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011 PSCo's Motion to Dismiss for Lack of Subject Matter Jurisdiction 8.5.19 1 US.124016568.02 DISTRICT COURT, BOULDER COUNTY, COLORADO Court Address: 1777 6TH Street, Boulder Colorado 80302 303-441-3750 _________________________________________________ Petitioner: THE CITY OF BOULDER, a Colorado Home Rule City, v. Respondents: PUBLIC SERVICE COMPANY OF COLORADO, a Colorado Corporation, d/b/a XCEL ENERGY; MORGAN GUARANTY TRUST COMPANY OF NEW YORK; and PAUL WEISSMANN, in his official capacity as Treasurer of Boulder County. _________________________________________________ Attorneys for Respondent, Public Service Company of Colorado, a Colorado Corporation John R. Sperber, Atty. Reg. No. 22073 Brandee L. Caswell, Atty. Reg. No. 30706 Matthew D. Clark, Atty. Reg. No. 44704 FAEGRE BAKER DANIELS LLP 1144 Fifteenth Street, Suite 3400 Denver, Colorado 80202 Telephone: (303) 607-3500 Fax: (303) 607-3600 Email: jack.sperber@FaegreBD.com brandee.caswell@FaegreBD.com matthew.clark@FaegreBD.com COURT USE ONLY __________________________ Case Number: 19 CV 30637 Division: 5 MOTION TO DISMISS FIRST AMENDED PETITION IN CONDEMNATION FOR LACK OF SUBJECT MATTER JURISDICTION PURSUANT TO COLO. R. CIV. P. 12(b)(1) I. CERTIFICATE OF CONFERRAL Pursuant to C.R.C.P. 121(c), § 1-15(8), Public Service Company of Colorado (“PSCo” or “Public Service”) certifies it conferred in good faith with counsel for the City of Boulder (the 2 US.124016568.02 “City”), who stated that the City opposes this Motion. II. INTRODUCTION Public Service Company of Colorado (“PSCo”) is currently the retail electric and gas utility for customers in the City, in Boulder County, and elsewhere in the State of Colorado. In this condemnation action, the City seeks to condemn property in and around the City so as to “separate the existing electrical distribution system serving customers in the vicinity of the City into two separate distribution systems … one serving only customers within the City … and the other serving customers of [PSCo], by reconfiguration of the existing equipment and the addition of new facilities so that each system can be operated independently of the other in order to distribute electricity to the respective retail customers of the City and [PSCo].” Am. Pet. ¶ 6.1 The property the City seeks to acquire includes facilities, both inside and outside of substations, which are currently also used to provide service to customers outside the city limits. As this Court previously held, this monumental undertaking triggers the Colorado Public Utilities Commission’s (the “PUC” or the “Commission”) exclusive jurisdiction to oversee the safety, reliability, and effectiveness of the state-wide interconnected electrical distribution system prior to a condemnation action being initiated: The PUC has the authority to regulate public utilities and the facilities, which provide service within the City of Boulder as well as unincorporated Boulder. … [I]t is necessary and appropriate for the PUC to determine how facilities should be assigned, divided, or jointly used to protect the system’s effectiveness, reliability, and safety. Such a determination must be made prior to the City’s condemnation of property for utility municipalization. (emphasis added). See January 14, 2015, Order Re: Judicial Review of the Colorado Public Utilities Commission 1 Cites to “Am. Pet.” refer to the City’s First Amended Petition in Condemnation. 3 US.124016568.02 Decisions (Case No. 14CV30047) (LaBuda, J.) (hereinafter “Final Opinion”) (rejecting the City’s appeal of two PUC decisions implicated by the present condemnation lawsuit).2 Accordingly, shortly after issuing the Final Opinion, this Court dismissed a prior condemnation action the City had filed seeking to acquire portions of PSCo’s electric distribution system without first conducting proceedings before the PUC. See February 13, 2015 Order Re: Respondents’ … Motion to Dismiss under C.R.C.P. 12(b)(1) for Lack of Subject Matter Jurisdiction (Case No. 2014CV30890) (LaBuda, J.) (hereinafter “Condemnation Dismissal”).3 Despite this, the City has again filed condemnation proceedings before the PUC has finally determined and approved how facilities should be assigned, divided, or jointly used to ensure the effectiveness, reliability, and safety of the separated systems and what assets Boulder may seek to acquire. Thus, whether analyzed through the lens of issue preclusion or on the underlying merits, this Court lacks subject matter jurisdiction and must dismiss this condemnation lawsuit. III. PROCEDURAL AND FACTUAL BACKGROUND Beginning in 2013, PSCo, Boulder, and numerous other parties participated in proceedings at the PUC initiated by PSCo seeking declarations on a number of issues related to the City’s proposal to acquire electric distribution facilities from PSCo and serve customers both within and outside the city limits.4 2 A true and correct copy of the Final Opinion is attached hereto as Exhibit 1. 3 A true and correct copy of the Condemnation Dismissal is attached hereto as Exhibit 2. 4 The docket for these proceedings and the parties’ extensive briefing is available on the PUC’s website: https://www.dora.state.co.us/pls/efi/EFI_Search_UI.search. Enter “13D-0498E” into the “Proceeding Number” box, check the box next to “I’m not a robot,” and then click on the “Search” button. PSCo will provide the Court with copies of its Verified Petition for Declaratory Orders (“Declaratory Petition”) and any briefs or PUC pleadings desired if requested to do so. 4 US.124016568.02 The PUC’s Declaratory Rulings. In its initial order on PSCo’s Declaratory Petition, the PUC held, in pertinent part: The Commission exercises its regulatory authority over Public Service’s transmission and distribution lines, substations, and other facilities to protect the reliability, safety, and service quality of electricity services provided to unincorporated Boulder County, and to safeguard the integrity of the system statewide. If Boulder seeks to condemn facilities, wherever located, that Public Service currently uses, at least in part, to serve customers located outside of Boulder’s city limits, this Commission must have the ability to investigate and determine how the facilities should be assigned, divided, or jointly used to protect the system’s effectiveness, reliability, and safety, as well as any other matter affecting the public interest. Thus, a Commission proceeding addressing these facilities should precede a condemnation action to allow the district court to rule on the public need and value of facilities that the Commission determines may be the subject of transfer to Boulder. October 29, 2013, Decision Issuing Declaratory Rulings (Proceeding No. 13D-0498E, Decision No. C13-1350) (hereinafter “Declaratory Decision”) at ¶ 28 (emphasis added).5 Upon the City’s request for reconsideration, the PUC confirmed its role and the necessity of completing approval proceedings prior to commencing a condemnation action: Regulatory oversight of the assets, plant, and facilities used to provide electricity outside Boulder’s territorial boundaries advances important public interests. Public Service constructs, engineers, and operates its network as an integrated system, and its service capabilities cross the political boundaries defining the City of Boulder and Boulder County. Performance of the Commission’s duty to ensure the reliability of the system for unincorporated Boulder County and other regions of the state requires an evaluation and determination of the optimal division, joint use, and potential replacement of assets and facilities providing services both inside and outside Boulder city limits. * * * 5 A certified copy of the Declaratory Decision is attached hereto as Exhibit 3. 5 US.124016568.02 Commission approval proceedings over regulated property is a condition precedent to a condemnation action over the subject property.” December 18, 2013, Decision Denying City of Boulder’s Application for Rehearing, Reargument, or Reconsideration (Proceeding No. 13D-0498E, Decision No. C13-1550) (hereinafter “RRR”) at ¶¶ 19, 20 (emphasis added)6; see also id. ¶ 1 (“Because Colorado Supreme Court precedent interpreting Article XXV of the state constitution … validates Commission jurisdiction to approve the transfer of regulated property before a condemnation court acquires subject matter jurisdiction over the property, the Commission denies Boulder’s RRR.” (emphasis added)). This Court Affirms the PUC and Dismisses the City’s Prior Condemnation Action. The City sought certiorari review of the PUC Decisions in this Court, claiming that the PUC exceeded its jurisdiction when issuing the declaratory orders and that Boulder’s home rule powers pursuant to Article XX of the Colorado Constitution allowed it to condemn property free from PUC involvement.7 See Final Opinion at 7–8. In the Final Opinion, this Court affirmed the Declaratory Decision and the RRR, without qualification or exception. Id. at 12. The review action was assigned to Judge LaBuda, who rejected the City’s arguments and explained: It is necessary for the PUC to determine which entity will be providing service outside of the City and to then determine how to best allocate the property to accomplish service to the extraterritorial customers and the statewide power grid. In the event Public Service continues serving those outside of Boulder [as is the case], the Court finds that the property in question will not be easy to separate and may require technical expertise in determining the best method of separation in order to avoid negatively impacting the statewide energy grid. The PUC is best suited to exercise jurisdiction in this regard; when the General Assembly vested the PUC with 6 A certified copy of the RRR is attached hereto as Exhibit 4. 7 The district court “acts as an appellate body” when reviewing a PUC order. Lake Durango Water Co. v. Pub. Utils. Comm’n, 67 P.3d 12, 22 (Colo. 2003); see also C.R.S. § 40-6-115(1) (authorizing certiorari review by district court). 6 US.124016568.02 this jurisdiction in the Colorado constitution, it intended to provide a regulatory body with more expertise in administering utilities than the district court. * * * [T]he actual facilities to be taken cannot be identified until it is known what parts of the system will be retained by Public Service; only then can the proper assets be transferred to the City. * * * By requiring the PUC to determine the allocation and transfer of assets prior to the City’s condemnation, the parties avoid finding themselves in a situation where the City has condemned property to which it ultimately may not be entitled. Id. at 9, 10, 12 (“The Court hereby AFFIRMS the October 29, 2013 Decision No C13-1350 and the December 11, 2013 Decision No. C13-1550, both issued by the PUC.” (emphasis in original)). Based upon the Final Opinion, the Court also dismissed the City’s prior condemnation action, which the City had commenced while the appeal of the PUC’s decisions was pending. As the Condemnation Dismissal succinctly explained: The January 14, 2015 Order permits the Public Utility Commission to determine how facilities should be assigned, divided, or jointly used to protect the utility system’s effectiveness, reliability, and safety. The Court noted that such a determination must be made prior to the City’s condemnation of property for utility municipalization. Accordingly the Court GRANTS Respondents’ Motion to Dismiss and dismisses this matter without prejudice. Condemnation Dismissal at 1 (emphasis in original). The City did not appeal the Final Opinion or the Condemnation Dismissal. The Ongoing PUC Proceedings. On July 7, 2015, the City initiated the PUC proceedings that it must complete prior to 7 US.124016568.02 commencing an action to condemn electric distribution facilities in Boulder.8 After the PUC rejected the City’s first two utility plans, the City submitted a third application, nearly two years after it began the PUC proceedings. See generally May 12, 2017, Third Supplemental Verified Application of the City of Boulder, Colorado (Proceeding No. 15A-0589E) (“Third Application”). The PUC conditionally granted in part and denied in part the City’s Third Application. See generally Aug. 30, 2017, Decision Granting, in Part and with Conditions, and Denying, in Part, Third Supplemental Verified Application (“Third Application Order”).9 The Third Application Order made two high-level rulings relevant to this Motion to Dismiss. First, as to assets located outside of substations, the PUC held that the designation for potential transfer of those assets was subject to Commission approval of: (1) an agreement that “provides Public Service permanent non-exclusive easements and other necessary real property rights for the location of its electric facilities within Boulder’s city limits that are necessary for Public Service to provide service to its customers after separation”; (2) a corrected, complete, and accurate list of distribution assets and real property interests outside substations; and (3) one or more agreements for approval addressing “the payment by Boulder to Public Service of the costs incurred by Public Service to effectuate municipalization and the separation of Public Service’s system into two separate systems.” See, e.g., Third Application Order ¶ 5. Second, as to assets inside substations, the PUC denied the 8 The PUC docket is available here: https://www.dora.state.co.us/pls/efi/EFI_Search_UI.search. Enter “15A-0589E” into the “Proceeding Number” box, check the box next to “I’m not a robot,” and then click on the “Search” button. The extensive docket may take more than a minute to load. Subject to confidentiality restrictions, PSCo will provide the Court with copies of papers from this docket if requested to do so. 9 The Third Application Order appears as Exhibit 6 to the City’s First Amended Petition in Condemnation. 8 US.124016568.02 City’s Third Application. See, e.g., Third Application Order ¶ 6. In reaching this decision, the PUC concluded, “[w]e find that it is premature to designate any facilities inside the substations for potential transfer to Boulder from Public Service.” Id. In late-2018 and early-2019, the City made a series of filings intended to show compliance with the conditions necessary to obtain approval for the designation of assets for transfer outside substations. These filings included various agreements negotiated between PSCo and Boulder for approval by the Commission and City-updated lists of assets and real property interests. The agreements presented for approval have significant consequences to the condemnation action. For example, the parties submitted an Agreement for Payment of Costs (the “Cost Agreement”) addressing, among other things, the City’s responsibility to pay PSCo for $100 million or more in costs related to the separation of the two systems. The Cost Agreement is relied upon by the City numerous times in the Amended Petition to limit the scope of the condemnation and the City’s just compensation obligations. See, e.g., Am. Pet. ¶¶ 38, 43, 85–86. But the Cost Agreement by its express terms is not effective unless and until the PUC issues a final, non-appealable order approving the Agreement without modification.10 Were the PUC to reject or modify the terms of the Cost Agreement, the amount of compensation owed by the City in condemnation would skyrocket and the amount and character of evidence at trial would fundamentally change. Similar important condemnation consequences flow from other agreements still awaiting Commission approval.11 10A true and correct copy of the Cost Agreement is attached hereto as Exhibit 5; see § VII.A. 11 The Easement Sharing Agreement attached as Exhibit 5 to the Amended Petition governs the shared use of thousands of easements and facilities between PSCo and the City. The parties also negotiated an agreement providing PSCo rights to retain its own electric facilities within the City 9 US.124016568.02 By January of this year, significant disagreement concerning the City’s filings emerged between the City and various parties to the proceedings, including PSCo. Those disagreements focused primarily on the proper identification of real estate assets (the complete and accurate list specified in the second condition discussed above) and on what is required before the City can seek to condemn any assets within substations.12 As a result, the PUC stayed proceedings in order to give the City the opportunity to address the concerns and amend its filings. See, e.g., Feb. 8, 2019, Interim Decision Staying Proceeding and Requiring Filings (hereinafter “Stay Order”)13 ¶ 2. The PUC proceedings remain stayed and the PUC has not issued a final order approving the designation of assets for transfer either within or outside the substations. Rather than completing the necessary work and giving the PUC the opportunity to rule on the proposed designation of assets for transfer, the City filed this condemnation action. IV. GOVERNING STANDARDS “Whenever it appears by suggestion of the parties … that the court lacks jurisdiction of the subject matter, the court shall dismiss the action.” C.R.C.P. 12(h)(3) (emphasis added). Defendants bring such challenges pursuant to C.R.C.P. 12(b)(1). Tulips Invs., LLC v. State ex rel. Suthers, 340 P.3d 1126, 1131 (Colo. 2105) (“A 12(b)(1) motion to dismiss challenges a court’s subject matter post-separation. If either of these agreements is rejected or materially altered, a very different separation plan may be required and the character of the condemnation, the amount and character of evidence at trial, and the amount of compensation owed by the City would dramatically change. 12 See, e.g., Jan. 18, 2019, Notice of Public Service Company of Colorado’s Withdrawal from the Joint Motion for Modification of Commission Decision C17-0750, etc. (Proceeding No. 15A- 0589E) at 2; Jan. 25, 2019, Petition for Declaratory Orders with Regard to the Portion of Commission Decision C-17-0750 Concerning Public Service Assets (Real and Personal) Inside Substations (Proceeding No. 15A-0589E) at 1. 13 A true and correct copy of the Stay Order is attached hereto as Exhibit 6. 10 US.124016568.02 jurisdiction.”). The burden of demonstrating subject matter jurisdiction falls to the City. Arline v. Am. Fam. Mut. Ins. Co., 431 P.3d 670, 672 (Colo. App. 2018). The City enjoys no presumptions in its favor. See Medina v. State, 35 P.3d 443, 452 (Colo. 2001) (court weighs competing evidence rather than treating plaintiff’s allegations as true); see also Coquina Oil Corp v. Harry Kourlis Ranch, 643 P.2d 519, 522 (Colo. 1982) (courts resolve uncertainty as to condemnation power against the entity asserting the right to condemn). When ruling on a motion to dismiss for lack of subject matter jurisdiction, the Court may consider evidence outside of the pleadings; without converting the motion to one for summary judgment. Medina, 35 P.3d at 452. The existence of subject matter jurisdiction is a “threshold issue” for the Court. Stell v. Boulder Cnty. Dep’t of Soc. Servs., 92 P.3d 910, 914 (Colo. 2004). If jurisdiction is lacking, the case must be dismissed; no other action can be taken. See People in Interest of P.K., 411 P.3d 963, 968 (Colo. App. 2015) (“[A] lack of jurisdiction deprives the court of all authority to act—it is a quintessential threshold matter.”); In re Support of E.K., 410 P.3d 480, 482 (Colo. App. 2013) (“The court’s authority must be properly invoked before it can act ….”); People v. Widhalm, 991 P.2d 291, 293 (Colo. App. 1999) (“A court must always have jurisdiction to act. Thus, any action taken by a court when it lacks jurisdiction is a nullity.”); C.R.C.P. 12(h)(3) (court “shall dismiss” the action); see also 4 Colo. Prac., Civil Rules Annotated R 12 (4th ed.) (“Any proceedings that follow a court’s improper exercise of jurisdiction are a nullity and thus a waste of the parties’ time and resources.”). V. ARGUMENT The City is trying again to condemn PSCo’s electrical distribution facilities without first obtaining the required approvals from the PUC. While Colorado law is clear on this requirement, 11 US.124016568.02 the Court need not conduct a detailed review of this authority—Judge LaBuda has already done that and her prior rulings are binding on the City. Therefore, issue preclusion mandates dismissal of the City’s First Amended Petition in Condemnation due to lack of subject matter jurisdiction. 1. Issue Preclusion Bars this Lawsuit. The City has already had four opportunities to argue that it can proceed to condemnation prior to receiving approval from the PUC—twice at the PUC, once before this Court on appeal of those rulings, and in a prior condemnation case dismissed by this Court. Pursuant to Colorado’s issue preclusion doctrine, the Court should not give the City a fifth opportunity to litigate this issue. The doctrine of issue preclusion (historically called collateral estoppel) bars litigation of previously decided issues in certain circumstances. By barring successive litigation, the doctrine protects litigants from needless relitigation of the same issues, furthers judicial economy, and promotes the integrity of the judicial system by affirming that one can rely upon judicial decrees because they are final. The party seeking to assert issue preclusion to bar relitigation of an issue must show that: (1) the issue is identical to an issue actually litigated and necessarily adjudicated in the prior proceeding; (2) the party against whom estoppel was sought was a party or was in privity with a party to the prior proceeding; (3) there was a final judgment on the merits in the prior proceeding; and (4) the party against whom the doctrine is asserted had a full and fair opportunity to litigate the issues in the prior proceeding. Villas at Highland Park Homeowners Ass’n, Inc. v. Villas at Highland Park, LLC, 394 P.3d 1144, 1152 (Colo. 2017) (citations and quotations omitted). 14 14 Administrative actions are afforded the same preclusive effect as judicial proceedings. See Gallegos v. Colo. Ground Water Comm’n, 147 P.3d 20, 32 (Colo. 2006) (citing Indus. Comm’n of the State of Colo. v. Moffat County Sch. Dist. Re No. 1, 732 P.2d 616, 620 (Colo. 1987)). “In all 12 US.124016568.02 Here, all four requirements of issue preclusion have been met. First, the issue of whether the City can commence a condemnation action before completing PUC proceedings was central to the PUC declaratory proceedings and related district court proceedings and was squarely decided: “[I]t is necessary and appropriate for the PUC to determine how facilities should be assigned, divided, or jointly used to protect the system’s effectiveness, reliability, and safety. Such a determination must be made prior to the City’s condemnation of property for utility municipalization.” Final Opinion at 12; see also Bristol Bay Prods., LLC v. Lampack, 312 P.3d 1155, 1160 (Colo. 2013) (“In most cases, the issue raised in a later proceeding is found to be the same, or not to be the same, as the issue decided in the first proceeding without in-depth analysis.”). The City’s related condemnation Petition was also dismissed. Condemnation Dismissal at 1. Second, PSCo and the City were both parties to the proceedings that terminated with the Final Opinion. See Final Opinion at 1. Third, there was a final judgment on the merits—Judge LaBuda’s Final Opinion, which affirmed the PUC’s original Declaratory Decision and RRR.15 There was collateral actions or proceedings, the decisions of the commission which have become final shall be conclusive.” Colo. Rev. Stat. § 40-6-112. Therefore, a final judgment entered by the PUC is not subject to collateral attack in another proceeding. Lake Durango Water Co. v. Public Util. Comm’n, 67 P.3d 12, 22 (Colo. 2003). 15 Furthermore, Colorado law precludes the City from using this new condemnation lawsui t as a means to circumvent the prescribed procedures for the review of PUC decisions. C.R.S. § 40 -6- 115 and its predecessors provide the exclusive procedure for reviewing a PUC decision. See, e.g., Silver Eagle Servs. v. Pub. Utils. Comm’n, 768 P.2d 208, 209 (Colo. 1989); Pub. Serv. Co. of Colo. v. Pub. Utils. Comm’n, 765 P.2d 1015, 1017 n. 1 (Colo. 1988). If the City was unhappy with Judge LaBuda’s Final Opinion, its remedy lay in an appeal to the Supreme Court, the time for which has long since expired. C.R.S. § 40-6-115(5). As noted above, the City also did not seek review of the Third Application Order (which issued nearly 23 months ago) with either the PUC or the District Court. 13 US.124016568.02 also a final judgment dismissing the original condemnation action.16 Fourth, before the PUC and then on appeal to this Court, the City fully and fairly litigated the issue of whether it can commence a condemnation action before completing PUC proceedings, as the PUC and Court dockets reflect. See PUC Proceeding No. 13D-0498E docket and Boulder District Court Case No. 2014CV30890 docket. Because all four elements of issue preclusion have been satisfied, the City cannot relitigate the question of whether the district court has jurisdiction to hear its condemnation claim before the PUC proceedings are completed and the Commission determines how facilities should be assigned, divided, or jointly used. See O’Neill v. Simpson, 958 P.2d 1121, 1123 (Colo. 1998) (en banc) (issue preclusion applies to jurisdictional decisions). As the facts recited above demonstrate, the PUC has not issued a final decision approving the designation of any assets sought by the City for potential transfer. See, e.g., Stay Order ¶¶ 24–25 (observing that the City is still seeking final approval, the PUC needs to “better understand where Boulder is in its process of acquiring assets,” and ordering the City to work with the many parties to the PUC proceedings “to develop and to file a proposal for addressing and resolving all outstanding issues and pleadings”); June 19, 2019, Staff’s Response to Boulder’s Notice (Proceeding No. 15A-0589E)17 at 2 (recognizing that the PUC may be approaching the time when it can consider final t ransfer of assets but also observing that “serious problems lie ahead”). Accordingly, the Court must dismiss this lawsuit. See Condemnation Dismissal at 1. 16 Indeed, all four elements of issue preclusion independently have been satisfied in the context of the Court’s dismissal of the first condemnation lawsuit for lack of subject matter jurisdiction. 17 A true and correct copy of the Staff’s Response is attached hereto as Exhibit 7. 14 US.124016568.02 2. The City Must Obtain PUC Approval as a Precondition to Condemnation, and This Court Lacks Subject Matter Jurisdiction until It Does. Even if this Court were to look beyond the Final Opinion and Condemnation Dismissal, Colorado Supreme Court precedent mandates dismissal of this action for lack of subject matter jurisdiction. Courts have recognized that the PUC has considerable expertise in matters concerning utilities within the state, and judicial action that undermines the PUC’s authority is disfavored. See Integrated Network Servs., Inc. v. Pub. Utils. Comm’n, 875 P.2d 1373, 1377 (Colo. 1994); Van Wyk v. Public Serv. Co., 27 P.3d 377, 384 (Colo. 2001). Where, as here, the PUC has jurisdiction over the property that a condemnor seeks to acquire, a condemnation court lacks jurisdiction to proceed until the agency has acted. Colorado & S. Ry. Co. v. Dist. Ct. in and for Tenth Jud. Dist., 493 P.2d 657, 659 (Colo. 1972) (hereinafter “Southern Railway”).18 In Southern Railway, C&W Railway filed a condemnation case to acquire an easement over the railroad tracks of two other railroad companies (the “Petition ers”). C&W argued that it had selected a “suitable place” for the crossing and provided the legal description of the easement it sought to condemn. The Petitioners filed a motion to dismiss on the grounds that the condemnation court lacked jurisdiction over the subject matter of the petition because C&W had to first obtain an order from the PUC determining the particular point of crossing. The condemnation court denied the motion. The Petitioners then filed for a writ of prohibition, which the Colorado Supreme Court granted, holding that the court lacked subject 18 Other condemnation courts have also dismissed cases where another body has exclusive jurisdiction to determine an issue that is a necessary predicate to the condemnation case moving forward. See, e.g., In re Tonko, 154 P.3d 397, 400 (Colo. 2007) (condemnation court lacked subject matter jurisdiction because “the water court, not it, had jurisdiction to determine whether the [condemnor] had or could obtain an adjudicated water right, a requisite for maintaining their ditch right-of-way condemnation action”). 15 US.124016568.02 matter jurisdiction because the PUC had “the power to determine what property the condemning railroad [could] use as the ‘particular point of crossing.’” Id. Absent the PUC exercising its jurisdiction and deciding where the crossing must be placed, proceeding in condemnation would “put the cart before the horse.” Id. (“If the railroad acquires immediate possession of the property by eminent domain and the commission later determines the ‘particular point of crossing’ to be at another location . . . the railroad would have acquired land or an easement that it cannot use, and the one against whom the decree was entered would have had taken from it property actually not subject to condemnation.”). Thus, until the PUC exercises its jurisdiction to (i) finally determine how the existing integrated facilities will be assigned, divided, or jointly used in a manner that does not threaten service to the customers retained by PSCo or otherwise impair the state’s integrated electric grid and (ii) designates the specific assets both inside and outside substations for potential transfer to the City, there is no defined “property” that is the proper subject of this condemnation action. As Southern Railway recognized, without that, this Court cannot proceed.19 Here, the PUC has not yet analyzed whether the City has satisfied the conditions upon the potential designation of assets for transfer outside of substations (much less issued an order authorizing potential transfer) and has never even conditionally approved the potential designation of assets for transfer within substations, id. ¶ 6 (“We find that it is premature to designate any facilities inside the substations for potential transfer to Boulder from Public Service.”). In fact, the 19 Condemnation courts have similarly recognized that a condemnor is unable to establish the public purpose and necessity elements of a condemnation case in such circumstances. See, e.g., Pub. Serv. Co. of Colo. v. Shaklee, 784 P.2d 314, 317 n.3 (Colo. 1989), overruled on other grounds by Carousel Farms Metro. Dist. v. Woodcrest Homes, Inc., 442 P.3d 402 (Colo. 2019); Silver Dollar Metro. Dist. v. Goltra, 66 P.3d 170, 172 (Colo. App. 2002). 16 US.124016568.02 parties have not yet reached agreement, as required by the PUC, concerning numerous aspects of a potential substation asset transfer and negotiations regarding substation asset issues continue. Ultimately, it is critical to resolve the many outstanding regulatory issues pending before the PUC prior to condemnation for two reasons: First, as recognized in Southern Railway, a decision from the PUC is “absolutely essential to framing a material allegation—the legal description of the property sought to be acquired—in the action.” Id. at 659–660. That property, in turn, is the foundation against which legal challenges to the taking are measured, including whether the City has carried its burden of establishing that: 1. It has the legal authority to condemn the property; 2. There is a necessity for it to acquire the particular property; 3. The property sought to be taken will serve a public use or public purpose; and 4. It engaged in good faith negotiations to acquire the specific property at issue. See Shaklee v. Dist. Ct., 636 P.2d 715, 717–18 (Colo. 1981); Thornton v. Farmer’s Reservoir & Irrigation Co., 575 P.2d 382, 391–92 (Colo. 1978); Colo. State Bd. of Land Comm’rs v. Dist. Ct., 430 P.2d 617, 619 (Colo. 1967); Swift v. Smith, 201 P.2d 609, 615 (Colo. 1948) (each case describing condemnation prerequisites that must be proven by a condemnor). All of these legal issues turn on the division of property that can only be authorized by the entity with the technical expertise and sole jurisdiction to do so—the PUC. See Pub. Serv. Co. of Colo. v. Pub. Utils. Comm’n of State of Colo., 765 P.2d 1015, 1018–1019 (Colo. 1988) (holding that because of the expertise of the PUC, courts should not undertake to duplicate the evaluation and judgment of the PUC); Colo. Const. art. XXV (“[A]ll power to regulate the facilities, service and rates and charges [of electric utility systems] … is hereby vested in such agency of the State of Co lorado as the General Assembly shall by law designate [the PUC].”); C.R.S. 40-5-105(1); see also Final Opinion 17 US.124016568.02 at 12 (“By requiring the PUC to determine the allocation and transfer of assets prior to the City’s condemnation, the parties avoid finding themselves in a situation where the City has condemned property to which it ultimately may not be entitled.”). Second, the practical importance of the PUC’s approval of City plans prior to Boulder’s acquisition of any facilities cannot be overstated. Southern Railway involved a single easement to effectuate a railroad crossing. Here the subject matter involves, by the City’s own count, “over 100,000 pieces of equipment” that take thousands of pages to describe. See Am. Pet. ¶¶ 19, 21, 24. It also involves the separation and reintegration of complex interconnected electric networks in a manner that ensures ongoing safe and reliable service to the customers retained by PSCo and protects the larger grid.20 Many stakeholders, none of which currently are parties to this proceeding, but all of whom represent important interests related to the proposed separation, are involved in the PUC proceedings, including PUC staff, the Office of Consumer Counsel, IBM, Tri-State Generation and Transmission, Poudre Valley REA, and other customers.21 Moving forward with condemnation without the PUC’s final review and approval (and without the input of all key stakeholders) and allowing the City to simply take for itself whatever the City deems desirable to run its own municipal utility threatens the Commission’s ability to protect the safety, 20 The legislature has declared that the location, construction, and improvement of major electrical facilities are matters of statewide concern and that impacts on the electric grid in one location may have impacts on other areas of the state. C.R.S. § 29-20-108(1). 