013 PUC Motion to InterveneDISTRICT COURT, BOULDER COUNTY, COLORADO
Boulder County Justice Center
1777 6th Street
Boulder, Colorado 80302
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.
COURT USE ONLY
Attorneys for Proposed Intervenor:
PHILIP J. WEISER, Attorney General
PAUL C. GOMEZ, 22759*
First Assistant Attorney General
RUTH M. HARPER, 52143*
Assistant Attorney General
1300 Broadway, 6th Floor
Denver, CO 80203
Telephone: 720-508-6166
FAX: 720-508-6041
E-Mail: paul.gomez@coag.gov
ruth.harper@coag.gov
*Counsel of Record
Case No. 2019CV30637
Division: 5
MOTION TO INTERVENE
2
The Colorado Public Utilities Commission (“PUC”); Jeffrey P. Ackermann, in his official
capacity as Chairman of the Public Utilities Commission; and Frances A. Koncilja and John C.
Gavan, in their official capacities as Commissioners of the Public Utilities Commission; through
undersigned counsel, hereby submits the following Motion to Intervene (“Motion to Intervene”).
The PUC seeks intervention pursuant to C.R.C.P. 24(a) and, in the alternative, C.R.C.P. 24(b).
CERTIFICATION PURSUANT TO C.R.C.P. 121 § 1-15(8)
Undersigned counsel for the PUC has conferred with counsel for Petitioner, the City of
Boulder (“Boulder or “City”) and Respondents: (1) Public Service Company of Colorado
(“Public Service”); and (2) Paul Weissmann, in his official capacity as Treasurer of Boulder
County, regarding this Motion to Intervene.
Counsel for Plaintiff stated that Plaintiff opposes the Motion to Intervene. Counsel for the
PUC is authorized to represent that neither Respondent opposes the Motion to Intervene.
GROUNDS AND AUTHORITY
The PUC respectfully submits that it has a right to intervene in this matter pursuant to
C.R.C.P. 24(a)(2). In the alternative, the PUC requests the Court permit it to intervene under
C.R.C.P. 24(b)(2). As required by C.R.C.P. 24(c), this Motion to Intervene states the grounds for
intervention and is accompanied by the PUC’s “Motion to Dismiss Pursuant to C.R.C.P.
12(b)(1), Or In the Alternative Stay Proceeding Pending Final PUC Decision,” which pleads that
the Court dismiss the First Amended Petition in Condemnation for lack of subject matter
jurisdiction, or in the alternative stay the proceeding pending a final PUC decision approving the
designation of assets for transfer. The PUC reserves its right to other claims or defenses.
3
The PUC seeks to intervene in order to apprise the Court of the ongoing PUC proceeding
and to preserve the PUC’s jurisdiction to approve the designation of assets for transfer, a duty
required of the PUC under C.R.S. § 40-5-105(1) (2018) and confirmed through prior decision of
the Boulder District Court. See Attachment A to this Motion to Intervene, Order Re: Judicial
Review of the Colorado Public Utilities Commission Decisions, City of Boulder v. Pub. Utils.
Comm’n, Case No. 14CV30047 (Boulder Dist. Ct., January 14, 2015) (“Boulder District Court
Decision”). The PUC files this motion to intervene, rather than a cross petition pursuant to
C.R.S. § 38-1-109 (2018), because of the PUC’s narrow and unique interest in the subject matter
of this condemnation action—specifically, that this action should not proceed until the PUC has
issued a final decision approving the designation of assets for transfer. Case law denying parties
intervention for lack of interest in the property at issue is not applicable here. See, e.g., Denver
Power & Irrigation Co. v. Denver & R.G.R. Co., 69 P. 568 (1902); Bd. of Cty. Comm’rs of Weld
Cty. v. Anderson, 525 P.2d 478, 479 (1974). The instant case is distinguishable. By prior
decision, the Boulder District Court found the PUC must approve the designation of assets for
transfer to Boulder as a condition precedent to condemnation. See Attachment A to this Motion
to Intervene, Boulder District Court Decision. Boulder just recently provided final versions of
outstanding filings in ongoing PUC Proceeding No. 15A-0589E on June 28, 2019, and August 2,
2019, and the PUC has not yet had opportunity to provide the necessary approvals for transfer.
Given these circumstances, the PUC respectfully asks this Court to grant this Motion to
Intervene so that the Court may review and consider the PUC’s concurrently filed motion to
4
dismiss, or in the alternative stay the proceeding, and be fully apprised of the ongoing PUC
proceeding and applicable case law before determining how to proceed with Plaintiff’s petition.
ARGUMENT
1. The PUC May Intervene As a Matter of Right
Pursuant to C.R.C.P. 24(a)(2), upon timely application, a party may intervene as a matter
of right where it claims an interest in the subject matter of the litigation, the disposition of the
litigation may impede or impair the ability to protect that interest, and the interest is not
adequately represented by existing parties. “Rule 24 should be liberally interpreted to allow,
whenever possible and compatible with efficiency and due process, issues related to the same
transaction to be resolved in the same lawsuit and at the trial court level.” Cherokee Metro. Dist.
v. Meridian Serv. Metro. Dist., 266 P.3d 401, 404 (Colo. 2011).
In determining whether intervention is appropriate, a court should consider: (1) whether
an intervenor has an interest; (2) whether it has an impairment; and (3) whether it is inadequately
represented. Id. at 404-07.
a. The PUC has an interest in completing its proceeding prior to any
condemnation action in Boulder District Court.
The PUC’s narrow and unique interest in this litigation is to preserve its jurisdiction to
approve the designation of assets for transfer from Public Service to Boulder to form Boulder’s
new municipal electric utility, as required under C.R.S. § 40-5-105(1) (2018). This designation
by the PUC of assets for transfer is a necessary and logical condition precedent to any action to
condemn and price the assets. In 2015, Judge LaBuda of the Boulder District Court considered
this very issue and ruled “it is necessary and appropriate for the PUC to determine how facilities
5
should be assigned, divided, or jointly used to protect the system’s effectiveness, reliability, and
safety.” See Attachment A to this Motion to Intervene, Boulder District Court Decision at p. 12.
Judge LaBuda found this PUC determination “must be made prior to the City’s condemnation of
property for utility municipalization.” Id. Thus the PUC retains jurisdiction over the subject
matter of this dispute until it issues a final decision designating assets for transfer including a
finding that the division will protect the remaining system’s effectiveness, reliability, and safety.
The PUC has not yet issued this final decision. To date, the PUC has conditionally
approved designation of certain assets outside substations. See Attachment B to this Motion to
Intervene, PUC Decision No. C17-0750, issued September 14, 2017, in PUC Proceeding No.
15A-0589E (“PUC Decision No. C17-0750”). Several issues remain pending for resolution. The
following list is not exhaustive. Now that the proper filings have been made, the PUC can move
forward to expeditiously establish appropriate procedures and a schedule for resolving the
outstanding issues and complete its proceeding.
First, the PUC must approve the “Corrected List of Facilities Outside Substations,”
referred to as “Exhibit 5A.” In PUC Decision No. C17-0750, the PUC required Boulder to
“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.” Boulder has now filed, concurrent with this
condemnation case and after extensions,1 a final version of Exhibit 5A. Now the PUC can make
1 See PUC Decision Nos. C17-1065-I, issued December 22, 2017 (extension to March 13, 2018);
C18-0181-I, issued March 14, 2018 (extension to June 11, 2018); C18-0557-I, issued July 16,
2018 (extension to August 24, 2018); C18-0742-I, issued August 31, 2018 (extension to October
26, 2018).
6
a final determination whether to approve the corrected asset list. This may require additional
process to develop a record demonstrating the proposed division will “protect the system’s
effectiveness, reliability, and safety,” consistent with the standard in the Boulder District Court
Decision. Public Service, the regulated utility whose assets are the subject of this dispute, has
expressly asked that it and other parties be afforded due process before the PUC as the PUC
makes its final “critical” determination whether the resulting system is effective, reliable, and
safe. See Attachment C to this Motion to Intervene, Public Service Response to Boulder’s
Proposed Procedures and to the Combined Response in Opposition, filed June 19, 2019, in PUC
Proceeding No. 15A-0589E.
Second, the PUC must approve the “Corrected List of Property Interests Outside
Substations,” referred to as “Exhibit 5B.” In PUC Decision No. C17-0750, the PUC required
Boulder to file an agreement(s) between Boulder and Public Service “that provides Public
Service permanent non-exclusive easements and other necessary 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 separation.” Boulder has just now filed a
final version of Exhibit 5B, on August 2, 2019. Review and approval of this final version will
require additional process like Exhibit 5A.
Third, the PUC must resolve whether any decisions are ripe for review regarding transfer
of assets inside substations. In PUC Decision No. C17-0750, the PUC found it premature to
designate facilities inside substations for transfer. On January 25, 2019, Public Service filed a
petition for declaratory order requesting the PUC declare that Boulder may not commence
7
condemnation proceedings to acquire assets inside substations until Boulder and Public Service
agree on the transfer and an application for designation of assets for transfer is filed with, and
granted by, the PUC. See Attachment D to this Motion to Intervene, Public Service Petition for
Declaratory Order, filed January 25, 2019, in PUC Proceeding No. 15A-0589E. Intervenor IBM,
Corp. (“IBM”) supports this petition. See Attachment E to this Motion to Intervene, IBM Notice
of Support and Joinder of Relief Sought in Petition for Declaratory Order, filed January 29,
2019, in PUC Proceeding No. 15A-0589E. The PUC has not yet ruled on the petition because the
proceeding was stayed to allow parties time to develop a proposal to resolve the many
outstanding issues. See Attachment F to this Motion to Intervene, PUC Decision No. C19-0151-
I, issued February 8, 2019, in PUC Proceeding No. 15A-0589E. Boulder has now filed a
proposed process. See Attachment G to this Motion to Intervene, Boulder Notice Regarding
Proposed Process to Address and Resolve Outstanding Issues, filed June 12, 2019, in PUC
Proceeding No. 15A-0589E. However, Public Service and IBM object. In its response, Public
Service specifically reiterates its request that substation-related filings be filed with the PUC and
parties be given opportunity to request a hearing, conduct discovery, and present evidence. See
Attachment C to this Motion to Intervene, Public Service Response to Boulder’s Proposed
Procedures and to the Combined Response in Opposition. Likewise, IBM responds that Boulder
cannot proceed to condemnation without final PUC action and that Boulder’s proposed process
is inadequate. See Attachment H to this Motion to Intervene, IBM Response to Boulder’s
Combined Response in Opposition, filed June 19, 2019, in PUC Proceeding No. 15A-0589E.
Now that final versions of Exhibits 5A and 5B have been filed, a status conference is expected to
8
soon be set in the PUC proceeding to determine next steps in resolving this and other outstanding
issues and pleadings.
Fourth, the PUC must resolve remaining issues raised by intervenor IBM. In PUC
Decision No. C17-0750 at ¶¶ 236-239, the PUC found the record insufficient “at this time” to
conclude Boulder was unwilling or unable to provide substantially adequate service to IBM. The
PUC found IBM’s operational and financial concerns can be addressed as Boulder and Public
Service develop plans for substation configurations and as Boulder continues to make operation
plans for its new utility. The PUC clarified that IBM is not precluded from bringing additional
evidence to the PUC that demonstrates Boulder is unable to provide it adequate service. IBM
continues to assert to the PUC that its concerns have not been addressed.
Because of these outstanding issues, the PUC has a direct interest in this condemnation
action. The PUC’s interest is to ensure that, before any condemnation action proceeds, the PUC
is afforded opportunity to complete its administrative proceeding and issue a final decision
approving the designation of assets for transfer.
b. The PUC’s interest in completing its proceeding would be impaired if the
condemnation case moves forward.
