Colorado Power Co. v. Halderman

• Court: U.S. District Court — District of Colorado
• Citation: Colorado Power Co. v. Halderman, 295 F. 178 (D. Colo. 1924)
• Decision Date: 04 January 1924
• Docket Number: 7473.
• Parties: COLORADO POWER CO. v. HALDERMAN et al.

295 F. 178

COLORADO POWER CO. v. HALDERMAN et al.

No. 7473.

United States District Court, D. Colorado.

January 4, 1924

William V. Hodges, James Grafton Rogers and D. Edgar Wilson, all of Denver, Colo., for plaintiff.

Barney L. Whatley, of Denver, Colo., for defendants.

SYMES District Judge.

The Colorado Power Company was incorporated in Colorado in 1913 and is the successor through reorganization of all the property and assets of the Central Colorado Power Company and the Leadville Light & Power Company. Since its incorporation it has acquired the Georgetown hydro plant, hereinafter referred to, and other isolated properties not part of its so-called central system. The plaintiff and its said predecessors will be referred to as the power company. Three of the defendants constitute the Public Utilities Commission of Colorado, and the fourth is the Attorney General-- all made defendants in their official capacities. The power company is the owner and operator of several plants generating and selling electrical energy. This suit concerns only that part of its properties known as the central system, which, it is admitted by all parties, constitutes a separate operating entity. The two or three isolated plants owned by the power company have been disregarded by both sides in this proceeding.

The central system consists of a large hydro-electric development at Shoshone, on the Colorado river just above Glenwood Springs; a hydro development of considerable size on Middle Boulder creek above Boulder; a small hydro-electric plant at Georgetown; and an old steam plant at Leadville-- all in Colorado. These plants are all connected by a transmission line with substations at Leadville, Dillon, Idaho Springs and a so-called Denver substation located just outside the city limits of Denver. It supplies energy from this system to a large territory, all within the state, and has a diversified market for its product. A portion of its energy is used for power purposes in the mining districts of Colorado accessible to its lines and the lighting of many small mining towns. It wholesales a large proportion of its product to other public utilities, two serving the city of Denver and another a considerable territory adjacent thereto on the north, and one or two very small utilities in the western part of the state. More detailed facts concerning its properties and history will be developed in the opinion.

In 1913 the Legislature of the state passed a comprehensive public utility act, creating a board of three commissioners defining their powers, and making all public utilities, including electrical corporations, such as the plaintiff, subject to its control and regulation. The state Supreme Court has held that the commission does not have jurisdiction over utilities operating in the larger so-called 'home rule' cities. The plaintiff, however, does not operate in any of these cities, except as a wholesaler to the local utilities. The plaintiff was doing business, and had entered into certain agreements for the disposal of part of its product at agreed or contract rates before the passage of the act. In December, 1919, the power company filed with the commission certain schedules and increases it proposed or requested to be allowed to make in power rates, and also special agreements with certain specified consumers, and cancellations of special power agreements with other consumers. In January, 1920, the commission ordered applicant to make for the commission, under the direction and supervision of its engineer, a full and complete inventory and appraisal, as of January 1, 1920, of the physical properties of the company located within the state, and, further, the company to place its books, records, and accounts at the disposal of the commission's statistician for the purpose of enabling it to arrive at a full and fair valuation of the power company's property. Later, in October the same year, the power company filed a supplemental application with schedules attached thereto, including the power rates above mentioned, asking for further increases in power rates.

Numerous protests were filed with the commission by consumers affected. Again, and on November 10, 1920, the power company filed new schedules, containing summaries of special power agreements and proposed cancellations of special rates, which placed before the commission substantially its entire rate structure as it then existed, together with proposed increases and cancellations of certain contracts. In effect it asked for an increase of 40 per cent. in certain power schedules known as 11 and 12, 20 per cent. increase, with some exceptions, in certain special power agreements, and permission to cancel certain special agreements, which would require the consumers named therein to pay scheduled rates. By various orders of the commission the proposed increases and cancellations were suspended from time to time, and finally, by mutual agreement by all the parties, until the final decision was rendered.

In November, 1920, the power company filed a full and complete inventory and appraisal as ordered, and in December, 1920, asked permission to temporarily increase its rates as an emergency measure until final hearing. This was denied. All of the applications and protests were consolidated, considered at one hearing, and all parties in interest were given an opportunity to be fully heard. In April, 1922, the commission handed down its opinion, in which it discussed the issues raised, and made its order permanently suspending the proposed increases, in effect denying the power company any of the relief asked for. The commission found that:

'(44) The net investment upon which the applicant is entitled to earn a fair rate from firm power customers is found to be * * * $3,736,965.'

To this net investment, it added for working capital necessary for firm power consumers, $184,495 and $300,000 as a reasonable allowance for going concern value, making a total of $4,211,460 as the fair valuation of--

'so much of applicant's property as is reasonably necessary for the service of all the customers on the central system (and excluding the Denver Gas & Electric Light, the Denver Tramway, and the Western Light & Power Companies).'

They further found that the balance of the property known as the central system is the result of an overbuilt plant, and is not in use or useful in serving the customers on the central system, excluding the above-named companies. The opinion discusses the operating expenses for the whole central system, and allocated a certain portion of them in proportion to that part of the system that it found used and useful, and found that the net revenue, after depreciation upon this rate base, was $365,323, and as this amount gave more than an 8 per cent. return on the rate base they came--

'to the conclusion that the rates charged the customers on which this earning was obtained were amply sufficient and high enough to afford the company a reasonable return on the capital invested.'

The commission states that this rate base was arrived at by a segregation and value of that part of the properties comprising the central system in use and useful in serving all of the customers on the central system outside of the Denver Gas & Electric Light Company, the Denver Tramway Company, and the Western Light & Power Company.

This allocation included the value of certain parts of the system as a whole, to wit, the Shoshone, Georgetown, and Leadville plants, excluded certain other units as a whole, such as Boulder, and in allocating on the basis of relative traffic or use, the value of the transmission lines and other properties, as between firm power use and the total use.

The plaintiff thereafter filed its bill in this court, complaining of the action of the Public Utilities Commission as here set forth, and asked that the acts of the commission in denying any increase in rates be declared unconstitutional, null, and void; that any further action, or threatened action, on the part of the defendants, be enjoined; that the Public Utilities Act be held unconstitutional, in so far as it affects the right of the plaintiff to charge its proposed increase in rates; and that the defendants and all the consumers and users of electric energy from the central system be restrained from enforcing in any way the order of the commission, or from interfering with the plaintiff or from taking any action against the plaintiff on account of its failure or refusal to conform to the rates prescribed by the commission. In short, this court is called upon to decide whether any of the plaintiff's rights or guaranties under the federal Constitution have been violated by the order of the commission. The case was tried to the court, and took four weeks for the testimony. The record is very voluminous, consisting of testimony of the officials, numerous experts on both sides, many lengthy and varied exhibits, and several depositions.

I. The plaintiff contends that, regardless of anything else, the order is unconstitutional, because the Colorado Public Utilities Act does not provide for an independent judicial review of the commission's orders. The answer to this question depends upon the construction of section 52 of the act (section 2961, Comp. Laws of 1921). It provides that any party aggrieved by a decision of the commission may, within 30 days thereafter, apply to the Supreme Court of the state for a writ of review. No new or additional evidence may be introduced in the Supreme Court, but the case shall be heard on the record made before the commission, as certified by it. This record, according to section 46 of the act (section 2955, Comp. Laws), consists of a full and complete record of all...