21 The Third Application Order did not provide that Boulder had to merely file documents its believes evidence satisfaction of the three conditions. Instead, the Third Application Order provided a 30-day period for any party to request a hearing on whether Boulder has met the conditions and for the Commission to issue a final decision on whether the conditions have been met. Third Application Order ¶¶ 162–63. A hearing has been requested as to several issues by the parties, although proceedings remain stayed. 18 US.124016568.02 effectiveness, and reliability of service to the remaining customers and to the statewide electric network. See Final Opinion at 12 (“[I]t is necessary and appropriate for the PUC to determine how facilities should be assigned, divided, or jointly used to protect the system’s effectiveness, reliability and safety.”). VI. CONCLUSION For the reasons set forth above and the earlier decisions of the Court, the City’s First Amended Petition in Condemnation should be dismissed. DATED this 5th day of August, 2019. FAEGRE BAKER DANIELS LLP /s/ John R. Sperber John R. Sperber, Atty. Reg. No. 22073 Brandee L. Caswell, Atty. Reg. No. 30706 Matthew D. Clark, Atty. Reg. No. 44704 Attorneys for Respondent Public Service Company of Colorado 19 US.124016568.02 CERTIFICATE OF SERVICE The undersigned certifies that on August 5, 2019, a copy of the foregoing MOTION TO DISMISS FIRST AMENDED PETITION IN CONDEMNATION FOR LACK OF SUBJECT MATTER JURISDICTION PURSUANT TO COLO. R. CIV. P. 12(b)(1) was served on all counsel of record by the methods listed below: Attorneys for Petitioner, City of Boulder: Office of the Boulder City Attorney Thomas A. Carr Kathleen E. Haddock P.O. Box 791 Boulder, CO 80306 carrt@bouldercolorado.gov haddockk@bouldercolorado.gov ( ) First Class Mail ( ) Hand Delivery ( ) Overnight Delivery (X ) CCES ( ) E-Mail Hamre, Rodriguez, Ostrander & Dingess, PC Donald M. Ostrander Richard F. Rodriguez 3600 S. Yosemite Street, Suite 500 Denver, CO 80237 dostrander@hrodlaw.com rrodriguez@hrodlaw.com ( ) First Class Mail ( ) Hand Delivery ( ) Overnight Delivery (X ) CCES ( ) E-Mail Attorney for Defendant, Paul Weissmann, in his official capacity as Treasurer of Boulder County Olivia D. Lucas Boulder County Attorney P.O. Box 471 Boulder, CO 80306 olucas@bouldercounty.org ( ) First Class Mail ( ) Hand Delivery ( ) Overnight Delivery (X ) CCES ( ) E-Mail /s/Lisa Riggenbach Legal Administrative Assistant EXHIBIT 1 TO MOTION TO DISMISS FIRST AMENDED PETITION IN CONDEMNATION FOR LACK OF SUBJECT MATTER JURISDICTION PURSUANT TO COLO. R. CIV. P. 12(B)(1) 1 This matter comes before the Court on the City of Boulder’s (the “City” or “Boulder”) Petition for Writ of Certiorari Review of Decision No. C13-1350 and Decision No. C13-1550 issued by the Colorado Public Utilities Commission (the “PUC” or the “Commission”). The City filed its Opening Brief on May 14, 2014; the PUC, Public Service Company of Colorado (“Public Service”), and Colorado Office of Consumer Counsel each filed an Answer Brief on June 25, 2014; the City filed a Reply Brief on July 23, 2014; after receiving leave of court, the PUC and Public Service each filed Sur-Reply Briefs on August 8, 2014; and the City filed a Response to Sur-Reply Briefs on August 21, 2014. On October 16, 2014, this matter was District Court, Boulder County, State of Colorado 1777 Sixth Street, Boulder, Colorado 80306 (303) 441-3744 THE CITY OF BOULDER, a home rule City and a Colorado Municipal Corporation, PETITIONER, v. COLORADO PUBLIC UTILITIES COMMISSION; JOSHUA B. EPEL and PAMELA J. PATTON, in their official capacities as members of the Commission; GLENN A. VAAD, in his official capacity as a member of the Commission and as successor to former Commissioner James K. Tarpey, in his official capacity as a member of the Commission, RESPONDENTS, and PUBLIC SERVICE COMPANY OF COLORADO; and COLORADO OFFICE OF CONSUMER COUNSEL, INVERVENORS. Case Number: 14CV30047 Division 2 Courtroom Q ORDER RE: JUDICIAL REVIEW OF THE COLORADO PUBLIC UTILITIES COMMISSION DECISIONS DATE FILED: January 14, 2015 CASE NUMBER: 2014CV30047 2 reassigned to the undersigned judicial officer. After carefully considering the extensive pleadings filed, the exhibits, and the applicable law, the Court hereby enters the following Order: I. BACKGROUND In November 2011, Boulder voters approved a ballot measure that authorized the creation of a municipal utility subject to certain conditions. The intended municipal utility’s service area includes the City of Boulder as well as part of unincorporated Boulder County, as described in a July 2013 Boulder City Council memorandum and attached map. In August 2013, the Boulder City Council adopted a City Charter Amendment allowing the City to include non-resident customers in the City’s utility service area. Also in August 2013, the City Council adopted an ordinance that authorized the acquisition, by purchase or condemnation, of the Public Service Company’s utility system that currently serves the intended municipal utility’s service area. The utility system the City seeks to acquire includes four substations, power lines and poles, a 115kV transmission loop, and other facilities. Public Service correctly maintains that many of these facilities serve customers outside the City as well as customers inside the City, and are part of a larger distribution system that serves other parts of Colorado. In November 2013, Boulder voters approved acquisition of the Public Service utility system located in the municipal utility’s intended service area if bonds for the purchase of same did not exceed $214 million. Boulder, as a home rule city, has a constitutional right to use the power of eminent domain to create and operate a municipal utility. Colo. Const. art. XX, §§ 1 and 6. Accordingly, if Boulder were seeking to create a municipal utility to serve City of Boulder residents onl y, it could do so without any PUC involvement. City of Ft. Morgan v. Colo. Pub. Utils. Comm’n, 159 P.3d 87 (Colo. 2007). Respondents do not dispute Boulder’s authority to create a municipal utility and to condemn facilities, wherever located, to create a utility that serves Boulder residents only. If Boulder residents are not satisfied with the services provided by the municipal utility, they may “demonstrate their discontent at the next municipal election.” K.C. Elec. Ass’n v. Pub. Utils. Comm’n, 550 P.2d 871, 873 (Colo. 1976). There is no need for PUC protection because the city’s electorate exercises the ultimate control over a city-run utility. Id. at 874. However, when a municipal utility serves customers who are not residents of the municipality, it is subject to the same PUC control and supervision that applies to private public utility owners. City of Lamar v. Town of Wiley, 248 P. 1009 (Colo. 1926); see also Colo. Const. art. XXV (vesting the PUC with broad authority to regulate public utilities). The rationale for PUC regulation of a municipal utility serving non-residents was explained in K.C. Electric, 550 P.2d at 874: When a municipally owned utility provides utility service outside the municipality, those receiving the service do not have a similar recourse on 3 election day. They have no effective way of avoiding the possible whims and excesses of the municipality in the absence of state regulation by the PUC. Boulder’s municipalization plans assume its utility will provide service to at least 5,8001 customers who are not Boulder residents. In February 2013, Boulder sent letters to potential customers who reside outside the city limits; advising them that the city utility, if created, would provide their electrical service. The PUC issues Certificates of Public Convenience and Necessity (“CPCN”) that authorize an entity to provide electric service in a specified geographic area. Currently, Public Service holds the CPCN for the geographic area outside the City of Boulder that Boulder intends to serve with its municipal utility. The Respondents do not object to transfer of the portion of the CPCN that relates to the City of Boulder, but they do object to transferring the portion of the CPCN that relates to customers in unincorporated Boulder County. The City has reserved its right to take, by eminent domain, Public Service’s CPCN, and to seek its own CPCN, to serve those customers outside the City of Boulder—the extraterritorial customers.2 II. THE PUC DECISIONS In May 2013, Public Service filed a Petition with the PUC requesting declaratory rulings about Boulder’s stated intention to obtain the extraterritorial customers through condemnation of its CPCN and condemnation of the facilities that serve those customers. The Petition requested five declaratory orders: (1) If a municipal utility seeks to serve customers located outside the city's boundaries, it is subject to the certificate jurisdiction of the Commission. (2) The Commission has already granted to Public Service a certificate of public convenience and necessity covering the territory in Boulder County, outside the Boulder city boundaries, in which the 5,800 customers are located; (3) Under Colorado law, there can only be one certificated utility per geographic area; (4) The certificate of an existing utility cannot be taken away without due process of law which requires a hearing before this Commission and proof by substantial 1 Public Service notes that the term “5,800 customers” refers to 5,800 meters, which translates to service for over 11,000 persons. Answer Br. at 5. Since the PUC hearing, Public Service revised its estimate of affected meters to 7,015. Id. 2 The Court notes the City’s shifting position with regard to Public Service’s CPCN throughout its briefings for this appeal. In its Opening Brief, the City states that its intends to acquire, by negotiation with Public Service or by eminent domain, Public Service’s CPCN to serve those outside the City of Boulder. Opening Br. at 4. In its Reply Brief, the City noted that in its Petition in Condemnation in case number 2014CV30890, it did not list any portion of Public Service’s CPCN in the list of property and facilities to be acquired. Reply Br. at 14. In its Response to Sur - Reply Briefs, the City states that while it did not include Public Service’s CPCN in the Petition in Condemnation, it has not withdrawn the same CPCN issue from the instant appeal. Resp. t o Sur-Reply at 1. 4 evidence that the existing certificated public utility is unwilling or unable to serve the certificated area; and (5) The need to construct replacement facilities as a result of actions taken by a challenging utility does not constitute an inability to serve. The City admitted the first three statements. The PUC orders at issue in this case addressed the fourth and fifth statements. On October 29, 2013, the PUC issued Decision No. C13-0498E, that states: Boulder’s plans to condemn Public Service’ CPCN to serve unincorporated Boulder County do not affect the Commission’s authority over the transfer of the CPCN or the applicable standards. The statute upon which Boulder relies as granting a property interest to a CPCN, § 40-5-105, C.R.S., conditions any sale or assignment of a CPCN upon Commission approval and upon such terms and conditions as the Commission may prescribe. PUC Decision at 10. Boulder agrees that a transfer of Public Service’s CPCN to the City is subject to Commission approval. “[T]he City understands that the Commission ultimately will need to approve the transfer of the portion of the Company’s CPCN that includes out of city customers.” Opening Br. at 4. Boulder disagrees with the following Commission rulings: If Boulder seeks to condemn facilities, wherever located, that Public Service currently uses, at least in part, to serve customers located outside of Boulder’s city limits, this Commission must have the ability to investigate and determine how the facilities should be assigned, divided, or jointly used to protect the system’s effectiveness, reliability, and safety, as well as any other matter affecting the public interest. Thus, a Commission proceeding addressing these facilities should precede a condemnation action to allow the district court to rule on the public need and value of facilities that the Commission determines may be the subject of transfer to Boulder. The potential that Boulder may file a condemnation action to obtain Public Service’s CPCN for unincorporated Boulder County does not affect the Commission’s regulatory authority, the doctrine of regulated monopoly, or the standards governing transfer of Public Service’s CPCN. Further, Commission proceedings addressing the transfer of Public Service’s CPCN or other plant, equipment, and facilities used to provide service to customers located in unincorporated Boulder County are to be completed before Boulder initiates a condemnation action for such property. 5 The City filed an Application for Rehearing, Reargument, or Reconsideration. The PUC issued Decision No. C13-1550 denying that Application; it stated the Commission will decide what property rights Boulder may acquire and Boulder must obtain PUC approval before it begins a condemnation action. That decision was adopted on December 11, 2013. These are the rulings that are the subject of this judicial review. III. STANDARD OF REVIEW “The PUC order is equivalent to a trial court decision, and in reviewing a PUC order, the district court acts as an appellate body.” Lake Durango Water Co. v. Pub. Utils. Comm’n, 67 P.3d 12, 22 (Colo. 2003). The district court’s role is to “ensure that the Commission has regularly pursued its authority, that its decisions are just and reasonable and that the Commission's conclusions are ‘in accordance with the evidence.’” City of Montrose v. Pub. Utils. Comm’n, 629 P.2d 619, 622 (Colo. 1981) (quoting § 40-6-115(3), C.R.S.). The party objecting to a Commission decision has the burden of proving that the decision is unlawful. CF&I Steel, L.P. v. Pub. Utils. Comm’n, 949 P.2d 577, 585 (Colo. 1997). When a party challenges a Commission decision based on a violation of constitutional rights, as Boulder does here, “the district court shall exercise an independent judgment on the law and the facts.” § 40-6-115(2), C.R.S. The court decides matters of law de novo. Pub. Serv. Co. v. Trigen-Nations Energy Co., 982 P.2d 316, 326 (Colo. 1999). “Upon review, the district court shall enter judgment either affirming, setting aside, or modifying the decision of the commission.” § 40-6-115(3), C.R.S. IV. THE PARTIES’ POSITIONS The City objects vigorously to the sequence of events ordered by the Commission. The City maintains that Commission approval as a pre-condition to condemnation disregards and interferes with its constitutional right of eminent domain. Boulder asserts it should be free to proceed with eminent domain action before seeking any approval from the PUC. Boulder has reserved its right to obtain Public Service’s CPCN and facilities by condemnation.3 Boulder would then seek PUC approval of an amended CPCN that is consistent with the condemnation court orders. The Commission maintains Boulder does not have an unfettered right to condemn and acquire fundamental components of the electric grid serving communities outside Boulder. The Commission notes it is mandated to ensure safety and reliability of the statewide network. The Commission asserts it has the authority to determine which provider to certificate in unincorporated Boulder County; Boulder does not have the right to assume it will take whatever service area it deems fit to take. 3 The City filed for condemnation on July 17, 2014 and did not request condemnation of Public Service’s CPCN at that time. See supra footnote 2. Boulder asserts it would seek the PUC’s regulatory review following the condemnation. 6 V. ANALYSIS A. Constitutional Authority Boulder, a home rule city, has a constitutional right to use the power of eminent domain to create and operate a municipal utility. The Colorado Constitution expressly grants home rule cities the power, “within or without [their] territorial limits to . . . condemn and . . . operate . . . public utilities . . . and everything required therefore.” Colo. Const. art. XX, §§ 1 and 6.4 The Respondents do not dispute Boulder’s authority to establish a municipal utility to serve residents within the city limits, nor do Respondents dispute Boulder’s authority to condemn property needed to create the utility that would serve Boulder’s residents, including property located outside the city limits. The Respondents do dispute Boulder’s assertion that its eminent domain power is superior to the Commission’s constitutional authority as it relates to customers located outside the City or to facilities that affect customers outside the City or the statewide utility network. Article XXV of the Colorado Constitution vests the Commission with “all power to regulate the facilities, service and rates and charges . . . of every . . . public utility” operating within the state. Colo. Const. art. XXV. Article V, section 35 states, “[t]he general assembly shall not delegate to any special commission, private corporation or association, any power to make, supervise or interfere with any municipal improvement, money, property or effects, whether held in trust or otherwise, or to levy taxes or perform any municipal function whatever.” This section has been interpreted as pertaining to public utilities operating within municipal boundaries. City of Ft. Morgan, 159 P.3d at 96. The PUC is vested with broad authority to regulate public utilities in this state and it has considerable discretion in its choice of the means to accomplish its functions. Colo. Const. art. XXV; § 40-4-101, C.R.S.; Mountain States Tel. & Tel. Co. v. Pub. Utils. Comm’n, 763 P.2d 1020 (Colo. 1988); City of Montrose v. Pub. Utils. Comm'n, 629 P.2d 619 (Colo. 1981). The Court must evaluate the proper process by which to address these distinct constitutional rights under Articles XX and XXV. The Court must review the rights provided to each party under the Colorado Constitution—the City’s right to eminent domain and the PUC’s right to regulate public utilities. The pivotal question then is whether these constitutional rights in this instance are in conflict or may coexist. The Court must interpret the application of these constitutional rights under the facts of this case. It is clear that the PUC does not have jurisdiction to exercise its authority under Article XXV when a municipality operates a utility solely within its boundaries under Article XX. City of Loveland v. Pub. Utils. Comm’n, 580 P.2d 381, 383 (Colo. 1978); City and Cnty. of Denver v. Pub. Utils. Comm’n, 507 P.2d 871, 874-75 (Colo. 1973); Town of Holyoke v. Smith, 226 P. 158, 161 (Colo. 1924). However, municipal utilities servicing areas outside of the boundaries of the municipality are subject to the jurisdiction of the PUC. Loveland, 580 P.2d at 383; City and 4 The City also claims a franchise and statutory right to purchase or condemn utility systems. In this case, the franchise has expired; accordingly, any rights conferred by the franchise have likewise expired. The statutory right is based on section 31-15-707, C.R.S., which provides that municipalities may acquire utility systems by purchase or condemnation after the franchise has been in effect for a given number of years. 7 Cnty. of Denver, 507 P.2d at 875. This proposition is true even if the municipality is providing service extraterritorially in connection with providing service within the city—the municipality is still treated as a privately-owned public utility. Loveland, 580 P.2d at 384. Therefore, the PUC’s right to regulate a public utility is of utmost importance and will not be overcome by a municipality’s exercise of its right to condemn. In assessing the operation of utilities outside the boundaries of a municipality, “the PUC must . . . be allowed the power to resolve jurisdictional disputes between municipalities and private utilities companies over who is to serve areas outside municipal boundaries.” Id. at 385. The PUC’s right to exercise jurisdiction over a municipality providing services to customers outside of the municipality is important to protect those who do not have voting rights within the municipality. See K.C. Elec., 550 P.2d at 874. The City characterizes the extraterritorial customers as “incidental” and asserts they represent only 3 per cent of the customer load. Originally the number of extraterritorial customers was quantified at 7,800; it has since been revised to a greater number. The Court finds the number of customers outside the city limits is neither dispositive nor persuasive for the arguments presented by the City or the PUC ; what matters is the fact that Boulder seeks to include non-resident customers in its service area. Service to non-resident customers thus invokes PUC jurisdiction and regulation. B. The Doctrine of Regulated Monopoly “Colorado has long been dedicated to the principle of ‘regulated monopoly’ in the conduct of public utilities operations. Pub. Serv. Co. of Colo. v. Pub. Utils. Comm’n of the State of Colo., 765 P.2d 1015, 1021 (Colo. 1998). “After a utility has been assigned a specific territory, no other utility may provide service in that territory unless it is established that the certificated utility is unable or unwilling to provide adequate service. Once an area has been certificated to one utility, it and it alone has the right to serve the future needs of that area provided it can do so. This is essential to the doctrine of regulated monopoly in Colorado. This exclusive right to serve an area is a property right which cannot be affected except by due process of law.” Id. (internal citations omitted). Therefore, only one entity may hold a CPCN to provide utilities to a designated geographic area. Public Services currently holds the CPCN to provide utilities to unincorporated Boulder. Boulder asserts it has the authority to take Public Service’s CPCN for non-residents by eminent domain. Such assertion would reduce the PUC’s authority to regulate services and facilities for those extraterritorial customers to a ministerial role. The Court finds this is not consistent with Article XXV of the Colorado Constitution or the doctrine of regulated monopoly. C. Right to Choose Property for Condemnation The City claims the PUC exceeded its authority when it ruled that the “[PUC] must have the ability to investigate and determine how the facilities should be assigned, divided, or jointly used to protect the system’s effectiveness, reliability, and safety, as well as any other matter affecting the public interest.” Decision at 13. Similarly, the City claims the PUC exceeded its authority when it ruled that PUC proceedings addressing the transfer of Public Service’s CPCN or other plant, equipment, and facilities used to provide service to customers located in unincorporated Boulder County are to be completed before Boulder initiates a condemnation 8 action for such property. Id. at 12. The City maintains these decisions “threaten to block or limit the electric utility project approved by the Boulder voters in 2011 and 2013. Opening Br. at 1. The City also maintains the PUC rulings “interfere with the City’s constitutional authority to acquire the electric system serving the City.” Id. Boulder repeatedly characterizes the PUC action as abrogating its constitutional right to eminent domain. The Court is not persuaded. The PUC action only delays Boulder’s constitutional right to eminent domain, a delay that would necessarily occur at some point in time prior to finalizing the utility municipalization, to provide PUC its constitutional right to investigate and determine how the facilities should be assigned, divided, or jointly used to protect the system’s effectiveness, reliability, and safety, as well as any other matter affecting the public interest. The City claims the City, not the PUC, has the right to determine which property to acquire. Boulder states “condemnation is ‘an essential part of the power of eminent domain.’” City of Thornton v. Farmers Reservoir & Irrigation Co., 575 P.2d 382, 389 (Colo. 1978). The City asserts that “[i]n Thornton v. Farmers, the Supreme Court held that which utility assets a home rule city may condemn is a matter for the city and not the Commission.” Opening Br. at 10-11. The Court does not find the Thornton case stands for that proposition. Thornton involved a home rule city’s eminent domain action to condemn certain water and water rights, and ditches and ditch rights. Thornton, 575 P.2d at 382. The case examined the city’s right of eminent domain vis a vis the Water Rights Condemnation Act. Id. at 386. That Act provided for the appointment of three commissioners to determine the issue of necessity in an eminent domain action; the “commissioners” referred to were members of that three person commission. Id. The Act also prohibited condemnation of water rights for future use in excess of 15 years. Id. The cited section of Thornton, discusses why the Act’s provision for commissioners to determine necessity and the limit on condemnation based on the number of years are unconstitutional. Id. at 388-90. In Thornton, the Court found that the statutory authority of the appointed commissioners was unconstitutional because it conflicted with the constitutional rights of home rule cities with regard to eminent domain. Id. at 388. Here, the PUC is vested with its own constitutional authority to regulate public utilities, a right not conferred on the commissioners in Thornton. Accordingly, the PUC, a state regulatory commission vested with constitutional authority, has greater authority than the commissioners in Thornton and such constitutional authority is not necessarily overcome by a home rule city’s right to eminent domain when the exercise of Boulder’s right impacts extraterritorial customers and the statewide energy grid. The City also relies on Public Service Company of Colorado v. City of Loveland, 245 P. 493 (Colo. 1926), to support its assertions that it has the right to choose which property to acquire and condemn. In that case, the City of Loveland brought an eminent domain proceeding against the Public Service Company to acquire an electric lighting plant owned by the company. Id. at 495. The city did not need all of the property owned by the company, sp ecifically a certain substation, the real estate upon which it stood, and certain transmission lines, and excluded these items from the condemnation. Id. at 496. Public Service argued that the city must take the entire plant if it takes anything. Id. at 499. The Supreme Court disagreed, stating “the necessities and requirements of the city . . . is the determining factor as to what shall be taken.” Id. The Court observed the company will receive compensation for the value of what the city takes and 9 compensation for any damage to the residue. Id. This Court notes that, in this Loveland case, it was easy to separate the property the city wanted to take from the property it did not want to take and that the property in question was intended to provide services within the municipality. Boulder also cites to City of Loveland, 580 P.2d at383: “The PUC may not interfere with municipal decisions about purchasing, selling or building public utilities facilities.” That is an accurate quote; however, Boulder fails to mention that it appears in a paragraph discussing a municipal utility operating solely within its boundaries. The case at hand is distinguished from many of the eminent domain cases cited by the City because the property to be condemned is less identifiable. Boulder asserts it is clearly identifiable because it is the power system currently being used to deliver power to its planned service area. However, the power system is intertwined with the system that provides service to extraterritorial customers and the statewide energy grid. In making this argument, Boulder assumes it will be providing service to those customers outside of the City that receive service through the same power system. Public Service still holds the CPCN to provide service to the extraterritorial customers. Respondents correctly maintain that Boulder cannot appropriate the Public Service customers in unincorporated Boulder County as there has been no evidence or assertion that Public Service is unable or unwilling to provide adequate service and therefore retains the right to do so.5 The Court proceeds under the assumption that Public Service maintains its right to provide service outside of the municipality unless and until the PUC determines whether the CPCN will be transferred. It is necessary for the PUC to determine which entity will be providing service outside of the City and to then determine how to best allocate the property to accomplish service to the extraterritorial customers and the statewide power grid. In the event Public Service continues serving those outside of Boulder, the Court finds that the property in question will not be easy to separate and may require technical expertise in determining the best method of separation in order to avoid negatively impacting the statewide energy grid. The PUC is best suited to exercise jurisdiction in this regard; when the General Assembly vested the PUC with this jurisdiction in the Colorado Constitution, it intended to provide a regulatory body with more expertise in administering utilities than the district court. D. Regulation of Asset Transfer and Condemnation In reaching its determination, the Court relies, in part, on Colorado and Southern Railway Company v. District Court, 493 P.2d 657 (Colo. 1972). In this case, the Colorado and Southern Railway Company filed a condemnation action in district court to acquire property for a railroad crossing that crossed the tracks of two other railroads. Id. at 658. The location of the crossing was subject to PUC approval. Id. at 659. The Colorado Supreme Court held the district court did not have subject matter jurisdiction to proceed in the condemnation case because the PUC first had to determine where the crossing would be located. Id. The Court stated, “the Public 5 The only assertion that Public Service is unable to provide service to extraterritorial customers is Boulder’s argument that if it obtained the CPCN for unincorporated Boulder, Public Service would be unable to provide service to those customers. 