, § 40-6-111(4), 1981 Colo. Sess. Laws 1922-1923 [codified at § 40-6-111(4)(a), 17 C.R.S. (1981 Supp.)]. The effect of the 1981 amendment was to grant to cooperative electric associations relief from the PUC's power to suspend rates for up to 120 days pending investigation and hearing, see § 40-6-111(1)(b), without diminishing the PUC’s power under existing statutes to investigate and hold hearings, whether upon complaint or on its own motion, and to enter remedial orders to carry out the purposes of the public utilities law. As a result of the 1981 amendment, when a cooperative electric association files a tariff with the PUC, such a tariff becomes effective at the expiration of the 30-day notice period provided by section 40-3-104, 17 C.R.S. (1984). Therefore, any hearing commenced by the PUC, whether on its own motion, or upon complaint made to the PUC, pursuant to sections 40-6-101(1) or 40-6-111, does not have the effect of suspending the effective date of such tariffs. This is not the case, however, with respect to other utilities in Colorado subject to the PUC’s jurisdiction. With respect to those utilities, the PUC still retains the power to suspend the effective date of such tariffs. See § 40-6-111(1)(a), (b)? It was the statutory suspension power -- not the PUC’s power to investigate and hold hearings -- which was abolished by section 40-6-111(4)(a) for the benefit of cooperative electric associations. These organizations had contended that the A-20 “regulatory lag" which accompanied the investigation and hearing process made it difficult for them, because of the intervening suspension period, to be adequately compensated for the costs of inflation even if the proposed rate increase was ultimately approved in full. See Colorado-Ute Electric Ass'n y. Public Utilities Comm'n, 198 Colo., 534, 544, 602 P.2d 861, 867 (1979). The efforts of cooperative electric associations to persuade the General Assembly to grant some form of relief achieved fruition with the passage of section 40- 6-111(4)(a) in 1981. See also Advice Letter No. 45 ("Under the provisions of {section 40-6-111(4)(a)], this rate filing becomes effective on thirty (30) days notice -- thereby eliminating any regulatory lag in obtaining necessary rate relief."). The statute only eases the burden on cooperative electric associations resulting from suspensions during the hearing process. It does not exempt cooperative electric associations from PUC review of tariff changes. The court below wrongly concluded that by removing the suspension power, the legislature also intended to limit the Commission’s powers to investigate tariff changes, hold hearings, and enter remedial orders. We have previously rejected the assumption that the power to investigate and hold hearings is inseparably tied to, and dependent upon, the suspension power, such that removing the power to suspend also precludes an investigation. See, ¢e.g., Public Service Co. y. Public Utilities Comm'n, 653 P.2d 1117, 1122 (Colo. 1982) ("we decline to impose an ‘all or nothing’ requirement upon the commission”). Moreover, section 40-6-111(2)(a), 17 C.R.S. (1984), states that tariff changes “not so suspended” shall go into effect after the 30-day notice period “subject to the power of the commission, after a hearing on its own motion or upon complaint, as provided in this article, to alter or modify the same." Traditionally, the PUC has enjoyed broad discretion in ‘‘* tal bt, ~~ io al ae A-21 determining whether to suspend the effective date of newly filed rates, while under investigation, or allow rates to become effective (after the statutory notice period), fully or in par, pending the outcome of an investigation. In enacting section 40-6-111(4)(a), the General Assembly was careful to structure the amendment in such a fashion as to make the suspension powers inapplicable to cooperative electric associations, while leaving such entities subject to the other provisions of that section and the public utilities law. The Statute expressly provides that “this subsection (4) shall not be construed to exempt such associations from any other provision of this section." Among those “other provisions of this section:"” section 40-6-111(1), which grants the Commission the power to have a hearing concerning the propriety of a newly filed rate or changed raic, "either upon complaint or upon its own initiative . . ."; and section 40-6-111(2)(a). When the statuie is read in this way -- that cooperative electric associations are exempted only from that provision relating to the PUC’s power of suspension -- an interpretation is achieved which gives a harmonious and consistent effect to its various provisions. In fact, when the last sentence of section 40-6-111(4)(a) is read in conjunction with section 40-6-108(1)(a) and (b) and section 40-6-111(1), it becomes possible to discem that not only are these provisions consistent with each other, but also that the last sentence of section 40-6-111(4)(a) lessens a requirement in section 40-6-108(1)(b) -- thereby promoting the legislative intent behind subsection (4) of easing the regulatory burden on cooperative electric associations. Section 40-6-108(1)(b) prohibits the PUC from entertaining complaints as to the reasonableness of any rates or charges of A-22 , any public utility "except upon its own motion,” or upon a complaint signed by: The mayor or the president or chairman of the board of trustees or a majority of the council, commission, or other legislative body of the county, city and county, city, or town, if any, within which the alleged violation occurred, or not less than’ twenty-five customers’ or prospective customers ef such public utility. On the other hand, section 40-6-111(4)(a) authorizes the PUC to determine whether a rate charged is discriminatory or preferential "[uJpon complaint filed by any member or customer of a cooperative electric association or by any affected public utility .. ." In a sense, the complaint provision incorporated in section 40-6-111(4)(a) is a counterweight to the freedom given cooperative electric associations to increase their rates without suspension. Although the legislature, by adding section 40-6- 111(4)(a), terminated the authority of the PUC to suspend the effective date of a tariff filed by an electric cooperative, the members or customers of a cooperative electric association or affected public utility were given added protection in the form of an eased requirement for challenging the utility’s rate increases. The last sentence of subsection (4) states thai "[uJpon complaint . . . the commission shall determine. . . ." § 40-6- 111(4)(a) (emphasis added). In other words, under certain circumstances the Commission is required to investigate a tariff change. But nothing in subsection (4) can be interpreted as diminishing any of the Commission’s powers under existing a A-23 law to investigate tariff changes and, if necessary, to prescribe just and reasonable rates.” Having concluded that the PUC was properly