The PUC’s interest in completing its proceeding would be impaired if the condemnation
case proceeds prematurely. The Boulder District Court Decision established that the PUC’s
approval must be granted prior to Boulder going to court to condemn assets. If the Court were to
allow the condemnation action to move forward while the PUC proceeding is ongoing, the result
would be confusing and inconsistent agency and court rulings. This conflict could further delay
and complicate this already prolonged and complicated dispute.
9
In PUC Decision No. C17-0750 at ¶ 5 and Ord. ¶ 2, the PUC required Boulder to
resubmit the asset list in Exhibit 5A “for final approval.” The PUC stated the proceeding may
conclude with a final decision designating the assets for transfer upon the PUC’s satisfaction that
Boulder has complied with the conditions in Decision No. C17-0750. Id. at ¶ 10. Likewise,
Judge LaBuda in the Boulder District Court Decision recognized that the facilities Public Service
requires to provide service to its customers and the facilities needed by Boulder to create its
municipal electric utility are “intimately intertwined.” See Attachment A to this Motion to
Intervene, Boulder District Court Decision at p. 12. She concluded it was therefore “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.” Id.
Accordingly, the PUC must have opportunity to complete its proceeding and issue a final
decision approving the designation of assets for transfer. This includes opportunity to review the
June 28, 2019, and August 2, 2019, filings recently made by Boulder, allow parties to respond,
and determine finally that this assignment, division, or joint use will meet the standard in the
Boulder District Court Decision. And, as Judge LaBuda recognized, timing is key—the PUC’s
determinations must be made prior to Boulder beginning condemnation. Were the Court to allow
this condemnation action to proceed, it would undermine the ongoing PUC proceeding and
create confusing results.
c. The PUC’s interests are not adequately represented by the parties.
No other party adequately represents the PUC’s interest in this condemnation case. The
PUC’s narrow and unique interest is to apprise the Court of the ongoing PUC proceeding and
10
preserve the PUC’s jurisdiction to approve the designation of assets for transfer. The PUC is the
only entity interested in protecting its jurisdictional decision-making authority. Although Public
Service has also filed a motion to dismiss Plaintiff’s petition, the PUC’s interest in preserving its
jurisdiction and completing its ongoing proceeding is distinct from that of a party litigating
before the PUC, particularly where, as is the case here, the PUC has not yet issued a final
decision concluding its proceeding. The PUC’s interest in intervening is to ensure the Court is
fully apprised of the ongoing PUC proceeding and that the PUC’s critical prerequisite
determinations are made prior to any condemnation action.
Because all three parts of C.R.C.P. 24(a)(2) are satisfied, the PUC is entitled to intervene
as of right in this condemnation case.
2. In the Alternative, the Court Should Permit the PUC to Intervene
Alternatively, C.R.C.P. 24(b)(2) permits that, upon timely application, anyone may be
permitted to intervene in an action when an applicant’s claim or defense and the main action
have a question of law or fact in common. In exercising its discretion to grant permissive
intervention, a court “shall consider whether the intervention will unduly delay or prejudice the
adjudication of the rights of the original parties.” C.R.C.P. 24(b)(2).
The PUC’s claim that it retains jurisdiction over this dispute and must be afforded
opportunity to complete its administrative proceeding concerns the same questions of law and
fact as this condemnation action. Permitting the PUC to intervene at this time will not unduly
delay or prejudice the adjudication of the rights of the original parties. Rather, it will avoid
confusing and inconsistent results that may only further complicate and delay resolution of this
11
dispute. Respondent Public Service has just filed its answer to Plaintiff’s petition along with a
motion to dismiss for lack of subject matter jurisdiction. This Court has not yet made any
substantive rulings or established a procedural schedule and trial date. Now is the appropriate
and best time for the PUC to be admitted as an intervenor.
3. PUC Intervention is Timely and Does Not Prejudice Petitioner or Respondents
The PUC’s intervention before this Court is timely. Respondent Public Service has just
filed its answer along with a motion to dismiss. This Court has not yet made any substantive
rulings or established a procedural schedule and trial date. The parties are therefore in no way
prejudiced by PUC intervention in this condemnation case at this time. However, the PUC would
be unduly prejudiced if it is denied intervention, particularly as it actively moves forward to
resolve the outstanding issues before it in its ongoing administrative proceeding that are a
necessary prerequisite to any condemnation action.
CLAIM OR DEFENSE TO BE ASSERTED
In compliance with C.R.C.P. 24(c), concurrent with this Motion to Intervene, the PUC
files a concurrent “Motion to Dismiss Pursuant to C.R.C.P. 12(b)(1), Or In the Alternative Stay
Proceeding Pending Final PUC Decision.” The PUC’s interest in this matter not only warrants
intervention in this litigation, but also requires dismissal of the First Amended Petition in
Condemnation. In the alternative, the PUC urges that the Court stay the condemnation action
pending a final PUC decision approving the designation of assets for transfer.
In the event the Court does not dismiss this action and moves forward with the merits of
Plaintiff’s petition, the PUC reserves its right to assert future claims and defenses.
12
CONCLUSION
WHEREFORE, the PUC respectfully requests that the Court grant the PUC’s Motion to
Intervene, allowing the PUC the opportunity to intervene in this litigation, and accept the
concurrently filed PUC Motion to Dismiss Pursuant to C.R.C.P. 12(b)(1), Or In the Alternative
Stay Proceeding Pending Final PUC Decision, such that the Court may consider the PUC
pleading that requests the Court dismiss the First Amended Petition in Condemnation for lack of
subject matter jurisdiction, or in the alternative stay the proceeding pending a final PUC decision
approving the designation of assets for transfer.
Respectfully submitted August 8, 2019.
PHILIP J. WEISER,
Attorney General
/s/ Paul C. Gomez
PAUL C. GOMEZ, 22759*
First Assistant Attorney General
RUTH M. HARPER, 52143*
Assistant Attorney General
State Services Section
Attorneys for the Colorado Public Utilities
Commission
*Counsel of Record
In accordance with C.R.C.P. 121 § 1-26(7), a printed copy of this document with original
signature is maintained by the Office of the Attorney General and will be made available for
inspection by other parties or the Court upon request.
13
CERTIFICATE OF SERVICE
This is to certify that a true and correct copy of the above captioned MOTION TO
INTERVENE was served upon all parties herein by e-filing and service through the Colorado
Courts E-Filing System (CCEF) or by depositing copies of the same in the United States mail, first-
class postage prepaid, at Denver, Colorado, this 8th day of August, 2019, addressed as follows:
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 Hamre, Rodriguez, Ostrander & Dingess, PC Donald M. Ostrander Richard F. Rodriguez 3600 S. Yosemite Street, Suite 500 Denver, CO 80237 Attorney for Respondent, Paul Weissmann, in his official capacity as Treasurer of Boulder County Oliva D. Lucas Boulder County Attorney P.O. Box 471 Boulder, CO 80306
Attorneys for Respondent, Public Service Company of Colorado John R. Sperber Sarah M. Kellner Brandee L. Caswell Matthew Dumont Clark Katharine M. Gray Sean J. Metherell FAEGRE BAKER DANIELS LLP 1144 Fifteenth Street, Suite 3400 Denver, CO 80202
/s/ Xan Serocki
XAN SEROCKI
In accordance with C.R.C.P. 121 § 1-26(7), a printed copy of this document with original
signature is maintained by the Office of the Attorney General and will be made available for
inspection by other parties or the Court upon request.
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
ATTACHMENT A
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 only, 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
Decision No. C17-0750
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.
DECISION GRANTING, IN PART AND WITH
CONDITIONS, AND DENYING, IN PART,
THIRD SUPPLEMENTAL VERIFIED APPLICATION
Mailed Date: September 14, 2017
Adopted Date: August 30, 2017
TABLE OF CONTENTS
I. BY THE COMMISSION .........................................................................................................3
A. Statement ...........................................................................................................................3
B. Third Supplemental Verified Application .........................................................................6
1. Proposed Assets for Transfer .....................................................................................7
2. Boulder’s Proposed Separation Plan ..........................................................................8
3. Four-Phase Proceeding and Other Regulatory and Court Activities ........................10
C. Procedural History ...........................................................................................................14
D. Overview of the Positions of the Intervening Parties ......................................................20
1. Public Service ...........................................................................................................20
2. Staff ..........................................................................................................................22
3. IBM ..........................................................................................................................24
4. OCC ..........................................................................................................................24
5. CU-Boulder ..............................................................................................................25
6. Climax ......................................................................................................................25
7. Evraz .........................................................................................................................26
8. Tri-State ....................................................................................................................26
II. LEGAL OBLIGATIONS AND RESPONSIBILITIES ..........................................................27Colorado PUC E-Filings SystemATTACHMENT B
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
2
A. Commission Jurisdiction .................................................................................................27
B. Burden of Proof ...............................................................................................................30
C. Standard of Review .........................................................................................................31
III. ASSETS FOR TRANSFER FROM PUBLIC SERVICE TO BOULDER ............................33
A. Assets Inside the Substations ...........................................................................................36
1. Colocation at Substations .........................................................................................37
2. Positions of the Intervening Parties ..........................................................................42
3. Findings and Conclusions ........................................................................................43
B. Assets Outside the Substations ........................................................................................45
1. Boulder’s Position ....................................................................................................46
2. Positions of the Intervening Parties ..........................................................................47
3. Findings and Conclusions ........................................................................................48
C. Conditions on the Approval of Assets for Transfer .........................................................50
1. Access to Rights of Way and Other Real Property Rights .......................................50
2. Addressing Deficiencies in the List of Identified Assets .........................................51
3. Agreement(s) on Boulder’s Reimbursement of Public Service’s Costs...................53
4. Filing Deadline and Review of Compliance Conditions ..........................................54
IV. BOULDER’S PROPOSED ASSOCIATED AUTHORIZATIONS AND RELIEF ..............55
A. Joint Use of Poles ............................................................................................................55
1. Boulder’s Proposal ...................................................................................................55
2. Public Service’s Position ..........................................................................................56
3. Findings and Conclusions ........................................................................................57
B. Detailed Design Drawings and Specifications ................................................................58
1. Boulder’s Proposal ...................................................................................................58
2. Positions of the Intervening Parties ..........................................................................59
3. Findings and Conclusions ........................................................................................60
C. Construction of New Facilities and Reconfiguration of Existing Facilities ....................61
1. Boulder’s Proposal ...................................................................................................61
2. Positions of the Intervening Parties ..........................................................................62
3. Findings and Conclusions ........................................................................................65
D. Financing, Proposed Regulatory Asset, and Payment by Boulder ..................................66
1. Boulder’s Proposal ...................................................................................................66
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
3
2. Positions of the Intervening Parties ..........................................................................68
3. Findings and Conclusions ........................................................................................70
E. Dispute Resolution ..........................................................................................................72
V. SERVICE TO IBM .................................................................................................................74
A. IBM’s Position .................................................................................................................74
B. Boulder’s Response .........................................................................................................77
C. Positions of Other Parties ................................................................................................78
D. Legal Analysis .................................................................................................................79
E. Findings and Conclusions ................................................................................................82
VI. DIRECTIVES TO PUBLIC SERVICE ..................................................................................83
A. Good Faith Cooperation with Boulder ............................................................................83
B. Obligation to Serve Until Cut-Over ................................................................................85
C. Cost Accounting ..............................................................................................................85
VII. PROCEEDINGS BEFORE THE COMMISSION .................................................................87
VIII. ORDER ............................................................................................................................88
A. It is Ordered That: ...........................................................................................................88
B. ADOPTED IN COMMISSIONERS’ DELIBERATIONS MEETING August 30, 2017.90
I. BY THE COMMISSION
A. Statement
1. The City of Boulder (Boulder or the City) has conditionally authorized the
formation of a municipal electric utility, and the Boulder City Council has voted to pursue the
acquisition of the electric utility assets in Boulder from Public Service Company of Colorado
(Public Service or the Company). There are approximately 52,500 Public Service customers in
Boulder that the City seeks to separate from Public Service’s service area. Boulder states that it is
not seeking to provide service to any customers located outside of the Boulder city limits.