10 Utilities Commission . . . has the power to determine what property the condemning railroad can use as the particular point of crossing. It follows logically then that the commission—not the railroad—determines what property the railroad requires.” Id. at 659. The Court noted that the property had to be identified in the eminent domain complaint and the eminent domain court could not assess just compensation until the property was identified. Id. “Any other construction . . . would present the classic ‘cart before the horse’ situation.” Id. Although in Colorado and Southern Railway, the property at issue was a single railroad crossing, this case provides significant support for the PUC’s authority to identify the specific property for condemnation, prior to the actual condemnation. In holding that the PUC must identify the property for condemnation, even when the subject property is minimal, it follows that the PUC would have the authority to identify the property for condemnation when there is a large amount of property in question. This holds true particularly when such property provides service to at least 5,800 extraterritorial customers and impacts the statewide energy grid over which the PUC clearly has regulatory authority. The City attempts to distinguish the Colorado and Southern Railway case by arguing that the location of the railroad crossing had to be identified prior to the condemnation action whereas here, the location of the property for condemnation is already known. While accurate, the Court finds that Colorado and Southern Railway still governs the matter at hand. Although the location of the property is known, the actual facilities to be taken cannot be identified until it is known what parts of the system will be retained by Public Service; only then can the proper assets be transferred to the City. A similar proposition requiring commission approval prior to the transfer of assets is set forth in Mountain States Telephone and Telephone Company v. Public Utilities Commission, 763 P.2d 1020, 1023 (Colo. 1988), which involved an asset transfer from Mountain Bell to U.S. West Direct. Mountain Bell was a telephone company regulated by the PUC and it did not obtain PUC approval prior to the asset transfer. Id. at 1024. The PUC ordered Mountain Bell to reacquire the assets; the Court upheld the PUC’s decision. Id. at 1028. Further, section 40-5-105(1), C.R.S., permits the sale, assignment, or lease of a CPCN only upon authorization by the PUC and upon the terms and conditions set forth by the PUC. Boulder seeks to serve unincorporated Boulder through transfer of the CPCN; there is no legal authority to indicate such a transfer is not subject to this statutory provision. Boulder argues that Miller v. Public Service Company, 272 P.2d 283 (Colo. 1954), supports its position that condemnation may occur prior to PUC approval. In Miller, the Public Service sought to condemn land to construct a new generating plant. Id. at 284. The landowner argued that Public Service could not condemn his property because Public Service had not yet obtained a certificate of necessity from the PUC. Id. at 285. The Colorado Supreme Court found in favor of Public Service, stating, “[t]he so-called certificate is only a permit or license to use and enjoy land that has been condemned; it is not a condition precedent to the right to condemn.” Id. This case does not govern the matter at hand because here the City is attempting to condemn utility infrastructure already owned by Public Service, rather than land on which to build utility infrastructure. An entity is only required to fist obtain a CPCN when the property to be condemned is property over which the PUC already has authority. Here, the property to be 11 condemned is clearly already under PUC’s authority, as a CPCN is already assigned to Public Service and therefore, Boulder must obtain a CPCN transfer prior to condemnation. The City addressed at length its power to condemn extraterritorial property. The Court agrees the City has the power to condemn extraterritorial property, and the Respondents do not contest that fact. See, e.g., Town of Telluride v. San Miguel Valley Corp. 185 P.3d 161 (Colo. 2008). In Telluride, the Court found a statute that prohibited home rule cities from condemning extraterritorial land for open space and park purposes was unconstitutional because it abrogated the eminent domain power granted to home rule cities by article XX of the Colorado Constitution. Id. at 163. In a footnote, the Court stated, “[o]ur past cases indicate that, although the legislature may not prohibit the exercise of article XX powers, it may regulate the exercise of those powers in areas of statewide or mixed state and local concern. Therefore, the analysis of competing state and local interests would be appropriate in a case involving a statute which merely regulates home rule municipalities' exercise of their constitutional powers.” Id. at 170, n.8 (emphasis in the original). The Court finds that Telluride does not provide the City unfettered power to condemn property necessary for utility municipalization. Unlike in Telluride, the property the City desires to condemn provides service outside of the municipality and the PUC has the authority under the Colorado Constitution, not just a statute, to govern the provision of utilities to extraterritorial customers and state interests. Boulder has a constitutional right to condemn facilities in unincorporated Boulder County for its city utility municipalization, but it does not have a constitutional right to usurp the PUC’s constitutional right to regulate facilities and services that serve utility customers in unincorporated Boulder County. Further, because of the effect that transfer of the CPCN would have on extraterritorial customers, this is a matter of mixed state and local concern, which the PUC has the right to regulate as set forth above. This does not prevent the City from ultimately condemning property to municipalize the utility, but rather requires the PUC to make a determination regarding allocation prior to the condemnation. Public Service asked the PUC to enter a declaratory judgment that the need to construct replacement facilities as a result of actions taken by a challenging utility does not constitute an inability to serve. The PUC now asks this Court to make the same declaratory judgment. The Court leaves this initial determination to the PUC, a regulatory agency that has the expertise to make such a determination. VI. CONCLUSION Under the doctrine of regulated monopoly, which governs PUC regulations, Boulder and Public Service cannot simultaneously serve the same geographic region, in this case the section of unincorporated Boulder County that Boulder included in its acquisition area. Only one entity may hold the CPCN for a specific geographic location. Here, no evidence has been set forth to show that Public Service is unable or unwilling to serve unincorporated Boulder and therefore maintains a property right to do so, which the City cannot single-handedly appropriate despite its constitutional rights under Article XX of the Colorado Constitution. The City’s constitutional right to eminent domain over property outside of its territory does not extend to serving those 12 outside the municipality. The City’s constitutional right is not unfettered because the PUC has constitutional authority to regulate public utilities for those outside the municipality. This limitation provides a certain level of protection for those who have no vote, and therefore no voice, within a municipality. The PUC has the authority to regulate public utilities and the facilities, which provide service within the City of Boulder as well as unincorporated Boulder. The City has the right to create a municipal utility to serve its citizens. These facilities are intimately intertwined. Therefore, it is necessary and appropriate for the PUC to determine how facilities should be assigned, divided, or jointly used to protect the system’s effectiveness, reliability, and safety. Such a determination must be made prior to the City’s condemnation of property for utility municipalization. This finding does not abrogate the City’s constitutional right to eminent domain, but rather just delays the City’s constitutional right, a delay that would necessarily occur at some point in the process. By requiring the PUC to determine the allocation and transfer of assets prior to the City’s condemnation, the parties avoid finding themselves in a situation where the City has condemned property to which it ultimately may not be entitled. The Court hereby AFFIRMS the October 29, 2013 Decision No. C13-1350 and the December 11, 2013 Decision No. C13-1550, both issued by the PUC. DATED: 1/14/15 BY THE COURT Judith L. LaBuda District Court Judge EXHIBIT 2 TO MOTION TO DISMISS FIRST AMENDED PETITION IN CONDEMNATION FOR LACK OF SUBJECT MATTER JURISDICTION PURSUANT TO COLO. R. CIV. P. 12(B)(1) District Court, Boulder County, State of Colorado 1777 Sixth Street, Boulder, Colorado 80302 (303) 441-3744 ▲ COURT USE ONLY ▲ Petitioner: THE CITY OF BOULDER, a Home Rule City and a Colorado Municipal Corporation, v. Respondents: PUBLIC SERVICE COMPANY OF COLORADO, a Colorado Corporation; XCEL ENERGY INC.; and BOB HULLINGHORST, in his official capacity as Treasurer of Boulder County. Case Number: 2014CV30890 Division 2 Courtroom Q ORDER RE: RESPONDENTS’ PUBLIC SERVICE COMPANY OF COLORADO AND XCEL ENERGY INC.’S MOTION TO DISMISS UNDER C.R.C.P. 12(b)(1) FOR LACK OF SUBJECT MATTER JURISDICTION This Matter comes before the Court on Respondents’ Public Service Company of Colorado and Xcel Energy Inc.’s August 12, 2014 Motion to Dismiss Under C.R.C.P. 12(b)(1) For Lack of Subject Matter Jurisdiction. Petitioner filed a Response on September 2, 2014, to which Respondents filed a Reply on September 9, 2014. Having considered the pleadings and applicable case law, the Court finds and rules as follows: On January 14, 2015, the Court affirmed the Public Utility Commission’s October 29, 2013 and December 11, 2013 Decisions in case 2014CV30047. The January 14, 2015 Order permits the Public Utility Commission to determine how facilities should be assigned, divided, or jointly used to protect the utility system’s effectiveness, reliability, and safety. The Court noted that such a determination must be made prior to the City’s condemnation of property for utility municipalization. Accordingly the Court GRANTS Respondents’ Motion to Dismiss and dismisses this matter without prejudice. 1 DATE FILED: February 13, 2015 3:24 PM CASE NUMBER: 2014CV30890 DATED: 2/13/15 BY THE COURT Judith L. LaBuda District Court Judge 2 EXHIBIT 3 TO MOTION TO DISMISS FIRST AMENDED PETITION IN CONDEMNATION FOR LACK OF SUBJECT MATTER JURISDICTION PURSUANT TO COLO. R. CIV. P. 12(B)(1) Decision No. C13-1350 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF COLORADO PROCEEDING NO. 13D-0498E IN THE MATTER OF THE VERIFIED PETITION OF PUBLIC SERVICE COMPANY OF COLORADO FOR CERTAIN DECLARATORY ORDERS CONCERNING THE RIGHTS OF PUBLIC SERVICE COMPANY OF COLORADO UNDER ITS SERVICE TERRITORY CERTIFICATE COVERING BOULDER COUNTY, COLORADO. DECISION ISSUING DECLARATORY RULINGS Mailed Date: October 29, 2013 Adopted Date: October 9, 2013 TABLE OF CONTENTS I. BY THE COMMISSION .........................................................................................................2 A. Statement ...........................................................................................................................2 B. Public Service’s Requests for Declaratory Orders ............................................................3 C. Positions of the Parties and Amici. ....................................................................................4 D. Discussion ..........................................................................................................................6 1. Commission Jurisdiction to Hear this Matter .............................................................6 2. Ripeness .....................................................................................................................7 a. The Commission’s Regulatory Authority Over a Municipal Utility Serving Outside its Territorial Boundaries. ......................................................................9 b. Commission Proceedings Addressing Transfer of Public Service’s CPCN and Other Property ...................................................................................................12 E. Conclusion .......................................................................................................................14 II. ORDER ...................................................................................................................................15 A. The Commission Orders That: ........................................................................................15 B. ADOPTED IN COMMISSIONERS’ WEEKLY MEETING October 9, 2013. .............16 Colorado PUC E-Filings System Before the Public Utilities Commission of the State of Colorado Decision No. C13-1350 PROCEEDING NO. 13D-0498E 2 I. BY THE COMMISSION A. Statement 1. On May 9, 2013, Public Service Company of Colorado (Public Service) filed a Verified Petition for Declaratory Orders (Petition) pursuant to Rules 1001 and 1304(i) of the Commission's Rules of Practice and Procedure, 4 Code of Colorado Regulations 723-1, and Colorado Rule of Civil Procedure 57. The Petition requests that the Commission enter declaratory rulings relating to actions of the City of Boulder (Boulder) to municipalize and provide electricity services to customers located in unincorporated Boulder County, Colorado. 2. On June 12, 2013, the Commission issued a decision accepting the Petition and providing notice of the Petition to interested persons.1 3. The Commission granted Boulder’s motion to intervene and noted the intervention by right of the Colorado Office of Consumer Counsel (OCC). The Commission denied the motion to intervene filed by Black Hills/Colorado Electric Utility Company, L.P., and Black Hills/Colorado Gas Utility Company, L.P. (collectively Black Hills); however, the Commission permitted Black Hills to participate as amicus curiae. The Commission granted the joint motion to participate as amicus curiae filed by the Colorado Rural Electric Association; Delta-Montrose Electric Association, Inc.; Holy Cross Electric Association, Inc.; Poudre Valley Rural Electric Association, Inc.; and United Power, Inc.2 Through this Decision, the Commission 1 Order Accepting Petition for Declaratory Order and Issuing Notice; Decision No. C13-0705, issued June 12, 2013. 2 Interim Decision: (1) Addressing Interventions and Motion to Participate as Amici Curiae; (2) Granting Motion for Leave to Reply; and (3) Establishing a Procedural Schedule, Decision No. C13-0875-I, issued July 16, 2013. Before the Public Utilities Commission of the State of Colorado Decision No. C13-1350 PROCEEDING NO. 13D-0498E 3 denies the motion to intervene filed by the Gunbarrel Energy Future Citizens’ Group,3 but accepts its filing as public comment. 4. The Commission heard this case en banc. 5. Pursuant to Commission scheduling orders, the parties and amici filed briefs addressing the issues raised by the Petition. In addition, this Decision grants Boulder’s request for acceptance of its supplemental authority, filed September 6, 2013, and also grants Public Service’s request for leave to reply to the supplemental authority, filed September 13, 2013. B. Public Service’s Requests for Declaratory Orders 6. Public Service’s Petition describes Boulder’s actions and plans to form a municipal electric utility, condemn Public Service’s facilities, and serve customers located not only inside Boulder’s city limits, but also outside in unincorporated Boulder County. Public Service asserts that Boulder expects to obtain these extraterritorial customers through condemnation of Public Service’s certificate of public convenience and necessity (CPCN) and facilities that serve unincorporated Boulder County. 7. Paragraph 25 of the Petition requests the Commission enter the following five declaratory orders: 1) If a municipal utility seeks to serve customers located outside the city's boundaries, it is subject to the certificate jurisdiction of the Commission; 2) The Commission has already granted to Public Service a certificate of public convenience and necessity covering the territory in Boulder 3 Because The Gunbarrel Energy Future Citizens’ Group as an association must be represented by a licensed attorney to participate formally as a party, and because its filing is not signed by and does not identify a licensed attorney representing the group, the Commission denies its request to intervene as a party. See Rules 1201(a) and (b) of the Rules of Practice and Procedure, 4 Code of Colorado Regulations 723-1; Denver Bar Association v. Public Utilities Commission, 391 P.2d 467 (1964). Before the Public Utilities Commission of the State of Colorado Decision No. C13-1350 PROCEEDING NO. 13D-0498E 4 County, outside the Boulder city boundaries, in which the 5,800 customers4 are located; 3) Under Colorado law, there can only be one certificated utility per geographic area; 4) The certificate of an existing utility cannot be taken away without due process of law which requires a hearing before this Commission and proof by substantial evidence that the existing certificated public utility is unwilling or unable to serve the certificated area; and 5) The need to construct replacement facilities as a result of actions taken by a challenging utility does not constitute an inability to serve.5 Public Service further explains that it “is simply seeking a clarification that it will not lose its right to serve out-of-city customers because Boulder creates a municipal utility and condemns some facilities which currently serve customers both inside and outside the Boulder city limits.”6 8. Public Service is not requesting declaratory rulings addressing Boulder’s authority to form a municipal utility and serve customers located within Boulder city limits, or its ability to acquire through condemnation facilities located outside city limits but used to provide service within the city.7 Public Service’s request for declaratory rulings refers only to its rights to serve the customers located service outside Boulder’s territorial boundaries.8 C. Positions of the Parties and Amici. 9. Public Service argues that the Commission has the authority to regulate a municipal utility operating extraterritorially and to resolve service disputes between a municipality and an existing utility. Public Service also contends that the doctrine of regulated monopoly, which permits only one certificated utility to serve in an area and requires a new 4 Subsequent filings indicate that the number of customers located in unincorporated Boulder County at approximately 7,000. See Public Service Response, dated August 15, 2013, at 2. 5 Verified Petition, at ¶ 25. 6 Public Service Reply, at 8. 7 Public Service Response, dated August 15, 2013, at ¶¶ 11-15. 8 Verified Petition, at ¶ 26. Before the Public Utilities Commission of the State of Colorado Decision No. C13-1350 PROCEEDING NO. 13D-0498E 5 carrier to show that the existing carrier is unable or unwilling to provide adequate service, governs Boulder’s plans to serve in unincorporated Boulder County. Public Service asserts that a municipality’s decision to seek condemnation of an existing utility’s CPCN does not override the Commission’s exclusive jurisdiction over certification of a municipal utility operating its territorial boundaries. Public Service also argues that the Commission’s determination—of whether the CPCN and other extraterritorial assets will be transferred to Boulder—should precede a condemnation action. 10. The OCC and amici curiae support Public Service’s position. They argue that becoming a municipal utility does not automatically allow Boulder to serve customers located outside of its municipal boundaries, and that the doctrine of regulated monopoly requires a showing that Public Service is unwilling or unable to serve the customers at issue, regardless of whether Boulder’s provisioning of service would be more efficient or technically optimal. 11. Boulder states that as a home rule municipality, it has the authority under Article XX of the Colorado Constitution to operate an electric utility and to condemn all necessary facilities and property, whether located inside or outside of its city limits. Boulder asserts that a CPCN to serve a particular area is a property interest subject to condemnation, and the district court hearing a condemnation action has the authority to determine Boulder’s need for the CPCN. Boulder argues that its plans to condemn Public Service’s CPCN as a property interest distinguish this case from those cited by Public Service recognizing the Commission’s authority to regulate municipal utilities extraterritorially and apply the doctrine of regulated monopoly to a new carrier’s encroachment into an existing provider’s territory. Condemnation of a CPCN would relieve Boulder from the burden of showing that Public Service is unable or unwilling to serve in unincorporated Bolder County. Boulder admits that it must obtain a Before the Public Utilities Commission of the State of Colorado Decision No. C13-1350 PROCEEDING NO. 13D-0498E 6 certificate from the Commission to serve extraterritorial customers, but argues that the condemnation action would precede the Commission’s proceedings for transfer of Public Service’s certificate, and that the Commission must act consistently with the orders of the district court condemning the CPCN. 12. Boulder also contends that the public interest standard should apply to the transfer of Public Service’s certificate, and that its provision of service in unincorporated Boulder County would be the most efficient, effective, and reliable option. Further, Boulder argues that Public Service’s request may not be ripe, because Boulder has not decided finally whether to serve unincorporated Boulder County. D. Discussion 1. Commission Jurisdiction to Hear this Matter 13. Boulder contends that Articles II and XX of the Colorado constitution authorize home rule cities to condemn property for the creation and operation of a municipal utility, and that the district court has jurisdiction over condemnation matters. Thus, Boulder argues, the district court sitting in condemnation, not the Commission, has the jurisdiction to determine Boulder’s ability to obtain Public Service’s CPCN to serve unincorporated Boulder County.9 14. We disagree. The Commission has the authority to determine the facts upon which its jurisdiction may depend and rule on the scope of its jurisdiction.10 The Commission’s jurisdiction to decide matters has been analogized to that of judicial tribunals: “except in the case of plain usurpation, a court has the jurisdiction to determine its own jurisdiction.”11 9 Boulder Response, dated August 15, 2013, Part I.C., at 7-9. 10 Keystone v. Flynn, 769 P.2d 484, 488 (Colo. 1989). 11 Id., quoting United States v. United Mine Workers, 330 U.S. 258, 292 n. 57 (1947) (in turn quoting Carter v. United States, 135 F.2d 858, 861 (5th Cir. 1943)). Before the Public Utilities Commission of the State of Colorado Decision No. C13-1350 PROCEEDING NO. 13D-0498E 7 The Commission therefore has the authority to hear Public Service’s request for declaratory rulings regarding Boulder’s attempts to serve unincorporated Boulder County. As shown below, our rulings do not interpret Boulder’s constitutional or statutory rights to condemn property; rather, we apply the Commission’s authority under Article XXV of the Colorado constitution and the public utilities law as interpreted by the Colorado Supreme Court to rule upon Boulder’s municipal utility service in unincorporated Boulder County. 2. Ripeness 15. Boulder argues that Public Service’s request for declaratory rulings is not ripe, contending that no final decision has been made on whether its municipal utility will serve customers in unincorporated Boulder County.12 16. “Ripeness requires that there be an actual case or controversy between the parties that is sufficiently immediate and real so as to warrant adjudication.”13 “A court may find ‘a conflict is ripe for judicial review even in the context of uncertain future facts so long as there is no uncertainty regarding the facts relevant to the dispute and no pending actions that might resolve the issue prior to the court’s determination.’”14 To be ripe, the court’s or an agency’s decision must have a “practical effect upon an actual and existing controversy.”15 17. Undisputed facts show that a controversy is sufficiently immediate and that there is no uncertainty regarding the facts relevant to the dispute. The Boulder City Council passed an ordinance authorizing the city to acquire the property of Public Service through negotiation or 12 Boulder Reply, dated August 30, 2013, at 3. 13 Beauprez v. Avalos, 42 P.3d 642, 648 (Colo. 2002); See also Developmental Pathways v. Ritter, 178 P.3d 524, 534 (Colo. 2008). 14 Metal Management West, Inc. v. State, 251 P.3d 1164, 1175 (Colo. App. 2010) (quoting Stell v. Boulder County Dep't of Social Servs., 92 P.3d 910, 915, n.6 (Colo. 2004)). 15 Board of Directors v. Nat'l Union Fire Ins. Co., 105 P.3d 653, 656 (Colo. 2005). Before the Public Utilities Commission of the State of Colorado Decision No. C13-1350 PROCEEDING NO. 13D-0498E 8 the power of eminent domain. The ordinance authorizes a condemnation action on or after January 1, 2014.16 Boulder’s engineers have advised the city that it should provide service to extraterritorial customers.17 Boulder sent letters dated February 15, 2013, to customers located in unincorporated Boulder County stating that, if it creates a city utility, then it plans on providing service to residential and business customers located outside the city.18 This letter states that Boulder has no plans to annex the area outside of Boulder where it seeks to provide service.19 18. A Commission ruling will have a practical effect on an actual and existing controversy between Public Service and Boulder. Public Service asserts that the Commission has the authority to apply the breadth of public utilities law to Boulder’s attempt to obtain a CPCN to serve customers outside its city boundaries; whereas, Boulder contends that the Commission’s rulings upon a transfer of Public Service’s CPCN to Boulder must await and be consistent with a court’s condemnation orders. We find that a Commission ruling will instruct the parties on the legal standards governing their conduct and disputes regarding Boulder’s actions to obtain Public Service’ CPCN for unincorporated Boulder County. A Commission ruling also will guide the parties on whether a Commission proceeding should precede a condemnation action and which property interests and facilities could be used to provide service and thus may be part of a condemnation action. Therefore, Public Service’s Petition is ripe for Commission determination. 19. Boulder admits that the first three statements listed in paragraph 25 of the Petition for which Public Service seeks declaratory rulings—that a municipal utility serving outside its 16 See Response of Public Service, dated August 15, 2013, at 2-3. 17 Boulder Response, at 3-4. 18 Letter from City of Boulder to unincorporated Boulder County customers, dated February 15, 2013, attached as Exhibit A to Public Service’s Verified Petition. 19 Id. Before the Public Utilities Commission of the State of Colorado Decision No. C13-1350 PROCEEDING NO. 13D-0498E 9 territorial boundaries is subject to the certificate jurisdiction of the Commission, that Public Service had been granted a certificate to serve unincorporated Boulder County, and that there can be only one certificated utility per geographic area—are correct.20 We therefore proceed with addressing the issues underlying the fourth and fifth statements. a. The Commission’s Regulatory Authority Over a Municipal Utility Serving Outside its Territorial Boundaries. 20. Dating back to the 1920s and extending through interpretations of Commission powers granted by Article XXV, the Colorado Supreme Court repeatedly and consistently has acknowledged the Commission’s authority to regulate a municipal utility serving customers located outside its territorial boundaries.21 This rule is premised upon the customers’ ability to vote on municipal matters. If the services offered by a municipality to its citizens within its territory are not satisfactory to a majority of the citizens, they can effect a change, either at a regular election, or by the exercise of the right of recall. 22 In contrast, When a municipally owned utility provides utility service outside the municipality, those receiving the service do not have a similar recourse on election day. They have no effective way of avoiding the possible whims and excesses of the municipality in the absence of state regulation by the PUC.23 21. The court has elaborated on the Commission’s authority over service area disputes between a municipal utility and a certificated public utility. “[T]he Utilities Act unmistakably 20 Boulder’s Response, filed August 15, 2013, at 4. 21 Town of Holyoke v. Smith, 226 P. 158 (Colo. 1924); City of Lamar v. Town of Wiley, 248 P. 1009 (Colo. 1926); Public Utilities Commission v. City of Loveland, 289 P. 1090 (Colo. 1930); City and County of Denver v. Public Utilities Commission, 507 P.2d 871 (Colo. 1973); Board of County Commissioners v. Denver Board of Water Commissioners, 718 P.2d 235 (Colo. 1886); Poudre Valley Rural Electric Association, Inc. v. City of Loveland, 807 P.2d 547 (Colo. 1991). 22 Town of Holyoke v. Smith, 226 P. 158, 161 (Colo. 1924); City of Lamar v. Town of Wiley, 248 P. 1009, 1010 (Colo. 1926). 23 K.C. Electric Association, Inc. v. Public Utilities Commission, 550 P.2d at 871, 874 (Colo. 1976). See also City and County of Denver v. Public Utilities Commission, 507 P.2d at 874; and City of Loveland v. Public Utilities Commission, 580 P.2d 381, 385 (Colo. 1978) (“the PUC [is] the only protection for the non-resident customers.”) Before the Public Utilities Commission of the State of Colorado Decision No. C13-1350 PROCEEDING NO. 13D-0498E 10 and clearly invests the Public Utilities Commission with the sole jurisdiction to hear and determine, in the first instance, a controversy of this nature.”24 Further, We believe it is essential that the PUC be allowed to regulate the public utility services provided by municipalities outside their boundaries. Not only is the PUC the only protection for the non-resident customers,…but the PUC must also be allowed the power to resolve jurisdictional disputes between municipalities and private utilities companies over who is to serve areas outside municipal boundaries.25 22. The court also has defined a municipality’s status relative to other utilities when it serves outside its boundaries: “Both upon authority and reason a municipally owned public utility, as to service furnished consumers beyond its territorial jurisdiction, should be as already stated, subject to the same regulation to which a privately owned public utility must conform in similar circumstances."26 23. Boulder’s plans to condemn Public Service’ CPCN to serve unincorporated Boulder County do not affect the Commission’s authority over the transfer of the CPCN or the applicable standards. The statute upon which Boulder relies as granting a property interest to a CPCN, § 40-5-105, C.R.S., conditions any sale or assignment of a CPCN upon Commission approval and upon such terms and conditions as the Commission may prescribe.27 The court rulings quoted above in this Decision—recognizing Commission authority to resolve disputes between municipalities serving outside its boundaries and existing public utilities—also refute 24 Public Utilities Commission v. City of Loveland, 289 P. 1090, 1093 (Colo. 1930). 25 City of Loveland v. Public Utilities Commission, 580 P.2d 381, 385 (Colo. 1978). 26 City and County of Denver v. Public Utilities Commission, 507 P.2d at 874. 27 Section 40-5-105, C.R.S., says: Certificate or assets may be sold, assigned, or leased. (1) The assets of any public utility, including a certificate of public convenience and necessity or rights obtained under any such certificate held, owned, or obtained by any public utility, may be sold, assigned, or leased as any other property, but only upon authorization by the commission and upon such terms and conditions as the commission may prescribe….” Before the Public Utilities Commission of the State of Colorado Decision No. C13-1350 PROCEEDING NO. 13D-0498E 11 Boulder’s argument that the potential of an action in condemnation over utility property diminishes Commission authority. 24. Two Supreme Court cases specifically confirm Commission authority even when a municipality is planning or has completed condemnation actions. In City and County of Denver v. Public Utilities Commission,28 the Supreme Court upheld the Commission’s regulatory authority over Denver’s tramway service outside its boundaries, even after a district court had completed a condemnation action transferring ownership rights to Denver. In Colorado and Southern Railway Co., Inc. v. District Court,29 the court ruled that the Commission may exercise its statutory authority to determine where a railroad may cross the tracks of another, even though the utility already had filed an action to condemn an easement for the crossing. These cases demonstrate that, if the public utilities law has granted the Commission regulatory authority over property or service used by a utility to serve outside its territory boundaries, the Commission retains its regulatory authority even though the property or service is the subject of a condemnation action. 25. The doctrine of regulated monopoly governs Boulder’s attempt to serve unincorporated Boulder County where Public Service is certificated.30 “After a utility has been assigned a specific territory, no other utility may provide service in that territory unless it is established that the certificated utility is unable or unwilling to provide adequate service.”31 Evidence that the challenging utility may provide better service or may serve the customers more 28 City and County of Denver v. Public Utilities Commission, 507 P.2d 871 (Colo. 1973). 29 Colorado and Southern Railway Co., Inc. v. District Court, 493 P.2d 657 (Colo. 1972). 30 Public Service Company v. Public Utilities Commission, 765 P.2d 1015, 1021 (Colo. 1988). 31 Id. Before the Public Utilities Commission of the State of Colorado Decision No. C13-1350 PROCEEDING NO. 13D-0498E 12 easily cannot be the basis of a finding that the existing utility is unwilling or unable to serve its certificated area.32 b. Commission Proceedings Addressing Transfer of Public Service’s CPCN and Other Property 26. Boulder’s briefing argues that a condemnation action for Public Service’s extraterritorial CPCN should precede any Commission proceedings under § 40-5-105, C.R.S., addressing Boulder’s request for the CPCN, and that any resulting Commission orders must be consistent with a condemnation court’s order awarding ownership to Boulder.33 Public Service disagrees, asserting that “it is essential that a determination be made, before the condemnation action, regarding who has the right to serve the out-of-city customers. That information affects the separation of the two utilities, reconnection costs, the compensation owed in any condemnation proceeding, and pre-filing good faith negotiations.”34 27. Transfer of Public Service’s CPCN would be required for Boulder to serve customers in unincorporated Boulder County, and the Commission possesses the statutory power to determine under § 40-5-105, C.R.S., and under the doctrine of regulated monopoly, whether Public Service’s CPCN is to be transferred to Boulder. Thus, Commission proceedings addressing the transfer of Public Service’s CPCN are to precede any actions seeking to condemn Public Service’s CPCN. 32 Id., at 1022; See also Public Service Company v. Public Utilities Commission, 485 P.2d 123, 127; Public Utilities Commission v. Poudre Valley Rural Electric Association, 480 P.2d 106, 107 (Colo. 1970). 33 Boulder Response, dated August 15, 2013, at 12-14. 34 Public Service Reply, dated August 30, 2013, at ¶ 7. Before the Public Utilities Commission of the State of Colorado Decision No. C13-1350 PROCEEDING NO. 13D-0498E 13 28. Also under the Commission’s jurisdiction are other types of property, plant, and equipment used to provide service in unincorporated Boulder County. The Commission exercises its regulatory authority over Public Service’s transmission and distribution lines, substations, and other facilities to protect the reliability, safety, and service quality of electricity services provided to unincorporated Boulder County, and to safeguard the integrity of the system statewide. If Boulder seeks to condemn facilities, wherever located, that Public Service currently uses, at least in part, to serve customers located outside of Boulder’s city limits, this Commission must have the ability to investigate and determine how the facilities should be assigned, divided, or jointly used to protect the system’s effectiveness, reliability, and safety, as well as any other matter affecting the public interest. Thus, a Commission proceeding addressing these facilities should precede a condemnation action to allow the district court to rule on the public need and value of facilities that the Commission determines may be the subject of transfer to Boulder. 29. Case law also supports Public Service’s position. In Colorado & Southern,35 a railroad company known as C&W commenced a proceeding in district court to condemn an easement over tracks owned by two other railroads. C&W selected the easement as suitable for the crossing. The two other railroads filed a motion to dismiss the district court action, asserting that C&W first had to secure an order from the Commission as required under the public utilities law that would determine the point at which C&W may cross the tracks or facilities of other railroads. The Supreme Court ruled that the district court did not have jurisdiction over the property easement identified by C&W absent a predetermination by the Commission. Because 35 Colorado and Southern Railway Co., Inc. v. District Court, 493 P.2d 657 (Colo. 1972). Before the Public Utilities Commission of the State of Colorado Decision No. C13-1350 PROCEEDING NO. 13D-0498E 14 the Commission has the power to determine the point of crossing, “[i]t follows logically then that the commission -- not the railroad -- determines what property the railroad requires.”36 37 E. Conclusion 30. For the reasons stated above, we rule on the fourth and fifth statements listed in paragraph 25 of Public Service’s Petition by clarifying that the Commission has regulatory authority over electricity services provisioned by a municipal utility formed by Boulder to customers located in unincorporated Boulder County, and that the doctrine of regulated monopoly as delineated by rulings of the Colorado Supreme Court governs any application filed by Boulder seeking transfer of Public Service’s CPCN. The potential that Boulder may file a condemnation action to obtain Public Service’s CPCN for unincorporated Boulder County does not affect the Commission’s regulatory authority, the doctrine of regulated monopoly, or the standards governing transfer of Public Service’s CPCN. Further, Commission proceedings addressing the transfer of Public Service’s CPCN or other plant, equipment, and facilities used to provide service to customers located in unincorporated Boulder County are to be completed before Boulder initiates a condemnation action for such property. 