acting within the scope of its authority, we now consider whether that authority was exercised in a lawful manner. IV. The district court found "that the Commission’s action in changing Colorado-Ute’s rate design from a flat-energy rate to a seasonally adjusted demand-energy rate is an unwarranted intrusion into the management prerogatives and discretion of Colorado-Ute.". Among the reasons given by the cour were that in 1981 the PUC approved a flat-energy rate for Colo-Ute and no findings in Decision No. C83-1176 vitiated the 1981 order, and in the absence of evidence or findings of abuse associated with Colo-Ute’s existing all-energy scheme, "the Court can only conclude that the Commission is substituting its Own personal preference in managerial matters and _ has exceeded its statutory authority." The adequacy of the Commission’s findings will be discussed later in this opinion. Considering solely the issue of managerial discretion, it is clear that the district court erred in concluding that the Commission, in prescribing the proper rate design for Colo-Ute, overstepped the bounds of its proper authority. The setting of "just and reasonable rates," both as to level and design, goes to the very essence of the Commission’s duties under the public utilities law. See § 40-3-102, 17 C.R.S. (1984). It is precisely the Commission’s raison d’ etre to determine and prescribe just, reasonable, non-discriminatory, and non-preferential “rates of every public utility in this state." Both statutory and case law demonstrate that rate-making, both A-24 as to charge and design, is a vital part of the Commission’s area of responsibility. Rate-making is a legislative function. Mountain States hone & Tel h_v Li iliti mm’n, 176 Colo. 457, 464, 491 P.2d 582, 586 (1971). Under the Colorado Constitution, art. XXV, the legislative authority in public utility matters has been delegated to the PUC. Mountain States Telephone & Telegraph v. Publi ilities Comm’n, 195 Colo. 130, 134, 576 P.2d 544, 547 (1978). As such, the PUC, in the area of utility regulation, including rate-making, has broadly based authority to do whatever it deems necessary or convenient to accomplish the legislative functions delegated to it. Id.; Miller Bros. v. Public Utilities Comm’n, 185 Colo. 414, 431, 525 P.2d 443, 451 (1974). Nowhere in title 40, C.R.S., has the legislature specifically restricted the authority of the PUC in designing rates for cooperative electric associations. To the contrary, the public utilitics law imposes upon the PUC no more imperative duty than to “adopt all necessary rates . . . and regulate all rates . . Of every public utility of this state." § 40-3-102. No exception is provided for cooperative electric associations. Until the General Assembly changes the law, the Commission possesses not only the power and authority, but also the duty to prescribe the rates of all utilities subject to its jurisdiction. The fact that the instant case involves rate design, as opposed to rate increase, is irrelevant for purposes of the analysis. After all, rate design, just as much as rate levels, could produce unjust, unreasonable, discriminatory, or preferential results.” The district court held that the Commission can set aside a rate Only where "there is a substantial showing that rate payers Re | A-25 are prejudiced materially . . ." and that "the rate is so unreasonable as to be detrimental to the public interest . . ."; in all other circumstances, rate design "[is] within the realm of sound management discretion of the public utility." It is of course generally accepted that the management of the utility belongs to the company. Li Ivi Vv Public Utilities Comm’n, 653 P.2d 1117, 1123 (Colo. 1982). The PUC may not, under the guise of rate regulation, take over the management of the company. As to matters specifically entrusted to management, the PUC may not assert itself absent an abuse of managerial discretion. Id. But it has never been the law in Colorado that rate-making is solely a matter within the domain of management, such that PUC involvement is triggered only following an abuse of that discretion. Rate-making, including the designing of rates, has long been the exclusive province of the Commission. In fact, in a previous case where this court recognized that "[cjourts and Commission should . . . in general, not succumb to the temptation of assuming the role of management," we went on to hold that “our regulatory commissions have a duty to declare the abuse and 1 ke such orders as will give to ratepayers the advantage of those economies in_ which management has failed to avail itself." Colorado Municipal League _v. Publi iliti omm’n, 172 Colo. 188, 203-04, 473 P.2d 960, 967 (1970). The district court erred when it concluded that the Commission’s action in ordering Colo-Ute to shift to a demand-energy rate "is an unwarranted intrusion into the management prerogatives and discretion of Colorado-Ute."” A-26 We now tum to issues conceming the adequacy of the Commission’s findings, and the sufficiency of the evidence to support the findings. ¥. A. Adequacy of Commission Findings The district court held that the “whole tenor of Decision No. C83-1176 as it relates to rate design is one of personal preference on the part of the Commission as opposed to specific findings of fact which would support a new rate design." In the court’s words: The commission has made no such findings in any of its decisions regarding Case No. 6076, and a review of the record indicates that no such findings can reasonably be made. The bootstrap attempt to do so in Decision No. C83-1392 makes no additional findings than those contained in the original Decision No. C83-1176. Nothing in the record supports the bold faced conclusion stated by the commission on page 3 in Decision No. C83-1392 that the flat energy rate currently charged by Colorado- Ute is discriminatory, preferential, creates an advantage, or otherwise violates 40-3-106(1) or 40-3-111. Any ultimate findings the district court was able to discern in the PUC’s decisions, whether implied or stated, were critiqued Pia aE Ligh WORDT, AP SE LOTTIIS The demand variable is a component used to determine the demand- energy rate and is the sum of several components, including a generation component. The generation component is based on total average and excess demand (also called “Average and Excess Demand"), which is the sum of the average demand and excess demand figures. Demand-related costs are A-66 allocated by the generation component based on “average demand” (annual kilowatt hour usage) and “excess demand” (difference between the utility's peak and average demands). Ww Wendling testified: The energy charge was computed [after the demand charge]. Here Staff is proposing only for generation costs to recognize the increase[d] investment in demand related dollars made by Colorado-Ute in its generating plant so that they can bum coal. A utility can minimize its investment in generation plant by constructing oil or gas fired generators. However, a fuel cost penalty is [incurred]. On the other hand a utility may expend more capital and build a coal fired unit and burn a lower priced fuel. Therefore, this additional investment should be recovered in the energy charge. To accomplish this consistent with the cost of service methodology the average portion of the average and excess demand allocation factor was split... . 