Western Colorado Power Co. v. Public Utilities Commission

Decision Date14 February 1966
Docket NumberNo. 21136,21136
Citation411 P.2d 785,159 Colo. 262
Parties, 63 P.U.R.3d 113 The WESTERN COLORADO POWER COMPANY, a Colorado corporation, and Public Service Company of Colorado, a Colorado corporation, Plaintiffs in Error, v. The PUBLIC UTILITIES COMMISSION of the State of Colorado, Henry E. Zarlengo, Ralph C. Horton, and Howard S. Bjelland, the individual members of said Commission, and Colorado-Ute Electric Association, Inc., a cooperative association, Defendants in Error.
CourtColorado Supreme Court
Irvine & Baucom, Salt Lake City, Utah, Loesch & Kreidler, Montrose, Barry & Boyle, Denver, for plaintiff in error The Western Colorado Power Co

Lee, Bryans, Kelly & Stansfield, Denver, for plaintiff in error Public Service Co. of Colorado.

Duke W. Dunbar, Atty. Gen., Frank E. Hickey, Deputy Atty. Gen., Robert N. Trunk, Asst. Atty. Gen., Denver, for defendants in error The Public Utilities Commission and others.

Raphael J. Moses, Boulder, John J. Conway, Denver, John A. Hughes, R. Jerry

Bennett, Montrose, for defendant in error Colorado-Ute Elec. Ass'n, Inc.

MOORE, Justice.

We will refer to the parties as follows: to The Western Colorado Power Company as Western; the Public Service Company of Colorado as Public Service; the Public Utilities Commission as the Commission; and the Colorado-Ute Electric Association, Inc. as Colorado-Ute.

On May 11, 1962, Colorado-Ute filed an application with the Commission for a 'Certificate of Convenience and Necessity.' The object of the application was to permit Colorado-Ute to construct near Hayden, Colorado, a steam electric generating plant with a nominal rating of 150,000 kilowatts, together with associated transmission lines and related facilities necessary to deliver power to certain new customers it sought to serve at wholesale. On June 14, 1962, Colorado-Ute filed a petition for an order of the Commission authorizing it to execute notes payable to the United States of America in an amount not to exceed $22,876,000 and mortgages to secure the notes in order to finance the project.

Public Service and Western filed protests in opposition to Colorado-Ute's requests and the matters were consolidated for hearing. Protests to those applications which were filed by Public Service and Western generally alleged that each was a public utility subject to the jurisdiction of this Commission engaged, among other things, in the generation, transmission and distribution of electric power and energy at wholesale and otherwise throughout various areas of the State of Colorado; that all or a portion of the lines, plant, and facilities proposed to be constructed by Colorado-Ute would cause physical and uneconomical duplication of the lines, plants, and systems of the companies which had been lawfully constructed and dedicated to the public use; that the companies then, and for many years past, had maintained electric generating facilities and transmission lines and related facilities adequate and sufficient to meet all present and future needs of their customers and service areas, and held themselves out as ready, willing and able to render wholesale electric service to Colorado-Ute or any of its members; that there did not exist any need nor necessity for the construction of the proposed plant and facilities of Colorado-Ute and that if such construction was authorized by the Commission it would result in substantial damage to the companies and their electric consumers.

Subsequent to hearing, the Commission entered its order authorizing the construction of the Hayden plant and the financing thereof, but denying authority to construct certain of the facilities originally requested. Western and Public Service thereafter commenced certiorari proceedings in the district court, and from the judgment therein entered, affirming the Commission's decision, they bring writ of error here.

Colorado-Ute is an incorporated rural electric cooperative association engaged in generating and transmitting electric energy as a wholesaler. It proposes to sell electric energy to various customers it denominates 'members' as well as to the Bureau of Reclamation, a nonmember. It further proposes to dedicate its facilities to whatever use the public convenience and necessity require, including the wheeling of power to protestants Public Service and Western. It is federally financed by the Rural Electrification Administration under the Rural Electrification Act of 1936 (Title VII, U.S.C.A. § 601 et seq.). Eleven of its members are 'distribution members' and distribute electrical energy directly to their users. Of the two other members, the Arkansas Valley G & T generates and transmits energy for its three 'distribution members,' and the Salt River Project Agricultural Improvement and Power District provides both electric and water service in the area surrounding Phoenix, Arizona. Salt River is not a cooperative but is a quasi-governmental organization incorporated under the laws of the State of Arizona.