36 Id., 493 P.2d at 659. 37 The case cited by Boulder, Miller v. Public Service Company of Colorado, 272 P.2d 283 (1954), for the proposition that its condemnation action for Public Service’s CPCN should precede a Commission proceeding, is inapposite and has been distinguished by the court in Colorado & Southern. The court in Miller ruled that a utility was not required to obtain a CPCN from the Commission to construct a facility before the utility filed a condemnation action to acquire the land upon which the facility was to be built. The court reasoned that the construction permitted by the CPCN is an act that occurs after the utility obtains ownership of the land. Further, the court in Miller found that: “[t]he so-called certificate is only a permit or license to use and enjoy land that has been condemned; it is not a condition precedent to the right to condemn; and has no relationship whatever with the matter of condemnation.” Miller, 272 P.2d at 285 (emphasis added). The court in Colorado and Southern ruled that the Miller result—that a condemnation action may precede the Commission’s—did not apply to C&W’s condemnation of the easement, because the location of crossing point was essential to determining the property to be condemned and was subject to the Commission’s approval authority. Colorado and Southern, 493 P.2d at 659. The issue presented in this proceeding mirrors that of Colorado & Southern, in which the property at issue in the potential condemnation proceeding, Public Service’s extraterritorial CPCN, is the same property over which the Commission has jurisdiction and approval authority. Before the Public Utilities Commission of the State of Colorado Decision No. C13-1350 PROCEEDING NO. 13D-0498E 15 II. ORDER A. The Commission Orders That: 1. The request to intervene filed by the Gunbarrel Energy Future Citizens’ Group is denied. The filing submitted by the Gunbarrel Energy Future Citizens’ Group on August 8, 2013, will be accepted as public comment. 2. The request of the City of Boulder to accept its Supplemental Authority, filed September 6, 2013, is granted. The request of Public Service Company of Colorado (Public Service) for leave to reply to the City of Boulder’s Supplemental Authority, filed September 13, 2013, is granted. 3. The Commission grants the request of Public Service to enter as declaratory orders the first, second, and third statements listed in paragraph 25 of Public Service’s Verified Petition for Declaratory Orders (Petition). 4. The Commission enters declaratory rulings addressing the fourth and fifth statements listed in paragraph 25 of the Petition by clarifying that the Commission has regulatory authority over electricity services provisioned by a municipal utility formed by the City of Boulder to customers located in unincorporated Boulder County, and that the doctrine of regulated monopoly as delineated by rulings of the Colorado Supreme Court governs any application filed by the City of Boulder seeking transfer of Public Service’s certificate of public convenience and necessity (CPCN). The potential that the City of Boulder may file a condemnation action to obtain Public Service’s CPCN does not affect the Commission’s regulatory authority, the doctrine of regulated monopoly, or the standards governing transfer of Public Service’s CPCN. Further, Commission proceedings addressing the transfer of Public Service’s CPCN or other plant, equipment, and facilities used to provide service to customers Before the Public Utilities Commission of the State of Colorado Decision No. C13-1350 PROCEEDING NO. 13D-0498E 16 located in unincorporated Boulder County are to be completed before the City of Boulder initiates a condemnation action for such property. 5. The 20-day time period provided by § 40-6-114(1), C.R.S., to file an application for rehearing, reargument, or reconsideration shall begin on the first day after the effective date of this Decision. 6. This Decision is effective on its mailed date. B. ADOPTED IN COMMISSIONERS’ WEEKLY MEETING October 9, 2013. (S E A L) ATTEST: A TRUE COPY Doug Dean, Director THE PUBLIC UTILITIES COMMISSION OF THE STATE OF COLORADO JOSHUA B. EPEL ________________________________ JAMES K. TARPEY ________________________________ PAMELA J. PATTON ________________________________ Commissioners EXHIBIT 4 TO MOTION TO DISMISS FIRST AMENDED PETITION IN CONDEMNATION FOR LACK OF SUBJECT MATTER JURISDICTION PURSUANT TO COLO. R. CIV. P. 12(B)(1) Decision No. C13-1550 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF COLORADO PROCEEDING NO. 13D-0498E IN THE MATTER OF THE VERIFIED PETITION OF PUBLIC SERVICE COMPANY OF COLORADO FOR CERTAIN DECLARATORY ORDERS CONCERNING THE RIGHTS OF PUBLIC SERVICE COMPANY OF COLORADO UNDER ITS SERVICE TERRITORY CERTIFICATE COVERING BOULDER COUNTY, COLORADO. DECISION DENYING CITY OF BOULDER’S APPLICATION FOR REHEARING, REARGUMENT, OR RECONSIDERATION Mailed Date: December 18, 2013 Adopted Date: December 11, 2013 TABLE OF CONTENTS I. STATEMENT ...........................................................................................................................1 A. Introduction .......................................................................................................................1 B. Procedural Background and Positions of the Parties .........................................................2 II. DISCUSSION ...........................................................................................................................4 A. Scope of Commission Jurisdiction ....................................................................................4 B. Commission Jurisdiction and Municipal Functions ..........................................................5 C. Sequencing of Commission and Condemnation Proceedings ...........................................9 III. ORDER ...................................................................................................................................14 A. The Commission Orders That: ........................................................................................14 B. ADOPTED IN COMMISSIONERS’ WEEKLY MEETING December 11, 2013. ........14 I. STATEMENT A. Introduction 1. On November 18, 2013, the City of Boulder (Boulder) filed its Application for Rehearing, Reargument, or Reconsideration (RRR) of Commission Decision issued on Colorado PUC E-Filings System Before the Public Utilities Commission of the State of Colorado Decision No. C13-1550 PROCEEDING NO. 13D-0498E 2 October 29, 2013 (Decision). Boulder’s RRR challenges the Decision’s rulings clarifying the Commission’s jurisdiction to conduct approval proceedings of the proposed transfer from Public Service Company of Colorado (Public Service) to Boulder of certifications, assets, and facilities used to provide electricity services to customers located outside Boulder’s territorial limits in unincorporated Boulder County. Boulder’s RRR also opposes the requirement to obtain Commission approval before Boulder commences a condemnation action over regulated property rights. Because Colorado Supreme Court precedent interpreting Article XXV of the state constitution and the public utilities law validates Commission jurisdiction to approve the transfer of regulated property before a condemnation court acquires subject matter jurisdiction over the property, the Commission denies Boulder’s RRR. B. Procedural Background and Positions of the Parties 2. We incorporate the Decision’s description of the procedural history of this case, including Public Service’s petition for declaratory ruling, intervention by Boulder and the Office of Consumer Counsel, grants of amicus status, and the positions of parties and amici.1 3. The Decision issued declaratory rulings clarifying the Commission’s jurisdiction under the state constitution and the public utilities law to regulate Boulder’s certification as a municipal utility to provide electricity services to customers located in unincorporated Boulder County. The Decision also declares the Commission has the authority to conduct approval proceedings over Boulder’s proposed acquisition of assets and facilities owned and used by Public Service to provide service outside the city. Citing Colorado and Southern,2 the Decision requires Boulder to obtain Commission approval before a condemnation action could commence. 1 Decision, issued October 29, 2013, at ¶¶ 1-12. 2 Colorado and Southern Railway Co., Inc. v. District Court, 493 P.2d 657 (Colo. 1972). Before the Public Utilities Commission of the State of Colorado Decision No. C13-1550 PROCEEDING NO. 13D-0498E 3 4. Boulder’s RRR challenges the following ruling from paragraph 28 of the Decision: If Boulder seeks to condemn facilities, wherever located, that Public Service currently uses, at least in part, to serve customers located outside of Boulder’s city limits, this Commission must have the ability to investigate and determine how the facilities should be assigned, divided, or jointly used …. Thus, a Commission proceeding addressing these facilities should precede a condemnation action to allow the district court to rule on the public need and value of facilities that the Commission determines may be the subject of transfer to Boulder. (emphasis added by Boulder). Boulder requests the deletion of paragraph 28 from the Decision. According to the RRR, selection of facilities for condemnation is a “municipal function,” and the Decision impairs Boulder’s ability as a home rule city to form a municipal utility and condemn plant and facilities it deems necessary. Boulder also objects to the Decision’s application of the Colorado and Southern case requiring Commission approval of any acquisition of regulated property rights from Public Service before Boulder files a condemnation action. 5. Boulder’s RRR “recognizes the authority of the Commission over service provided by a municipal electric utility to customers located outside the jurisdictional boundaries of the municipality,”3 and indicates it “will file all applicable applications for transfer.”4 Boulder argues, however, “Commission’s approval of an application for transfer is not the same as the Commission’s deciding what property rights may be transferred and when the transfer may occur.”5 6. By leave of the Commission, Public Service filed a response to Boulder’s RRR on December 3, 2013. Public Service requests denial of Boulder’s RRR and provides argument and 3 Boulder RRR, at 3. 4 Id., at 5-6. 5 Id., at 6. Before the Public Utilities Commission of the State of Colorado Decision No. C13-1550 PROCEEDING NO. 13D-0498E 4 citations to the state constitution, the public utilities law, and Colorado case law in support of Commission regulatory authority over extraterritorial electricity services. II. DISCUSSION A. Scope of Commission Jurisdiction 7. The Decision defines the Commission’s jurisdiction over Boulder’s municipal utility to encompass certifications, assets, and facilities used to provide electricity to customers located outside Boulder’s territorial boundaries. The Decision does not suggest or imply Commission jurisdiction over services Boulder’s utility may provide within the city. Paragraph 28 of the Decision, the object of Boulder’s RRR, also is limited to facilities and assets used to provide extraterritorial services. 8. Despite these definitions of the scope of Commission authority, Boulder’s RRR causes us to question whether it is addressing Commission jurisdiction over municipal services provided inside, or outside, the city. Boulder’s RRR on occasion references extraterritorial matters; however, the vast majority of the RRR discusses municipal powers in general terms, and cases cited by the RRR address municipal functions to provide services within the municipality, not outside. 9. The Commission reiterates its assertion of regulatory authority over the certifications, assets, and facilities, wherever located, used by Public Service at least in part to provide electricity service to customers outside Boulder city limits. The Commission does not assert regulatory authority over Boulder’s efforts to form a utility or over facilities and plant, wherever located, used only to provide service to customers within Boulder’s municipal territory. Before the Public Utilities Commission of the State of Colorado Decision No. C13-1550 PROCEEDING NO. 13D-0498E 5 B. Commission Jurisdiction and Municipal Functions 10. Boulder argues in its RRR that selection of certifications, facilities, and other property rights for condemnation is a municipal function beyond the Commission’s jurisdiction. Boulder’s primary citation for this proposition is the 1926 case of Public Service v. City of Loveland,6 in which the city sought to condemn Public Service’s distribution system used to provide service to Loveland’s residents.7 Public Service challenged Loveland’s ability to acquire ownership through eminent domain proceedings and also protested the city’s unwillingness to condemn a substation and real estate located within the town. The Court in Public Service v. City of Loveland ruled that the town has the authority to condemn facilities, and the selection of which facilities to condemn is a municipal function Public Service could not override. Boulder’s RRR also relies upon City of Thornton v. Farmers Reservoir & Irrigation Co.,8 arguing a home rule city has constitutionally-granted powers to condemn “within or without its territorial limits,” to acquire utilities “and everything required therefore.”9 11. Neither Public Service v. City of Loveland nor City of Thornton addresses the Commission’s jurisdiction over regulated services provided by a municipal utility to customers located outside territorial boundaries. These cases do not diminish the multitude of Supreme Court cases and their citations to article XXV of the Colorado constitution and the public utilities law granting the Commission regulatory authority over services provided to customers located 6 Public Service Company v. City Of Loveland, 245 P. 493 (Colo. 1926). 7 The distribution system in Loveland also served “a few customers located adjacent to or in close proximity with the city.” Public Service raised no objections before the Supreme Court to Loveland serving customers located outside the city, and the Court did not address any issues defining either the municipality’s or the Commission’s authority over facilities used to provide service outside city limits. 8 City of Thornton v. Farmers Reservoir & Irrigation Co., 575 P.2d 382 (1978). 9 Id., 575 P.2d at 388-899 (emphasis that of the Court). Before the Public Utilities Commission of the State of Colorado Decision No. C13-1550 PROCEEDING NO. 13D-0498E 6 outside city limits. Our Decision lists these cases and their holdings,10 examples of which include the following: · “When the city became a public utility under the statute, it had no superior right as to territory outside of its municipal boundaries over the rights of any other public utility, private corporation or otherwise, authorized to furnish service.”11 · In the 1930 case in which the City of Loveland extended its facilities to serve customers outside the city’s boundaries, the Court stated: “the Utilities Act unmistakably and clearly invests the Public Utilities Commission with the sole jurisdiction to hear and determine, in the first instance, a controversy of this nature.”12 · In the 1978 City of Loveland case, the court stated: “We believe it is essential that the PUC be allowed to regulate the public utility services provided by municipalities outside their boundaries. Not only is the PUC the only protection for the non-resident customers,…but the PUC must also be allowed the power to resolve jurisdictional disputes between municipalities and private utilities companies over who is to serve areas outside municipal boundaries.”13. 12. None of the other cases cited in Boulder’s RRR impair Commission authority to regulate services provided by a municipal utility outside city boundaries.14 13. Boulder’s citations also do not reconcile the Court’s ruling in City and County of Denver v. Public Utilities Commission,15 in which the Court upheld the Commission’s regulatory authority over Denver’s provision of tramway services outside its boundaries, even after a 10 Decision, issued October 29, 2013, at ¶¶ 20-22. 11 Public Utilities Commission v. City of Loveland, 289 P. 1090, 1094 (Colo. 1930). 12 Id., 289 P. at 1093 (emphasis added). 13 City of Loveland v. Public Utilities Commission, 580 P.2d 381, 385 (Colo. 1978) (emphasis added). 14 In Colorado Cent. Power Co. v. City of Englewood, 89 F.2d 233 (10th Cir. 1937), cited in Boulder’s RRR, a private utility challenged the city’s condemnation of facilities located outside the city and part of the system supplying electricity inside and outside of the city. The federal appeals court held that the city may condemn extraterritorial facilities to serve customers within the city. The utility also argued condemnation of such facilities amounted to an effort to generate, distribute, and sell electricity outside the city without first having obtained a certificate of convenience and necessity from the PUC. The court ruled: “Whether the city is required to obtain such a certificate cannot be determined on the complaint of a private suitor. It may be inquired into only on the complaint of the state or the commission.” Thus, the federal appeals court did not address Commission jurisdiction to regulate any efforts by the City of Englewood to provide extraterritorial service. 15 City and County of Denver v. Public Utilities Commission, 507 P.2d 871 (Colo. 1973). Before the Public Utilities Commission of the State of Colorado Decision No. C13-1550 PROCEEDING NO. 13D-0498E 7 district court had completed a condemnation action transferring ownership rights of the system to Denver. 14. Characterizing the selection of facilities for condemnation as a “municipal function” does not undermine the scope of Commission jurisdiction over certifications and facilities used to serve extraterritorial customers. In the 1978 City of Loveland v. PUC case,16 the Court characterized the setting of rates by a city utility for its inhabitants as a “municipal function”;17 however, when the city performed the same function for extraterritorial customers, it was subject to the Commission’s jurisdiction.18 Also, in Colorado and Southern Railway Co., Inc. v. District Court,19 in which a railway company attempted to condemn property for a railroad crossing, the Court referenced the Commission’s authority to approve the location of railway crossings and stated “the commission – not the railroad -- determines what property the railroad requires.”20 15. Boulder’s RRR reflects an intention to initiate condemnation proceedings over Public Service’s certificate of public convenience and necessity (CPCN) before obtaining the Commission’s formal approval: “Because a CPCN is a property right, whether a CPCN will be included in a city’s petition in condemnation is likewise a matter within the purview of the city to determine.”21 A major issue addressed in the briefing of parties and amici prior to issuance of the Decision was Boulder’s ability to condemn Public Service’s CPCN for service in unincorporated Boulder County. The Decision, citing the Commission’s authority to approve 16 City of Loveland v. Public Utilities Commission, 580 P.2d 381 (Colo. 1978). 17 Id., 580 P.2d at 384. 18 Id., 580 P.2d at 384-85. 19 Colorado and Southern Railway Co., Inc. v. District Court, 493 P.2d 657 (Colo. 1972). 20 Id., 493 P.2d at 659 (emphasis added). 21 Boulder RRR at 7. Before the Public Utilities Commission of the State of Colorado Decision No. C13-1550 PROCEEDING NO. 13D-0498E 8 and regulate CPCN transfers, held that Boulder must obtain Commission approval of any proposed acquisition of Public Service’s CPCN to serve extraterritorial customers.22 Boulder’s RRR does not cite any cases or other legal authorities placing this holding into question. 16. Boulder’s RRR at times acknowledges Commission authority over CPCNs and services provided to extraterritorial customers; however, its RRR minimizes this authority by suggesting it will satisfy this requirement by simply working and coordinating with the Commission and Public Service to identify which facilities should be acquired and condemned.23 Boulder also attempts to reduce the extent of Commission approval authority: “[T]he Commission’s approval of an application for transfer is not the same as the Commission’s deciding what property rights may be transferred and when the transfer may occur.”24 17. Negotiation and coordination among Boulder, Public Service, and other interested entities and agency staffs are encouraged to reduce the scope of disputed issues and conserve administrative and judicial resources. Informal negotiations, however, do not supplant formal Commission approvals required by statute. Further, an inability to determine which property rights may be acquired conflicts with the Commission’s constitutional and statutory duties to regulate the transfer of certification, assets, and facilities used to provide service to extraterritorial customers. 18. Boulder contends that pre-approval proceedings before the Commission will deny Boulder of its right to conduct discovery pursuant to the rules of civil procedure applicable to 22 Decision, issued October 29, 2013, at ¶¶ 23-24 (citing City and County of Denver v. Public Utilities Commission, 507 P.2d 871 (Colo. 1973), and Colorado and Southern Railway Co., Inc. v. District Court, 493 P.2d 657 (Colo. 1972)). 23 Boulder RRR at 3, 10. 24 Id., at 6. Before the Public Utilities Commission of the State of Colorado Decision No. C13-1550 PROCEEDING NO. 13D-0498E 9 eminent domain actions.25 The Commission’s procedural rules provide Boulder with the same mechanisms to conduct discovery through written interrogatories, requests for production of documents, and depositions.26 Boulder also objects to delays resulting from Commission approval proceedings.27 Commission rules allow parties to request expedited proceedings, which accelerate discovery responses and hearing schedules.28 The Commission will process and decide the matter as efficiently as the issues and the public interest allow. 19. Regulatory oversight of the assets, plant, and facilities used to provide electricity outside Boulder’s territorial boundaries advances important public interests. Public Service constructs, engineers, and operates its network as an integrated system, and its service capabilities cross the political boundaries defining the City of Boulder and Boulder County. Performance of the Commission’s duty to ensure the reliability of the system for unincorporated Boulder County and other regions of the state requires an evaluation and determination of the optimal division, joint use, and potential replacement of assets and facilities providing services both inside and outside Boulder city limits. C. Sequencing of Commission and Condemnation Proceedings 20. The Supreme Court’s Colorado and Southern case29 governs the sequencing of Commission and condemnation proceedings of property subject to Commission regulation. In Colorado and Southern, a railway company commenced a condemnation action for an easement over railroad tracks. The public utilities law granted the Commission “the power to determine 25 Id., at 13. 26 4 Code of Colorado Regulations (CCR) 723-1-1405 of the Commission’s Rules of Practice and Procedure. 27 Boulder RRR, at 9-10. 28 4 CCR 723-1-1302(c), 1405(i). 29 Colorado and Southern Railway Co., Inc. v. District Court, 493 P.2d 657 (Colo. 1972). Before the Public Utilities Commission of the State of Colorado Decision No. C13-1550 PROCEEDING NO. 13D-0498E 10 what property the condemning railroad can use as the ‘particular point of crossing.’”30 The Court issued two holdings applicable to Boulder’s RRR: first, because the Commission has the statutory power to determine the point of crossing, “[i]t follows logically then that the commission -- not the railroad -- determines what property the railroad requires”;31 and second, absent Commission approval, the district court sitting in condemnation did not have jurisdiction over the subject matter of the case.32 Under Colorado and Southern, Commission approval proceedings over regulated property is a condition precedent to a condemnation action over the subject property.33 21. Boulder’s RRR attempts to distinguish Colorado and Southern. Boulder first argues that the statute cited in Colorado and Southern authorized the Commission to approve the property at issue, whereas, according to Boulder, “Here, there is no such statute. No statute grants this Commission the power to determine, order, and prescribe which property a municipality may seek to condemn in order to create a municipal utility.”34 22. Two public utilities law provisions prove otherwise and authorize Commission approval of the transfer of property and facilities providing regulated services. As cited in the Decision, § 40-5-105(1), C.R.S., requires Commission approval of the sale, assignment, or lease of assets of a public utility, including any CPCN. This statute also permits the Commission to 30 Id., 493 P.2d at 659. 31 Id. 32 Id., 493 P.2d at 659-60. 33 Id., 493 P.2d at 658-60. 34 Boulder RRR, at 11. Before the Public Utilities Commission of the State of Colorado Decision No. C13-1550 PROCEEDING NO. 13D-0498E 11 prescribe the terms and conditions of approval.35 The transfer of ownership through condemnation means to “purchase” or to “acquire,”36 which is a “sale,” and thus a transfer of facilities used to provide electricity service outside territorial limits is within Commission purview under § 40-5-105(1), C.R.S. Despite arguing no statute grants the ability of the Commission to conduct approval proceedings, Boulder in other portions of its RRR concedes regulatory approval authority over property it may wish to condemn.37 35 § 40-5-105, C.R.S., says: Certificate or assets may be sold, assigned, or leased. (1) The assets of any public utility, including any certificate of public convenience and necessity or rights obtained under any such certificate held, own, or obtained by any public utility, may be sold, assigned, or leased as any other property, but only upon authorization by the commission and upon such terms and conditions as the commission may prescribe; except that this section does not apply to assets that are sold, assigned or leased: (a) In the normal course of business: or (b) [Describing circumstances applying only to telecommunications service providers] 36 See Article XX, Section 1 (extended to home rule cities by Article XX, Section 1), which says: [The City and County of Denver] … shall have the power, within or without its territorial limits, to construct, condemn and purchase, purchase, acquire, lease, add to, maintain, conduct, and operate water works, light plants, power plants, transportation systems, heating plants, and any other public utilities or works or ways local in use and extent, in whole or in part, and everything required therefore, for the use of said city and county and the inhabitants thereof, and any such systems, plants, or works or ways, or any contracts in relation or connection with either, that may exist and which said city and county may desire to purchase, in whole or in part, the same or any part thereof may be purchased by said city and county which may enforce such purchase by proceedings at law as in taking land for public use by right of eminent domain…. 37 See, for example, Boulder RRR at 3 (“The transfer of a CPCN, which is a property right subject to condemnation, cannot take place without the Commission’s approval….While Boulder recognizes the authority of the Commission over service provided by a municipal electric utility to customers located outside the jurisdictional boundaries of the municipality, Boulder respectfully submits that the Decision misapprehended certain points of law, as discussed below, and requests that the Commission reconsider its Decision.”), and 5-6 (“Once Boulder determines that it may form a retail electric utility in compliance with its Charter requirements and it, in fact, does so, Boulder will file all applicable applications for transfer.”). Before the Public Utilities Commission of the State of Colorado Decision No. C13-1550 PROCEEDING NO. 13D-0498E 12 23. The emphasis in Boulder’s RRR upon facilities, and the potential for interference with Public Service’s system, invokes a second provision of the public utilities law, § 40-5-101(1)(b), C.R.S. It says: If a public utility, in constructing or extending its line, plant, or system, interferes, or is about to interfere, with the operation of the line, plant, or system of any other public utility already constructed, the commission, upon complaint of the public utility claiming to be injuriously affected, after hearing, may prohibit the construction or extension or prescribe just and reasonable terms and conditions for the location of the lines, plants, or systems affected. Boulder acts as a “public utility” under Commission regulation when it operates outside territorial limits.38 Any extension of Boulder’s system interfering with Public Service’s provisioning of service to extraterritorial customers is within this statute, and the Commission may prohibit the extension or prescribe just and reasonable terms for the location of the lines, plant, or systems affected. 24. Independent of these two statutory authorizations is the Commission’s constitutional mandate over regulated property and services, as recognized by the Court: Article XXV of the Colorado Constitution vests in such agency as the General Assembly may designate all power to regulate the facilities, service, rates, and charges of every public utility operating within Colorado. See Colo. Const. art. XXV. Through the Public Utilities Law, 40-1-101 to 40-7-117, 11 C.R.S. (1998), the General Assembly has assigned to PUC the authority "to do all things, whether specifically designated in articles 1 to 7 of this title or in addition thereto, which are necessary or convenient in the exercise of such power." 40-3-102, 11 C.R.S. (1998). Accordingly, PUC has power to accomplish functions delegated to it by the Public Utilities Law and article XXV.39 25. Boulder’s attempt to minimize the precedential value of Colorado and Southern—by arguing the public utilities law does not contain a specific statute authorizing the 38 Public Utilities Commission v. City of Loveland, 289 P.2d 1090, 1094 (Colo. 1930). 39 Public Service Company of Colorado, v. Trigen-Nations Energy Company, L.L.L.P., 982 P.2d 316, 322 (Colo. 1999). Before the Public Utilities Commission of the State of Colorado Decision No. C13-1550 PROCEEDING NO. 13D-0498E 13 Commission to select property for condemnation of a municipal utility—is of no consequence. In Colorado and Southern, the approval statute at issue also did not reference or grant Commission authority to select facilities for condemnation; rather, as here, the statute granted the Commission general approval powers over the subject property.40 The approval statutes governing the acquisition of Public Service’s assets by Boulder are comparable to the crossing approval statute in Colorado and Southern. 26. Boulder’s second attempt to distinguish Colorado and Southern is to attach significance to the demands of the condemning railway in that case to take immediate possession, in contrast to Boulder’s commitment not to take possession of Public Service’s assets until after the condemnation action (but by implication before obtaining Commission approval). The language and reasoning of Colorado and Southern do not support Boulder’s contention. The condemnation action was prohibited from proceeding not because of the demand for immediate possession, but because the district court lacked subject matter jurisdiction over the property absent Commission approval of the crossing pursuant to the public utilities law.41 40 As quoted by the Court in Colorado and Southern, the approval statute at issue stated: The [public utilities] commission shall have power to determine, order, and prescribe, in accordance with the plans and specifications to be approved by it, the just and reasonable manner including the particular point of crossing at which the tracks or other facilities of any railroad corporation may be constructed across the tracks or other facilities of any other railroad corporation at grade, or above or below grade; and to determine, order, and prescribe the terms and conditions of installation and operation, maintenance, and protection of all such crossings which may now or hereafter be constructed to the end, intent, and purpose that accidents may be prevented and the safety of the public promoted. 493 P.2d at 658-59. 41 Colorado and Southern, 493 P.2d at 658-60. Before the Public Utilities Commission of the State of Colorado Decision No. C13-1550 PROCEEDING NO. 13D-0498E 14 III. ORDER A. The Commission Orders That: 1. The City of Boulder’s Application for Rehearing, Reargument, or Reconsideration of Decision No. C13-1350, filed November 18, 2013, is denied. 