6 Wendling testified that another way to accurately track Colo-Ute’s costs is through a time-of-day rate. He stated that a portion of the average demand component of the average and excess demand a!location for Colo- Ute should be recovered in the energy charge since that component is analogous to the base load portion of generating capacity. In time-of-day rates, the costs of base load generating capacity are recovered through the rate’s energy component. He stated that a similar formula was used in two prior PUC rate determinations. According to Wendling, his rate design tracked costs better than time-of-day rates and was much easier to A-67 implement. The PUC and Wendling use the terms “time-of-day rate” and "“time-of-use” rate interchangeably. ~ Other pertinent parts of the PUC order stated: One way to address (Colo-Ute’s investment in coal fired plants to meet peaks in demand] is by the use of a time- of-use rate which would recognize the use of capacity at the time it occurs. The disadvantages of a time-of-use rate, of course, is the increased complexity of metering and billing and the need to perform cost allocation studies for the distribution cooperatives. As a surrogate for such a rate, Mr. Wendling proposed a modification of the demand-energy rate. In this modified rate, the dollars of generation costs associated with the average portion of the [average and excess demand] allocation were spread into the energy charge. Mr. Wendling testified that for the Colorado-Ute system, the amount so calculated approximated very closely the dollars of base load generation that would have been spread to all hours by a ume-of-use rate. oo A customer's annual “load factor" is the percentage relationship of its average daily demand (annual use/365) to its maximum daily demand. Northern Ind. Pub. Serv. Co. v. Federal Energy Regulatory Comm'n, 782 F.2d 730 (1986). Concerning the modification of the demand-energy rate, the PUC order stated: A-68 . . For Colorado-Ute’s particular load shape and seasonality, the excess portion of the AED [average and excess demand] is a proxy for the peaking portion of the generating facilities. This peaking capacity was allocated on the basis of coincident peak demand recognizing that the members exhibit a high coincidence with the Colorado-Ute system peak. Placing only the excess portion of the AED allocation in the demand charge provides an automatic incentive to Colorado-Ute to improve its system load factor since the higher the load factor becomes, the higher is the proportion of generation costs collected in the energy charge and the lower is the demand charge. This provides the incentive to maintain and improve the system load factor that was absent in the flat energy rate. . . . This should, if applicd in conjunction with an effective resource management pian, produce essentially a flat rate, the very rate Colorado Ute seeks to employ. This rate form has the additional advantage that, in the present apniication, it comports with the regulatory objective of rate stability. ‘© We have also held that the Pl'C's findings and conclusions may be set aside or modified if not supported by substantial evidence. See, e.g., City of Montrose, 629 P.2d at 622; Public Util, Comm'n v. City of Loveland, 87 Colo. 556, 289 P. 1090 (1930). The substantial evidence standard requires a party challenging the findings and conclusions of the PUC to carry a heavy burden. Substantial evidence is more than a scintilla, and must do more than create a suspicion of the existence of the fact to be established. “It means such relevant evidence as a reasonable mind might accept as adequate to support a A-69 conclusion,” . . . and it must be enough to justify, if the trial were to a jury, a refusal to direct a verdict when the conclusion sought to be drawn from it is one of fact for the jury. National Labor Relations Bd. v. Columbian E. & S. Co., Inc., 306 U.S. 292, 300 (1939) (quoting ‘cidade 4, taoiee kidibianalin Bd., 305 U.S. 197, 229 (1938)). See generally 5 K. Davis, Administrative Law Treatise § 29:5 (2d ed. 1984)(discussing substantial evidence standard). In my view, the PUC’s findings and conclusions in this case are supported by substantial evidence. 10 Wendling’s opinion that a modification in the amount of $24,084,126 was necessary was based on the staff's separation of demand functionalized costs and revenues. See supra note 5. The $24,084,126 is the sum of the total of the average demand portion as set forth in Exhibit 60 in the PUC hearing. A-70 DISTRICT COURT, MONTROSE COUNTY, COLORADO Civil Action No. 83 CV 218 ORDER COLORADO-UTE ELECTRIC ASSOCIATION, INC.; DELTA-MONTROSE ELECTRIC ASSOCIATION; EMPIRE ELECTRIC ASSOCIATION, INC.; GRAND VALLEY RURAL POWER LINES, INC.; GUNNISON COUNTY ELECTRIC ASSOCIATION, INC.; HOLY CROSS ELECTRIC ASSOCIATION, INC.; INTERMOUNTAIN RURAL ELECTRIC ASSOCIATION; LA PLATA ELECTRIC ASSOCIATION, INC.; SANGRE DE CRISTO ELECTRIC ASSOCIATION, INC.; SAN ISABEL ELECTRIC ASSOCIATION, INC.; SAN LUIS VALLEY RURAL ELECTRIC COOPERATIVE, INC.; SAN MIGUEL POWER ASSOCIATION, INC.; SOUTHEAST COLORADO POWER ASSOCIATION; WHITE RIVER ELECTRIC ASSOCIATION, INC.; and YAMPA VALLEY ELECTRIC ASSOCIATION, INC., Petitioners, VS. THE PUBLIC UTILITIES COMMISSION OF THE STATE OF COLORADO; CHERYL MUHOVICH; UNION CARBIDE CORPORATION; SHELL OIL COMPANY; EXXON A-71 COMPANY, U.S.A.; ATLANTIC RICHFIELD COMPANY; and CITY OF DELTA, COLORADO, Respondents. AND DISTRICT COURT, MONTROSE COUNTY, COLORADO Civil Action No. 84 CV 07 ORDER ATLANTIC RICHFIELD COMPANY and EXXON CORPORATION, Petitioners. VS. PUBLIC UTILITIES COMMISSION OF THE STATE OF COLORADO; COMMISSIONERS EDYTHE S. MILLER, RONALD L. LEHR, AS SUCCESSOR TO FORMER COMMISSIONER DANIEL E. MUSE, ANDRA SCHMIDT, AS SUCCESSOR TO FORMER COMMISSIONER CLARENCE RAYMOND CLARK, III and COLORADO-UTE ELECTRIC ASSOCIATION, INC., Respondents, and A-72 SAN LUIS VALLEY RURAL ELECTRIC COOPERATIVE, INC.; YAMPA VALLEY ELECTRIC ASSOCIATION, INC.; INTERMOUNTAIN RURAL ELECTRIC ASSOCIATION; CHERYL MUHOVICH; WHITE RIVER ELECTRIC ASSOCIATION, INC.; SAN ISABEL ELECTRIC ASSOCIATION, INC.; SANGRE DE CRISTO ELECTRIC ASSOCIATION, INC.; GRAND VALLEY RURAL POWER LINES, INC.; DELTA-MONTROSE ELECTRIC ASSOCIATION; HOLY CROSS ELECTRIC ASSOCIATION, INC.; EMPIRE ELECTRIC ASSOCIATION, INC.; CITY OF DELTA, COLORADO; UNION CARBIDE CORPORATION; WESTERN SLOPE ENERGY RESEARCH CENTER; WESTERN COLORADO CONGRESS; SHELL OIL COMPANY; SAN MIGUEL POWER ASSOCIATION, INC.; GUNNISON COUNTY ELECTRIC ASSOCIATION, INC.; LA PLATA ELECTRIC ASSOCIATION, INC.; and SOUTHWEST [sic) COLORADO POWER