Boulder, however, is not seeking to provide service to all customers within the city. Because of
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
4
the cost of serving two City-owned facilities within the city, Boulder has requested that Public
Service continue to serve those facilities.
2. On May 12, 2017, Boulder filed its Third Supplemental Verified Application
(Application) seeking approval of the transfer of certain assets from Public Service to the City.
Boulder also seeks associated authorizations and relief as set forth in the Application. Boulder
filed Direct Testimony and Exhibits of six witnesses in support of the Application.
3. Boulder states that the Colorado Public Utility Commission’s (Commission or
PUC) task in this Proceeding is to determine how Public Service’s system should be assigned,
divided, and jointly used and to ensure that the transfer of property required for Boulder to
municipalize will not impact the effectiveness, reliability, and safety of Public Service’s system
after separation.
4. Now being fully advised in this matter, the Commission grants, in part and
with conditions, and denies, in part, the Application. Our decision satisfies the requirements
stemming from 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 Dist. Ct., January 14, 2015)(Boulder District Court Decision). Namely, our decision
determines—to the extent necessary at this time—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. Our decision to grant conditionally a portion of the
Application also reflects two primary considerations: first, we seek to preserve Public Service’s
ability to serve its customers during separation and post-separation; and second, we seek to
protect Public Service’s ratepayers from being responsible for payment of any municipalization
and separation costs that Boulder should pay.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
5
5. We approve the designation of certain assets for transfer from Public Service to
Boulder, subject to Boulder demonstrating compliance with three conditions as discussed in
detail below. The specific assets designated for potential transfer are located outside of the
substations that Public Service presently uses to serve its retail electric customers in the Boulder
area. In order to secure final approval of the designation of these assets for transfer, Boulder
must take the following actions: (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 effectuate municipalization and the separation of
Public Service’s system into two separate systems.
6. We find that it is premature to designate any facilities inside the substations
for potential transfer to Boulder from Public Service. We conclude that it is reasonable
for Public Service and Boulder to rely upon the normal load interconnection request process
that is available to Boulder as a prospective transmission customer of Public Service. We
expect the transmission load interconnection process will establish the required configurations
and ownership arrangements within the substations without requiring further action by the
Commission before Boulder proceeds to condemnation.
7. Further, we deny Boulder’s other requests as set forth in its Application,
consistent with the discussion below.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
6
8. We direct Public Service to assist Boulder in good faith in the City’s efforts to
satisfy the conditions set forth in this Decision for securing final Commission approval of the
designation of assets for transfer outside of the substations. We also direct Public Service to work
with Boulder in good faith pursuant to the transmission load interconnection process under the
Company’s Open Access Transmission Tariff (OATT), consistent with the discussion below.
9. We direct Public Service to serve customers within Boulder city limits until the
time when Boulder begins to operate its municipal electric utility (i.e., the Cut-Over Date).
We further direct Public Service to account for the costs it incurs associated with Boulder’s
municipalization and separation efforts for the purpose of review of such costs in future rate
cases and associated proceedings.
10. This Proceeding may conclude with a final decision designating the assets for
transfer (those outside of the substations) from Boulder to Public Service upon the Commission’s
satisfaction that Boulder has complied with the three conditions set forth in this Decision. In the
future, Boulder and Public Service shall file an application in a separate proceeding for final
approval of the transfer of assets, pursuant to § 40-5-105, C.R.S., prior to when Boulder begins
to operate its municipal electric utility.
B. Third Supplemental Verified Application
11. Boulder asks the Commission to approve a proposed separation of the electric
distribution system to permit, on the one hand, the City to provide electric service to its future
customers within the city limits with City-owned facilities; and, on the other hand, Public
Service to provide electric service to the Company’s customers in unincorporated Boulder
County. The specific assets that Boulder seeks to acquire, according to the Application, were
identified during the development of a “Separation Plan.”
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
7
12. Boulder asks the Commission to approve the transfer of Public Service’s assets
associated with the distribution of electricity that are needed for Boulder to own and operate a
municipal electric utility. Boulder also requests that the Commission approve the proposed
planning level configuration of the Separation Plan that identifies the construction of new
facilities and reconfiguration of the existing facilities that will be necessary for the existing
system to operate as two separate systems. Specifically, Boulder requests that the Commission
find that the Separation Plan will, if implemented as proposed by the City, result in a system for
Public Service that is as effective, reliable, and safe as Public Service’s current system.
1. Proposed Assets for Transfer
13. Boulder’s Application filing, including Direct Testimony and Exhibits, describes
in detail the proposed assets for transfer.
14. Boulder separates the assets into two categories: (1) the assets for approval that
are inside the six substations that Public Service currently uses to provide retail electric service
to customers within Boulder (identified as Substations A, B, C, D, E, and F);1 and (2) the assets
for transfer that are outside of those substations.2
15. The assets for transfer outside the substations include the following: the electric
distribution property, plant, and equipment used, in whole or in part, to serve electric customers
within Boulder, whether located within or outside the city limits, including: overhead and
underground distribution lines; distribution transformers (both pole and pad mount); overhead
and underground secondary and service conductors; fiber optic and other communications
1 See Hearing Exhibits 202 and 202A, Nickell Answer, Attachment CSN-1.
2 See, e.g., Hearing Exhibits 103 and 103A, Ghidossi Direct, Attachment TAG 5, Technical Volume Part I,
p. 11.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
8
equipment associated with the distribution system; customer meters and other equipment;
easements; and associated property rights for the electric distribution system. The assets for
transfer also include streetlights and traffic signal lights owned by Public Service and located
within the city limits.
16. The assets for transfer inside the substations include protective equipment on the
high voltage side of transformers (including relaying, communications, and control equipment),
power transformers, distribution switchgear, and easements.
17. Boulder states that it is not seeking authority to transfer any other assets,
including any of Public Service’s generation assets, transmission assets, the Company’s
Certificate of Public Convenience and Necessity (CPCN), goodwill, consulting agreements,
brands, advertising, or employees.
2. Boulder’s Proposed Separation Plan
18. Boulder’s proposed Separation Plan consists of: (1) two separation models—a
Synergi version (using proprietary engineering software) and a Geographic Information System
(GIS) version; (2) the testimonies of two engineers hired by Boulder to provide expert testimony
in this Proceeding—Mr. Thomas A. Ghidossi and Mr. Steven D. Catanach; and (3) certain
attachments to their pre-filed testimony. Boulder argues that its proposed Separation Plan is the
result of extensive engineering design and testing that is sufficient to prove that it will ensure
Public Service has a system after separation that is at least as effective, reliable, and safe to
operate as the existing system.
19. Boulder states that its proposed Separation Plan is presented at a planning level
of engineering, which, according to the City, is a mid-level design having more detail than
conceptual design, but less detail than a final design. Boulder argues that this planning level
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
9
of engineering provides: (1) sufficient detail to guide long-term decisions and perform cost
estimates in the 30 percent contingency range; (2) general construction and modification
descriptions; (3) preliminary routes and configurations; and (4) performance analysis indicating
that construction and modifications are intended to meet Public Service’s criteria. According to
Boulder, the Separation Plan may serve as a blueprint for the design of the construction phase of
the work by combining known, existing facilities with facilities to be constructed in order to
maintain electrical continuity and system reliability.
20. Boulder’s proposed Separation Plan is primarily the result of its planning of a “No
Distribution Interconnection” scenario (NDI Plan), where feeders would be extended, in some
cases across the City, to provide a tie between substation transformers that are owned and
operated by each serving utility: Public Service and Boulder. Boulder explains that the result is
essentially a separate distribution loop for Public Service that is being created around the City to
allow Public Service to have necessary back-up sources, as well as new ties. In turn, Boulder
will have the necessary back-up sources it needs on the Boulder system in order for it to provide
service within the City.
21. The NDI Plan applies to all “study areas” in Boulder, with the exception of Area
1.3 Certain out-of-city customers in Area 1 would follow an alternative “Emergency Back-up
Plan” (EB Plan). Boulder explains that an EB Plan would allow Boulder’s system to normally
operate independently from Public Service’s system. However, during an outage or during
maintenance, construction, or other activities requiring back-up, one utility will provide back-up
to the other from key interconnection points on the system. Boulder estimates that an NDI Plan
3 There are ten study areas depicted in Hearing Exhibits 105, 105A, and 105B, Catanach Direct,
Attachment SDC-2, p. 1.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
10
for all of Area 1 would cost approximately $1 million more than an EB Plan for the eight
out-of-City customers.
22. Notwithstanding the proposed separation of the two systems, Boulder proposes
that Public Service continue to serve two city-owned parcels within its city limits: the facilities
at Boulder Reservoir and the Open Space and Mountain Parks Department facilities located at
Cherryvale Road and South Boulder Road, respectively.
23. Boulder acknowledges that Public Service developed the existing distribution
system without regard to the City’s municipal boundaries, recognizing that Public Service
designed its system to serve all of the electric customers within its designated service territory.
Boulder also acknowledges that throughout the existing system, individual feeders routinely
serve customers both inside and outside the city limits and often cross the boundaries of the City
several times.
24. Boulder states that the implementation of the Separation Plan will entail the
addition of new substation transformers and the construction of new backbone feeders that are
tied together to provide back-up. Boulder estimates that the construction and reconfiguration
work in the Separation Plan will take at least three years to complete.
3. Four-Phase Proceeding and Other Regulatory and Court Activities
25. Boulder proposes that this Proceeding be divided into four phases. Boulder’s
plan is that itself and Public Service would both undertake various activities between the
phases. Further, Boulder and Public Service would engage in other proceedings related to
municipalization, including potentially, a condemnation proceeding to acquire the assets needed
to operate a municipal electric utility as well as other proceedings before this Commission
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
11
and the Federal Energy Regulatory Commission (FERC) to address electric generation and
generation-related stranded costs.
26. Boulder argues that the Commission will retain jurisdiction over all matters
through all four of the City’s proposed phases for this Proceeding, because Public Service will
continue to own the distribution system in Boulder and because Public Service will continue to
have a CPCN to provide retail electric service in the area. Boulder explains that Public Service
would operate, maintain, and improve the system in Boulder until the separation of the system is
complete. Boulder argues this approach would eliminate any impact to customers in the interim
period and would permit Public Service to continue to receive the benefits and obligations of
asset ownership within the Boulder city limits. In addition, Boulder proposes that Public
Service, using a third-party contractor in coordination with the City, would construct all new
facilities and engage in any reconfiguration necessary to separate the systems, in conformance
with detailed design drawings and specifications as approved by the Commission. Boulder also
proposes that Public Service finance this construction and reconfiguration work, where all costs
associated with these activities would be accounted for in a “regulatory asset,” subject to various
Commission reviews and prudency determinations, for repayment by Boulder after the
implementation of the Separation Plan is complete.
27. In order to ensure Commission jurisdiction over all matters in this Proceeding,
Boulder proposes that Public Service enter an agreement with Boulder delaying issuance of a
Rule and Order in the district court condemnation proceeding. Specifically, the agreement would
provide the following: (1) the payment of the condemnation court’s valuation award would be
deferred until after construction of the Separation Plan is complete; (2) there would be no interest
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
12
paid on such deferred amounts; and (3) the entry of the Rule and Order would be delayed until
the systems are fully separated.
28. Phase 1 of this Proceeding is intended to support Boulder’s attempt to acquire the
assets from Public Service by negotiation, or if unsuccessful, to file a condemnation case to
acquire the assets approved by the Commission for transfer. Phase 2 is centered on a “Go/No-Go
Decision” when Boulder will determine, prior to the beginning of any construction and
reconfiguration of the system, whether it can move forward with municipalization. The final two
phases culminate in the “Cut-Over Date” which is when Boulder begins to operate its municipal
electric utility.