Both Public Service and Western have been rendering electric service in Colorado since long prior to the time Colorado-Ute was first incorporated or ever constructed any generation and transmission facilities. Western serves in southwestern Colorado in the general area from Durango to Paonia, Colorado, and Public Service serves in a large area of the eastern slope of Colorado, including, Denver, as well as in portions of western Colorado such as the San Luis Valley, Grand Junction, Rifle, and other specific areas within the state.

In this writ of error, contentions of Western and Public Service fall into three general categories: (1) That Colorado-Ute did not prove the need, demand, or necessity required by the law of public convenience and necessity for power to be provided by the Hayden Plant; (2) that the financial arrangements of Colorado-Ute with the Rural Electrification Administration are illegal; and (3) that numerous errors of an evidentiary, procedural, and administrative nature were committed by the Commission, all to the prejudice of Western and Public Service.

The first category consisted of six subcategories, each of which, it is said, points to error because the action of the Commission, and the trial court in affirming the Commission, contravened the fundamental concept of public utility law relating to public convenience and necessity. In this respect it is asserted: (1) That the evidence established that proposed new customers of Colorado-Ute already had an adequate power supply and that these customers would merely change their source and commence taking their power from Colorado-Ute; (2) that the construction of the plant would duplicate service made available by Western and Public Service as well as other electric suppliers presently rendering such service; (3) that the estimates of power costs submitted by Colorado-Ute found no support in the evidence; (4) that the generation and transmission of energy at less cost, assuming the record established such fact, is not a factor in establishing public convenience and necessity where reliance upon cheaper energy as basis for certification would be destructive of the concept of regulated monopoly; (5) that it would not be in the public interest to permit the construction of the plant where it would put Colorado-Ute in a debt position of more than 100%; (6) that the Commission erred in receiving evidence concerning alleged benefits which would accrue to the Colorado River Basin fund as a result of the construction of the plant where the reception of such evidence was based upon the construction of a 600,000 k. w. plant and basing its decision thereon when the application was for a plant of only 150,000 k. w.

The Commission (by a two to one vote) found that public convenience and necessity demanded the construction of the Hayden Plant and its related facilities. This determination is the subject of attack by writ of error in this court. The record consists of some eight thousand pages with over twenty-five hundred pages of testimony. One hundred and twenty-four exhibits were offered. It would unduly lengthen this opinion to discuss in detail each facet of the evidence presented, and it is not necessary to do so.

The record discloses that the Colorado-Ute was organized in 1941 by a group of rural electric distribution associations on the Western Slope, but remained inactive for some years. In 1952 Colorado-Ute was reorganized, and it obtained a loan from the Rural Electrification Administration to construct transmission lines and a generating plant to supply the electric requirements of its then members. Upon the completion of the construction of this plant, known as the Nucla plant, Colorado-Ute commenced serving, on a wholesale basis, four distribution cooperatives located in the southwestern portion of the state. At the time of the hearing before the Commission there was then pending an application by Colorado-Ute to commence serving a fifth member located near Grand Junction, Colorado.

The alleged purpose to be served by the construction of the Hayden plant is to supply the electric requirements not of its five members but of thirteen members. This would have the effect of making Colorado-Ute the wholesale supplier of electric energy to a large portion of the State of Colorado, as well as to a small portion of the State of Wyoming and the State of Utah, and a large supplier to the Salt River Project in Arizona. Each of these eight potential new customers of Colorado-Ute is now receiving service from other sources, and the existing Nucla Plant of Colorado-Ute is adequate to serve the requirements of the five earlier members. It is thus apparent that Colorado-Ute seeks to commence rendering electric service on an expanded basis in areas it has not heretofore served, to customers it has never before served, and to customers and in areas where electric service is...

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