ASSOCIATION, Intervenors. This matter coming on for hearing this 12th day of March, 1985, and the Court receiving argument of counsel, being advised in the parties’ briefs, reviewing the record, and being otherwise advised in the premiscs, hereby enters the following order: 83 CV 218 I. HI RY Colorado-Ute Electric Association, Inc. (hereinafter referred to as Colorado-Ute) generates and transmits electrical power on a wholesale basis to fourteen member electrical cooperatives A-73 (hereinafter referred to as Co-ops), which in tum, sell the electrical power on a retail basis to electrical consumers. The Co-ops are consumer-owned and also have representatives on the Board of Directors of Colorado-Ute, which is a non-profit corporation. Colorado-Ute filed Advice Letter Number 45 with the Public Utilities Commission (hereinafter referred to as the Commission or PUC) on December 15, 1981, to increase its revenue by approximately 12.157%. At this time, Colorado- Ute’s pricing rate to its fourteen member Co-ops was on a flat rate, that is, a flat rate per kilo-watt [sic] hours used. This method of charging had previously been approved by the PUC on February 24, 1981, in Decision No. C81-373. No member co-op is charged under a demand-energy rate. As a result of Advice Letter Number 45, the PUC instituted Case No. 6076 and set the matter for hearing. The hearing was held over several days in October and November of 1982, and none of Colorado-Ute’s member Co- ops complained to the PUC about the rate increase or the pricing rate. As a result of the hearing, the PUC granted the request for the increase in revenue but required Colorado-Ute to change from charging its member Co-ops on a flat rate to requiring Colorado-Ute to institute what was called a season- ably-differentiated demand-energy rate. As a result of the hearings in Case No. 6076, the PUC issued Decision No. C83- 1176, dated July 26, 1983. A re-hearing was held and the PUC issued Decision No. C83-1392 on September 7, 1983, which denied the application for re-hearing by Colorado-Ute and granted, in part, some of the requests filed by Exxon and Arco. Applications for re-hearing were again filed, and by Decision No. C83-1561, the Commission denied those applica- tions. A-74 On October 21, 1983, Colorado-Ute and the twelve mem- ber Co-ops filed a petition for writ of ceniorari in the Montrose District Court and also filed a motion for stay or suspension of the PUC’s decisions. The motion for stay or suspension of the Commission decisions was granted on January 16, 1984, and a briefing schedule was then set forth for the parties. Il. GROUNDS FOR REVIEW Colorado-Ute alleges that the Commission decisions Outlined above are unlawful, arbitrary, capricious, unjust, un- reasonable and abuse of discretion and violate their nights under the Constitutions of the United States and the State of Colorado and that the PUC has not regularly pursucd its authority and has rendered decisions upon findings and conclusions not in accordance with the law and the evidence of record. Colorado-Ute and the member Co-ops make the following assertions: 1. The Commission does not have jurisdiction to investigate the filing of a tariff or schedule under C.R.S. 1973, 40-6-111(4) by a cooperative electric association where no member or consumer of such cooperative or affected public utility has filed a complaint, as required by Section 40-6- 111(4), which provides in part: "Notwithstanding any other provision of law, no cooperative electric association shall establish, charge, or collect a discriminatory or preferen- tial rate, charge, rule, or regulation which would be violative of Section 40-3-106(1) or Section 40-3-111. Upon complaint filed by any member or customer of a cooperative clectric A-75 association or by any affected public utility, the Commission shall determine whether the rate, charge, rule or regulation in question is contrary to this section, Section 40-3-106(1), or Section 40-3-111." C.R.S. 1973, 40-3-106 prohibits a public utility from making any preferential or advantage or subjecting any corporation or person to any prejudice or disadvantage. C.R.S. 1973, 40-3- 111 provides that whenever the PUC, after hearing, finds that rates, charges, classifications, regulations or practices, etcetera, are unjust, unreasonable, discriminatory, or preferential, or in any way violate any provision of law or that they are insuffi- cient, the Commission shall determine the just, reasonable or sufficient rates, rules, regulations, etcetera, and may consider any factors which influence an adequate supply of energy and any factors which encourage energy conservation. This par- ticular statute also allows the PUC, upon its own motion or upon complaint, to investigate the matter and to establish new rates, fares, tolls, rentals, charges, classifications rules, regula- tions, contracts, practices, or schedules, in licu of the previous existing matters. Several statutes contained within the public utilities law grant the PUC the authority and the power to conduct hearings and investigations as to the propriety of rates, charges, clas- sifications, etcetera, upon the filing of a complaint or on its own motion. In contrast, this statute, 40-6-111(4)(a), permits that authority only upon the filing of a complaint by any mem- ber or customer of a cooperative electric association or by any affected public utility. Subparagraph (4)(a) removes the power of the PUC to suspend rates, fares, tolls, rentals, charges, clas- sifications, practices, rules or regulations pending a hearing, and does not provide that the PUC, of its own motion, may A-76 hold such hearings. Even upon complaint, Subparagraph (4)(a) limits the Commission's determination to whether or not the rate, charge, rule or regulation in question is contrary to 40-6- 111, 40-3-106(1) or 40-3-111. Here we have a specific statu- tory scheme set out by the legislature and the gencral rule is set forth in State v. Dayhoff, et al, 609 P.2d 119 (Colo. 1980), in which the court stated: “Finally, we adhere to the well-established rule that where specific and general statutes conflict, the provisions of the specific statute prevail [citations omitted).” While the legislature has enacted numerous general and specific Statutory provisions relating to public utilities in general, 40-6- 111(4)(a) is a specific statutory provision relating to coopera- tive electric associations, and must be followed. To hold otherwise would be to create nonsense out of what appears to the Court to be a very clear and unambiguous statute and to defeat the obvious legislative intent of the Legislature. People y. Meyers, 182 Colo. 21, 510 P.2d 430 (1973). The Coun therefore finds that the PUC does not have the authority pur- suant to C.R.S. 1973, 40-6-111 (4), without complaint as pro- vided by statute, to change the rate design of an elective [sic] cooperative such as Colorado-Ute. 2. Colorado-Ute argues that the PUC may not reject a tariff by a cooperative electric association and direct