29. In this Phase 1, the City is asking the Commission to approve: (1) the transfer of
the assets Boulder wishes to acquire from Public Service so the City may move forward to
condemnation; and (2) the Separation Plan. Boulder states that once the Commission approves
the transfer of assets, Boulder can move to condemnation in order to acquire the assets.
30. Boulder proposes that after the Commission approves the Separation Plan, Public
Service, in consultation with Boulder’s engineers, would contract with third-party engineers to
complete the final design for the Separation Plan, solicit bids for the necessary construction
work, and develop an estimated timeline for the separation.
31. Boulder then proposes to return to the Commission in Phase 2, when it will
seek Commission approval of: (1) detailed design drawings and specifications consistent with a
Commission-approved Separation Plan; (2) the bid for the construction and reconfiguration work
necessary to implement the Separation Plan; and (3) an estimated construction timeline. Boulder
states that Phase 2 would be concurrent with a condemnation proceeding in Boulder District
Court.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
13
32. At the conclusion of Phase 2 and the conclusion of the condemnation proceeding,
but prior to the start of construction and reconfiguration of the systems, Boulder proposes that it
would determine whether it could proceed with municipalization. The Go/No-Go Decision
would be premised on the cost of acquisition, separation, and other start-up costs.
33. Should Boulder decide to continue with municipalization of the electric
distribution system, it would move into Phase 3 of this Proceeding. Boulder proposes that
Public Service’s third-party contractor, consistent with the Separation Plan, would construct new
facilities and reconfigure existing facilities during this phase. Boulder further proposes that costs
incurred during this time would be tracked in a regulatory asset. Phase 3 would also entail
Commission approval of Boulder’s “Cut-Over Plan.” During Phase 3, Boulder anticipates a need
to obtain information necessary to operate an electric distribution system and states that it will
require a waiver of certain of the Commission’s Data Privacy Rules.
34. Boulder proposes to complete this Proceeding in Phase 4, in which Boulder would
make a compliance filing, notifying the Commission that the electric distribution system has
successfully been divided into two independent systems and containing the final total costs
incurred in separation and reconfiguration of the system, plus interest equal to Public Service’s
weighted average cost of capital. After Boulder has paid the condemnation award and the costs
tracked through the regulatory asset, the City would receive the court title and possession of the
electric distribution system assets and the system would be separated for independent operations
at the Cut-Over Date.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
14
C. Procedural History
35. The Application is the third iteration of Boulder’s request for approval of the
transfer of assets and associated orders and directives from the Commission related to its
municipalization efforts.
36. On July 7, 2015, Boulder filed a Verified Application (First Application) which
caused this Proceeding to be opened. Boulder initially sought various approvals from the
Commission to acquire facilities from Public Service that would serve customers both within
Boulder city limits and outside the city’s boundaries. Boulder filed the application with Direct
Testimony and Exhibits of nine witnesses.
37. The Parties to this Proceeding were established through Decision
Nos. C15-0888-I, issued on August 14, 2015, and C15-0946-I, issued on August 28, 2015:
Boulder; Public Service; Staff of the Colorado Public Utilities Commission (Staff); IBM, Inc.
(IBM); the Colorado Office of Consumer Counsel (OCC); Tri-State Generation and Transmission
Association, Inc. (Tri-State); Climax Molybdenum Company (Climax); CF&I Steel, L.P., doing
business as Evraz Rocky Mountain Steel (Evraz); Boulder Chamber of Commerce; University
of Colorado Boulder (CU-Boulder); and Leave BoCo Out. Poudre Valley Rural Electric
Association, Inc. (PVREA) and United Power, Inc. were granted amicus curiae status.
38. Through Decision No. C15-1360-I, issued on December 30, 2015, the
Commission dismissed the portions of the First Application requesting acquisition of facilities
used exclusively to serve Public Service customers outside of the Boulder city limits. The
Commission also granted Boulder’s request to conduct discovery and to supplement its
application in a future filing.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
15
39. Through Decision No. C16-0336-I, issued on April 19, 2016, the Commission
approved modified discovery procedures in order to allow Boulder to obtain information
necessary to file a second supplemental application.
40. On September 28, 2016, Boulder filed its Second Supplemental Verified
Application (Second Supplement). Boulder filed the Second Supplement with Direct Testimony
and Exhibits of eight witnesses.
41. The Commission deemed the Second Supplement complete for purposes of
§ 40-6-109.5, C.R.S., through Decision No. C16-1053-I, issued on November 17, 2016. That
decision also required Boulder to provide notice of the Second Supplement to its residents and
residents of enclaves outside of the Boulder city limits who may be affected by the Second
Supplement.
42. Through Decision No. C16-1148-I, issued on December 15, 2016, the
Commission established a procedural schedule for the consideration of the Second Supplement.
An evidentiary hearing was scheduled to begin on April 26, 2017 and to continue through May 5,
2017. The deadline for a decision on the Second Supplement was established as June 15, 2017
pursuant to § 40-6-109.5(1), C.R.S.
43. Through Decision No. C17-0052-I, issued on January 20, 2017, the Commission
granted the intervention filed by Twin Lakes Action Group (TLAG).
44. On January 27, 2017, through Decision No. C17-0084-I, the Commission required
that the parties file legal briefs to certain questions no later than February 17, 2017, and also
required that the parties confer and file a joint statement of the remaining legal and factual issues
in dispute no later than March 3, 2017.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
16
45. Through Decision No. C17-0131-I, issued on February 14, 2017, the Commission
granted the intervention filed by the International Brotherhood of Electrical Workers, Local
No. 111 (Local 111).
46. On February 17, 2017, Answer Testimony and Exhibits were filed on behalf of
Public Service (seven witnesses), IBM (three witnesses), Staff (one witness), the OCC (one
witness), and Local 111 (one witness). All of the intervening parties opposed approval of all or
parts of the Second Supplement.
47. Legal briefs were filed on February 17, 2017 by Boulder, Public Service, Staff,
IBM, the OCC, and TLAG, in accordance with Decision No. C17-0084-I.
48. On March 27, 2017, Boulder filed a Motion to Withdraw a Portion of its
Application and Direct Testimony in Support Thereof (Motion to Withdraw).
49. On March 30, 2017, Boulder filed Rebuttal Testimony and Exhibits of six
witnesses. Also on March 30, 2017, Cross-Answer Testimony and Exhibits were filed by Public
Service (three witnesses), Staff (one witness), and CU-Boulder (one witness).
50. The Commission convened a prehearing conference in this matter on April 19,
2017.
51. In Decision No. C17-0318-I, adopted at the prehearing conference and issued on
April 24, 2017, the Commission found that the Motion to Withdraw and the City’s Rebuttal
Testimony and Exhibits had altered the relief Boulder seeks in this Proceeding substantially
enough to potentially prejudice intervening parties, should the hearing commence as scheduled
on April 26, 2017. The Commission, therefore, vacated the remaining procedural schedule,
including the evidentiary hearings scheduled to begin on April 26, 2017, and ordered Boulder to
file a Third Supplemental Verified Application to ensure that intervening parties had adequate
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
17
clarity as to the relief sought by Boulder. The Commission extended the deadline for a final
decision an additional 90 days, or until September 13, 2017, pursuant to § 40-6-109.5(4), C.R.S.
Determining that the pre-filed testimony submitted before the prehearing conference would not
be part of the evidentiary record at hearing, the Commission rescheduled the hearing to begin on
July 26, 2017.
52. On May 12, 2017, Boulder filed its Third Application which is the Application
that is addressed by this Decision. Boulder filed Direct Testimony and Exhibits of six witnesses
in support of the Application, including: (1) Heather Bailey, Executive Director of Energy
Strategy and Electric Utility Development for the City of Boulder (Hearing Exhibit 101);
(2) Thomas A. Ghidossi, P.E., of Exponential Engineering Company (Hearing Exhibits 103
and 103A); (3) Steven D. Catanach, P.E. (Hearing Exhibits 105, 105A, and 105B);
(4) Robert Eichem, Chief Financial Advisor to the City of Boulder (Hearing Exhibit 111);
(5) Christopher J. Meschuk, Senior Planner for the City of Boulder (Hearing Exhibit 100); and
(6) Kenneth K. Skogg, an attorney experienced in commercial litigation with an emphasis on
disputes based on or related to real estate (Hearing Exhibit 107). These are the same six
witnesses that filed Rebuttal Testimony and Exhibits addressing the Second Supplement.
53. On June 16, 2017, the following intervening parties filed Answer Testimony and
Exhibits: Public Service (eight witnesses), IBM (three witnesses), Staff (two witnesses), the
OCC (two witnesses), and Tri-State (one witness).
54. Public Service submitted the Answer Testimony and Exhibits of the following:
(1) David L. Eves, President of Public Service Company of Colorado (Hearing Exhibit 200);
(2) Chad S. Nickell, Manager of Distribution System Planning and Strategy of Xcel Energy
Services Inc. (Hearing Exhibits 202 and 202A); (3) Helen C. Atkeson, an attorney experienced in
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
18
public finance (Hearing Exhibit 208); (4) Deborah A. Blair, Director, Revenue Analysis of Xcel
Energy Services Inc. (Hearing Exhibit 209); (5) Hubert A. Farbes, Jr., a real estate and
construction litigator (Hearing Exhibit 212); (6) Leslie Fields, an attorney whose practice focuses
almost exclusively on eminent domain matters (Hearing Exhibit 214); (7) Lawrence J. Gelbien, a
consultant from Navigant Consulting and a former Vice President of Engineering for an electric
utility (Hearing Exhibit 205); and (8) Betty L. Mirzayi, Manager Transmission Planning West for
Xcel Energy Services Inc. (Hearing Exhibit 211).
55. IBM submitted the Answer Testimony and Exhibits of: (1) Leo M. Ladaga,
Senior Service Delivery Manager—US (Hearing Exhibits 500 and 500A); (2) Brody O. Wilson,
P.E., Site Energy Coordinator at IBM’s Boulder campus (Hearing Exhibits 501 and 501A); and
(3) Eugene Shlatz, a Director in Navigant Consulting’s Energy Practice (Hearing Exhibits 503
and 503A).
56. Staff submitted the Answer Testimony and Exhibits of: (1) Gene L. Camp, P.E.,
Chief Engineer (Hearing Exhibit 302); and (2) Sharon Podein, P.E., Senior Engineer (Hearing
Exhibit 300).
57. The OCC submitted the Answer Testimony and Exhibits of:
(1) Ronald Fernandez, Financial Analyst (Hearing Exhibit 400); and (2) Chris Neil,
Rate/Financial Analyst (Hearing Exhibit 402).
58. Tri-State submitted the Answer Testimony and Exhibits of Grant D. Lehman,
Senior Manager, Transmission Engineering and Construction, Tri-State Generation and
Transmission Association, Inc. (Hearing Exhibits 600 and 600A).
59. On July 10, 2017, Boulder filed Rebuttal Testimony and Exhibits of the same six
witnesses that filed Direct Testimony and Exhibits: Bailey (Hearing Exhibit 102), Catanach
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
19
(Hearing Exhibits 106 and 106A), Eichem (Hearing Exhibit 112), Ghidossi (Hearing Exhibits
104 and 104A), Meschuk (Hearing Exhibit 110), and Skogg (Hearing Exhibit 108).
60. Cross-Answer Testimony and Exhibits were filed by Public Service (six
witnesses), Staff (two witnesses), IBM (two witnesses), the OCC (two witnesses), and Tri-State
on July 10, 2017.
61. Public Service submitted testimony of Mr. Eves (Hearing Exhibit 201), Ms. Blair
(Hearing Exhibit 210), Mr. Farbes (Hearing Exhibit 213), Ms. Fields (Hearing Exhibit 215),
Mr. Gelbien (Hearing Exhibit 206), and Mr. Nickell (Hearing Exhibit 203), as well as
Mr. John D. Lee, Senior Director, Electric Distribution Engineering for Xcel Energy Services
Inc. (Hearing Exhibit 207).