2. This Decision is effective on its mailed date. B. ADOPTED IN COMMISSIONERS’ WEEKLY MEETING December 11, 2013. (S E A L) ATTEST: A TRUE COPY Doug Dean, Director THE PUBLIC UTILITIES COMMISSION OF THE STATE OF COLORADO JOSHUA B. EPEL ________________________________ JAMES K. TARPEY ________________________________ PAMELA J. PATTON ________________________________ Commissioners EXHIBIT 5 TO MOTION TO DISMISS FIRST AMENDED PETITION IN CONDEMNATION FOR LACK OF SUBJECT MATTER JURISDICTION PURSUANT TO COLO. R. CIV. P. 12(B)(1) AGREEMENT FOR PAYMENT OF COSTS THIS AGREEMENT FOR PAYMENT OF COSTS (this "Agreement"), is entered into this ~ay of £A'jj) be~( 2018, between the City of Boulder, a Colorado home rule city (the "City" or "Boulder"), and Public Service Company of Colorado, a Colorado corporation, its successors and assigns ("PSCo" or "Public Service"). The City and PSCo may hereinafter be referred to individually as a "Party" or collectively as the "Parties." RECITALS A. In PUC Proceeding No. 15A-0589E (the "PUC Proceeding"), the Colorado Public Utilities Commission ("PUC" or "Commission") approved the designation of assets for transfer outside of the six substations at issue in the PUC Proceeding, subject to Boulder satisfying three conditions, the third one of which is to file an agreement (or multiple agreements) between Boulder and Public Service that address( es) "the payment by Boulder to Public Service of the costs incurred by Public Service to effectuate the separation of the systems." Decision No. Cl 7-0750 (the "Decision"), at Paragraph VIII.A.2. Details regarding the agreement were specified by the Commission in paragraphs 157 through 160 of the Decision. As used in this Agreement and consistent with the Decision, the reference to "separation of the systems" means the Separation Work and Cut-Over Work related to only the Distribution Assets Outside Substations as defined herein. B. The Parties have entered into an Interim Agreement for Payment of Certain Municipalization Costs (Conditions) dated February 28, 2018 (the "Interim Cost Agreement") to commence various portions of the Conditions Work prior to execution of this Agreement. C. The Parties intend that this Agreement, together with the Interim Cost Agreement, satisfy the third PUC Condition in Paragraph VIII.A.2 of the Decision. The third condition is more specifically described in Paragraph 157 of the Decision as a condition "to the designation of the assets for transfer outside the substations." In that context, this Agreement addresses (1) the payment by Boulder of costs incurred by Public Service to effectuate the separation of the systems; (2) the reimbursement by Boulder of costs incurred by Public Service associated with: (a) Boulder's compliance with the PUC's conditions, (b) the development of scope of work documents and detailed design drawings and specifications, ( c) new construction and reconfiguration work costs incurred by Public Service to effectuate the separation of the systems; (3) how Public Service will recover from Boulder the costs that will be incurred to restore the two systems to a single electric system if Boulder changes its mind about municipalization after construction and separation activities have begun; (4) responsibilities for repair and replacement of existing facilities ( outside substations) while Public Service is providing service to customers within Boulder; (5) how failures and damages will be addressed after the date value is established in the condemnation case and up to the Cut-Over Date; and (6) any other final "true up" at the Cut-Over Date not otherwise addressed by the condemnation court. D. The intent of this Agreement is to address the matters set forth in Recital C above, which pertain to Distribution Assets Outside Substations. The Parties intend that matters outside of the scope set forth in Recital C above, including, but not limited to, matters pertaining to 4500267.1 Colorado PUC E-Filings System substations, will be addressed in other agreements between the Parties, as applicable, or by amendment(s) to this Agreement. E. PSCo and the City desire to cooperate with each other in moving forward in an orderly, timely and efficient manner to ensure the safety, reliability, and effectiveness of the PSCo System. Therefore, the Parties incorporate these Recitals into this Agreement, and agree as follows: I. Definitions Boulder System means the electric distribution system to be created, including existing facilities and new construction, which will serve Boulder customers within the Boulder city limits separate from the electric distribution system PSCo will use to serve its customers after the Cut-Over Date. Capital Costs means those costs recorded by PSCo in the ordinary course of its public utility business as capital costs. In general, it is anticipated that these costs will be recorded in FERC capital accounts including, but not limited to, Distribution Plant Accounts 361-373, pursuant to the FERC Uniform System of Accounts and the capitalization requirements outlined in the Xcel Energy Capitalization Policy. Clerical Error means a typographical numerical error in a Payment Request, a computational error in a Payment Request or an entry error in a Payment Request, such as an entry that is for another activity and not for Costs under this Agreement. Commission has the meaning as defined in Recital A. Condemnation Case refers to an eminent domain proceeding that may be filed by the City against PSCo to acquire certain portions of PSCo's existing distribution system and property for the Boulder System. Conditions Work means the work required to satisfy the PUC conditions as described in paragraphs 151 through 160 and Paragraph VIII. A.2 of the Decision. Costs mean the actual costs incurred by PSCo pursuant to this Agreement to effectuate the separation of its Existing System based upon (I) the Fully Loaded Costs (defined below) incurred by PSCo for its internal resources; (2) costs of materials (including purchasing and warehousing overheads as described in PSCo's Commission-approved Cost Assignment and Allocation Manual, the current version of which has been made available to the City); (3) costs incurred under contracts with third-party contractors and vendors; (4) costs identified by the PUC in Paragraphs 157 through 160 of the Decision; (5) legal expenses to the extent provided for in Paragraph I of Section II below; and (6) any other costs covered by the Interim Cost Agreement and this Agreement. 2 Costs Estimates mean the non-binding good faith estimates of Costs PSCo expects to incur as provided for in this Agreement. Cut-Over Date refers to the date when the separation of the Boulder System from the PSCo System is complete, so that (1) PSCo's System has the same safety, reliability and effectiveness as it did prior to the commencement of Separation activities; (2) the PSCo System and the Boulder System can each be operated separately from the other; and (3) Boulder is · willing and able to begin serving all of its customers. Cut-Over Period means the period of time during which the Cut-Over Work 1s undertaken and completed. Cut-Over Work refers to the activities after the Separation Work is completed that are necessary for the PSCo System and the Boulder System to be operated separately from each other. Detailed Design Drawings mean the package of drawings, equipment, construction specifications and any other documentation created by each Party to be furnished to their respective construction personnel and contractors in order for them to undertake the Separation Work. Detailed Design Drawings for the Separation Work to be performed by PSCo also include PSCo' s Scope of Work documents. Dispute means a good faith claim made by either Party in writing to the extent, and only to the extent, permitted under this Agreement. Dispute Notice means a written identification of a Dispute containing the information required by this Agreement. Dispute Resolution Process means the process described in Section V below. Distribution Assets Outside Substations means the existing distribution assets and property, both real and personal, outside of substations that were the subject of the PUC Proceeding, and any new distribution assets outside substations, both real and personal, that will be constructed in connection with Separation, and include the portion of distribution feeders located inside substations that originate at the breakers and exit the substation. Existing System means PSCo's Distribution Assets Outside Substations, which presently serve customers both within and outside the Boulder city limits. Force Majeure refers to the inability to perform an obligation of this Agreement, as a result of a cause that could not be reasonably anticipated by a Party or is beyond its reasonable · control after exercise of commercially reasonable efforts to perform, including but not limited to fire, strike, war, riots, terrorist acts, acts of governmental authority ( other than the City), acts of God, floods, epidemics, quarantines, labor disputes, unavailability or shortages of materials or equipment or failures or delays in the delivery of materials. 3 Fully Loaded Costs means PSCo's direct labor costs, which include labor-related benefit loadings (including administrative and general expenses, facility costs, lost time, payroll taxes, pension and benefit costs, insurance expenses, and workers compensation costs) in effect at the time such direct labor costs are incurred. These amounts are subject to change. Go/No Go Decision means the pre-Separation decision by the City to move forward with Municipalization, after a Condemnation Case, or an agreement in lieu of a Condemnation Case regarding acquisition of PSCo property interests, and after the City otherwise has sufficient information, in its sole discretion, including cost information, to decide whether to move forward with Municipalization; and, if the City decides Municipalization should move forward, the term "Go/No Go Decision" also includes all necessary decisions by Boulder voters. Good Utility Practice means any practices, methods, and acts engaged in or approved by a significant portion of the electric utility industry during the relevant time period, or any of the practices, methods, and acts which, in the exercise of reasonable judgment, in light of the facts known at the time the decision was made, could have been expected to accomplish the desired result at a reasonable cost consistent with good business practices, reliability, safety and expedition. Good Utility Practice is not intended to be limited to the optimum practice, method, or act to the exclusion of all others, but rather to be acceptable practices, methods, or acts generally accepted in the region, including those practices required by Federal Power Act Section 215(a)(4). The term "Good Utility Practice" describes a minimum measure of quality and not a maximum measure of quality. Gross Negligence or Willful Misconduct of PSCo means any act, omission, or failure to act by PSCo in connection with this Agreement that was intended to cause harm to, or was in reckless disregard of, or wanton indifference to, the financial interests of Boulder. Municipalization means all activities required for Boulder to own and operate the Boulder System separately from the PSCo System. Payment Due Date means the date that is thirty (30) days after submittal by PSCo of a Payment Request to Boulder. In the event a Payment Due Date falls on a weekend or federal banking holiday, the Payment Due Date shall be the next business day. Payment Request means a written request, which may be via email or in accordance with Section VII.M. of this Agreement, including the items required in this Agreement, for payment conveyed by PSCo to Boulder for reimbursement by Boulder of Costs incurred prior to the date of the Payment Request. Pre Go/No Go Decision Work means all work covered by this Agreement to be completed before the Go/No Go Decision. Proprietary Information means all ( 1) information submitted by PS Co to Boulder under this Agreement, or one or more non-disclosure agreements, that it marks as confidential or 4 proprietary, including information in a Payment Request; (2) information which should have been identified as confidential when disclosed to Boulder or its representative, upon notification that such information should have been marked as confidential or proprietary; and (3) information of either Party protected from disclosure by applicable law, including without limitation, the Colorado Open Records Act, applicable PUC rules and the Homeland Security Act. PSCo System means the electric distribution system to be created, including existing facilities and new construction, in accordance with the Decision, that will serve PSCo customers, separate from the Boulder System. PSCo Work, within the scope of this Agreement, means the work necessary to design, engineer and construct new Distribution Assets Outside Substations required for the PSCo System and to design, engineer and reconfigure the Existing System as necessary to effectuate Separation. Scope of Work means the standard documents Public Service prepares prior to having Detailed Design Drawings prepared and in sufficient detail to provide designers information to produce Detailed Design Drawings. Examples of Scope of Work were provided by PSCo in the PUC Proceeding at pages 1-6 of Attachment CSN-18 and pages 1-6 of Attachment CSN-19. Security means the instrument meeting the requirements of this Agreement that binds a financial institution to pay PSCo in the event the City does not pay PSCo as provided in Section IV below. Separation means the creation of the Boulder System and the PSCo System. Separation Period means the period of time during which the Separation Work 1s commenced and completed. Separation Work means the construction by PSCo and Boulder of their respective new Distribution Assets Outside Substations and the separation and reconfiguration of the Existing System in connection with creating the Boulder System and the PSCo System. It is understood that additional work, outside the scope of this Agreement, associated with substations, will also be required for Separation. Stop Work Default has the meaning set forth in Section IV.B. of this Agreement True Up Costs has the meaning set forth in Section II.K. of this Agreement. Valuation Date means the date of valuation of the PSCo property interests to be acquired by Boulder pursuant to agreement of the Parties or in the Condemnation Case. 5 II. Work to be Performed; Boulder Cost Responsibilities A. PSCo Work Standards. PSCo Work shall be performed in accordance with PSCo's existing standards or practices, Good Utility Practice, applicable reliability standards, and applicable law. To the extent that PSCo's existing standards or practices in effect at the time PSCo Work is being undertaken exceed Good Utility Practice, PSCo Work on PSCo's new facilities and on existing facilities that will be part of the PSCo System may be performed in accordance with PS Co's existing standards or practices. If and to the extent PS Co agrees in its sole discretion in writing to operate any Boulder new facilities prior to the Cut-Over Date, PSCo may require that such facilities be designed and constructed to PS Co's existing standards even if such standards are more stringent than Good Utility Practice. If and to the extent PSCo does work on existing facilities that will become part of the Boulder System, such work will be performed at a minimum of Good Utility Practice, but PSCo may perform such work consistent with PSCo' s existing standards or practices, even if such standards or practices are higher than Good Utility Practice, in order for PSCo to be able to operate such facilities. B. Payment of Costs. Boulder hereby agrees to pay all Costs incurred by PSCo to effectuate Separation, including the Costs for the work described below, subject only to refund if and to the extent determined pursuant to the Dispute Resolution Process in Section V of this Agreement to have been incurred as a result of the Gross Negligence or Willful Misconduct of PSCo or Clerical Error. C. Cooperation, Communication and Coordination. The Parties shall cooperate with each other in good faith to effectuate Separation without unnecessary delay or Costs. In order to prevent or minimize disputes, designated representatives of each Party shall confer with each other no less frequently than every thirty (30) days during the term of this Agreement to: (a) provide information about the progress of their respective activities, (b) coordinate their activities, as appropriate, (c) discuss any additional matters that may be advisable, and (d) timely address any issues or concerns regarding Costs. D. Conditions Work. 1. The Interim Cost Agreement. The Interim Cost Agreement contains the process agreed upon by the Parties to reimburse PSCo for the Costs associated with certain portions of the Conditions Work. Any Conditions Work not covered by the Interim Cost Agreement shall be covered by this Agreement. In the event of any conflict between the terms of the Interim Cost Agreement and this Agreement, this Agreement shall control. 2. Preparation of Scopes of Work. PSCo, in collaboration with Boulder, has prepared and furnished to Boulder a list of the Scopes of Work (including distribution feeder work and tap work) that involve PSCo Work. Public Service engineers are in the process of preparing the Scopes of Work for the feeders and taps on the list, except those feeder Scopes of Work that are identified on the list as being 6 substation dependent. Scopes of Work for feeders that are substation dependent will be prepared after the final determinations are made regarding where Boulder will connect its distribution facilities to substations. The Scopes of Work are being prepared using assumptions in lieu of necessary field work. The field work will be done as part of the Detailed Design Drawings work and changes may be required based on new information provided by the field work. 3. Boulder Review and Comment on Scopes of Work. PSCo will provide copies of the Scopes of Work to Boulder for review and comment (i) so that Boulder may suggest changes for PSCo consideration, prior to the competitive solicitation for Detailed Design Drawings, regarding the engineering, the points of separation, or other issues relevant to the Scopes of Work, and (ii) so that Boulder's designers and other contractors can coordinate Boulder work with the PSCo Work to avoid duplication of preparation of Detailed Design Drawings or Separation Work, conflicts in Separation Work, or any gaps in the Separation Work. (a) Within thirty (30) days after receipt of each Scope of Work, Boulder shall review the Scope of Work in good faith and may raise, in writing any suggested changes that it has identified that are reasonably determinable from the Scope of Work documents. Boulder shall also respond with its views as to items noted in the Scope of Work that require resolution such as which Party will retain ownership of existing distribution transformers in specific situations. (b) Public Service shall consider in good faith any requests for changes to the Scopes of Work made by Boulder and responses to items that require resolution but, because PSCo is the certificated utility and PSCo's Work involves the facilities necessary to serve its customers, final determinations regarding the Scopes of Work shall be in the sole discretion of PSCo, subject only to Boulder's right to dispute Costs on the grounds of Clerical Error or Gross Negligence or Willful Misconduct of PSCo as provided in this Agreement. (c) Failure to respond within thirty (30) days or to request a particular change does not waive Boulder's right to request changes or provide responses for PSCo's good faith consideration (i) in connection with Boulder's review of Detailed Design Drawings (as provided in Section II.E.4 below), or (ii) during construction; but does waive any right Boulder may have had to claim that there has been Gross Negligence or Willful Misconduct of PSCo as to issues that are reasonably determinable from the Scopes of Work. ( d) The purpose of affording Boulder an opportunity to review the Scopes of Work is to minimize or avoid disputes later. Any review conducted by or information obtained by either Party as to the other Party's Scopes of Work shall not be construed as endorsing the design or as any warranty of safety, reliability or effectiveness of the work described. 7 E. Pre Go/No Go Decision Work. 1. Commencement of and Security for Pre Go/No Go Decision Work. After the completion of and payment in full for the Conditions Work, resolution of any existing Disputes, and the City providing the Security for the Pre Go/No Go Decision Work as described in Section IV of this Agreement, PSCo will proceed with the Pre Go/No Go Decision Work as set forth in this Agreement. 2. Cost Estimate for Detailed Design Drawings. Within thirty (30) days after completion of the Scopes of Work, which shall be following Boulder's review thereof and the making of any changes required to resolve items identified by PSCo in the Scopes of Work, or changes requested by Boulder to which PSCo has agreed, PSCo will conduct a competitive solicitation, using PSCo' s existing procedures and standards, to the extent applicable, to hire a contractor to prepare the Detailed Design Drawings (including conducting all field work) in accordance with PSCo's design standards and applicable bidding standards. The request for proposals will request proposals for completion by October 1, 2019. The terms and conditions and manner of conducting such competitive solicitation and awarding of bids shall be in the sole discretion of PSCo. The amount bid by the contractor selected by PS Co, together with PS Co's good faith non-binding estimate of its internal costs associated with the Detailed Design Drawings, will be PSCo's Cost Estimate for preparation of the Detailed Design Drawings. PSCo will provide to Boulder its Cost Estimate for the Detailed Design Drawings promptly after the Cost Estimate is completed. 3. Field Work in Connection With Detailed Design Drawings. The portions of Scope of Work activities not done as part of Conditions Work including, but not limited to, field work and other work to assess constructability, were deferred by agreement of the Parties and will need to be completed as part of the preparation of the Detailed Design Drawings. Field Work includes, but is not limited to, PSCo or its contractor(s) obtaining government permits to be able to conduct field work activities, preparing and submitting plans and profiles to the extent required by applicable laws, conducting surveys, acquiring easements and other real property rights ( consistent with its existing procedures and standards and to the extent deemed appropriate by PSCo prior to the Go/No Go Decision) on terms and conditions acceptable to PSCo, estimating or engaging consultants to estimate the work and Costs involved in obtaining construction-related permits including, but not limited to, state and local storm water drainage permits, and performing such other work as necessary to inform the preparation of the Detailed Design Drawings. To the extent practicable and in accordance with PSCo's normal practices, the application for permits and acquisition of easements will occur concurrently with other Detailed Design Drawings Work. Neither Party will unnecessarily delay Detailed Design Drawings Work while seeking permits or easements or other real property rights. Boulder agrees to be cooperative with and provide assistance to PSCo to minimize regulatory delays and burdens and to facilitate field work and the acquisition of any necessary easements and other real property rights. 8 4. Boulder Review and Comment on Detailed Design Drawings. PSCo will provide the Detailed Design Drawings to Boulder for review and comment so that Boulder may suggest changes for PSCo consideration, regarding the design, prior to the competitive solicitation for a general contractor. (a) Boulder shall review the Detailed Design Drawings in good faith and may raise, in writing, any suggested changes that it has identified that are reasonably determinable from the Detailed Design Drawings documents within thirty (30) days after receipt of each Detailed Design Drawing. (b) Public Service shall consider in good faith any requests for changes to the Detailed Design Drawings made by Boulder but, because PSCo is the certificated utility and PS Co's Work involves the facilities necessary to serve its customers, final determinations regarding the Detailed Design Drawings shall be in the sole discretion of PSCo, subject only to Boulder's right to dispute Costs on the grounds of Gross Negligence or Willful Misconduct of PSCo or Clerical Error as provided in this Agreement. (c) Failure to respond within thirty (30) days or to request a particular change does not waive Boulder's right to request changes for PSCo's good faith consideration during construction, but does waive any right Boulder may have had to claim that there has been Gross Negligence or Willful Misconduct of PSCo as to issues that are reasonably determinable from the Detailed Design Drawings. ( d) The purpose of affording Boulder an opportunity to review the Detailed Design Drawings is to minimize or avoid disputes. Any review conducted by or information obtained by either Party as to the other Party's Detailed Design Drawings shall not be construed as endorsing the design or as any warranty of safety, reliability or effectiveness. 5. Cost Estimate for PSCo's Work and the Cut-Over Work. After completion of the Detailed Design Drawings, which shall be following Boulder's review thereof and the making of any changes requested by Boulder to which PSCo has agreed, subject to the provisions of Section II.E.5.(e) below, PSCo will conduct a competitive solicitation, using PSCo's existing procedures and standards, to the extent applicable, to hire a general contractor for PSCo's Work and the Cut-Over Work. The request for proposals for the competitive solicitation will be issued within sixty (60) days after completion of the Detailed Design Drawings. The competitive solicitation will request bids for a completion date for PSCo's Work of three years after the Go/No Go Decision and, at PSCo' s option, may also seek bids for one or more alternative completion dates. While the competitive solicitation will also seek bids for the Cut-Over Work, because the Cut-Over Work is dependent on the status of Boulder's Separation Work, the competitive solicitation will not necessarily specify a completion date for Cut-Over Work. 9 (a) The terms and conditions and manner of conducting such competitive solicitation shall be consistent with PSCo's existing procedures and standards, to the extent applicable. The awarding of bids shall be in the discretion of PSCo, consistent with PSCo's existing procedures and standards. PSCo reserves the right to exclude certain activities or portions of the PSCo Work from the competitive solicitation, in its sole discretion. PSCo reserves the right not to award any contracts as a result of any competitive solicitation. (b) PSCo anticipates the competitive solicitation process, including preparation of and issuance of a request for proposals, evaluation of bids, tentative selection of a winning bidder and such negotiations as PSCo deems appropriate prior to a Go/No Go Decision will take approximately six (6) months from completion of the Detailed Design Drawings, but Boulder acknowledges and agrees that such process may be of longer duration and PSCo is not responsible for any delays unless directly caused by the Gross Negligence or Willful Misconduct of PSCo. ( c) The amount bid by the general contractor selected by PS Co, subject to all exceptions, limitations and qualifications included in the bid, together with PSCo's good faith non-binding estimate of its internal costs associated with the Separation Work and Cut-Over Work (including all of the Cut-Over Work described in Section II.F.3. below) will be PSCo's Cost Estimate for the Separation Work and Cut- Over Work. In accordance with Section II.E.5.(b) above, PSCo anticipates that it will provide to Boulder its Cost Estimate, including, upon execution of a highly confidential non-disclosure agreement, details consistent with PSCo's requirements and the confidentiality requirements of the winning bidders, on or before May 1, 2020, or within six months after completion of the Detailed Design Drawings, whichever is later. (d) If for any reason the competitive solicitation process is not completed and PSCo's Cost Estimate for the Separation Work and Cut-Over Work is not available on or before May I, 2020, PSCo will provide to Boulder the information PSCo has available by that date regarding its Cost Estimate and will provide its Cost Estimate as soon thereafter as it is available. (e) Notwithstanding the foregoing, PSCo reserves the right not to conduct a competitive solicitation for a general contractor in the event that PSCo decides to perform the Separation Work and Cut-Over Work without a general contractor. In such event, PSCo will provide to Boulder a Cost Estimate, based on information available to PSCo at that time, for PSCo Work and Cut-Over Work, no later than May I, 2020. (f) In the event there is a Stop Work Default pursuant to Section IV.B. of this Agreement, the dates set forth in subparagraphs ( c) through ( e) above shall be extended by the number of days of the stop work plus additional days to the extent the Stop Work Default has exacerbated the delay greater than a day-for-day extension. 10 (g) On or before May 1, 2020, PSCo will provide to Boulder a general, high-level estimate, to the extent available, of the Capital Costs that are of the type described in Section II.K4.(a) and (b) that were incurred by PSCo in the City of Boulder for the prior calendar year. 6. No Other Cost Estimates. (a) Because True Up Costs are contingent, Public Service cannot provide during the Pre Go/No Go Decision, a Cost Estimate for True Up Costs. (b) Prior to the Go/No Go Decision, Boulder will be conducting its own field work in connection with preparation of its own Detailed Design Drawings for the Boulder System and, upon reasonable request for purposes of Boulder's Detailed Design Drawings (and not for the purpose of valuation), PSCo will provide information that it deems reasonable about specific pieces of equipment of the Existing System that will interconnect to the Boulder System. During the Separation Period, Boulder may need PS Co's assistance as the serving utility from time to time as the Parties may agree, for switching customers to backup feeders, providing load for testing and commissioning, energizing any Boulder underground lines to prevent moisture damage prior to a line being placed in service, and other similar activities. Boulder will be responsible for the Costs of such activities, but it is understood that PSCo will not provide a Cost Estimate for such activities, due to their intermittent nature. 7. Ballot Measure. Boulder intends to submit to its voters a ballot measure to obtain authorizations for funding of its Municipalization costs including, but not limited to, the Costs Boulder is required to pay under this Agreement. Boulder is solely responsible for evaluating its own and PSCo's Cost Estimates for the Separation Work and Cut-Over Work, and Boulder's startup costs, any other costs Boulder may incur in the process and determining the amount of funding for which it will seek authorization. F. Post Go/No Go Decision Work. 1. Commencement of and Security for Post Go/No Go Decision Work. After the Go/No Go Decision, if Boulder has made the determination to proceed with Municipalization, and has paid all Pre Go/No Go Decision Costs in full, and all existing Disputes have been finally resolved, and Boulder has provided Security as described in Section IV, PSCo will proceed with its share of the Post Go/No Go Decision Work and Boulder shall pay for all Costs associated therewith, which shall include but not be limited to the Costs described in this Section II.F. 2. PSCo Work (a) PSCo Work. PSCo will perform or cause to be performed its portion of the Separation Work including, but not be limited to, the work involved in the 11 reconfiguration of the Existing System and construction of its new Distribution Assets Outside Substations, any additional field work including field work required to be updated due to the passage of time or new legal requirements, permitting, acquisition of easements or other property rights, procurement, project management and supervision, and all other internal and third party contractor work. (b) PSCo Assistance to Boulder. Upon the agreement of both Parties, the Parties will coordinate efforts as needed, including without limitation, potential PSCo assistance (without liability to PSCo) with Boulder's testing and commissioning of its new facilities such as temporarily switching customers to backup; temporarily providing load; energizing any Boulder underground lines to prevent moisture damage prior to a line being placed in service, etc. 3. Cut-Over Work. Cut-Over Work shall not commence until all Separation Work (both PSCo Work and work required to be performed by Boulder) has been completed, all substation and transmission work required for Separation has been completed, all Separation Work Costs have been paid in full, all existing Disputes have been finally resolved, and Security for the True Up Costs has been provided as required by Section IV.A.2. or IV.A.3., as applicable. Boulder shall pay all Costs associated with the activities to be performed by PSCo in relation to Cut-Over Work, which shall include but not be limited to the following: (a) PSCo creating a means for removing electric customers and retaining gas customers in PSCo systems; and physical switching activities to cut City customers over to service by Boulder; (b) PSCo reworking, reconciling, and reestablishing its electric outage management reporting systems and control, electric meter reading, and billing systems after removal of City electric customers; ( c) PSCo generating its final electric bills for customers in the City; ( d) Such meter reading coordination activities during the last billing cycle before Cut-Over and the first billing cycle after Cut-Over involving Boulder's first meter readings and PSCo's last electric meter readings to mitigate to the extent possible any disruption to customers as the Parties may agree by separate agreement entered into prior to commencement of the Cut-Over Work; and (e) Other activities PSCo agrees to perform in its sole discretion. G. Service Prior to Cut-Over Date. Prior to the Cut-Over Date, PSCo will continue to operate the existing distribution system and be the retail electric utility provider for all customers inside and outside the City, in accordance with its current practice, to maintain safe, effective and reliable service. PSCo will continue to collect payments for electric service from Boulder customers prior to the Cut-Over Date. 12 H. Regulatory Proceedings. Boulder shall reimburse PSCo for its Costs incurred in connection with PUC proceedings pertaining to Distribution Assets Outside Substations including: 1. Commission Review of Conditions compliance (Decision ,r,rl 61 and 162), 2. PUC Final Approval (Decision ,rl 0), and 3. Any other PUC proceedings related to the subject matter of the Decision required by the Commission or that the Parties jointly determine are necessary. I. Litigation Costs. Boulder shall reimburse PSCo for its Costs incurred in connection with the following litigation proceedings: 1. Enforcement of third party contracts, provided any actual damages awarded to PSCo from such litigation attributable to such Costs shall be credited toward the amount of the Costs Boulder is to pay PSCo, 2. Costs incurred by PSCo to enforce the Security provisions of this Agreement including, but not limited to, the Costs of any action against the Issuer or Bank providing the Security, and 3. Attorneys' fees incurred to enforce Boulder's performance of this Agreement as provided in Section V.F. of this Agreement. J. Restoration Costs. 