the coop- erative to file a new tariff or schedule without finding that the original tariff or schedule was unjust, unreasonable, discrimina- tory, preferential or otherwise in violation of the law, and without further finding that the new tariff or schedule ordered by the Commission is just, reasonable, non-discriminatory, non- preferential, or not unlawful. A-77 This particular point was addressed in Decisie~ *‘o. C83- 1392 at Page 3. This was the re-hearing order in Case No. 6076 which essentially denied the petitioner's application for re-hearing and affirmed its previous order in Case No. 6076, that is, its Decision No. C83-1176. At Page 3 of that Deci- sion, the PUC rejected Colorado-Ute’s argument that the PUC was required to find that Colorado-Ute's rate schedules were unjust and unreasonable and that the rates ordered by the PUC were just and reasonable, relying on the case of Aspen _Air- ways, Inc, v. Public Utilities Commission, 169 Colo. 56, 453 P.2d 789 (1969) holding that the findings of the Commission need not take any particular form and that certain findings of the Commission may be implied. The Commission thereupon made the following finding: . since, in Colorado-Ute’s view, the record does not contain any competent evidence that a unit pricing rate, which charges everyone the same cents per kilo-watt [sic] hour, is unjust, unreasonable, discriminatory, preferential, or in violation of the law, we shall nonetheless ex- plicitly state that Colorado-Ute'’s rate structure is in fact unjust, unreasonable, discriminatory, and preferential, and that its unit pricing rate is not cost tracking for the reasons sect forth in Decision No. C83-1176. By the same token, we explicitly find the rate schedule proposed by the staff of the Commission, as a result of iis cost-of-service study, being a demand-energy rate with seasonally differentiated demand charges for summer and winter and an annual- ized energy charge on a uniform kwh basis, is more nearly cost tracking than that proposed by A-78 Colorado-Ute, and accordingly, the staff rate is, in fact, just and reasonable and should be adopted." The whole tenor of Decision No. C83-1176 as it relates to rate design is one of personal preference on the part of the Com- mission as opposed to specific findings of fact which would support a new rate design. The essence of the PUC findings is that the seasonally differentiated demand-energy rate, based on the PUC staff's cost-of-service study, is more cost tracking, provides an accurate price signal, and will encourage a more effective resource management plan. The apparent basis for requiring the implementation of a demand-energy rate is found at Page 16 of Decision No. C83-1176 wherein the Commission found that the Colorado-Ute members exhibit a high coinci- dence of demand with the Colorado-Ute system peak and there- fore demand-energy rates are appropriate for Colorado-Ute. The Commission found that because the total cost per unit of Output vanes monthly, that this condition resulted in an un- economic under-utilization of capacity. In coming to this conclusion, the Commission ignored the evidence presented by Colorado-Ute and the member Co-ops that a combination of a flat energy rate charge and proper resource management will have the same effect. The Commis- sion did not accept the notion that the overall economic condi- tions, such as the recession and surplus energy in the region has made Colorado-Ute less able to sell energy to non-mem- bers so as to more effectively use its plants, however, the Commission stated that these factors were impondcrable at best. However, this ignores C.R.S. 1973, 40-3-111(1) which provides in part: A-79 . . . any may consider any factors which influ- ence an adequate supply of energy and any factors which encourage energy conservation." Strangely, the Commission, at Page 22 of its Decision in C83- 1176 found that the use of the demand-energy rate, if applied in conjunction with an effective resource management plan, would produce essentially a flat rate, the very rate Colorado- Ute seeks to employ. The Commission further stated that this rate form would have the additional advantage of rate stability which is a regulatory objective. There does not appear to be any evidence to support that conclusion, and on the contrary, it is difficult to conceive a more stable rate than the flat energy rate currently used by Colorado-Ute. Since the result of the proposed energy-demand rate sought to be instituted by the Commission, in conjunction with an effective resource management plan, is essentially a flat rate, it is extremely difficult to see why the flat energy rate currently employed by Colorado-Ute, in conjunction with an effective resource management plan, needs to be changed. Based upon the Commission’s findings contained in Decision No. C83-1176, it is clear that the Commission has simply preferred its own rate design over that employed by Colorado- Ute, and as such, should be set aside. The Colorado Supreme Court in Public Utilities Commission v lorado_Motorw Inc., 165 Colo. 1, 437 P.2d 44 (1968) stated that: "There is no question, as an abstract proposition of law, that the Commission has broad constitu- tional and statutory authority. However, the breadth of that authority is to be tested by the Statutes themselves and not by the unbridled whim of the Commission. The Commission is A-80 a creature of statute. Both the power and the scope of its authority and its procedures are necessarily controlled by the act upon which it relies." C.R.S. 1973, 40-6-111(4), specifically provides: "The Commission shall determine whether the rate, charge, rule, or regulation in question is contrary to this section, Section 40-4-106(1) or Section 40-3-111." The Commission has made no such findings in any of its decisions regarding Case No. 6076, and a review of the record indicates that no such findings can reasonably be made. The bootstrap attempt to do so in Decision No. C83-1392 makes no additional findings than those contained in the original Decision No. C83-1176. Nothing in the record supports the boldfaced conclusions stated by the Commission on Page 3 in Decision No. C83-1392 that the flat energy rate currently charged by Colorado-Ute is discriminatory, preferential, creates an advan- tage, or otherwise violates 40-3-106(1) or 40-3-111. Further, it appears that the requirement by the Commission that Colo- rado-Ute implement a new rate design was of its own motion, based on staff recommendations without the filing of a com- plaint by any member or customer of a cooperative electric association or by any affected public utility. The Court does agree with the Commission that Colorado-Ute can hardly claim Surprise after going through several days of hearing [sic] when it appears from the record that the question of rate design was the primary concern, however, that does not alter the statutory requirement that a complaint must be filed. Therefore, the Court finds that the Commission