62. Staff filed testimony of Mr. Camp (Hearing Exhibit 303) and Ms. Podein (Hearing
Exhibit 301).
63. The OCC filed testimony of Mr. Fernandez (Hearing Exhibit 401) and
Mr. Neil (Hearing Exhibit 403). Tri-State filed testimony of Mr. Lehman (Hearing Exhibit 601).
64. On July 21, 2017, Public Service filed Surrebuttal Testimony directed at
Boulder’s Rebuttal Testimony and Exhibits. Testimony was submitted by Fields (Hearing
Exhibit 216) and Nickell (Hearing Exhibit 204).
65. The Commission conducted a prehearing conference on July 21, 2017. At the
prehearing conference, the parties agreed that Boulder could present oral testimony in response
to the issues raised in Public Service’s Surrebuttal Testimony.
66. The Commission conducted a nine-day evidentiary hearing on the Application
beginning on July 26, 2016 and extending through August 7, 2017. Boulder witness Ghidossi
was permitted to present oral testimony in response to the Surrebuttal Testimony of Public
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
20
Service witness Nickell,4 and Boulder witness Skogg was permitted to present oral testimony in
response to the Surrebuttal Testimony of Public Service witness Fields.5
67. During the course of the hearing, Hearing Exhibits 100 through 112, 200 through
216, 300 through 303, 400 through 403, 500 through 504, and 600 through 601 were offered and
admitted into the evidentiary record in this Proceeding. Hearing Exhibit 100 is the Application
while the remainder of the Hearing Exhibits correspond to the pre-filed Direct Testimony,
Answer Testimony, Rebuttal Testimony, Cross-Answer Testimony, and Surrebuttal Testimony.
Hearing Exhibits 700 through 708, 710 through 740, 742 through 743, 745 through 761,
764 through 769, 771, and 773 were offered and admitted as evidence during either direct
examination, cross-examination, or redirect examination of the witnesses. Hearing Exhibit 772
was marked for identification, offered, but then withdrawn. Hearing Exhibits 709, 741, 744, 762,
763, and 770 were not admitted.
68. On August 15, 2017, final statements of position were filed by Boulder, Public
Service, Staff, IBM, OCC, CU-Boulder, Climax, Tri-State, and Evraz.
69. Numerous public comments were submitted to the Commission during the course
of this Proceeding.
D. Overview of the Positions of the Intervening Parties
1. Public Service
70. Public Service rejects Boulder’s position that its Separation Plan is approvable at
this time, and argues that the Commission must have substantially more information than the
engineering analyses that Boulder provided in order to be in a position to render a decision as to
4 Hearing Transcript, July 27, 2017 at 103-147.
5 Hearing Transcript, July 31, 2017 at 11-24.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
21
whether safety, reliability, and effectiveness will be preserved and as to whether no costs of
municipalization will be shifted to Public Service and its remaining customers.
71. Public Service further argues that Boulder cannot engage in the mandatory,
pre-filing good faith negotiations for filing a condemnation action based upon Boulder’s
proposed Separation Plan as it currently exists.
72. Public Service asserts that Boulder’s requests for relief must be within the scope
of the Commission’s jurisdiction to grant, but that most elements of the Separation Plan are not
within that scope. Public Service contends, for example, that the Commission does not have the
authority to require Public Service to engage in the following: (1) finance the entire separation
and construction; (2) construct facilities for Boulder; (3) construct facilities for Public Service
and to separate existing facilities on Boulder’s terms and conditions; (4) waive certain rights
which would otherwise exist in condemnation; and (5) “negotiate” up to a dozen or more
agreements with Boulder. Public Service argues that Boulder’s financing and construction
proposals essentially are requests that the Commission order Public Service to provide lending
services and general contractor services to Boulder. Public Service further argues that while
the Company could voluntarily agree with Boulder to enter various agreements, it cannot be
compelled to enter into such contracts.
73. Public Service also contends that Boulder must meet its burden of proof in this
Proceeding, not in later phases, to demonstrate that Boulder’s proposed Separation Plan will
enable Public Service to provide the same safe, reliable, and effective service for its customers as
it provides today.
74. Public Service asserts that the scope of work and final designs must be completed
and provided to the Commission for review. In other words, Public Service argues that the flaws
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
22
of the Separation Plan need to be fixed, that the Company and Boulder need to prepare the scope
of work and final designs in accordance with that revised Separation Plan, and that the assets for
transfer then should flow from that work.
75. Public Service concludes that the fastest way for Boulder to get to the Go/No Go
Decision is for the Commission to reject the Application, but decide as many issues as can be
decided now in order that Boulder has the guidance it needs to move forward.
76. In summary, Public Service suggests that the Commission find that it is necessary
for Boulder to do the following: (1) agree with Public Service’s proposed modifications
concerning substations, joint use of poles, and other feeder lines; (2) fund the preparation of the
scope of work, detailed design drawings and specifications, cost estimates, and timeline;
(3) apply for and complete the transmission load interconnection request process; and (4) provide
the missing information concerning real property rights (Boulder ’s and Public Service’s) and the
terms and conditions of all required agreements. Public Service argues that if those conditions
are met, Boulder could return to the Commission and request approval of its Separation Plan, and
the Commission could expect to be in a position to make a preliminary determination as to
whether Boulder’s proposed, modified Separation Plan will preserve safety, reliability, and
effectiveness as well as provide Boulder with a conditional transfer order (or, in other words, an
order sufficient for Boulder to proceed to condemnation).
2. Staff
77. Staff also takes the position that more siting and engineering work needs to be
performed by both Boulder and Public Service before the Commission can render an opinion as
to whether the Separation Plan is effective as well as safe, reliable, and not contrary to the public
interest.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
23
78. Staff envisions Public Service and Boulder working collaboratively towards
finalizing the Separation Plan and returning to the Commission for final approval. Staff further
suggests that the Commission require an independent engineer, overseen and selected by
the Commission or Staff, to facilitate collaboration between Boulder and Public Service and
to monitor the resolution of the remaining issues and the engineering details necessary for
Commission approval of the Separation Plan. Staff also proposes regular reporting on the
progress made by Boulder and Public Service.
79. Despite its position that the Separation Plan is not yet ready for approval, Staff
recommends that the Commission approve the power facilities portion of the list of assets for
transfer, subject to a reasonable true-up process necessary due to the changes that may result
from the effect of the detailed design on certain elements of the Separation Plan, as well as
normal changes to the system that occur over time.
80. Staff suggests that the Commission require Public Service to work collaboratively
with Boulder to identify the non-recorded real property interests to be included in the final list of
assets for transfer. Staff further recommends that the Commission find that Boulder cannot
complete the condemnation process before the Commission approves the real property additions
to the list of assets for transfer.
81. Staff argues that any order approving the transfer of assets to Boulder must be
conditioned upon Boulder’s full satisfaction of all financial obligations to Public Service,
including any disputed payments that the Commission rules that Boulder must nonetheless pay.
Staff also suggests that the Commission reserve an ability to consider Boulder’s operational
capability, after the Go/No-Go Decision but before the final transfer of assets occurs.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
24
3. IBM
82. IBM argues that the lack of detail in Boulder’s Application is a sufficient basis to
deny the application in its entirety. IBM contends that Boulder has provided a Separation Plan
for a “paper utility,” showing no evidence that it can actually operate that utility, either from a
financial or technical perspective. IBM contends that this lack of detail places IBM at significant
financial and reputational risk because of IBM’s need for 99.9 percent reliability as well
as penalty provisions in its contracts with its customers. IBM further contends that it is
contractually obligated to advise certain customers if backup generation is required and that
Boulder’s Separation Plan will require back up generation for weeks, and possibly months during
construction. IBM further contends that the Boulder campus is IBM’s largest facility in the world
and that it has invested millions of dollars in configuring the substation.
83. IBM states that if the Commission is not yet prepared to deny the Application
outright, it can and should decide the IBM-specific issue and deny the Application as to IBM.
4. OCC
84. The OCC requests that the Commission deny Boulder’s Application without
prejudice due to the numerous outstanding and significant issues raised in this Proceeding. For
example, concerning the list of assets for transfer, the OCC argues that the Commission cannot
approve the list at this time because it is a “snapshot in time” in that it is incomplete and already
out of date.
85. The OCC contends non-Boulder Public Service ratepayers should suffer no harm
as to costs. Specifically, OCC contends that no rate increases, directly or indirectly, should result
from Boulder’s municipalization efforts. Along these lines, the OCC takes the position that the
litigation costs incurred by Public Service with regard to Boulder’s municipalization efforts
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
25
should be a cost paid by Boulder and not passed on to ratepayers. The OCC argues that it is in
the public interest for the Commission to address this cost recovery issue expressly in this
Proceeding and to preclude the Company from including any Boulder municipalization costs,
such as litigation costs for this Proceeding, in its upcoming electric rate case.
86. With regard to next steps, the OCC suggests that the Commission: (1) consolidate
Phase 1 and Phase 2 activities; (2) adopt the “next steps” proposed by Public Service; (3) create a
series of deadlines for the parties; and (4) enhance Commission oversight through the inclusion
of Staff in these activities.
5. CU-Boulder
87. CU-Boulder argues that it is contrary to the public interest to require Boulder
and its citizens to pay all the legal and political costs Public Service incurs in connection with
Boulder’s efforts to municipalize. CU-Boulder further argues that the Commission lacks
authority to order Boulder to pay any costs that have already been incurred. Future costs incurred
to protect the Company’s business interests, customers, and the statewide grid should be paid by
Public Service’s ratepayers as a whole or by the Company’s shareholders.
88. CU-Boulder requests that the Commission order that Boulder only pay prudently-
and actually-incurred costs of construction and separation, which order should be implemented
through a transparent, fair, and periodic Commission-administered process.
6. Climax
89. Climax argues that the Commission should prevent Public Service’s customers
outside Boulder city limits from bearing any costs resulting from the City’s efforts to create
a municipal electric utility, whether those costs have been incurred either in the past or will be
incurred before or after the City’s Go/No-Go decision. Climax states that none of the costs
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
26
incurred by the City or the Company as a result of the City’s efforts to municipalize, whether the
City is successful or not, have been or will be caused by the “remaining customers.”
7. Evraz
90. Evraz similarly requests that the Commission issue an order precluding Public
Service from passing any costs of municipalization through to ratepayers remaining on the
Company’s system. Evraz adds that it is onerous for customers not represented by the OCC to
participate in multiple proceedings related to the same topic.
8. Tri-State
91. Tri-State owns equipment located in Substation F and has an agreement with
Public Service concerning construction, operations, and maintenance activities in Substation F.
Tri-State relies on this agreement and its equipment to ensure the reliable delivery of electric
power to Tri-States’ member’s system, Poudre Valley Rural Electric Association (PVREA),
which also owns certain equipment located in Substation F. Tri-State intervened to ensure that
its ability to deliver safe, effective, reliable electric power to PVREA is not adversely impacted.
Tri-State takes no position on the merits of Boulder’s plan but asks for the following: (a) to the
extent the Commission makes any decisions related to Substation F or provides any direction to
Boulder and Public Service with regard to Substation F, such decisions or direction should not
constrain or predetermine any of the issues to be decided in the process applicable to determining
the specific reconfiguration of Substation F;6 (b) any Commission decisions or direction
concerning Substation F should require Boulder to ensure that Tri-State’s ability to provide safe,
effective, and reliable service to its Member Systems through Substation F not be adversely
6 Hearing. Exhibit 600, Lehman Answer at 11:20-24.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
27
impacted as a result of accommodating Boulder’s proposal;7 (c) Tri-State should be protected
against any costs associated with modifications to Substation F needed to accommodate
Boulder’s proposal;8 and (d) In the event that Substation Alt_EF is found to be feasible, meets the
separation and service objectives of Boulder and Public Service, and is otherwise consistent with
the Commission’s findings in this Proceeding, Boulder should be required to implement that
alternative rather than its proposals for Substation F.9
II. LEGAL OBLIGATIONS AND RESPONSIBILITIES
A. Commission Jurisdiction
92. As has long been recognized, the Commission derives its authority from
Colo. Const. art. XXV, and with respect to electric service, from Public Utilities Law. As relates
to its constitutionally derived authority, article XXV bestows on the Commission:
all power to regulate the facilities, service and rates and charges therefor,
including facilities and service and rates and charges therefor within home rule
cities and home rule towns, of every corporation, individual, or association
of individuals, wheresoever situate or operating within the State of Colorado,
whether within or without a home rule city or home rule town, as a public utility,
as presently or as may hereafter be defined as a public utility by the laws of the
State of Colorado ….