1. If, after the Go/No-Go Decision but before the Cut-Over Date, the City decides not to continue with Municipalization, the City shall provide written notice to PSCo of its decision. The City shall pay any Costs incurred by PSCo under this Agreement up through the date PSCo receives Boulder's written notice that it is not continuing with Municipalization, any early termination or other damages or costs PSCo may incur as a result of Boulder's decision not to continue with Municipalization, and all costs to restore the Existing System to a single electric system that can provide service to customers both within and outside the Boulder city limits with the same safety, reliability and effectiveness (but not necessarily the same configuration) as it did prior to the Go/No Go Decision. As to restoration activities, the Parties will proceed to work cooperatively to obtain the following results: (a) PSCo will not necessarily be able to stop where it is with PSCo Work or the Cut-Over Work at the time notice is received regarding Boulder's decision and it may be necessary to complete or reverse some of the PSCo Work or Cut-Over Work in order to be able to restore the system to a single adequate system. 13 (b) In connection with achieving a single electric system, utilize reasonable Cost mitigation processes so long as they do not interfere with the safety, reliability and effectiveness of PSCo's service, the electric distribution facilities or other PSCo facilities and are consistent with PSCo practices. (For example, new facilities that were part of the PSCo Work paid for by the City and constructed by PSCo prior to receipt of Boulder's notice that are determined not to be needed by PSCo to serve customers may be disconnected from the restored system and title transferred to the City so that the City can decide whether to remove such facilities, at its sole cost, and at a time convenient to the City.) (c) The City will provide to PSCo a legal right to locate and maintain any facilities constructed for Municipalization that PSCo will own and operate as part of its system after Boulder determines not to municipalize. PSCo will provide the City with a final Payment Request within one hundred eighty (180) days after Boulder's notification and completion of all restoration activities. K. True Up Costs. I. Overview. The purpose of this section of this Agreement is to address the topics in paragraph 160 of the Decision. Boulder shall reimburse PSCo for the True Up Costs described in subparagraph 4 below. 2. Tracking and Security. PSCo shall track True Up Costs and annually after the Go/No Go Decision, and no later than ninety (90) days prior to the expected date of commencement of Cut-Over Work, PSCo will provide a high-level summary to Boulder concerning the estimated amount of True Up Costs incurred to date including, to the extent reasonably available, the associated FERC account numbers. Boulder shall raise any issues with the estimated True Up Costs included in the summary within thirty (30) days after receiving such summary. In the event of a Dispute concerning estimated True Up Costs, the dispute resolution provisions of this Agreement shall apply. The intent of providing the reports is to facilitate Boulder planning, to provide for timely dispute resolution, and allow for the determination of the amount of Security required for the True Up Costs; provided that failing to include any True Up cost in a summary shall not impact Boulder's obligation to pay for such True Up Cost. Security for the True Up Costs shall be 100% of the estimated amount of True Up Costs provided to Boulder by PSCo ninety (90) days prior to the expected date of commencement of Cut-Over Work. In the event Boulder fails to dispute any Costs apparent from the information contained within the high-level summary within the thirty (30) day period provided for herein, Boulder shall be deemed to have waived the right to challenge such Costs as Gross Negligence or Willful Misconduct by PSCo pursuant to Section V of this Agreement. 14 3. Payment. PSCo's final calculation of True Up Costs shall be provided to Boulder no later than one hundred eighty (180) days after the Cut-Over Date. Payment shall be due to PSCo within the time provided in this Agreement for payment and shall be subject to the dispute resolution provisions of this Agreement. 4. True Up Costs. Boulder shall reimburse PSCo for the following True Up Costs: (a) Capital Costs for New Facilities to Serve New Customers. The actual Capital Costs incurred by PSCo for new facilities installed subsequent to the Valuation Date and before the Cut-Over Date to serve new customers who will become Boulder customers after the Cut-Over Date. (b) Capital Costs Due to Storms, Catastrophic Events, and Failure of a Major Distribution Asset Outside Substations. (I) The actual Capital Costs incurred by PS Co subsequent to the Valuation Date and before the Cut-Over Date as a result of a major weather event or other catastrophic events or Failure of a Major Distribution Asset Outside Substations that will become part of the Boulder System at the Cut-Over Date. In the event of a major storm or other catastrophic event or Failure of a Major Distribution Asset Outside Substations, PSCo will perform in accordance with its duty to serve in its ordinary course of business and proceed with any capital expenses required to meet such duty. PSCo will notify Boulder of its actions as soon as it is reasonably able to do so. For purpose of this provision, "Failure of a Major Distribution Asset Outside Substations" shall mean the failure of a single Distribution Asset Outside Substations that exceeds $75,000 in new Capital Costs or a Capital Cost project, such as replacement of poles that in the aggregate exceeds $75,000 in new Capital Costs. (2) In the event PSCo believes a Capital Cost in excess of $75,000 may be necessary in connection with an existing Distribution Asset Outside Substations that will be owned by Boulder after the Cut-Over Date (such as a feeder exit), if such situation occurs after the Go/No Go Decision and no immediate risk of failure is perceived, PSCo will consult with Boulder and will proceed as directed by Boulder, so long as, in PSCo's sole determination, PSCo will not incur additional operational or maintenance costs if it defers replacement and provided PSCo also determines it will be able to maintain safe, effective and reliable service prior to the Cut-Over Date without the replacement. In the event replacement becomes necessary to maintain safe, effective, and reliable service prior to the Cut-Over Date, in PSCo's sole discretion, PSCo may replace such Distribution Asset Outside Substations and the Capital Costs for the portion that will become part of the Boulder System shall be included in True Up Costs. 15 ( c) Capital Costs for AGIS and Other System-Wide Improvements. (I) To the extent not addressed in the Condemnation Case, the actual Capital Costs incurred by PSCo for any PUC-approved, system-wide, improvements to PSCo's system, including but not limited to PSCo's Advanced Grid Intelligence and Security ("AGIS") initiative, made within the City and Boulder's share of the associated costs. (2) After the Go/No Go Decision, if Boulder has decided to proceed with Municipalization, then, to the extent that the PUC approves in a separate proceeding that PSCo is able to do so without impacting other customers, PSCo will defer the installation of AGIS meters in the City to the end of the schedule (currently estimated to be in 2023) or not deploy AGIS within the city limits subject to Boulder being responsible for any incremental costs arising out of such deferment or costs associated with non deployment that PSCo demonstrates will result from PSCo deferring or not making such deployment within city limits. (d) Distribution Assets Outside Substations That Cannot Be Used After Cut-Over. The value of any Distribution Assets Outside Substations that PSCo will not be able to use after Cut-Over because of changes in the Separation Work or other changes occurring after the Valuation Date, shall be included in True Up Costs to the extent the replacement costs new of such Distribution Assets Outside Substations, in the aggregate, exceed $250,000.00. ( e) Other Costs. True Up Costs shall include any other amounts not otherwise addressed by the Condemnation Case as ordered by the PUC under Section 160( c) the Decision. 5. Operation and Maintenance Expenses of Existing Facilities. Boulder is not required to reimburse PSCo's operation and maintenance expenses as to Distribution Assets Outside Substations that are not included in any of the True Up Costs identified above. 6. Operation and Maintenance Expenses of New Boulder Facilities. If and to the extent PSCo agrees in writing, in its sole discretion, to operate any of Boulder's new facilities prior to the Cut-Over Date, Boulder shall be responsible for reimbursement of PS Co's Costs for any maintenance and repair and capital costs incurred in connection with such new Boulder Facilities. 7. Other Provisions Concerning True Up Costs. True Up Costs will not include depreciation or appreciation of the assets to be acquired by Boulder. 16 III. Process for Payment Requests A. Submission of Payment Request. PSCo shall submit its Payment Request to Boulder no more often than monthly, for Costs not previously billed (including Costs for prior periods, not previously billed). As to PSCo internal Costs, Payment Requests shall include total hours by department and total amount owed to the extent reasonably practicable without requiring PSCo to incur additional costs and shall be generally in the form of the Payment Requests that have been previously submitted. PSCo will consult with Boulder, prior to issuance of the request for proposals for the general contractor, and consider Boulder's reasonable requests for request for proposal terms to allow PSCo to provide certain information to Boulder concerning the Costs billed to PSCo by the general contractor; provided, however, it is acknowledged that the final terms of a third party contract will not necessarily be consistent with the request for proposal. As to Costs of the general contractor, subject to requirements of maintaining confidentiality, applicable PSCo corporate policy, and the terms and conditions of the third-party contracts, PSCo and Boulder will determine what reasonably sufficient information to support the Payment Requests will be provided to Boulder in a mutually acceptable format. PSCo is not obligated to provide to Boulder, even pursuant to a Non- Disclosure Agreement, any PSCo timekeeper names, or any wage or benefit information. For any Payment Request containing Proprietary Information, PSCo will provide a cover sheet that does not contain Proprietary Information but that identifies the vendor, the date range covered by the Payment Request, and a brief explanation of the nature or type of work covered by the Payment Request. PSCo will use best efforts to include all Costs in a Payment Request within ninety (90) days of the Costs being incurred. All final Payment Requests for the Pre Go/No Go Work shall be provided to Boulder no later than one hundred eighty ( 180) days after commencement of the PSCo Work. All final Payment Requests for the Post Go/No Go Work shall be provided to Boulder no later than one hundred eighty (180) days after the Cut-Over Date. B. When Payment is Due. No later than the Payment Due Date, Boulder shall pay PSCo the entire amount of the Payment Request; provided, however, if and to the extent Boulder believes in good faith that there is a Clerical Error in the Payment Request and provides notice and an explanation of the asserted Clerical Error on or before the Payment Due Date, then Boulder shall not be required to pay the asserted Clerical Error portion of a Payment Request until the date specified in Section V.C. l. to allow for potential resolution by accounting representatives as provided in Section V of this Agreement. C. Proprietary Information. The Parties agree that only persons who have executed a Non-Disclosure Agreement in the form of Exhibit A attached to this Agreement shall have access to unredacted Payment Requests or Dispute Notices. In the event a Payment Request or Dispute Notice includes Proprietary Information, Boulder shall redact such Proprietary Information prior to disclosing the Payment Request or Dispute Notice to any person who has not executed a Non-Disclosure Agreement. 17 D. Stop Work if Payment Requests Not Timely Paid. As more fully provided in Section IV.B. of this Agreement, PSCo may stop work at any time if Boulder does not timely pay a Payment Request as provided herein. E. Payment Disputes Other Than for Clerical Errors. At any time that Boulder believes in good faith that Costs are being incurred or are about to be incurred as a result of Gross Negligence or Willful Misconduct of PSCo, Boulder shall promptly, but in no event later than thirty (30) days after Boulder first has reason to believe that Costs are being or were incurred, or are about to be incurred as a result of Gross Negligence or Willful Misconduct of PSCo, provide written notice to PSCo that includes an explanation of such claim. Such claim shall be subject to the provisions of Section V of this Agreement. IV. Security and Stop Work A. Security. Boulder will provide Security to PSCo to provide assurance that Boulder will reimburse PSCo for its Costs. 1. Pre Go/No Go Decision Costs -Letter of Credit. The instrument by which Boulder will provide security to PSCo that Boulder will reimburse PSCo for its Pre Go/No Go Decision Costs shall be a letter of credit as described below: (a) The security shall be in the form of an irrevocable, stand-by letter of credit substantially in the form of Exhibit B attached (a "Letter of Credit"), from a financial institution acceptable to PSCo ("Issuer"). The Issuer of the Letter of Credit shall have and maintain a long-term credit rating (unsecured by third party support) of equivalent to A-( or better) by Standard & Poors and A3 ( or better) from Moody's. If the credit rating is A-or A3, the Issuer must not be on credit watch or have a negative outlook by any rating agency. (b) Pursuant to C.R.S. 4-5-103(d), the rights and obligations of the Issuer to Public Service under the Letter of Credit shall be independent of the existence, performance, or nonperformance of any contract or arrangement out of which the Letter of Credit arises or which underlies it, including contracts or arrangements between the Issuer and Boulder and between Boulder and Public Service (including, but not limited to, this Agreement and the Interim Cost Agreement). (c) The Letter of Credit must be for a minimum of 360 days. The City shall provide PSCo at least forty-five ( 45) days advance written notice prior to any expiration or earlier termination of the Letter of Credit. No later than thirty (30) days prior to expiration of the Letter of Credit, the City shall cause the renewal or extension of the Letter of Credit for additional consecutive terms of 360 days until the Letter of Credit terminates as provided in subparagraph ( f) below. ( d) The Letter of Credit shall be provided to PSCo prior to the commencement of Detailed Design Drawings. The Letter of Credit for the Pre Go/No Go 18 Decision Costs shall be in the amount of $1,700,000.00 until terminated as provided in subparagraph (f) below. ( e) 1n order to draw upon the Letter of Credit, PS Co shall only be required to provide to the Issuer a written presentation in the form of Exhibit C. If at any time PSCo draws upon the Letter of Credit, Boulder shall restore the Letter of Credit to its pre-draw amount within ten (10) business days. (f) The Letter of Credit shall terminate after all of the Pre Go/No Go Decision Costs have been billed and indefeasibly paid in full and all Disputes pertaining to Pre Go/No Go Decision Costs have been fully resolved. (g) If the Issuer falls below the credit rating requirements of subparagraph (a) above, or the Letter of Credit is not renewed or extended at least thirty (30) days prior to its expiration date or otherwise is terminated early, or if the Letter of Credit is not restored to its pre-draw amount as provided in subparagraph (e) above, PSCo shall have the right to draw immediately upon the Letter of Credit, without any obligation to provide the Notice under Section IV.A.4. below, and to place the amounts so drawn, in an escrow account controlled by PSCo, until and unless Boulder provides a new Letter of Credit meeting the requirements of this Section IV.A.I., in which event the drawn funds, to the extent not utilized to pay Payment Requests, will be refunded to the City. For the avoidance of doubt, Boulder acknowledges and agrees that any refund to Boulder of funds in escrow shall be net of any funds Boulder owes pursuant to a Payment Request under this Agreement. 2. Post Go/No Go Decision Costs -Letter of Credit or Line of Credit. The instrument by which Boulder will provide Security to PSCo that Boulder will reimburse PSCo for its Post Go/No Go Decision Costs shall be either a Letter of Credit as provided in this subsection 2 or a line of credit as provided in subsection 3 below. The following are the terms and conditions for a Letter of Credit: (a) The Letter of Credit shall meet the same requirements as set forth in subparagraphs l(a), (b), (c), (e), and (g) above and the following requirements: (b) The Letter of Credit shall be provided to PSCo prior to the commencement of PSCo's Separation Work. The Letter of Credit for the Post Go/No Go Decision Costs shall be determined annually on a calendar year ( or portion thereof for the first and last years during which Separation Work and Cut-Over Work occur) basis as follows: (I) 130% of the expected Costs for PSCo Work and Cut-Over Work for each calendar year, as determined prior to the start of a calendar year; provided, however, that the security amount for any calendar year shall be, at a minimum, the lesser of (i) twelve million dollars ($12,000,000.00), or (ii) two times the expected Costs for PSCo Work and Cut-Over Work for each calendar 19 year. Notwithstanding the foregoing, if at any time during a calendar year, PSCo reasonably believes that the amount of the Letter of Credit is less than the total expected Costs for PSCo Work and Cut-Over Work for that calendar year, for example because work is proceeding at a faster pace than originally expected, PSCo shall provide Boulder with a notice of insufficient security. Within fifteen (15) days thereafter, Boulder shall increase the amount of the Letter of Credit or purchase an additional Letter of Credit in an amount equal to the difference between the amount of the existing Letter of Credit and PSCo' s total expected construction costs for the calendar year. (2) The Security for True Up Costs shall be a separate amount which shall be estimated as provided in Section II.K.2. and provided prior to commencement of Cut-Over Work as provided in Section II.F .3. (c) The Letter of Credit shall terminate after all of the Post Go/No Go Decision Separation and Cut-Over Work has been completed, all Post Go/No Go Decision Costs including Costs for Separation Work, Cut-Over Work, Restoration Work, and True Up Costs, have been billed and indefeasibly paid in full, all Disputes have been fully and finally resolved pursuant to the dispute resolution provisions of Section V of this Agreement, and the Commission has given final approval of the transfer as required by paragraph 10 of the Decision. 3. Post Go/No Go Decision Costs -Equivalent Alternative Security. Boulder shall have the right to propose to PSCo a line of credit as an alternative form of Security for the Post Go/No Go Decision Costs ("Alternative Security") that is irrevocable for the term of the Alternative Security and that meets the following conditions: (a) The Alternative Security must be provided by an Issuer meeting the requirements of Section IV.A.l.(a) above. (b) There must be a contract between the Issuer and PSCo, satisfactory to PSCo in its sole discretion, concerning the Alternative Security that: (i) provides that the rights and obligations of the Issuer to Public Service under the Alternative Security are independent of the existence, performance, or nonperformance of any contract or arrangement out of which the Alternative Security arises or which underlies it, including contracts or arrangements between the Issuer and Boulder and between Boulder and Public Service (including, but not limited to, this Agreement and the Interim Cost Agreement), (ii) allows PSCo to access the Alternative Security by providing to the Issuer a written presentation in the form of Exhibit C, and (iii) does not contain any other terms or conditions that are not acceptable to PSCo; provided, however, PSCo's acceptance of the Alternative Security shall not be unreasonably withheld, conditioned or delayed. 20 (c) The Alternative Security must be for a minimum of 360 days. The City shall provide PSCo at least sixty (60) days advance written notice prior to any expiration or earlier termination of the Alternative Security. No later than thirty (30) days prior to each expiration of the Alternative Security, the City shall cause the renewal or extension of the Alternative Security for additional consecutive terms of 360 days until the Alternative Security terminates as provided in subparagraph (f) below. (d) The Alternative Security shall be provided to PSCo prior to the commencement of the PSCO Work. (!) The Alternative Security for the Post Go/No Go Decision Costs shall be in the amount of $20,000,000. If at any time during a calendar year, PSCo reasonably believes that the amount of the Alternative Security is less than the total expected Costs for PSCo Work and Cut-Over Work for that calendar year, PSCo shall provide Boulder with a notice of insufficient security. Within 15 days thereafter, Boulder shall increase the amount of the Alternative Security or provide additional Alternative Security in an amount equal to the difference between the amount of the existing Alternative Security and PSCo' s total expected construction costs for the calendar year. (2) The Security for True Up Costs shall be a separate amount which shall be estimated as provided in Section II.K.2. and provided prior to commencement of Cut-Over Work as provided in Section II.F.3. ( e) In order to draw upon the Alternative Security, PS Co shall only be required to provide to the Issuer a written presentation in the form of Exhibit C. There can be no conditions to PS Co's ability to draw upon the Alternative Security other than the requirement to provide the written presentation. If at any time PSCo draws upon the Alternative Security, Boulder shall restore the Alternative Security to its pre-draw amount within ten (I 0) business days. (f) The Alternative Security shall terminate on the later of the following: (i) after all of the Post Go/No Go Decision Separation and Cut-Over Work has been completed, (ii) all Costs for the Post Go/No Go Decision, including Costs for Separation Work, Cut-Over Work, Restoration Work, and True Up Costs) have been billed and indefeasibly paid in full, (iii) all Disputes pertaining to Post Go/No Go Decision Costs have been fully resolved, (iv) the Cut-Over Date has occurred, and (v) the Commission has given final approval of the transfer as required by paragraph IO of the Decision (g) If the Issuer falls below the credit rating requirements of Section IV.A.3.(a) above, the Alternative Security is not renewed or extended at least thirty (30) days prior to its expiration date or otherwise is terminated early, or if the Alternative Security is not restored to its pre-draw amount as provided in subparagraph ( e) above, 21 PSCo shall have the right to draw immediately upon the Alternative Security, without any obligation to provide the Notice under Section IV.A.4 below, and to place the amounts so drawn, at City's cost and with City's funds, in an escrow account controlled by PSCo, until and unless Boulder provides a new Letter of Credit or Alternative Security meeting the requirements of this Section IV, in which event the drawn funds, to the extent not utilized to pay Payment Requests, will be refunded to the City. For the avoidance of doubt, Boulder acknowledges and agrees that any refund to Boulder of funds in escrow shall be net of any funds PSCo was obligated to pay or Boulder owes pursuant to a Payment Request under this Agreement. 4. Notice and Opportunity to Cure. Prior to drawing on the Security, PSCo shall provide Boulder with ten (I 0) days written notice of PSCo 's intent to make a draw, identifying the unpaid Payment Requests ( or portion thereof) by date and the amount owed. PSCo shall not draw from the Security if Boulder makes payment in full within ten (10) days from receipt of PSCo's notice of intent to draw or provides to PSCo evidence that the payment requests ( or portion thereof then due) have been paid in full. If Boulder fails to timely respond to a notice of PSCo' s intent to make a draw by making payment or providing such evidence, PSCo shall not be liable for liquidated damages under paragraph 5 below. Notice is not required in order for PSCo to exercise its rights under Section IV.A.l.(g) above, including subparagraph l(g) incorporated by reference into Section IV.A.2. above, and Section IV.A.3.(g) above, as to any Pre or Post Go/No Go Decision Security. 5. Liquidated Damages. Boulder asserts that it will incur significant damages if the Security is mistakenly or wrongfully accessed including costs it will incur with the Issuer for the Security and potential impact on the City's credit rating. Such damages cannot be quantified. Therefore, except as provided in Section IV .A.4above, if PSCo accesses the line of credit for any Payment Request that has previously been paid, PSCo agrees to return to Boulder immediately the amount wrongfully withdrawn and to pay to Boulder liquidated damages in an amount equal to the amount wrongfully withdrawn but not to exceed $100,000. B. Stop Work. PSCo may stop work under this Agreement in the event any of the following occurs ("Stop Work Defaults"): 1. In the event PSCo does not timely receive the amount owed under any Payment Request, 2. The Issuer fails to honor a presentation in the form of Exhibit C, or 3. The Security expires or terminates prior to the Security termination date, as provided under Sections IV.A.l(f); IV.A.2(c); or IV.A.3(f). PSCo shall not be obligated to resume work until the Stop Work Default has been cured. Any costs PSCo incurs as a result of stopping work due to a Stop Work Default shall be included in 22 the Costs Boulder is required to pay under this Agreement. Failure of PSCo to stop work while a Stop Work Default is pending shall not be deemed a waiver of any rights and shall not be deemed a waiver of future Stop Work Defaults. V. Dispute Resolution Process A. Context. The Parties acknowledge: · I. The City is a home rule city under Colorado law and desires to own and operate its own municipal electric distribution utility by acquiring portions of the Existing System that will serve Boulder customers, all in accordance with the Colorado Constitution. 2. PSCo is a jurisdictional public utility under the laws of the State of Colorado engaged in the on-going business of providing retail gas and electric service in Colorado including to customers located in the City and to customers not located in the City but who are currently served by facilities that also serve City customers. 3. If the Go/No Go Decision is to proceed with Municipalization, PSCo will be performing, at Boulder's cost, PSCo Work and Cut-Over Work to separate its Existing System into the facilities for the separate Boulder System and PSCo System. Furthermore, at Boulder's cost, Boulder and PSCo will each be responsible for the construction of their own new facilities, as part of the Separation Work, in order to complete their respective systems. PSCo will be performing its part of the Separation Work for itself and not for Boulder. However, Boulder will be responsible for PSCo's Costs for the Separation and Cut-Over Work and the other Costs contemplated by this Agreement. 4. Separation of the Existing System while it continues to provide service to customers is a complex undertaking that will require cooperation, communication and coordination between the Parties. 5. Given the scope and nature of the Separation Work, it is recognized that Costs may vary from the Cost Estimates and the schedule for completion of the Separation Work and Cut-Over Work may change during the course of the Separation Work and Cut-Over Work. Any such variance is not grounds for non- payment of Costs and shall not create liability to PSCo. 6. Both Parties have a desire to ensure that their respective systems will provide safe, reliable and effective service and that the Separation Work and Cut- Over Work is done in a manner that will achieve this objective in accordance with this Agreement. 7. Boulder has a desire to ensure that PSCo' s Costs are actually incurred and that any Costs that were incurred as a result of Clerical Error or Gross 23 Negligence or Willful Misconduct of PSCo are not included in the Costs Boulder is required to pay. 8. PSCo has a desire to ensure that it is timely reimbursed for all of its Costs and is not subjected to payment challenges and second guessing regarding its Costs except those that Boulder believes, in good faith, are improper as a result of Clerical Error or Gross Negligence or Willful Misconduct of PSCo. 9. The Parties desire to have a dispute resolution process that will promote cooperation and avoid or minimize Disputes. B. Disputes. The following provisions shall apply notwithstanding any provision of this Agreement to the contrary: I. Sole Grounds for Disputes Against PSCo and Remedies. (a) Cost Disputes. The sole grounds for Disputes by Boulder against PSCo related to Costs under this Agreement shall be good faith claims by Boulder disputing Costs on the basis that such Costs are the result of (i) a Clerical Error, or (ii) the Gross Negligence or Willful Misconduct of PSCo. There are no other grounds for Disputes related to Costs that may be asserted against PSCo pertaining to this Agreement. The maximum liability PSCo shall have to Boulder for Costs that are Disputed as authorized under this Agreement shall be the amount of the Disputed Costs that Boulder establishes through the dispute resolution provisions of this Section V of this Agreement are (i) Costs that are the result of a Clerical Error, or (ii) Costs that are the result of the Gross Negligence or Willful Misconduct of PSCo. If and to the extent there is a final and non-appealable determination that an amount of Costs was incurred as a result of Clerical Error or as a result of the Gross Negligence or Willful Misconduct of PSCo, Boulder shall be entitled to a refund of that amount plus any Costs ( or a pro rata portion thereof if Boulder prevails only as to a portion of the Disputed Costs) charged by PS Co to Boulder under this Agreement pertaining to any litigation between the Parties brought subsequent to the dispute resolution procedures set forth below, which will be applied as a credit on future Payment Request( s) until fully credited. If there are no further Payment Requests, PSCo shall refund any remaining amount required to be refunded within thirty (30) days after the final and non-appealable determination that Boulder is entitled to a refund. (b) Other Disputes by Boulder Against PS Co. The sole grounds for Disputes by Boulder against PSCo under this Agreement, other than Cost Disputes, shall be a good faith claim by Boulder of Gross Negligence or Willful Misconduct of PSCo in (i) failing to issue a request for proposals pursuant to Sections 11.E.2. and/or 11.E.5 or, alternatively, to undertake the Detailed Design Drawings Work, PSCo Work and/or Cut- Over Work to the extent not contracted out, or (ii) failing to reasonably enforce its rights pursuant to PSCo's agreements with contractors. The maximum liability PSCo will have to Boulder in damages for such authorized other Disputes shall be the actual damages 24 established through the dispute resolution provisions of Section V.E. of this Agreement but not to exceed $1,000,000.00 in the aggregate for all Disputes covered by this subparagraph (b ). 2. Dispute Resolution Procedures. Paragraphs C, D and E of this Section V, as applicable, are the dispute resolution procedures under this Agreement. 3. Limitation of Claims and Remedies. (a) PSCo is entering into this Agreement because of Boulder's decision to Municipalize and the PUC Decision to effectuate Separation. This Agreement concerns Boulder's obligation to reimburse PSCo for PS Co's costs and PSCo' s obligation to facilitate Separation as provided herein. This Agreement is not intended to create and does not create an "owner" and "contractor" relationship between the City and PSCo. By entering into this Agreement and performing the Work contemplated by this Agreement, PSCo does not intend to become and shall not be deemed to have become a contractor for the City of Boulder. (b) Nothing in this Agreement shall entitle either Party to assert any claims against the other Party except as specifically provided in this Agreement and the Parties hereby waive any and all other claims, liabilities, rights, demands, obligations, damages, losses, attorneys' fees (except as provided in Section V.F. below), expenses, actions, causes of action, suits, or liability or controversies of every kind and description whatsoever relating to or arising out of this Agreement. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR INCIDENTAL, CONSEQUENTIAL, NON-ECONOMIC, EXEMPLARY, OR PUNITIVE DAMAGES ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, REGARDLESS OF HOW CAUSED AND REGARDLESS OF THE THEORY OF RECOVERY. 