improperly considered the rate design which was not requested by Advice Letter No. 45. A-81 Findings 1 and 5 on Page 22 of Decision C83-1176 are the closest thing to findings which would support the Commis- sion’s decision pursuant to 40-3-106(1), being that Colorado- Ute’s costs are not uniform at all levels of output, and that the demand-energy rate more directly tracks cost than a flat rate. However, there is no finding that this is an unreasonable dif- ference as to rates or charges between localities or class of service. As outlined earlier, based on the Commission’s own findings, either rate design coupled with an effective resource management plan will produce essentially the same result. The record does not support the contention that any such findings pursuant to 40-3-106, 40-3-111 or 40-6-111 can be made, and the Commission made no such findings. The Court does agree with the Commission in Decision No. C83-1392 that certain findings of the Commission may be implied, and the fact that the Commission did not specifically determine that the demand-energy rate ordered by the Commis- sion was just, reasonable or sufficient is of no particular conse- quence. The whole tenor of Decision No. C83-1176, is that the Commission felt that its proposed rate design was just, reasonable and sufficient, however, these findings, both implied and stated, are conclusive in nature and are not supported by any factual findings based on the record. Colorado-Ute argues that, while the Commission found that the revenue increase sought by Colorado-Ute was reasonable and should be granted, that the new rate design did not take into consideration whether or not they would be sufficient pursuant to 40-3-111. The rate design and rate proposed by the Commission failed to take into account the uncontroverted testimony that the proposed rate would raise revenue when Colorado-Ute’s monthly costs are at its lowest point and lower the rates when its monthly costs are highest. The Commission A-82 found that the TIER of 1.31 would be reasovzable and that ‘he proposed rate design and rate would provide Colorado-Ute with a margin of safety in meeting its indenture requirements, how- ever, there is nothing in the record to indicate how this would be done. The expectation, of course, is that this would aver- age out over a calendar year, but does not take into account the financial difficulties which apparently would be encountered by Colorado-Ute in the summertime, resulting in increased short-term borrowing by Colorado-Ute. This also did not take into account the increased costs associated with a changed billing procedure and acquisition of equipment and meters necessary to implement the changeover. There is no indica- tion, except conjecture, that such rates would be sufficient and would allow Colorado-Ute to achieve the TIER level. 3. Colorado-Ute next argues that the Commission may not disregard the convenience and preference of Colorado-Ute and its member Co-ops in designing rates for electrical service by substituting the Commission’s own rate design. In this case, Colorado-Ute by its Advice Letter No. 45 was not seeking to change its existing rate design, but merely seek- ing an increase in that rate. The record is clear that Colorado- Ute and all member co-ops which provided testimony before the Commission supported a unit pricing rate, that is, the flat energy rate. People’s National Division v. Publi iliti Commission, 193 Colo. 421, 567 P.2d 377 (1977) notes that unless there is a substantial showing that rate payers are preju- diced materially by the managerial options in the area of capi- tal financing, such matters are within the realm of sound man- agement discretion of the public utility. That case dealt with Capital financing as opposed to rate design, however, the prin- ciple remains the same. Although an old case, this principle was also followed in Refining Co. v Public Utilities Commis- A-83 sion, 68 Colo. 137 (1920), determined that the cancelling of an existing rate in a contract could only be done if the Commis- sion determined that the contract rate was detrimental and injuriously affected the public welfare. That case requires the Commission to determine that the rate is so unreasonable as to be detrimental to the public interests before the Commission may establish the new rate. Even in this case, the court was talking about the rate as opposed to a new rate design. Also see 73B C.J.S., Public Utilities, § 19. There is no evidence of a substantial showing that the rate payers are being materially prejudiced by the unit pricing rate and apart from the staff, as Outlined earlier, only the intervenors such as Union Carbide and Exxon, which would benefit from the new rate design, opposed the unit pricing rate. The Commission ignored substantial testimony in the record by the member Co-ops in which they testified that if Colorado- Ute were forced to charge them on an energy-demand rate, they in tum would have to charge their consumers on the same basis. Not only would this necessitate a change in billing and metering by Colorado-Ute, and therefore increase the cost, but the same eifect would apply to the member Co-ops and the end use consumer. This, contrasted against the questionable benefits of going to an energy-demand rate does not support the Commission’s findings. The Court finds that the Commission’s action in changing Colorado-Ute’s rate design from a flat energy rate to a season- ally adjusted demand-energy rate is an unwarranted intrusion into the management prerogatives and discretion of Colorado- Ute. The Commission itself in Decision No. C81-373, Febru- ary 24, 1981, approved a flat energy rate for Colorado-Ute. Page 4 of that Decision recites several findings made by the Commission in this regard and the Commission in that Deci- A-84 sion notes that the costs to Colorado-Ute to generate power are basically constant and uniform, and that a flat energy rate would recover both the demand cost and the energy cost on the basis of usage. The Court can find no findings in Decision No. C83-1176 which vitiates these findings previously made by the Commission, and although the Commission has general authority to correct managerial abuses of discretion which adversely or injuriously affect the public interest, no such findings have been made. As stated in Public Service Co. v. Public Utilities Commission, 653 P.2d 1117 (Colo. 1982), the management of the public utility belongs to the company. And where, as here, there is no evidence or find- ings of abuse, the Court can only conclude that the Commis- sion is substituting its own personal preference in managerial matters and has exceeded its statutory authority. Based upon the record, it is clear that the Commission totally ignored the evidence and the testimony presented by Colorado-Ute and the member Co-ops conceming the flat ener- gy rate. The Court concurs with Mr. James at Page 13 of his brief wherein it is noted that Colorado-Ute and the member Co-ops have had an