Article XXV vests all power in the PUC to regulate public utilities both outside and within home
rule cities.10 However, such jurisdiction does not extend to municipally owned utilities except to
the extent that their operations are outside city limits (discussed in more detail below).11
7 Id. at 11:24 – 12:1.
8 Id. at 12:1-2.
9 Hearing Exhibit 601, Lehman Cross-Answer at 6:1-6.
10 See generally, IREA v. District Court, 4414 P.2d 911 (1966); Pub. Utils. Comm’n. v. City of Durango,
469 P.2d 131 (1970); City of Craig v. Pub. Utils. Comm’n., 656 P.2d 1313 (Colo. 1983).
11 Article XXV – “…nothing herein shall be construed to apply to municipally owned utilities.” See, City
and County of Denver v. Pub. Utils. Comm’n., 507 P.2d 871, 875 (Colo. 1973).
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
28
93. The Commission also derives its authority from Public Utilities Law.12 Those
statutes, with their attendant case law, establish the scope of the Commission’s authority over
public utilities. The statutory authorities applicable in this matter include the following:
§ 40-1-103, C.R.S.; §§ 40-4-101, 102, 103, and 105, C.R.S.; and § 40-5-105, C.R.S.
94. The Colorado Supreme Court has defined the Commission as “an administrative
agency whose function is to regulate public utilities within the parameters established by the
Colorado Constitution and the Public Utilities Law.”13 In defining a “public utility,”
§ 40-1-103(1)(a)(I), C.R.S., provides in relevant part:
The term “public utility”, when used in articles 1 to 7 of this title, includes every
common carrier, pipeline corporation, gas corporation, electrical corporation,
telephone corporation, water corporation, person, or municipality operating for
the purpose of supplying the public for domestic, mechanical, or public uses and
every corporation, or person declared by law to be affected with a public interest,
and each of the preceding is hereby declared to be a public utility and to be
subject to the jurisdiction, control, and regulation of the commission and to the
provisions of articles 1 to 7 of this title.
Determining what constitutes a “public utility” is essential in defining the scope of Commission
jurisdiction. The Commission has regularly cited specific case law when making this
determination. While the Supreme Court (and the Commission) initially relied on a common law
test to determine whether an entity was impressed with a public interest and held itself out as
serving or ready to serve all members of the public, to define it as a utility, the Supreme Court
subsequently rejected the prior common law test in favor of a statutory determination. The
Supreme Court held that:
Whether a particular entity is or is not a public utility should therefore be
analyzed at least at first, from the standpoint of whether the entity is a public
12 Title 40, C.R.S., articles 1 through 7, generally.
13 City of Montrose v. Pub. Utils. Comm’n., 629 P.2d 619, 622 (Colo. 1981); Colorado Office of Consumer
Counsel v. Mountain States Telephone & Telegraph Co., 816 P.2d 278, 283 (Colo. 1991).
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
29
utility within the contemplation of the constitution and the statutes concerning the
PUC and, if so, whether that public utility is exempted from regulation by the
constitution or statute.14
95. While the Commission possesses broad authority over public utilities, such
jurisdiction does not extend to municipally owned utilities except to the extent that such utility
operations are outside city limits.15 Article XX § 1 of the Colorado Constitution establishes the
powers of home rule cities and provides in relevant part that municipal corporations:
shall have the power, within or without its territorial limits, to construct, condemn
and purchase, purchase, acquire, lease, add to, maintain, conduct, and operate …
light plants, power 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, and shall have the power to issue bonds
upon the vote of the taxpaying electors, at any special or general election, in any
amount necessary to carry out any of said powers or purposes, as may by the
charter be provided.
96. As particularly related to this Decision, Judge LaBuda of the Boulder District
Court, in an order affirming a declaratory judgment decision by the Commission, determined that
the pivotal question was “whether the constitutional rights in that instance (article XX and
article XXV) were in conflict or may coexist.”16 The judge held that the court must interpret the
application of these constitutional rights under the facts of this case. It was clear to the judge that
14 Board of County Commissioners v. Denver Board of Water Commissioners, 718 P.2d 235, 243
(Colo. 1986).
15 See, Article XXV “… nothing herein shall be construed to apply to municipally owned utilities.” See
also, City and County of Denver v. Pub. Utils. Comm’n., 507 P.2d 871, 875 (Colo. 1973).
16 Boulder District Court Decision.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
30
the Commission does not have jurisdiction to exercise its authority under article XXV when a
municipality operates a utility solely within its boundaries under article XX.17
97. According to Judge LaBuda,
[t]he 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.18
98. Consequently, the Commission’s jurisdiction in this Proceeding is a complex
amalgamation of constitutional provisions, statutes, and Judge LaBuda’s relevant findings. The
outcomes reached by the Commission below carefully thread through those various provisions in
order to provide direction to the parties as to how to proceed with Boulder’s municipalization,
especially as directed to the transfer of Public Service assets to Boulder.
B. Burden of Proof
99. As has been often stated, as the party that seeks Commission approval or
authorization, the applicant bears the burden of proof with respect the relief sought, and the
burden of proof is by a preponderance of the evidence.19 The evidence must be “substantial
evidence,” which the Colorado Supreme Court has defined as “such relevant evidence as a
reasonable person’s mind might accept as adequate to support a conclusion … it must be enough
to justify, if the trial were to a jury, a refusal to direct a verdict when the conclusion sought to be
17 Boulder District Court Decision. citing, City of Loveland v. Pub. Utils. Comm’n, 580 P.2d 381,
383 (Colo. 1978); City and County. 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). Notably, the Boulder District Court Decision was issued under the
assumption that at that time, Boulder intended to municipalize beyond its city limits.
18 Boulder District Court Decision. at p.12.
19 § 24-4-105(7), C.R.S., § 13-25-127(1), C.R.S., and Commission Rule of Practice and Procedure 4 Code
of Colorado Regulations 723-1-1500.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
31
drawn from it is one of fact for the jury.”20 The preponderance standard requires the finder of fact
to determine whether the existence of a contested fact is more probable than its non-existence.21
A party has met this burden of proof when the evidence, on the whole and however slightly, tips
in favor of that party.
100. In this case, Boulder, as the applicant and party seeking Commission approval of
each component of its Third Supplemental Application, has the burden of proof with respect to
the relief sought in its application. Boulder must show, by a preponderance of the evidence that
its application is not contrary to the public interest.
C. Standard of Review
101. As related to the transfer of Public Service assets to Boulder, the applicable
standard of review is set forth in § 40-5-105(1), C.R.S., which states in relevant part that: “[t]he
assets of 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.” In determining whether a proposed transfer should be granted, the Commission
must evaluate whether the transfer is “not contrary to the public interest.”22 A determination of
whether a proposed transfer is in the public interest must involve a “balancing of the interests of
the shareholders in a reasonable rate of return and the rights of the [remaining Public Service]
ratepayers to receive adequate service at a price which reflects the cost of service.”23
20 City of Boulder v. Pub. Utils. Comm’n., 996 P.2d 1270, 1278 (Colo. 2000) (quoting CF&I Steel, LP v.
Pub. Utils. Comm’n., 949 P.2d 577, 585 (Colo. 1997)).
21 Swain v. Colorado Department of Revenue, 717 P.2d 507 (Colo. App. 1985).
22 Mountain States Tel. & Tel. v. Pub. Utils. Comm’n., 763 P.2d 1020, 1029 (Colo. 1988); Buckingham v.
Pub. Utils. Comm’n., 504 P.2d 677, 679 (Colo. 1972).
23 Mountain States Tel. & Tel. , 763 P.2d at 1029.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
32
102. Pursuant to 4 Code of Colorado Regulations (CCR) 723-3-3104(b)(IV) of the
Commission’s Rules Regulating Electric Utilities, an applicant for a transfer of utility assets must
demonstrate that the transaction is not contrary to the public interest. The applicant must also
provide the following information for the Commission to consider in balancing the interests of
shareholders and ratepayers: (1) The benefits and detriments to customers of each utility and all
other persons who will be affected by the transaction;24 and (2) A comparison of the kinds of
services rendered before and after the transaction and the costs of those services.25
103. The determination of the transfer standard of review has been addressed recently
in two major asset transfer cases: Decision No. C11-0001, Proceeding No. 10A-350T,26 In the
Matter of the Joint Application of Qwest Communications International, Inc., and CenturyLink,
Inc., for Approval of Indirect Transfer of Control of Qwest Corporation, El Paso County
Telephone Company, Qwest Communications Company, LLC and Qwest LD Corp. The second
asset transfer case was Decision No. R16-0058, Proceeding No. 15A-0667G,27 In the Matter of
the Joint Application of SourceGas Distribution LLC, Rocky Mountain Natural Gas LLC,
SourceGas LLC, SourceGas Holdings LLC, and Black Hills Utility Holdings, Inc. for all
Necessary Authorizations and Approvals for Black Hills Utility Holdings Inc. to Acquire
SourceGas Holdings, LLC.
104. In the Qwest/CenturyLink transfer, the Commission determined that the proper
standard of review was for the Commission to consider whether the merger and any conditions
was “not contrary to the public interest” and would: (1) ensure no net harm to customers; and
24 Rule 4 CCR 723-3-3104(b)(V).
25 Rule 4 CCR 723-3-3104(b)(VI).
26 Decision No. C11-0001 was issued on January 3, 2011.
27 Decision No. R16-0058 was issued on January 22, 2016.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
33
(2) balance ratepayer and provider interests. In making this finding, the Commission abrogated
the prior “consumer and producer welfare maximization test.”28
105. This standard of review was adopted in the Black Hills/SourceGas merger matter.
There, the ALJ held that in determining whether the transaction at issue was not contrary to the
public interest, the appropriate standard of review would be the standard adopted in Decision
No. C11-0001, where the Commission determined that the “no net harm” and ratepayer/provider
balancing tests were relevant to a determination of whether the merger was “not contrary to the
public interest.” It was reiterated that the Commission was not required to choose a particular test
over the other, and as a result, determined that the consideration should be whether the merger
would ensure: (1) no net harm to customers; and (2) balance ratepayer and provider interests.29
106. We adopt this standard of review test here and will consider whether the proposed
transfer of assets provides no net harm to Public Service ratepayers outside the city limits of
Boulder, while balancing ratepayer and provider interests.
III. ASSETS FOR TRANSFER FROM PUBLIC SERVICE TO BOULDER
107. Boulder seeks to acquire the electric distribution property, plant, and equipment,
wherever located, that are used, in whole or in part, to serve electric customers within the city
limits. Boulder argues that it has identified and described only the assets for transfer that are
necessary for Boulder to provide service after separation. Boulder also states that in its
identification of assets for transfer, the City has excluded any existing assets that are necessary
28 Decision No. C11-0001, Proceeding No. 10A-350T, ¶ 19.
29 Decision No. R16-0058, Proceeding No. 15A-0667G, ¶ 76.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
34
for Public Service to provide service after separation. Nevertheless, the identified assets are
“subject to verification after preparation of detailed design and specifications.”30
108. Boulder argues that the facilities it has identified in this Proceeding provide the
Commission with sufficient information to determine that they can be transferred to Boulder
without impact to the safety, reliability, and effectiveness of the remaining Public Service
system. Boulder states that the assets it seeks for approval for transfer are identified individually
in Attachment SDC-7 and Highly Confidential Attachment SDC-8 (Hearing Exhibits 105, 105A,
and 105B), as well as in Attachment SDC-18 (Hearing Exhibits 106 and 106A).31 According to
Boulder, there is no objection to the Commission’s authorization of the transfer of the vast
majority of the facilities at issue.