4. No Representations, Warranties or Guaranties. NOTHING IN THIS AGREEMENT IS INTENDED TO CREATE OR SHALL BE DEEMED TO CREATE ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, CONCERNING THE PSCO ASSETS OR THE PSCO WORK OR THE CUT-OVER WORK. C. Dispute Resolution Procedures -Costs -Clerical Errors. If Boulder submits a Dispute Notice disputing Costs on the basis that such Costs are the result of a Clerical Error, such Dispute Notice shall be subject to the provisions of Section V.B. l.(a) above and the Parties shall proceed as follows: 1. Accounting representatives of the Parties shall attempt to resolve the Clerical Error Dispute within ten ( 10) business days after delivery of the Dispute Notice. If the accounting representatives are unable to resolve the Clerical Error Dispute within this time period, the amount of the Clerical Error Dispute shall be paid to PSCo 25 within five (5) business days thereafter, subject to refund as provided m Section V.B. l.(a) above. 2. If the accounting representatives are unable to resolve the Dispute on or before ten (10) business days after delivery of the Dispute Notice, business representatives of the Parties shall meet to attempt to resolve the Dispute. 3. If the business representatives are unable to resolve the Dispute on or before twenty (20) business days after delivery of the Dispute Notice, senior management of the Parties shall meet to attempt to resolve the Dispute. 4. If senior management of the Parties are unable to resolve the Dispute on or before thirty (30) business days after delivery of the Dispute Notice, Boulder may file an action for a determination of the Dispute within sixty (60) days thereafter. In the event of a final non-appealable determination that all or a portion of the disputed Costs were the result of a Clerical Error, Boulder shall be entitled to a refund or payment as provided in Section V.B. l.(a), above. In the event Boulder does not file an action within such sixty-day period, the claim on which the Dispute was based shall be deemed waived. D. Dispute Resolution Procedures -Costs -Gross Negligence or Willful Misconduct of PSCo. If Boulder submits a Dispute Notice disputing Costs on the basis that such Costs are the result of the Gross Negligence or Willful Misconduct of PSCo, such Dispute Notice shall be shall be subject to the provisions of Section V.B. l.(a) above and the Parties shall proceed as follows: I. Business representatives of the Parties shall confer within ten (10) business days after delivery of the Dispute Notice to attempt to resolve the dispute. 2. If the business representatives are unable to resolve the dispute on or before fifteen (15) business days after delivery of the Dispute Notice, senior management of the Parties shall meet to attempt to resolve the dispute. 3. If senior management of the Parties are unable to resolve the dispute on or before thirty (30) business days after delivery of the Dispute Notice, Boulder may file an action for a determination of the Dispute within sixty (60) days thereafter. In the event of a final non-appealable determination that all or a portion of the disputed Costs were the result of the Gross Negligence or Willful Misconduct of PSCo, Boulder shall be entitled to a refund or payment as provided in Section V.B. l .(a), above. In the event Boulder does not file an action within such sixty-day period, the claim on which the Dispute was based shall be deemed waived. E. Dispute Resolution Procedures -Other Disputes. If Boulder submits a Dispute Notice to PSCo on the grounds specified in Section V.B. l.(b ), above, or if PSCo submits a 26 Dispute Notice to Boulder for failure to perform this Agreement, the Parties shall proceed as follows: I. Business representatives of the Parties shall confer within fifteen (15) business days after delivery of the Dispute Notice to attempt to resolve the dispute. 2. If the business representatives are unable to resolve the dispute on or before fifteen (15) business days after delivery of the Dispute Notice, senior management of the Parties shall meet to attempt to resolve the dispute. 3. If senior management of the Parties are unable to resolve the dispute on or before thirty (30) business days after delivery of the Dispute Notice, the aggrieved Party within sixty (60) days thereafter may seek actual damages, subject in the case of a Dispute Against PSCo to the damages cap in Section V.B. l.(b ), in an appropriate forum. In the event the aggrieved Party does not initiate an action or proceeding within such sixty-day period, the claim on which the Dispute was based shall be waived. F. Attorneys' Fees. The prevailing Party in any litigation between the Parties authorized under this Agreement and brought subsequent to the dispute resolution procedures provided above shall be entitled to its attorneys' fees. VI. Term This Agreement shall remain in effect until all Costs and sums owing under it have been paid in full, all Disputes, to the extent authorized under this Agreement, have been fully and finally resolved, and the Commission has given final approval of the transfer as required by paragraph IO of the Decision. VII. General Provisions A. Agreement Subject to PUC Approval. This Agreement is subject to approval of the Commission. This Agreement shall not become effective until the issuance of a final Commission decision approving the Agreement, which order (i) does not contain any modifications of the terms and conditions of this Agreement that are unacceptable to either of the Parties, and (ii) is final and non-appealable. B. Proprietary Information. In connection with the acttv1ttes covered by this Agreement, there will be Proprietary Information created, exchanged and used between the Parties that is critical electric infrastructure information and not subject to disclosure pursuant to the Homeland Security Act. Nothing herein shall be construed to allow or require disclosure of Proprietary Information to any third party or to any person or entity that has not executed an applicable Non-Disclosure Agreement. 27 C. Amendments. No alterations, amendments or modifications to this Agreement shall be valid unless executed by an instrument in writing signed by the Parties, adopted with the same formality used in adopting this Agreement, to the extent required by law, and no subsequent oral agreement shall have any validity whatsoever. D. Authority. Each Party represents and warrants that it has taken all actions that are necessary or that are required by its ordinances, regulations, procedures, bylaws, or applicable law, to legally authorize the undersigned signatories to execute this Agreement on behalf of the Parties and to bind the Parties to its terms. The persons executing this Agreement on behalf of each of the Parties represent and warrant that they have full authorization to execute this Agreement. E. Binding Agreement. The persons signing this Agreement in the name of and on behalf of PSCo and City each represent and warrant that they have the requisite power and authority on behalf of their respective entity to enter into, execute, and deliver this Agreement, and that this Agreement is a valid legally binding obligation of PSCo and City, and enforceable in accordance with its terms. F. Insurance. 1. In connection with each Party's performance of the Separation Work and Cut-Over Work, each Party agrees that it and each of its contractors and subcontractor shall carry insurance in such forms and amounts and subject to the terms as set forth in Exhibit D to insure against damages and injury caused by such Party, or its employees, agents, contractors, subcontractors or materialmen, in the course of the Separation Work, Cut-Over Work, or Restoration Work, to the property or facilities of the other Party, to the other Party's employees, agents, contractors, subcontractors or materialmen, or to the property or persons of third parties. 2. Each Party shall provide the other Party with certificates of insurance as required under subsection 1. above prior to commencement of Separation Work by the Party, or its contractors or subcontractors. 3. Further, each Party agrees to require its contractors and subcontractors to indemnify, defend and hold harmless the other Party with respect to all loss, cost, risk, expense or liability resulting from the acts of such contractor or subcontractor. G. Relationship of Parties. This Agreement shall not be interpreted or construed to create an association, joint venture, agency relationship, or partnership between the Parties or to impose any partnership obligation or partnership liability upon either Party. Neither Party shall have any right, power or authority to enter into any agreement or undertaking for, or act on behalf of, or to act as or be an agent or representative of, or to otherwise bind, the other Party. 28 H. No Waiver. Neither Party shall be excused from complying with any of the terms and conditions of this Agreement by any failure of the other, or any of its officers, employees, or agents, upon any one or more occasions, to insist upon or to seek compliance with any such terms and conditions. I. Condemnation Case. The Parties intend that any future Condemnation Case be conducted in accordance with applicable Colorado law. Nothing in this Agreement is intended to expand or waive any right, or act as an admission, by either Party of any issue that may arise in any future Condemnation Case, including but not limited to the amount of the condemnation award, any legal challenge to the taking, just compensation claims, post-trial relief, interest, attorney's fees, costs or abandonment damages. PSCo's provision of Scopes of Work, Detailed Design Drawings or other information and documents pursuant to or in connection with this Agreement and the PSCo Work and Cut-Over Work to be completed hereunder shall not constitute a waiver of any rights under condemnation law to compensation for PSCo's Proprietary Information, including Proprietary Information obtained in connection with this Agreement and the PSCo Work and Cut-Over Work to be completed hereunder. This Agreement shall not be admissible as evidence in the valuation phase of a Condemnation Case, except to the extent necessary to present to the court (not the jury or commission) in order to protect or defend against a compensation claim that either party alleges is addressed or excluded by this Agreement. J. Waiver of Jury Trial. EACH PARTY HERETO WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION (ACTION, PROCEEDING OR COUNTERCLAIM) DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, ANY DOCUMENT OR AGREEMENT ENTERED INTO IN CONNECTION HEREWITH AND ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY. K. Successors and Assigns. The rights, privileges, and obligations, in whole or in part, granted and contained in this Agreement shall inure to the benefit of and be binding upon the Parties, their successors and assigns, to the extent that such successors or assigns have succeeded to or been assigned such rights under this Agreement. L. Third Parties. Nothing contained in this Agreement shall be construed to provide rights to third parties M. Notice. Any notice, consent, waiver, request or other communication required or provided to be given pursuant to this Agreement shall be in writing and shall be deemed given when delivered (i) personally, (ii) on the first business day which is three (3) days following mailing by certified or registered mail, return receipt requested, postage prepaid, or (iii) the next business day after dispatch by nationally recognized overnight delivery service, in any event, addressed as follows: 29 To the City: Electric Utility Director City of Boulder P.O. Box 791 Boulder, Colorado 80306 City Manager City of Boulder P.O. Box 791 1777 Broadway Boulder, Colorado 80306 with a copy to: City Attorney City of Boulder P.O. Box 791 1777 Broadway Boulder, Colorado 80306 ToPSCo: Public Service Company of Colorado 1800 Larimer Street, Suite 1400 Denver, Colorado 80202 Attn: Diane Watkins with copies to: Public Service Company of Colorado Attn: Legal Department -Boulder Separation 1800 Larimer Street, Suite 1100 Denver, Colorado 80202 Attn: Chris Irby and Davis Graham & Stubbs LLP 1550 17 th Street, Suite 500 Denver, Colorado 80202 Attn: Judy Matlock 30 or to such Party at such other address as such Party, by ten (10) days prior written notice given as herein provided, shall designate. N. Force Majeure. Neither the City nor PSCo shall be in breach of this Agreement if a failure to perform any of the duties under this Agreement is due to Force Majeure as defined herein; provided, however, no event of Force Majeure shall relieve the City of the obligation to pay for Costs incurred by PSCo prior to or during the Force Majeure event. PSCo will consider in good faith any request by Boulder to delay all or a portion of payments due if the event is of such magnitude that the costs of recovery require the city to use all available funds to protect people or property. 0. Titles Not Controlling. Titles of the paragraphs herein are for reference only, and shall not be used to construe the language of this Agreement. P. Applicable Law. Colorado law shall apply to the construction and enforcement of this Agreement. The Parties agree that venue for any litigation arising out of this Agreement shall be in the District Court for Boulder County, State of Colorado. Q. Compliance with Laws. Each Party shall promptly and fully comply with all applicable laws, regulations, permits and orders enacted or issued by any applicable authority with appropriate jurisdiction. R. Interpretation of Agreement. Nothing herein shall preclude the recovery of attorney's fees and costs by either Party in regulatory or court proceedings between them as provided in the law applicable to such proceedings. In no event shall this Agreement be interpreted such that Boulder pays the same Costs twice. Any Costs paid by Boulder directly to a third party or specifically awarded to PSCo as part of another proceeding shall not be included in Costs under this Agreement. S. Counterparts. This Agreement may be executed in any number of counterparts and by different Parties hereto on separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute but one and the same agreement. T. Entire Agreement. This Agreement, including all Exhibits, together with the Interim Agreement and work plans thereunder, constitutes the entire agreement between the Parties with regard to the Costs to effectuate the separation of the systems as to Distribution Assets Outside Substations as provided by paragraphs l 57 through 160 of the Decision. This Agreement supersedes all prior oral and written communications, negotiations, representations or agreements in relation to the subject matter hereof and the Parties agree that no prior oral or written communications, including, but not limited to, drafts of this Agreement or the Interim Agreement, may be used to interpret this Agreement or constitutes a waiver in other litigation of positions raised in the negotiation of this Agreement. 31 EXHIBIT A CONFIDENTIALITY AGREEMENT (Billing Information) This Confidentiality Agreement ("Agreement") is effective as of the day of May 2018, (the "Effective Date") by and between Public Service Company of Colorado, a Colorado corporation ("Xcel Energy"), and the City of Boulder, a Colorado home rule city, with an address of City Manager, City of Boulder, P.O. Box 791, Boulder, CO 80306 ("Boulder"). "Party" or "Parties" refers to Xcel Energy and Boulder, individually or collectively. WITNESSETH: WHEREAS, Xcel Energy holds information which is proprietary to Xcel Energy and may develop information that will be proprietary to Xcel Energy; and WHEREAS, Xcel Energy may share such information with Boulder subject to the terms of this Agreement, in connection with invoices for payment of costs and performance of work under that certain Interim Agreement for Payment of Certain Municipalization Costs (Conditions Work) (the "Interim Agreement") or that certain Agreement for Payment of Costs between the Parties, (as amended, supplemented and otherwise modified and in effect from time to time, collectively, the "Agreements"), which concern satisfaction of conditions required by the Colorado Public Utilities Commission in Decision No. C 17-050 and the design and construction of new facilities as well as the separation and reconfiguration of existing facilities to create two independent electric distribution systems, the Boulder System for Boulder to use to serve customers within the Boulder city limits and the PSCo System which will serve Xcel Energy customers in Boulder County separate from Boulder customers within the Boulder city limits, and agreements related thereto (the "Work"). NOW, THEREFORE, the Parties agree as follows: I. Xcel Energy "Confidential Information" shall include, but not be limited to, any billing rates, wage schedules and rates; Fully Loaded Costs (as defined in the Interim Agreement) and information related thereto; operational, economic or financial knowledge, information or data of any nature whatsoever which has been or may hereafter be provided or disclosed by Xcel Energy concerning the Work; Critical Energy Infrastructure Information ("CEIi") as defined by the Federal Energy Regulatory Commission ("FERC''); and other information protected from disclosure by applicable law, such as the Colorado Open Records Act and the Homeland Security Act. All disclosures of Confidential Information, whether sent, heard or written shall be identified as confidential at the time of disclosure to Boulder, or any employee, attorney, consultant, agent or other representative of Boulder (such parties to be referred to as "Boulder Representatives") or promptly after discovery that information which should have been identified as confidential has been disclosed to Boulder or a Boulder Representative . Boulder shall ensure that the Boulder Representatives comply with the terms and conditions of this Agreement. 2. Boulder, for itself and on behalf of the Boulder Representatives, agrees not to use or disclose Confidential Information except as provided pursuant to the terms of the Agreements for the purpose of the Work. Boulder agrees only to disclose the Confidential Information received from Xcel Energy to the Boulder Representatives identified on Attachment I, whose duties justify their need to know 4463802.1 such Confidential Information. Boulder represents and warrants that the individuals it lists on Attachment 1 have the legal capacity to maintain the Confidential Information as confidential. 3. Confidential Information is not information which: a) now is or becomes generally known to the public without fault of Boulder; or b) is proven by written documentation to have been in Boulder's possession prior to its receipt from Xcel Energy and not to have been provided to Boulder pursuant to a prior confidentiality agreement or order including, but not limited to, the orders of the Colorado Public Utilities Commission; or c) is received from an independent third party who is not under an obligation of confidentiality; or d) is independently developed by Boulder as demonstrated by competent documentary evidence. 4. In the event that Boulder is served with a request to disclose Confidential Information, Boulder will immediately inform Xcel Energy so that Xcel Energy may seek an appropriate protective order regarding the Confidential Information. Boulder will cooperate with Xcel Energy in avoiding disclosure of the Confidential Information and shall be responsible for Xcel Energy's actual costs associated with any effort to protect the Confidential Information provided to Boulder from disclosure. 5. Disclosure of Confidential Information under this Agreement does not grant Boulder any right or license to use the Confidential Information other than for the purpose for which it was provided unless explicitly set forth herein. 6. All Confidential Information, unless otherwise specified in writing, remains the property of Xcel Energy, and must be used by Boulder only for the purpose intended by Xcel Energy. Upon (i) completion of the Work and transfer of title to the Boulder System to Boulder or (ii) Boulder's abandonment of its municipalization efforts, all copies of written, recorded, graphical or other tangible Confidential Information must either be returned to Xcel Energy, or destroyed by Boulder , subject to Boulder's right to retain one copy of each such document in the files of its law department or outside legal counsel for record purposes only. Boulder will execute a written acknowledgment that it has complied with the terms of this paragraph. Confidential Information supplied is not to be reproduced in any form. 7. All Confidential Information retained by Boulder must be in a secure place with access limited to only Boulder employees (or agents who have a non-disclosure obligation at least as restrictive as this Agreement) who need to know such information for purposes of this Agreement, and to such third parties as Xcel Energy has consented to by prior written approval. Boulder must provide the same care to avoid disclosure or unauthorized use of the Confidential Information as it provides to protect its own confidential and proprietary information. 8. Xcel Energy makes no representation or warranty, express or implied, with respect to any Confidential Information. 9. All media releases and public announcements by either Party relating to this Agreement, its subject matter, or the purpose of this Agreement must be in written form signed by both Parties prior to the release or announcement. 10. This Agreement is governed by and construed under the laws of the State of Colorado and any action brought with respect to this Agreement must be brought in the appropriate court in the State of Colorado. Page 2 of3 11. This Agreement may not be amended except in written form signed by both Parties. 12. The provisions of this Agreement are to be considered as severable, and in the event that any provision is held to be invalid or unenforceable, the Parties intend that the remaining provisions will · remain in full force and effect to the extent possible and in keeping with the intent of the Parties. 13. There are no third party beneficiaries to this Agreement. 14. Failure by a party to enforce or exercise any provision, right or option contained in this Agreement will not be construed as a present or future waiver of such provision, right or option. 15. Regardless of any termination of the Work or this Agreement, the obligations and commitments established by this Agreement shall remain in full force and effect until such time as the Parties have entered into an agreement providing otherwise. During this period, Boulder shall not divulge such Confidential Information to any third party or use for any purpose other than for review and evaluation consistent with this Agreement, without the prior written consent of Xcel Energy. 16. Signature pages delivered in counterparts via facsimile or electronic mail shall be deemed the same as original signatures for purposes of this Agreement. ATTEST: City Clerk APPROVED AS TO FORM: City Attorney's Office CITY OF BOULDER Jane S. Brautigam, City Manager PUBLIC SERVICE COMPANY OF COLORADO By: __________ _ Attest:. ___________ _ Asst. Secretary Page 3 of3 EXHIBITB FORM OF LETTER OF CREDIT [LETTERHEAD OF ISSUING BANK] [DATE] IRREVOCABLE LETTER OF CREDIT NO. Public Service Company of Colorado, as beneficiary (the "Beneficiary") 1800 Larimer Street, Suite 1400 Denver, Colorado 80202 Ladies and Gentlemen: At the request of and for the account of the City of Boulder, a Colorado home rule city (the "Applicant"), we hereby establish in your favor this Irrevocable Letter of Credit No .. ____ (this "Letter of Credit") in the amount of ______ Dollars ($ ____ _, (the "Stated Amount"). This Letter of Credit is issued for a term effective (unless sooner terminated as provided below) from the date set forth above through [[Issue Date+ 360 Days], the "Letter of Credit Expiration Date"). Funds under this Letter of Credit are available to you upon presentation to us of: (i) a draft at sight ("Sight Draft") drawn on us in the form of Exhibit A hereto in the amount of such demand (which amount shall not exceed the Available Amount (as defined below)); and (ii) a drawing certificate (the "Drawing Certificate") in the form of Exhibit B hereto duly executed and delivered by your authorized representative. Presentation of any such Sight Draft and Drawing Certificate shall be made by hand delivery, by courier or by facsimile at [__J, Attention: [__J. We hereby agree that any Sight Draft drawn under and in compliance with the terms of this Letter of Credit shall be duly honored by us upon the receipt of the above-specified Drawing Certificate, if presented (by hand delivery, by courier or by facsimile) before the Letter of Credit Expiration Date at our office specified above. If a demand for payment is made by you hereunder at or before 10:00 a.m., [New York City/Boulder Colorado] time, on any Business Day ( as defined below), and provided that such demand for payment and the documents presented in connection therewith conform to the terms and conditions hereof, payment shall be made to you of the amount specified, in immediately 4497381.2 available funds, at or before 2:00 p.m., [New York City/Boulder Colorado] time, on such Business Day. If a demand for payment made by you hereunder or the documents presented in connection therewith do not, in any instance, conform to the terms and conditions of this Letter of Credit, we shall, as soon as practicable, give you notice that the purported demand for payment was not effected in accordance with the terms and conditions of this Letter of Credit, stating the reasons therefor. Upon being notified that the purported demand for payment was not effected in accordance with this Letter of Credit, you may attempt to correct any defect in such purported demand for payment if, and to the extent that, you are entitled and able to do so hereunder. As used in this Letter of Credit, "Business Day" shall mean any day other than a Saturday, Sunday or a day on which banking institutions in the State of [New York/Colorado] are authorized or required by law to close. Upon payment to you of any amount demanded hereunder, we shall be fully discharged of our obligation under this Letter of Credit with respect to such amount, and we shall not thereafter be obligated to make any further payments to you or to any other person under this Letter of Credit with respect to such amount. Multiple demands for payment may be made under this Letter of Credit. The amount available to be drawn hereunder at any time (the "Available Amount") shall be equal to the Stated Amount, as reduced by the aggregate amount of any drawings hereunder and as increased by Applicant's restorative payments pursuant to the Agreement for Payment of Costs dated _____ (as amended, supplemented and otherwise modified and in effect from time to time, the "Agreement") between Beneficiary and Applicant. Pursuant to C.R.S. 4-5-103(d), the rights and obligations of the Issuer to the Beneficiary under this Letter of Credit are independent of the existence, performance, or nonperformance of any contract or arrangement out of which the Letter of Credit arises or which underlies it, including contracts or arrangements between the Issuer and the Applicant and between the Applicant and the Beneficiary (including, but not limited to, the Agreement). This Letter of Credit shall expire and shall be delivered to us for cancellation upon the first to occur of: (a) the close of business on the Letter of Credit Expiration Date; or (b) our receipt of written termination notice from the Beneficiary. We hereby issue this Letter of Credit in your favor and undertake with you and bona fide holders that draft(s) drawn under and in compliance with the terms of this Letter of Credit will be honored upon due presentation on or before the Letter of Credit Expiration Date. This Letter of Credit is subject to the International Standby Practices (ISP 98) 1998, International Chamber of Commerce, Publication No. 590 and engages us in accordance with the terms thereof. The number and the date of this Letter of Credit and the name of our bank must be quoted on all drafts required. This Letter of Credit's articles are binding on all parties thereto, unless otherwise expressly stipulated in this Letter of Credit, and to the extent not inconsistent therewith, shall be governed by the laws of the State of [New York/Colorado], including without limitation, the Uniform Commercial Code as in effect in such State. This Letter of Credit sets forth in full the terms of our undertaking. Reference in this Letter of Credit to other documents or instruments is for identification purposes only and such reference shall not modify or affect the terms hereof or cause such documents or instruments to be deemed incorporated herein. Very truly yours, [_], as Issuing Bank By:. _________ _ Name: Title: By: _________ _ Name: Title: FORM OF SIGHT DRAFT Exhibit A to Letter of Credit [DATE] To: [_] as Issuing Bank [The address] Re: Irrevocable Letter of Credit No. ( [ ] (the "Letter of Credit") ) of [name of Issuing Bank), dated On Sight Pay to Public Service Company of Colorado, a Colorado corporation (the "Beneficiary") in immediately available funds [ ] U.S. Dollars($ ____ by 2:00 p.m., [New York City/Boulder Colorado] time, [ on the date hereof, if this Sight Draft is presented prior to 10:00 a.m., [New York City/Boulder Colorado] time, pursuant to the Letter of Credit, and otherwise by 2:00 p.m., [New York City/Boulder Colorado] time, on the first Business Day (as defined in the Letter of Credit) after the date hereof)].** .. BENEFICIARY Public Service Company of Colorado By: ----------------Name: Title: If the Sight Draft is presented on the Letter of Credit Expiration Date, the bracketed words shall be replaced by the following words: "on the second Business Day (as defined in the Letter of Credit) after the date hereof, if this Sight Draft is presented prior to 10:00 a.m., [New York City/Boulder Colorado] time, pursuant to the Letter of Credit, and otherwise by 2:00 p.m., [New York City/Boulder Colorado] time, on the third Business Day after the date hereof, if this Sight Draft is presented after 10:00 a.m., [New York City/Boulder Colorado] time, pursuant to the Letter of Credit. FORM OF DRAWING CERTIFICATE Exhibit B to Letter of Credit [DATE] To: [__J as Issuing Bank [Address] This is a Drawing Certificate under Irrevocable Letter of Credit No. [ ] of [Name of Issuing Bank], dated ~---~ (the "Letter of Credit")]. Capitalized terms used herein, and not otherwise defined herein, shall have the meanings assigned to such terms in the Agreement for Payment of Costs, dated as of[_, 2018] (as amended, supplemented and otherwise modified and in effect from time to time, the "Agreement") between the City of Boulder, a Colorado home rule city (the "Applicant"), and Public Service Company of Colorado, a Colorado corporation, its successors and assigns (the "Beneficiary") or the Letter of Credit, as applicable. I, -------~an authorized representative of the Beneficiary, do hereby certify that: [This Drawing Certificate, as executed, must contain one, but only one, of the four alternative paragraphs (a) set forth below, and shall in all cases contain paragraph (b) set forth below:} Alternative 1: (a) Beneficiary has determined, and provided Notice to the Issuer in the format attached as Addendum 1, that Applicant has failed to timely pay a Payment Request as prescribed in the Agreement. Alternative 2: (a) Beneficiary has determined, and provided Notice to the Issuer in the format attached as Addendum 2, that Applicant has failed to timely renew or extend the Letter of Credit at least thirty (30) days prior to its expiration date. The amount of this drawing is the Stated Amount under the Letter of Credit. Alternative 3: (a) Beneficiary has determined, and provided notice to the Issuer in the format attached as Addendum 3, that the Issuer no longer meets the requirements for an issuing bank in accordance with the Agreement and Applicant has failed to timely replace Issuer. The amount of this drawing is the Stated Amount under the Letter of Credit. Alternative 4: (a) Beneficiary has determined, and provided Notice to the Issuer in the format attached as Addendum 4, that Applicant has failed to timely restore the Letter of Credit to its Stated Amount. (b) Beneficiary, pursuant to the terms of the Letter of Credit hereby demands payment in the amount of ~---~ U.S. Dollars ($~---~), such amount to be paid to Beneficiary by wire transfer in immediately available funds to: [Account Information]. IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Drawing Certificate this [_J day of[ J, [_J. BENEFICIARY Public Service Company of Colorado By: -------------- Name: Title: DRAWING CERTIFICATE ADDENDUM 1 NOTICE OF APPLICANT'S FAILURE TO TIMELY PAY To: [_J as Issuing Bank [The address] [DATE] This is Notice to Issuing Bank under Irrevocable Letter of Credit No. [ ] of [name of Issuing Bank], dated [ ] (the "Letter of Credit"). Capitalized terms used herein, and not otherwise defined herein, shall have the meanings assigned to such terms in the Letter of Credit. Issuer is hereby notified that Applicant has failed to timely pay under the terms of the Agreement for Payment of Costs between Applicant and Beneficiary. BENEFICIARY Public Service Company of Colorado By: -------------- Name: Title: DRAWING CERTIFICATE ADDENDUM2 NOTICE OF APPLICANT'S FAILURE TO TIMELY EXTEND OR RENEW To: [_] as Issuing Bank [The address] [DATE] This is Notice to Issuing Bank under Irrevocable Letter of Credit No. [ ] of [name oflssuing Bank], dated [ ] (the "Letter of Credit"). Capitalized terms used herein, and not otherwise defined herein, shall have the meanings assigned to such terms in the Letter of Credit. Issuer is hereby notified that Applicant has failed to timely renew or extend the Letter of Credit at least thirty (30) days prior to its expiration date. The amount of this drawing is the Stated Amount under the Letter of Credit. BENEFICIARY Public Service Company of Colorado By: -------------- Name: Title: DRAWING CERTIFICATE ADDENDUM3 NOTICE ISSUER FAILS TO MEET ISSUING BANK REQUIREMENTS To: LJ as Issuing Bank [The address] [DATE] This is Notice to Issuing Bank under Irrevocable Letter of Credit No. [ ] of [name oflssuing Bank], dated [ ] (the "Letter of Credit"). Capitalized terms used herein, and not otherwise defined herein, shall have the meanings assigned to such terms in the Letter of Credit. Issuer is hereby notified that Issuer no longer meets the requirements for an issuing bank in accordance with the Agreement for Payment of Costs between Applicant and Beneficiary, and Applicant has failed to timely replace Issuer. The amount of this drawing is the Stated Amount under the Letter of Credit. BENEFICIARY Public Service Company of Colorado By: ---------------Name: Title: DRAWING CERTIFICATE ADDENDUM4 NOTICE OF APPLICANT'S FAILURE TO TIMELY RESTORE STATED AMOUNT To: [_J as Issuing Bank [The address] [DATE] This is Notice to Issuing Bank under Irrevocable Letter of Credit No. [ ] of [name of Issuing Bank], dated [ ] (the "Letter of Credit"). Capitalized terms used herein, and not otherwise defined herein, shall have the meanings assigned to such terms in the Letter of Credit. Issuer is hereby notified that Applicant has failed to timely restore the Letter of Credit to its Stated Amount. BENEFICIARY Public Service Company of Colorado By: -------------- Name: Title: EXHIBITC FORM OF PRESENTATION (FOR SECURITY) FORM OF SIGHT DRAFT [DATE] To: [_J as Issuing Bank [Address] Re: [Irrevocable Letter of Credit No. ( J of [Name of Issuing Bank], dated ( -------] (the "Letter of Credit") OR (Line of Credit Security Identified as of (Name of Issuing Bank], dated ( l (the "Security").] On Sight Pay to Public Service Company of Colorado, a Colorado corporation (the "Beneficiary") in immediately available funds~---~ U.S. Dollars($ ___ ~ by 2:00 p.m., [New York City/Boulder Colorado l time, on the date hereof, if this Sight Draft is presented prior to 10:00 a.m., [New York City/Boulder Colorado] time, pursuant to the [Letter of Credit/Security], and otherwise by 2:00 p.m., [New York City/Boulder Colorado] time, on the first Business Day (as defined in the [Letter of Credit/Security] after the date hereof.