experience factor with both a flat energy rate structure and a demand-energy rate structure and all, with- Out exception, from a managerial point of view, favor the flat energy rate. This is particularly highlighted by the fact that, while Colorado-Ute only wholesales power to the fourteen member Co-ops, the member Co-ops retail this electrical power to the use of the consumer. Their testimony, particularly as it relates to an understandable pricing signal and general wants of the public, cannot be minimized. This is particularly true since Colorado-Ute and the fourteen member Co-ops are all non- profit, consumer-owned, cooperatives. It is extremely difficult to ascertain any improper motivation on the part of their col- lective managements which would cause them to prefer a flat Foren eee a arose, & f : é ae A-85 energy rate. Certainly the profit motive does not exist, and it is difficult to see any irresponsibility in their wanting to keep the flat energy rate. 4. Colorado-Ute next argues that its right to due process under the Fourteenth Amendment to the United States Constitu- tion and under Article II, § 25 of the Colorado Constitution, was violated by admitting testimony based on the WASP-82 computer analysis, and that the Commission violated C.R.S. 1973, 24-72-304 (The Colorado Open Records Act), in refusing to provide Colorado-Ute with a copy of the WASP-82 com- puter program. The Court rejects this argument advanced by Colorado-Ute. Hearings in this case were held before the Commission on seven separate days between October 6, 1982, and ending November 16, 1982. While Colorado-Ute is entitled to due process as set forth in Mountain States T. and T. Co. v. De- partment of Labor, 184 Colo. 334, 520 P.2d 586 (1974), a review of the record discloses that Colorado-Ute did not re- ceive information on the WASP-82 analysis and did sponsor testimony as a result thereof. This matter was discussed at length at the hearing date on October 26, 1982, and again on November 15, 1982. Colorado-Ute erroneously stood on their objection and did not cross-examine staff witness Mr. Wen- dling, and did so at their own peril. Based upon the applica- tion for re-hearing, the Commission in its Decision No. 1392 addressed this issue on Pages 3 and 4 of that Decision, and a review of the record in that regard clearly substantiates the Commission in that regard. The Court therefore finds that the Commission neither violated the Colorado Open Records Act nor Colorado-Ute’s right to due process under the Fourteenth Amendment to the U.S. Constitution or Article II, § 25 of the Colorado Constitution. A-86 5. The record does not support the conclusions reached by the PUC as to the applicability of the demand-energy rate to the Colorado-Ute system. The Commission relied heavily upon Exhibit 94 in an attempt to show a high coincidence between the system’s peaks and the members’ peaks, however, that Exhibit does not appear to accurately track all of the data available to determine coin- cidence of peaks. Page 1 of that Exhibit, listing the date and time of occurrence of member system peaks, together with the Colorado-Ute system peak "date hour", shows that the peaks are not nearly as coincident as believed by the Commission. It appears from the testimony in the record that the applicability of the demand-energy rate to the Colorado-Ute system is only appropriate if the peak demands are highly coincident. Further, the testimony indicated that the demand energy rate acts as a functional surrogate for time-of-day rates, and that time-of-day rates are not relevant at this point in time for the Colorado-Ute electric system. In shor, there does not appear to be sufficient competent evidence for the Commission to conclude that either the demand-energy rate is most appropriate for Colorado-Ute because of the high degree of coincidence of peaks, nor that the demand energy rate is the most cost tracking rate available for Colorado-Ute. Ill. NCLUSION WHEREFORE, based upon the foregoing, the Court hereby directs that the order of the Commission in Decision No. C83- 1176 requiring Colorado-Ute Electric Association, Inc. to file rates and tariffs reflecting the rates set forth in Appendix B of said order is hereby set aside and is of no force and effect. Paragraph 3 of said order is hereby affirmed, and Colorado-Ute Electric Association shall submit to the Commission a feasi- bility study of a load research program as contained in the A-87 Commission’s order. Further, the suspending bond filed by Colorado-Ute in the amount of $500,000.00 is hereby discharged and released. 84 CV 7 I. HISTORY This case, 84 CV 7, was consolidated with Case No. 83 CV 218, and was docketed in the Montrose District Court on January 12, 1984. Atlantic Richfield Co. (hereinafier referred to as ARCO), and Exxon Corporation (hereinafter referred to as Exxon) had filed a complaint seeking judicial review of the Commission’s decision in Case No. 6076. A motion to dis- miss the petitioners’ complaint was filed by several of the intervenors and by Colorado-Ute, which motions were denied on January 4, 1984. Because of the similarity of parties, and because both of these cases revolved around Case No. 6076 before the Commission, venue in Case No. 84 CV 7 was trans- ferred to the Montrose District Court and then consolidated with 83 CV 218. The history of 83 CV 218 and 84 CV 7 are therefore identical, and the only issue in 84 CV 7 relates to ARCO’s and Exxon’s disagreement with the Commission’s decision to shift substantial demand costs into the energy por- tion of the demand-energy rate required by the Commission and that such shift was contrary to the staff’s cost-of-service study, which is Exhibit 84 of the record. Il. GROUNDS FOR REVIEW 1. ARCO and Exxon argue that the Commission’s deci- sion to classify certain demand costs as energy costs is not supported by substantial evidence in the record. A-88 In particular, the petitioners argue that the Commission's shift of certain demand related cosis to the energy component of the seasonably adjusted energy-demand rate proposed by the staff and required by the Commission to be implemented as sct forth in Appendix B of Decision No. C83-1176 is not sup- ported by the evidence and the Commission's findings. Ac- cording to the staffs cost-of-service study, approximatcly 56% of Colorado-Ute’s costs are fixed capital costs, that is, expenses associated with the generation and transmission of clectric power, and 44% of the costs are operational and mainicnance expenses, primarily fucl costs. Assuming that the demand- energy rate proposed by the staff and adopted by the Commis- sion is implemented, then that rate includes a demand charge to recover fixed capital cosis and an energy charge to recover operational and maintenance expenses, the idca being that a separate energy charge and a separate demand charge most accurately tracks the actual cost of electrical service for any particular user. In its decision, the Commission allocated $24,084,126.00 of the average demand revenue to the annualized cnergy charge, which, to a high energy user such as the petitioners, results in increased cicctnical costs. Based upon the testimony and recommendations of Mr. Wendling, a staff witness, the Commission shificd pan of Colorado-Ute’s demand related costs to the energy component of their rate thereby assigning 32% of the cost to the demand charge and 68% to the energy charge, in contrast to the cost of service study which had determined that 56% of the costs were demand related and 44% energy related. The record is not clear on what basis this shift was made, and appears to be an attempt to devise a kind of “time-of-day" rate. The witness rrr em oe we A-89 acknowledged that such a rate could not properly be calculated without further data. While exactitude and unerroring precision is not required, guesswork and personal preference is not allowed. The record is clear that there was no technical literature to support this classification and that the witness had conducted no research or studies which would support this misclassification. This is particularly true when or. notes that such misclassification is contrary to the cost-of-service study resulting in a reduction of the demand related costs from 56% to 32% and an increase of the energy related costs from 44% to 68%. As noted on Page 14 of petitioners’ brief, the existence of “some evidence and some particulars” is insufficient if the evidence as a whole does not support the Commission's decision. Lassner v. Civil Service Commission, 177 Colo. 257, 259, 493 P.2d 1087, 1089 (1972) (emphasis in original). This is particularly true since the only evidence apart from the conjecture and personal pre- ference of Mr. Wendling is as it relates to the allocation of costs to the demand in energy components of the demand- energy rate, consists of the staff's cost-of-service study. There- fore, the Coun finds that the Commission's decision in this regard should be set aside and the Commission be directed to adopt the cost-of-service study rates set forth in Exhibit 84. 2. The petitioners argue that the Commission’s misclas- sification of demand costs as energy costs is arbitrary and Capricious. Any part of the Commission’s order which appears to be a matter of personal preference or administrative convenience, and without the necessary investigation and research data, may be considered arbitrary and capricious and therefore invalid. i Vv mmission, 197 Colo. A-90 119, 590 P.2d 502 (1979). The Court in that case held that there was no study done which would support the order of the Commission, however, in this case, there was a study done, the staff's cost-of-service study, however the basis for the misclas- sification, contrary to the study, was not founded upon any administrative or technical literature nor upon any research or Studies to support the shift. As such, the Court must conclude that the decision of the Commission to reclassify the $24,084.126.00 [sic] of the demand costs to the energy costs was arbitrary and capricious and without sufficient study and foundation. Further, as noted on Page 22 of the petitioners’ bricf, the evidence indicates that such a study as proposed by Mr. Wendling was feasible, but like the City of Montrose case, supra. was not done. 3. The petitioners argue that the Commission failed to make adequate findings of fact to support its misclassification and shift of certain demand costs as energy costs. The petitioners contend that the findings of the Commis- sion must be sufficiently clear as to enable the reviewing coun to engage in a meaningful review of the Commission’s deci- sion. A review of the record shows that the primary basis for this shift of demand costs inconsistent with the cost-of-service study was that Colorado-Ute utilized coal-fired power plants and therefore required a greater investment of capital than that generally needed for oil or gas plants, however, there was no finding nor evidence which suggested how the shift of the $24,084,126.00 corresponded to that premise. Since one of the primary purposes of the public utilities law is to insure that the rates do not establish an unreasonable difference between classes of customers and that the ratc payers be accorded equal treatment, it is clear that this shift of A-91 demand costs to energy costs, contrary of the cost-of-service study, results in an unjust and discriminatory rate as it relates to the petitioners. The practical and end result of this shift, of course, is that the petitioners, and users like them, will pay considerably more for their electrical power and is therefore a preferential rate forbidden by law as set forth in C.R.S. 1973, 40-3-102 and 40-3-106. As pointed out on Pages 30 through 33 of the petitioners’ brief, the Commission's proposed rate established a preference in that the winter customers pay rates below the actual cost of service to them (the record shows that Colorado-Ute is a winter peaking system) and that summer users pay higher rates than the actual cost-of-service and there- fore in effect subsidizes the preferential rate for winter users. This preference is eliminated by requiring the Commission to adopt the rates based upon the staff's cost-of-service study. Electric customers such as the petitioners, are constant and consistent users of electrical power, and are high-load consum- ers. That is, their use of electrical energy is fairly constant and is not significantly increased or decreased by summer or winter conditions. This means that the higher the load the lower the unit cost of electrical energy. Therefore, the mis- classification of demand costs as energy costs significantly increase the costs of electrical power to such consumers. Since the rates should approximate the actual cost of service, the PUC rate is discriminatory in nature and in effect requires a high load consumer to subsidize a low load consumer. Moun- 197 Colo. 56, 590 P.2d 495 (1979). While exact precision is not required as noted earlier, the enormity of this shift cannot be justified. A-92 III. CONCLUSION WHEREFORE, based upon the foregoing, the Court hereby sets aside that portion of the Commission’s order in Decision No. C83-1176, Case No. 6076, which allocates $24,084,126.00 of the demand cosis to the energy costs, and, if the Court’s order in 83 CV 218 is set, hereby directs the Commission to adopt rates based upon the staff’s cost-of-service study set forth in Exhibit 84 of the record. For the record and for clarifica- tion, 11 of the intervenors had filed a motion to dismiss in the Denver District Court in 84 CV 7, and the Court has not yet formerly [sic] denied Colorado Ute’s [sic] motion to dismiss in that case. By this order, the Court hereby denies Colorado- Ute’s motion to dismiss. DONE IN OPEN COURT this 7th day of May, 1986. /s/ Richard J. Brown JUDGE xc: All interested parties J [' —— --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385017_0865%3A2. Public record. Not legal advice.