109. Boulder contends that if its list of assets for transfer requires updating, because,
for example, it is incomplete or contains errors, the update could be accomplished in days or, at
most, weeks. In any event, Boulder takes the position that the completion of more detailed
engineering designs and work plans to execute its proposed Separation Plan will not have a
material impact on the assets for transfer.
110. Public Service argues that it is the Separation Plan, not the list of assets for
transfer, which determines whether Public Service (and Boulder) will be able to provide safe,
reliable, and effective service post-separation. Public Service further contends that the list of
assets for transfer provided by Boulder is inaccurate, incomplete, and subject to change.
According to the Company, the list: (1) includes assets that are not owned by Public Service or
are not Public Service distribution system assets; (2) is missing assets Boulder proposes to take
30 Boulder SOP at 20.
31 Id. at 23-24.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
35
that are located more than 200 feet outside the Boulder city limits; and (3) includes assets that
are located inside the Boulder city limits which Boulder proposes be retained by Public Service.
111. With respect to missing information, Public Service states that an updated list of
assets must include any fee property owned by Public Service and any easements or licenses
Public Service owns which Boulder seeks to acquire in whole or in part. Certain other assets
outside of substations are also missing. However, Public Service states in its Statement of
Position (SOP) that it would not object to a Commission order approving the transfer of these
types of smaller, associated distribution system assets by description, noting that appraisers in
condemnation can capture the value of these assets. Some of the items on the list of assets for
transfer for facilities outside the substations could change depending on whether the Commission
rejects the joint use of poles or particular substation options are pursued. In addition, Public
Service suggests that the updated list of assets for transfer should reflect final substation
configurations.
112. Staff states that the power facilities portion of Boulder’s proposed list of assets for
transfer probably contains sufficient detail for Boulder to proceed to condemnation even with the
uncertainties surrounding the final configuration of the substations that will become part of
Boulder’s new electric utility. Staff suggests that some of this uncertainty could be addressed
with certain allowances for a “true-up.”
113. Staff also acknowledges that the list currently does not describe the real property
rights with sufficient detail to protect both Boulder and Public Service post-separation. Staff
suggests that the Commission should permit Boulder to initiate the condemnation process with
the power facilities portion of the list of assets (again subject to true-up), but require a
Commission-approved list of real property interests before its completion. Staff notes that
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
36
requiring Boulder to provide details concerning the real property rights that it seeks to include on
the list of assets for transfer will require both Boulder to undergo an expensive title search
process and Public Service to cooperate with Boulder to help identify the Boulder-related real
property rights that it possesses but has never recorded.
114. We disagree with Public Service that it is necessary for the Commission to
approve a Separation Plan prior to rendering findings on the assets for transfer. We further find
that it is unnecessary for the Commission to render a decision on Boulder’s proposed Separation
Plan, either in its current form or in a modified form that either satisfies the conditions put
forward by Public Service or results from the follow-on process contemplated by Staff. As
discussed below, we conclude that Public Service will be able to continue to provide safe,
reliable, and effective service post separation in accordance with good utility practice and
industry standards in the design, construction, and operation of its system, provided that Boulder
meets certain conditions in compliance with this Decision and the designation of assets for
transfer is limited, at this time, to the assets outside the substations that presently serve the
Boulder area.
A. Assets Inside the Substations
115. The facilities Boulder seeks to acquire inside the substations include protective
equipment (including relaying, communications, and control equipment); power transformers
and distribution switchgear; and easements for the City equipment and access. (The assets for
transfer proposed by Boulder within the substations are the existing facilities and associated
appurtenances shown in blue and identified as Boulder’s on Highly Confidential Attachments
TAG-6—as modified by Highly Confidential Attachment TAG-27—and TAG-7 through
TAG-11.)
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
37
116. Boulder clarifies that the City is not requesting ownership of any real property
within the substations, only equipment and access easements. Boulder also asserts in its SOP that
none of the substation alternatives, see Section III.A.1 infra, would change the list of equipment
Boulder is requesting for transfer.32
1. Colocation at Substations
117. Boulder argues that it is necessary that Boulder facilities be co-located
with Public Service facilities in the substations that will be used to serve Boulder customers
post-separation. Boulder explains that the very nature of network transmission service means
that transmission and distribution providers will share substations. In other words, every
distribution-only utility in Colorado has distribution facilities co-located in substations with the
transmission facilities of its serving transmission utility. Boulder clarifies that it is not proposing
to interconnect electrical facilities at the distribution level between Public Service and Boulder
inside any of the substations. Boulder further states that the City anticipates paying Public
Service for maintaining the common facilities including the ground grid, fence, and access road.
118. Boulder proposes the following for the six substations
•••• Substation A. Boulder proposes to acquire no existing facilities at
Substation A. Boulder wants to add new facilities at this substation,
specifically a new 50 MVA transformer in the spare bank. Boulder would
require easements to place and access its equipment. Substation A presently
serves about 6,800 customers within Boulder city limits and 173 customers
outside of city limits. Under a scenario where Boulder acquires all
distribution facilities at Substation B, Substation A could serve another
roughly 2,250 Public Service customers post-separation.
Public Service takes the position that Boulder has not established that its
proposal for Substation A will allow Public Service to provide safe, reliable
and effective service to the 2,088 customers moving to Substation A from
Substation B and the existing 173 customers served by Substation A. Public
32 Id. at 28.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
38
Service also objects to the loss of the spare bank, listing both safety and
reliability issues, and suggests that if Boulder eventually acquires the
facilities in Substation A, the City may need the spare bank post separation,
because Substation B may not be expandable.
Public Service states that it is willing to work with Boulder to try to find a
solution. The Company offers an alternative proposal called “Alt_A,” in
which Boulder takes all of the distribution assets at Substation A and Public
Service builds a new substation to provide its own substation transformer
backup for the 2,088 customers in Left-Hand Canyon. Boulder portrays the
ALT-A proposal as costly and risky due to siting concerns.
•••• Substation B. Boulder proposes to acquire all distribution facilities at this
substation. Boulder would require easements to access its equipment.
Substation B presently serves about 24,600 customers within Boulder city
limits and 3,175 customers outside of city limits.
Public Service states that the transmission facilities at Substation B are
critical components of the Company’s 115 kV transmission loop. Public
Service argues that space is limited within the existing footprint of the
substation and that the Company is therefore concerned about co-locating
with Boulder without some physical separation of the transmission and
distribution facilities. Public Service states that physical separation might be
possible and should be fully evaluated when Boulder submits its request for
load interconnection at Substation B. However, separation could require
expansion of the substation footprint and relocation of certain distribution
facilities into that expanded area so that a fence could be constructed around
each set of facilities.
•••• Substation C. Boulder proposes to acquire no existing facilities at this
substation. However, Boulder proposes to expand the substation to
accommodate new facilities. Specifically, Boulder would have two new
transformers on a radial transmission bus. Boulder would require easements
to place and access its equipment. Substation C presently serves about
4,500 customers within Boulder city limits and 3,600 customers outside of
city limits.
Public Service explains that Boulder’s proposed design for Substation C
would likely run into complications during the transmission load
interconnection process under Public Service’s OATT, due to a radial
transmission line at the site. Under the Company’s alternative proposal, or
Alt_C, Boulder’s new transformers would need to be built in a new
substation adjacent to and contiguous with the current substation.
Boulder agrees to evaluate the Alt_C proposal. However, Boulder proposes
that Public Service continue to own the land and provide an easement for
Boulder’s facilities at Alt_C. Public Service does not agree with Boulder’s
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
39
proposal that Public Service own land on which Boulder’s substation
facilities would be located. Public Service argues that, although Public
Service owns the unfenced land north of the existing substation, the
Company should not have to construct and own an expanded substation.
Public Service states in its SOP: “The next step should be Boulder submitting
a request for interconnection for Alt_C so that a final design for Alt_C can
be determined. This will result in a final design that will then allow for
identification of the respective substation real property rights for Public
Service and Boulder. A substation co-location agreement can also be
negotiated at the same time.”33
•••• Substation D. Boulder proposes to acquire all distribution facilities at this
substation. Boulder does not propose the construction of any new facilities at
this substation. Boulder would require easements to access its equipment.
Substation D presently serves about 14,500 customers within Boulder city
limits and 12 customers outside of the city limits.
Public Service argues that the Company’s transmission facilities at
Substation D cannot be physically separated from the distribution
transformers at the site because the substation is too small. Nevertheless,
Public Service witness Chad Nickell states that the Company is willing,
subject to negotiation of a satisfactory substation sharing agreement, to
co-locate with Boulder in Substation D. Public Service explains that the
transmission facilities in Substation D serve only Substation D (i.e., they are
“in and out” transmission facilities) and, with the appropriate breakers in
place, the impact to Public Service’s transmission facilities of any problems
associated with co-location in Substation D will be limited to Substation D,
which is proposed to serve only Boulder customers after separation.34
•••• Substation E. Boulder proposes to acquire no existing facilities at this
substation. However, Boulder wants to add new facilities at this facility—
specifically a transformer and a “breaker and a half scheme.” Boulder would
require easements to place and access the new equipment. Substation E
presently serves about 1,600 customers within Boulder city limits and 7,500
customers outside of the city limits.
Public Service argues that Boulder’s proposals for Substation E will require
an expansion of the substation beyond the existing fence. Public Service also
argues that Boulder should be required to have a new control building at the
substation. Public Service is concerned that Boulder’s proposal, without
these necessary additions, would limit the Company’s ability to address its
own future transmission and distribution needs. As described below for
33 Public Service SOP at 119-120.
34 Hearing Exhibits 202 and 202A, Nickell Answer at 109-110.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
40
Substation F, Public Service proposes an alternative for both Substations E
and F called Alt_EF.
•••• Substation F. Boulder proposes to acquire all distribution facilities at this
substation. Boulder also proposes that a ring bus be installed, as well as a
transformer, to serve Boulder customers post-separation. Boulder would
require easements to place and access its equipment. IBM is presently the
only retail electric customer served by Public Service through Substation F.
In its SOP, Tri-State states that it remains concerned that Boulder’s proposals
for Substation F could impact Tri-State’s operations and maintenance
responsibilities at the substation. Tri-State takes wholesale service from
Public Service’s transmission equipment located at Substation F. Tri-State
also owns equipment located in Substation F, including a 230-24.9 kV
transformer, a 230 kV circuit switcher and disconnect switch, and a 24.9 kV
circuit breaker and disconnect switch. Tri-State has an agreement with Public
Service concerning construction, operations, and maintenance activities in
Substation F. Tri-State serves its member system PVREA from Substation F,
and PVREA also owns certain equipment located in Substation F. Tri-State
states that the implementation of Boulder’s proposed changes to Substation F
will require an outage of the Public Service line serving Tri-State, which will
cause PVREA to shift its load to another substation to allow the construction
to occur. Therefore, Tri-State wants to ensure an opportunity to participate in
the applicable utility or regulatory process that decides the reconfiguration of
Substation F.
Public Service describes Boulder’s proposals for Substation F to be
significant, requiring an expansion of the substation footprint. Public Service
explains that during construction: “each of the two transmission lines coming
into the Substation would have to be taken out of service in order to be
connected to the proposed new locations on the ring bus. When a
transmission line is out of service, IBM will only be radially fed. This will
deprive IBM of the redundancy it currently has which is critical to the
reliability it requires. If there is a transmission event on the line providing the
radial feed, then the customer would experience an outage.”35
Public Service proposes an alternative called Alt_EF in which Boulder’s two
new transformers would be located in a single new substation at Boulder’s
wastewater treatment plant which has ready access to Public Service’s
transmission line.