•• BENEFICIARY Public Service Company of Colorado By: --------------- Name: Title: •• If the Sight Draft is presented on the Letter of Credit/Security Expiration Date, the bracketed words shall be replaced by the following words: "on the second Business Day (as defined in the Letter of Credit/Security) after the date hereof, if this Sight Draft is presented prior to 10:00 a.m., [New York City/Boulder Colorado] time, pursuant to the Letter of Credit/Security, and otherwise by 2:00 p.m., [New York City/Boulder Colorado] time, on the third Business Day after the date hereof, if this Sight Draft is presented after 10:00 a.m., [New York City/Boulder Colorado] time, pursuant to the Letter of Credit/Security. 4502862.1 FORM OF DRAWING CERTIFICATE (Exhibit Includes modifications for use in connection with non-letter of credit security) To: [_] as Issuing Bank [Address] [DATE] This is a Drawing Certificate under [Irrevocable Letter of Credit No. [ ] of [Name of Issuing Bank], dated ~----(the "Letter of Credit")] OR [Line of Credit Security Identified as ______ of [Name of Issuing Bank], dated _______ (the "Security").] Capitalized terms used herein, and not otherwise defined herein, shall have the meanings assigned to such terms in the Agreement for Payment of Costs, dated as of [_, 2018] (as amended, supplemented and otherwise modified and in effect from time to time, the "Agreement") between the City of Boulder, a Colorado home rule city (the "City" or "Applicant"), and Public Service Company of Colorado, a Colorado corporation, its successors and assigns ("PSCo" or the "Beneficiary") or the [Letter of Credit/Security], as applicable. I,-------~ an authorized representative of the Beneficiary, do hereby certify that: [This Drawing Certificate, as executed, must contain one, but only one, of the three alternative paragraphs (a) set forth below and shall in all cases contain paragraph (b) set forth below.] Alternative I: (a) Beneficiary has determined, and provided Notice to the Issuer in the format attached as Addendum I, that Applicant has failed to timely pay a Payment Request as prescribed in the Agreement. Alternative 2: (a) Beneficiary has determined, and provided Notice to the Issuer in the format attached as Addendum 2, that Applicant has failed to timely renew or extend the [Letter of Credit/Security] at least thirty (30) days prior to its expiration date. The amount of this drawing is the Stated Amount under the [Letter of Credit/Security]. Alternative 3: (a) Beneficiary has determined, and provided notice to the Issuer in the format attached as Addendum 3, that the Issuer no longer meets the requirements for an issuing bank in accordance with the Agreement and Applicant has failed to timely replace Issuer. The amount of this drawing is the Stated Amount under the [Letter of Credit/Security]. Alternative 4: (a) Beneficiary has detennined, and provided Notice to the Issuer in the fonnat attached as Addendum 4, that Applicant has failed to make timely payment to restore the Stated Amount balance. (b) Beneficiary, pursuant to the tenns of the [Letter of Credit/Security] hereby demands payment in the amount of~---~ U.S. Dollars($~---~), such amount to be paid to Beneficiary by wire transfer in immediately available funds to: [Account Infonnation]. IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Drawing Certificate this [_] day of [ ], [_J. BENEFICIARY Public Service Company of Colorado By: --------------- Name: Title: DRAWING CERTIFICATE ADDENDUM I NOTICE OF APPLICANT'S FAILURE TO TIMELY PAY To: [_) as Issuing Bank [Address] [DATE) This is Notice to Issuing Bank under [Irrevocable Letter of Credit No. [ ) of [name of Issuing Bank], dated [ ) (the "Letter of Credit")) OR [Line of Credit Security Identified as of [Name of Issuing Bank], dated ~-----~ (the "Security").]. Capitalized terms used herein, and not otherwise defined herein, shall have the meanings assigned to such terms in the [Letter of Credit/Security). Issuer is hereby notified that Applicant has failed to timely pay under the terms of the Agreement for Payment, of Costs between Applicant and Beneficiary. BENEFICIARY Public Service Company of Colorado By: Name: Title: DRAWING CERTIFICATE ADDENDUM2 NOTICE OF APPLICANT'S FAILURE TO TIMELY EXTEND OR RENEW To: [_J as Issuing Bank [Address] [DATE] This is Notice to Issuing Bank under [Irrevocable Letter of Credit No. [ ] of [name oflssuing Bank], dated [ ] (the "Letter of Credit")] OR [Line of Credit Security Identified as ______ of [Name of Issuing Bank], dated ------~ (the "Security").]. Capitalized terms used herein, and not otherwise defined herein, shall have the meanings assigned to such terms in the [Letter of Credit/Security]. Issuer is hereby notified that Applicant has failed to timely renew or extend the [Letter of Credit/Security] at least thirty (30) days prior to its expiration date. The amount of this drawing is the Stated Amount under the [Letter of Credit/Security]. BENEFICIARY Public Service Company of Colorado By: -------------- Name: Title: ORA WING CERTIFICATE AOOENOUM3 NOTICE ISSUER FAILS TO MEET ISSUING BANK REQUIREMENTS To: [_J as Issuing Bank [Address] [OATE] This is Notice to Issuing Bank under [Irrevocable Letter of Credit No. [ ] of [name of Issuing Bank], dated [ ] (the "Letter of Credit")] OR [Line of Credit Security Identified as ______ of [Name of Issuing Bank], dated _______ (the "Security").] Capitalized terms used herein, and not otherwise defined herein, shall have the meanings assigned to such terms in the [Letter of Credit/Security]. Issuer is hereby notified that Issuer no longer meets the requirements for an issuing bank in accordance with the Agreement for Payment of Costs between Applicant and Beneficiary, dated ____ (as amended, supplemented and otherwise modified and in effect from time to time) and that Applicant has failed to timely replace Issuer. The amount of this drawing is the Stated Amount under the [Letter of Credit/Security]. BENEFICIARY Public Service Company of Colorado By: ---------------Name: Title: DRAWING CERTIFICATE ADDENDUM4 NOTICE OF APPLICANT'S FAILURE TO TIMELY RESTORE STATED AMOUNT To: [_] as Issuing Bank [Address] [DATE] This is Notice to Issuing Bank under [Irrevocable Letter of Credit No. [ ] of [name of Issuing Bank], dated [ ] (the "Letter of Credit")] OR [Line of Credit Security Identified as of [Name of Issuing Bank], dated .__ _____ _, (the "Security").] Capitalized terms used herein, and not otherwise defined herein, shall have the meanings assigned to such terms in the [Letter of Credit/Security]. Issuer is hereby notified that Applicant has failed to timely restore the [Letter of Credit/Security] to its Stated Amount. BENEFICIARY Public Service Company of Colorado By: -------------- Name: Title: EXHIBITD INSURANCE REQUIREMENTS (a) Limits: Each Party shall procure and maintain in force during the term of this Agreement, at its own cost, the following minimum coverages: (I) Workers' Compensation and Employers' Liability: State of Colorado: (2) General Liability: (i) (ii) General Aggregate Limit: Each Occurrence Limit: (3) Automobile Liability: Bodily Injury & Property Damage Combined Single Limit: (b) Coverage: Insurance required by this Agreement shall: (I) Be primary coverage; Statutory $2,000,000 $1,000,000 $1,000,000 (2) Include the City its officials and employees as additional insureds as their interest may appear (except for Worker's Compensation and Professional Liability). Additional insured endorsement should be at least as broad as ISO form CG20 I 0 for General Liability coverage and similar forms for auto liability; (3) Include a waiver of subrogation for General Liability coverage; ( 4) Be issued from a company allowed to do business in Colorado having an AM Best rating of at least A-VI; and (5) Be procured and maintained in full force and effect for duration of work. (c) Certificates: Certificates oflnsurance shall be forwarded to the other Party's Purchasing department. ( d) Cancelation: Within seven days after receiving insurer's notice of cancellation or reduction in coverage, the Party that receives such notice, or its insurance broker, shall notify the other Party. In either such case, the Party receiving such notice shall promptly obtain and submit proof of substitute insurance complying with these insurance requirements. 4511223.1 EXHIBIT 6 TO MOTION TO DISMISS FIRST AMENDED PETITION IN CONDEMNATION FOR LACK OF SUBJECT MATTER JURISDICTION PURSUANT TO COLO. R. CIV. P. 12(B)(1) Decision No. C19-0151-I BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF COLORADO PROCEEDING NO. 15A-0589E IN THE MATTER OF THE APPLICATION OF THE CITY OF BOULDER, COLORADO FOR APPROVAL OF THE PROPOSED TRANSFER OF ASSETS FROM PUBLIC SERVICE COMPANY OF COLORADO TO THE CITY AND ASSOCIATED AUTHORIZATIONS AND RELIEF. INTERIM DECISION STAYING PROCEEDING AND REQUIRING FILINGS Mailed Date: February 8, 2019 Adopted Date: February 6, 2019 I. BY THE COMMISSION A. Statement 1. By this Decision, we grant, with modifications, the Joint Unopposed Motion to Stay Commission Action on Pending Matters for Two Weeks and for Waiver of Response Time (Joint Motion to Stay) filed by the City of Boulder (Boulder) and Public Service Company of Colorado (Public Service) on February 1, 2019. 2. Action on all pending matters in this Proceeding is stayed until further order. Consistent with the discussion below, Boulder may file responses to certain pleadings to be filed by Public Service on February 15, 2019. In addition, we direct Boulder to file, no later than February 15, 2019, any court filings or related written documentation exchanged with Public Service regarding the commencement of condemnation proceedings. We also direct Boulder to confer with the parties to develop and to file a proposal for addressing and resolving all outstanding issues and pleadings. Colorado PUC E-Filings System Before the Public Utilities Commission of the State of Colorado Decision No. C19-0151-I PROCEEDING NO. 15A-0589E 2 3. By staying all pending matters in this Proceeding, we rescind the referral of matters to an Administrative Law Judge (ALJ), pursuant to Ordering Paragraph 3 of Decision No. C17-0750, issued on September 14, 2017. We will address that referral when we lift the stay ordered herein. B. Background 4. On September 14, 2017, the Commission issued Decision No. C17-0750, granting in part and with conditions, and denying in part, Boulder’s Third Supplemental Verified Application for Approval of the Proposed Transfer of Assets from Public Service Company of Colorado filed May 12, 2017. Decision No. C17-0750 satisfied the requirements of the Boulder District Court in Order Re: Judicial Review of the Colorado Public Utilities Commission Decision, City of Boulder v. Pub. Utils. Comm’n, Case No. 14CV30047 (Boulder District Court, January 14, 2015) by determining, to the extent necessary as of the date of the order, how Public Service’s facilities should be assigned, divided, or jointly used to protect Public Service’s electric distribution system’s effectiveness, reliability, and safety. 5. Decision No. C17-0750 assigned three conditions to the approval for transfer of certain assets from Public Service to Boulder. Boulder was directed to: (1) file an agreement reached between Boulder and Public Service that provides Public Service permanent non-exclusive easements and other necessary real property rights for the location of its electric facilities within Boulder’s city limits that are necessary for Public Service to provide service to its customers after separation; (2) correct the errors and omissions from the list of assets for transfer outside of the substations and resubmit the revised list of assets for final approval; and (3) file an agreement (or multiple agreements) between Boulder and Public Service that address(es) the payment by Boulder to Public Service of the costs incurred by Public Service to Before the Public Utilities Commission of the State of Colorado Decision No. C19-0151-I PROCEEDING NO. 15A-0589E 3 effectuate municipalization and the separation of Public Service’s system into two separate systems. 6. Public Service was directed to assist Boulder in good faith in order to satisfy the conditions of Decision No. C17-0750. 7. Boulder requested and received four extensions to make the required filings.1 Additionally, a status conference was held on June 29, 20182 at which Boulder and Public Service appeared and answered questions regarding the negotiation process for the agreements and the corrected asset list. 8. On October 26, 2018, Boulder and Public Service filed the Joint Notice of Filing of Permanent Easement Agreement, Cost Agreements, and Corrected List of Assets Outside Substations (Joint Notice), providing three filings required by Decision No. C17-0750: 1) An agreement between Boulder and Public Service through which Public Service would receive permanent non-exclusive easements and other real property rights for the location of Public Service’s electric facilities within Boulder’s city limits that are necessary for Public Service to provide service to its customers after the separation of Boulder from the system; 2) A corrected list of assets for transfer outside of substations; 3) An agreement(s) between Boulder and Public Service addressing the payment by Boulder to Public Service for costs incurred to separate the systems. 9. In the Joint Notice, Boulder and Public Service noted that Paragraph 156 of Decision No. C17-0750 requires identification of instances where Public Service’s gas or transmission facilities share an easement with the electric distribution facilities and that Public Service identify the portion of any such easement necessary for provision of gas or transmission 1 Decision No. C17-1065-I, issued on December 22, 2017; Decision No. C18-0181-I, issued on March 14, 2018; Decision No. C18-0557-I, issued on July 16, 2018; Decision No. C18-0742-I, issued on August 31, 2018. 2 The status conference was ordered by Decision No. C18-0492-I, issued on June 20, 2018. Before the Public Utilities Commission of the State of Colorado Decision No. C19-0151-I PROCEEDING NO. 15A-0589E 4 services. Boulder and Public Service stated that it would be time-consuming and expensive to identify the large number of easements that Public Service must retain in order to provide gas or transmission service. Therefore, they determined that if they negotiated an easement sharing agreement, identification of the portions of each easement required for gas and transmission facilities would not be necessary. An easement sharing agreement would protect Public Service’s ability to provide gas and transmission services while not shifting costs to gas and transmission customers. The agreement would also allow Boulder to use the easements for the existing electric distribution facilities it acquires. 10. On November 16, 2018, Boulder and Public Service filed a Motion for Modification of Certain Provisions of Paragraphs 155 and 156 of Decision No. C17-0750 (Motion for Modification) that included an Easement Sharing Agreement. 11. Also on November 16, 2018, Boulder filed a Motion for Final Approval of Designation of Assets Outside Substations for Transfer (Motion for Final Approval). In the Motion for Final Approval, Boulder stated that it was authorized to state that Public Service did not oppose the Motion for Final Approval. 12. The 30-day period, established by Decision No. C17-0750, during which Parties could request a hearing on the cost agreements, easement agreements, and corrected asset list began on November 16, 2018.3 13. On December 17, 2018, IBM Corp. (IBM) timely filed a Response, Request for Hearing, Request for Clarification, and Request for Status Conference; Tri-State Generation and Transmission Association Inc. (Tri-State) timely filed a Response, Request for Clarification, and 3 Decision No. C19-0004, issued on January 3, 2019 Before the Public Utilities Commission of the State of Colorado Decision No. C19-0151-I PROCEEDING NO. 15A-0589E 5 Request for Status Conference; and Staff of the Commission (Staff) timely filed a Request for Hearing. In accordance with Ordering Paragraph 3 of Decision No. C17-0750, the filings made by IBM, Tri-State, and Staff were referred to an ALJ. 14. The assigned ALJ held a pre-hearing conference on January 15, 2019 and set a hearing for February 25 and 26, 2019.4 15. On January 18, 2019, Public Service filed a Notice of Withdrawal from the Joint Motion for Modification; Notice of the Company’s Objections to the List of Assets; or Alternatively, Motion for Leave to File Out of Time Objections to the Asset List and Request for Hearing (Notice of Withdrawal). In the Notice of Withdrawal, Public Service states that it withdraws its support for the Joint Motion for Modification and objects to Boulder’s Motion for Final Approval. 16. On January 25, 2019, Public Service filed a Petition for Declaratory Orders with Regard to the Portion of Commission Decision C17-0750 Concerning Public Service Assets (Real and Personal) Inside Substations (Petition for Declaratory Orders). In this filing, Public Service requests that the Commission issue an order stating that Boulder may not commence condemnation proceedings unless and until Boulder and Public Service reach mutual agreement on the transfer of assets inside existing substations and an application requesting the designation of assets inside substations has been granted. 17. On January 29, 2019, IBM filed a Notice of Support and Joinder of Relief Sought in Petition for Declaratory Order. IBM states that it supports the Petition for Declaratory Orders and requests that the Commission declare that Boulder may not commence condemnation 4 Decision No. R19-0075-I issued on January 18, 2019 Before the Public Utilities Commission of the State of Colorado Decision No. C19-0151-I PROCEEDING NO. 15A-0589E 6 proceedings to acquire any Public Service assets inside substations unless and until Boulder and Public Service have reached an agreement on the transfer of assets inside the substations, and an application requesting the designation of assets inside substations is filed and granted. 18. On January 29, 2019, Staff filed a Notice Concerning Public Service Company’s Petition for a Declaratory Order. In this filing, Staff recommends that the Commission issue a declaratory order as provided for in Rule 1304(i)(II) of the Rules of Practice and Procedure, 4 Code of Colorado Regulations 723-1. Staff states that if the Commission does not issue a declaratory order, the municipalization process may stall and “become little more than an exercise in complex legal gymnastics.”5 19. On January 30, 2019, Tri-State filed a Notice Regarding Public Service Company’s Petition for Declaratory Orders, noting that Tri-State has concerns similar to Public Service with regard to its assets and property rights associated with Substation F. Tri-State states that it has been working with Boulder and Public Service to obtain information regarding Substation F, but that there are questions regarding the accuracy of the lists of assets and property rights outside and inside substations and plans for separation of the electric distribution systems. For these reasons, Tri-State states that it supports the Petition for Declaratory Orders, as it relates to the process for identification of assets and timing of the acquisition of assets. 20. On February 1, 2019, Boulder and Public Service filed the Joint Motion to Stay. In the Joint Motion to Stay, Boulder and Public Service state that they are engaging in negotiations regarding a number of disputed matters, including Public Service’s Notice of 5 Staff Notice at p. 3. Before the Public Utilities Commission of the State of Colorado Decision No. C19-0151-I PROCEEDING NO. 15A-0589E 7 Withdrawal and Petition for Declaratory Orders. Boulder and Public Service state that they wish to confer over the next two weeks in an attempt to resolve issues raised in those filings.6 21. Specifically, Boulder and Public Service request that the Commission stay action on the Notice of Withdrawal and the Petition for Declaratory Orders for two weeks. Any response to those filings would then be due on February 15, 2019. C. Findings and Conclusions 22. We agree with the relief sought by Boulder and Public Service regarding a stay of the Notice of Withdrawal and the Petition for Declaratory Orders. However, we find good cause to stay all deadlines and actions on all pending matters in this Proceeding until we lift that stay by separate decision. We therefore grant, in part, the unopposed Joint Motion to Stay. 23. Boulder is authorized to file responses to the Notice of Withdrawal and to the Petition for Declaratory Orders as proposed on February 15, 2019. We decline to establish February 15, 2019 as a deadline for such responses, because Boulder has requested to extend filing deadlines multiple times in this Proceeding for various reasons.7 Boulder has demonstrated interest in moving this Proceeding to final resolution given the filing of its Motion for Final Approval on November 16, 2019. 24. In order to better understand where Boulder is in its process of acquiring assets by agreement with Public Service or through condemnation, we require Boulder to file, no later than 6 On February 1, 2019, Boulder and Public Service filed a Motion to Modify Interim Decision R19-0075-I, to Toll Proceeding for Two Weeks. (Decision No. R19-0075-I, issued January 18, 2019, established a procedural schedule for a hearing on issues raised with regard to the compliance filings made by Boulder as required by Decision No. C17-0750.) On February 4, 2019, the ALJ issued Decision No. R19-0136-I granting the Motion to Modify Interim Decision No. R19-0075-I. 7 If Boulder does not file Responses to the Notice of Withdrawal and to the Petition for Declaratory Orders by February 15, 2019, it does not need to file a request for extension to file. Before the Public Utilities Commission of the State of Colorado Decision No. C19-0151-I PROCEEDING NO. 15A-0589E 8 February 15, 2019, any court filings or related documentation exchanged with Public Service regarding the commencement of condemnation proceedings. 25. Furthermore, in order to move this proceeding toward resolution, we direct Boulder to confer with the parties to this Proceeding to develop and to file a proposal for addressing and resolving all outstanding issues and pleadings, including Public Service’s Notice of Withdrawal and Petition for Declaratory Orders. That proposal shall be filed concurrently with Boulder’s response to the Notice of Withdrawal and Petition for Declaratory Orders. 26. Parties shall have seven days to file responses to the filings made by Boulder pursuant to this Decision. 27. As a result of the stay on all deadlines and actions on all pending matters in this Proceeding that we order here, including the procedural schedule and hearing established by the ALJ through Decision No. R19-0075-I, issued January 18, 2019 for a hearing on issues raised with regard to the compliance filings made by Boulder as required by Decision No. C17-0750.), we find it necessary to rescind our referral of matters to the ALJ, pursuant to Ordering Paragraph No. 3. of Decision No. C17-0750. At such time that we lift the stay in this proceeding, we anticipate that we will reinstate that referral. II. ORDER A. It Is Ordered That: 1. The Joint Unopposed Motion to Stay Commission Action on Pending Matters for Two Weeks and for Waiver of Response Time filed by the City of Boulder (Boulder) and Public Service Company of Colorado (Public Service) on February 1, 2019 is granted, in part, consistent with the discussion above. Response time to the motion is waived. Before the Public Utilities Commission of the State of Colorado Decision No. C19-0151-I PROCEEDING NO. 15A-0589E 9 2. All procedural deadlines and Commission action on all pending matters in this Proceeding are stayed, consistent with the discussion above. 3. Boulder is authorized to respond to the Notice of Withdrawal from the Joint Motion for Modification; Notice of the Company’s Objections to the List of Assets; or Alternatively, Motion for Leave to File Out of Time Objections to the Asset List and Request for Hearing, filed on January 18, 2019 by Public Service, on February 15, 2019, consistent with the discussion above. 4. Boulder is authorized to respond to the Petition for Declaratory Orders with Regard to the Portion of Commission Decision C17-0750 Concerning Public Service Assets (Real and Personal) Inside Substations, filed on January 25, 2019 by Public Service, on February 15, 2019, consistent with the discussion above. 5. No later than February 15, 2019, Boulder shall file any court filings or related documentation exchanged with Public Service regarding the commencement of condemnation proceedings, consistent with the discussion above. 6. Boulder shall confer with parties to this Proceeding and shall file a proposal for addressing and resolving the outstanding issues in the proceeding, consistent with the discussion above. 7. Response time to filings made filed by Boulder pursuant to this Decision shall be seven days. 8. The referral of matters to an Administrative Law Judge, pursuant to Ordering Paragraph No. 3. of Decision No. C17-0750, issued on September 14, 2017, is rescinded. 9. This Decision is effective upon its Mailed Date. Before the Public Utilities Commission of the State of Colorado Decision No. C19-0151-I PROCEEDING NO. 15A-0589E 10 B. ADOPTED IN COMMISSIONERS’ WEEKLY MEETING February 6, 2019. (S E A L) ATTEST: A TRUE COPY Doug Dean, Director THE PUBLIC UTILITIES COMMISSION OF THE STATE OF COLORADO JEFFREY P. ACKERMANN ________________________________ FRANCES A. KONCILJA ________________________________ JOHN GAVAN ________________________________ Commissioners EXHIBIT 7 TO MOTION TO DISMISS FIRST AMENDED PETITION IN CONDEMNATION FOR LACK OF SUBJECT MATTER JURISDICTION PURSUANT TO COLO. R. CIV. P. 12(B)(1) 1 BEFORE THE PUBLIC UTILITIES COMMISSION STATE OF COLORADO PROCEEDING NO. 15A-0589E IN THE MATTER OF THE APPLICATION OF THE CITY OF BOULDER, COLORADO FOR APPROVAL OF THE PROPOSED TRANSFER OF ASSETS FROM PUBLIC SERVICE COMPANY OF COLORADO TO THE CITY AND ASSOCIATED AUTHORIZATIONS AND RELIEF STAFF’S RESPONSE TO BOULDER’S NOTICE Boulder’s recently-filed Notice suggests an ongoing cooperative effort by the City and Public Service Company of Colorado, designed to satisfy important milestones necessary for the creation of an operational municipal utility. According to this Notice, the City’s proposed process to resolve all outstanding issues will culminate with the filing of: (1) a revised Exhibit 5A; (2) a revised Exhibit 5B; (3) a list of substation facilities and real property interests; (4) a Facilities Study Agreement; and (5) other completed substation agreements including, presumably, all necessary co-location, operations and maintenance Agreements (“COM Agreements”), as well as an updated Agreement of Payment for Costs.1 Since the City plans to file all five of these either after receiving them from the Company or after the City and Company both sign them, the proposed process represents a viable and comprehensive pathway for the City and the Company to cooperatively resolve all outstanding issues. This is very good news. Once the City submits these 1 See The City of Boulder’s Notice Regarding Proposed Process to Address and Resolve Outstanding Issues, Proceeding No. 15A-0589E, June 12, 2019 ¶ 11. Colorado PUC E-Filings System 2 five filings, the proposed process gives other parties to the proceeding fourteen days to comment upon them.2 After receiving these five filings, the Commission will be in a prime position to act in accordance with its August 2017 post-hearing order on matters concerning lists of assets for transfer and substation-related matters. This proceeding will then shift to new phases of the municipalization process. But serious problems lie ahead which could frustrate or even prevent the cooperative efforts between Boulder and Public Service. The City’s “Combined Response,”3 submitted on the same day as its recently-filed Notice, paints a much different picture of the working relationship between the City and the Company than what comes across from its Notice. The Combined Response suggests that the two parties still appear willing, albeit grudgingly, to continue working together to submit the same five items promised by the recently-filed Notice. The City and the Company do not, however, agree as to the Commission’s proper role in reviewing and approving these five items. The City appears to view the filings as a means of keeping the Commission apprised of the City’s progress towards condemnation, 2 The City’s Notice does not specify whether Boulder plans to file these five items all or one time or to roll them out piece-by-piece. In order to avoid creating a complex situation that induces multiple response filings from multiple parties, it may prove helpful to initiate the fourteen-day window only after the Commission receives all five promised items. That way the Commission will receive just one response filing per party to the proceeding. 3 See generally The City of Boulder’s Combined Response in Opposition to: (1) Petition for Declaratory Orders; and (2) Notice of PSCo’s Withdrawal from the Joint Motion for Modification; Objections to the List of Assets; or in the Alternative, Motion for Leave to File Out of Time Objections; and Request for Oral Argument, Proceeding No. 15A-0589E, June 12, 2019. 3 while the Company appears to insist that the Commission must approve all the filings as a prerequisite for condemnation. Both views cannot be correct. Fortunately, as first iterated back in January4 and restated here, the Commission possesses an ideal tool to quickly and decisively resolve this disagreement: accepting the Company’s petition and issuing a declaratory order pursuant to its Rule 1304(i)(II) powers that clarifies the Commission’s remaining expectations for the City and the Company before the City initiates a condemnation proceeding. What was true in January still holds true five months later, “if the Commission does not act on the petition, the municipalization process may stall and become little more than an exercise in complex legal gymnastics.”5 The City’s Combined Response underscores the differences between the City and the Company’s interpretation of the Commission’s August 2017 post-hearing order,6 and these differences are highly unlikely to disappear absent Commission action. Recent action by the Boulder City Council also highlights the immediate need to resolve, once and for all, the City and the Company’s different interpretations as to the Commission’s proper role in the municipalization process. On June 4th, the City Council passed the motion in Attachment 1, which suggests, once again, that the City strives to initiate a condemnation action in the very near future, perhaps even before Commission action on the five items submitted by the City at the culmination of the process outlined in the City’s recently-filed Notice. 4 Staff’s Notice Concerning Public Service Company’s Petition for a Declaratory Order, Proceeding No. 15A-0589E, Jan. 22, 2018. 5 Id. at 3. 4 Alternatively, the passage of the motion may suggest nothing more than that the City Council wishes to move quickly, but only after the Commission finishes its work. Whatever the City Council’s motivation, a declaratory order from the Commission will enable the City and the Company to confidently proceed in the same direction as this complex process of creating a new municipal utility continues. Hence, the Commission should allow the process proposed by Boulder’s Notice to move ahead. And while the Commission awaits the City’s five filings, plus any responsive filings to be submitted within fourteen days by the other parties, it should seize the opportunity to reduce the rising tension between the City and the Company by clarifying the intent of its August 2017 post-hearing decision by issuing an appropriate declaratory order at the appropriate time. 6 Proceeding No. 15A-0589E, Commission Decision No. C17-0750. 5 DATED June 19, 2019. Respectfully submitted, PHILIP J. WEISER Attorney General /s/ Paul J. Kyed /s/ Charlotte M. Powers Anne K. Botterud, 20726* First Assistant Attorney General Paul J. Kyed, 37814* Senior Assistant Attorney General Charlotte M. Powers, 47909* Assistant Attorney General Revenue and Utilities Section Attorneys for Trial Staff of the Public Utilities Commission Ralph L. Carr Colorado Judicial Center 1300 Broadway, 8th Floor Denver, Colorado 80203 Telephone: (720) 508-6334 (Botterud) Telephone: (720) 508-6332 (Kyed) Telephone: (720) 508-6331 (Powers) Fax: (720) 508-6038 Email: anne.botterud@coag.gov Email: paul.kyed@coag.gov Email: charlotte.powers@coag.gov *Counsel of Record CERTIFICATE OF SERVICE This is to certify that on June 19, 2019 I have served the foregoing STAFF’S RESPONSE TO BOULDER’S NOTICE upon all parties listed in the Commission’s E-Filing system for this proceeding. /s/ Kellie M. Anderson