Boulder requests that, in addition to approving its proposals for Substations E
and F, the Commission also approve Substation Alt E_F to allow Public
Service and Boulder to explore the alternative. Boulder states that Substation
Alt_EF may not be able to be sited, but recognizes that if Substation Alt_EF
35 Id. at 122.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
41
is feasible, the City’s proposed construction at Substations E and F will not
be necessary.
119. Boulder argues that no party objects generally to co-location within the
substations provided there are reasonable access restrictions and, where appropriate, separation
between the Public Service and Boulder facilities. Boulder argues that the Commission needs to
determine that the City’s proposed co-location of facilities within Substations A through F will
not negatively impact safety. Boulder argues that the City’s distribution facilities and Public
Service’s transmission and distribution facilities in the same substation provides no additional
safety, security, or reliability concerns as compared to a substation with Boulder distribution
facilities and just Public Service transmission facilities. Boulder states that all facilities in a
substation must meet National Electrical Safety Code (NESC) requirements, be isolated from the
public, grounded, and secured within a fence or other permanent boundary. Boulder continues
that, if facilities are appropriately designed and maintained, if appropriate safety precautions are
taken, and if the utilities engage in appropriate coordination, there is no reason why two or more
utilities cannot effectively, reliably, and safely co-locate facilities in the same substation.
120. For all substations, Boulder requests that the Commission allow Boulder and
Public Service to resolve the issues associated with co-location and substation configuration—
such as physical separation, equipment access, easements—in Public Service’s OATT processes.
Specifically, Boulder requests that the Commission order Public Service to process the City’s
Network Integration Transmission Service (NITS) application pursuant to the OATT within three
months of Boulder’s filings and to direct Public Service to work with Boulder to create the
detailed drawings and specifications for the substations, as required. (Boulder wants Public
Service to obtain bids from contractors for any new equipment and construction.) Boulder
volunteers to make a compliance filing with the Commission describing the substation
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
42
configurations approved in the NITS process and providing the substation co-location
agreements.36
2. Positions of the Intervening Parties
121. Public Service argues that Boulder’s list of assets for transfer, for assets both
inside and outside the substations, is incomplete. Public Service states, for example, that the
substation general arrangements provided by Boulder include only boxes that indicate where the
City would like easements. Public Service argues that the list includes no legal descriptions and
notes that no terms and conditions for Boulder’s easements have been proposed.
122. Public Service further argues that Boulder acknowledges that the actual location,
design, and configuration of facilities in substations are determined during the transmission load
interconnection process. Public Service concludes that, in order for the Commission to evaluate
whether Public Service will be able to provide safe, reliable and effective service, it is necessary
to know what real property rights Boulder will actually need inside substations, and that cannot
be known until Boulder applies for and completes the transmission load interconnection process.
123. Public Service adds that this information about property rights within the
substations is also necessary for the condemnation case because the real property rights Public
Service will have post separation, and any burdens on Public Service caused by Boulder’s
easements and colocation must be included in determining just compensation.
124. Public Service also notes that the OATT does not specify the requirements for
new facilities, or any particular configuration of facilities, beyond the general “Good Utility
Practice” standard. The Company continues that FERC does not directly review or pre-approve
36 Boulder SOP at 12-13.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
43
the engineering configuration of Public Service electric transmission facilities prior to
construction or modification.
125. From a legal perspective, Public Service argues that Boulder’s proposed
co-location at substations cannot be ordered by the Commission pursuant to § 40-4-105(1),
C.R.S.
126. In sum, Public Service argues that it is premature to approve the asset list when
“ideas are still being developed” that, with respect to substations, impact system “separation and
reconnection.”37 Public Service argues that load interconnection requests are the first step to
establishing the physical configuration at all substations and are the basis for substation sharing
agreements that must be negotiated so that risks can be evaluated. Public Service argues that
Boulder must complete the transmission load interconnection process and the negotiation of the
substation agreements before a determination can be made regarding the new and any existing
facilities and real property rights Boulder is seeking inside substations.
127. Staff agrees with Public Service that the Commission does not know the location
and configuration of the substations that will comprise the new Boulder electric utility. Staff
similarly argues that neither Public Service nor Boulder can state whether the various substation
proposals will receive approval under the OATT processes.
3. Findings and Conclusions
128. We find that it is premature to authorize the inclusion of facilities inside the
substations on the designated list of assets for transfer. We find that Public Service has provided
compelling evidence that it requires the existing distribution assets within Substations A, B, C,
37 Public Service SOP at 2.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
44
and E, because they are currently used to provide service to customers that Public Service will
continue to serve upon separation. We recognize, however, that Boulder and Public Service may
reach agreement on a transfer of assets at any or all of these substations. It is further possible that
Public Service could no longer require distribution facilities at a particular substation (e.g.,
Substation B) as a result of facilities’ transfers and system reconfigurations prior to separation.
We thus decline to approve assets for a transfer that may not be required by Boulder in order to
serve its customers, post separation.
129. The record indicates that Boulder can proceed to submit transmission service load
interconnection requests with Public Service’s transmission function for facilities outside of the
substations. See Section III.B.3 infra conditionally approving designation of assets outside
substations for transfer. It is reasonable for Public Service and Boulder to rely upon the
transmission load interconnection request process, and also the NITS process, to attempt to
resolve the required configurations and ownership arrangements inside the substations.
130. The outcomes of these transmission load interconnection requests and NITS
applications also may determine that Boulder will need to construct new substations in order to
begin operations as a municipal utility. Alternatively, Public Service and Boulder may reach
agreement on the sale to Boulder of existing transformers and other distribution equipment
within the substations. The Commission can approve the transfer of facilities inside substations
at a later time, because sales of facilities to Boulder will require Public Service to file
application(s) under § 40-5-105, C.R.S.
131. Although the record indicates that distribution facilities at Substation D may
not be useful to Public Service to serve Public Service customers upon separation, we also find it
premature to include Substation D assets on the list of assets for transfer at this time. Based on
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
45
testimony, it appears likely that Public Service and Boulder will be able to work out
arrangements for Substation D through the transmission load interconnection and NITS
processes.38
132. We find that it also is premature to include Substation F assets on the list of assets
for transfer at this time, because the continued examination of the Alt_EF proposal could alter
Boulder’s transmission load interconnection requests and NITS applications for Substation F and
hence change the configuration and use of that substation.
B. Assets Outside the Substations
133. The facilities that Boulder seeks to acquire outside of the substations include the
following: (a) overhead and underground distribution lines; (b) distribution transformers (pole
and pad mount); (c) overhead and underground secondary and service conductors; (d) fiber optic
and other communications equipment associated with the distribution system; (e) meters and
other equipment; (f) streetlights and traffic lights within the city limits that are owned by Public
Service; and (g) the property interests associated with those assets.
134. The assets for transfer proposed by Boulder outside of the substations are the
components of every distribution feeder system in Attachment TAG-5, Volume I, page 11.39
135. Boulder acknowledges that the data it received from Public Service did not
include complete information regarding customer meters, manholes, services and secondaries,
vaults, and fiber optic and communications facilities. Boulder states that it proposes to acquire
38 Hearing Exhibits 202 and 202A, Nickell Answer at 109-110; Hearing Exhibits 104 and 104A,
Ghidossi Rebuttal at 53.
39 Hearing Exhibit 103.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
46
these facilities and requests that the Commission approve the transfer of all of these “ancillary
assets and appurtenances” to the extent they are associated with the electric distribution system
serving Boulder customers upon separation.
1. Boulder’s Position
136. Boulder argues that it is undisputed by Public Service that Boulder’s Separation
Plan will, if constructed as proposed, allow Public Service to deliver electricity to its customers
over a system: (1) with the same or better capacity and voltage levels as today; (2) that is
capable of maintaining at least as much capacity and voltage as the system today, even under N-1
conditions; (3) that generally reduces or maintains the number of switching operations needed to
restore service in the event of a feeder trunk outage; (4) that allows Public Service to restore
service just as quickly in the event of a transformer failure wherever it currently exists; and
(5) that complies with the requirements of the NESC. Boulder therefore requests that the
Commission find that the Separation Plan will, if implemented as proposed by the City, result in
a system for Public Service that is as effective, reliable, and safe as the current system.
137. Boulder states that it seeks only assets owned by Public Service. Boulder states
that it is not seeking to acquire assets owned by anyone other than Public Service, such as poles
owned by Qwest Corporation, doing business as CenturyLink QC (CenturyLink).
138. Boulder requests that the Commission approve for transfer both the assets that
exist today and any new assets Public Service adds to the system in Boulder before the Cut-Over
Date that will serve Boulder customers, upon separation.
139. Boulder requests that the Commission require Public Service to provide, within
60 days of a final order to this phase of the proceeding, an update to the GIS model and the
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
47
Synergi model describing any new assets that will, post-separation, serve Boulder customers.40
Boulder further states that it is willing to provide, within 30 days of the Commission’s final order
in this phase of the proceeding, the recorded property interests for property rights associated with
the assets. However, Boulder requests that the Commission require Public Service to, within
30 days of the Commission’s final order in this phase of the proceeding: (1) identify any
unrecorded property interests associated with the facilities that will be owned by Boulder,
post-separation; and (2) identify any instances where Public Service’s gas facilities or
transmission facilities share an easement with its distribution facilities and the portion of any
such easement Public Service needs to retain to provide gas or transmission services.41
140. In addition to the facilities explicitly listed by Boulder, the City seeks to acquire
the specific non-exclusive portions of the real property interest necessary for the facilities that
will be owned by Boulder. Boulder clarifies that it is not requesting the transfer of any real
property interests associated with assets that are necessary for Public Service to serve its gas or
electric customers post-separation.
2. Positions of the Intervening Parties
141. Public Service argues that the real property rights Boulder seeks to acquire
must be identified and any necessary sharing arrangements negotiated where there are gas or
transmission facilities in or on the same property rights. Public Service also asserts that once
condemnation starts, Public Service’s bargaining power to negotiate agreements and real
property rights for itself will be limited because neither the Commission nor Public Service can
call a halt to the condemnation proceedings or alter their course once they have commenced.
40 Boulder SOP at 6-7.
41 Id. at 7.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
48
142. Staff recommends that the Commission should approve the physical assets portion
of the list of assets for transfer now (and thus, permit the commencement of condemnation
proceedings), as long as the list is still subject to another subsequent approval.
3. Findings and Conclusions
143. We approve the designation of assets for transfer outside of the substations.
However, as discussed below, we place three conditions on Boulder to secure this approval.
144. The record in this Proceeding supports the conclusion that Public Service can
provide safe and reliable service to its customers during separation and after the Cut-Over Date
upon the transfer of assets outside the substations. No party has argued that Public Service’s
existing system is not safe, reliable, and effective. Public Service will retain its feeder lines
serving customers outside of the city limits and, in accordance with our decision above,
the substations that serve those lines. Boulder’s engineers have modeled the existing system
and have shown that it satisfies voltage and capacity requirements. Provided that Public Service
also secures sufficient property rights to operate and maintain its feeders remaining in Boulder,
it is reasonable to conclude that Public Service will have the means to operate its system
post-separation in a manner that is as safe, reliable, and effective as it is pre-separation.
145. Public Service recommends that Boulder move forward with the transmission
load interconnection process.42 That recommendation would support a conclusion that Boulder’s
acquisition of the feeder lines would not result in a less safe, effective, and reliable system for
Public Service after separation. Public Service witness Chad Nickell’s advocacy also focused
almost exclusively on the substation configurations and the associated joint-use of poles for
42 Public Service SOP at 23.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
49
backups as recommended by Boulder. Public Service primarily suggests that any updated list of
assets for transfer should reflect final substation configurations. However, this Decision results
in no change in substation configurations, at this time.
146. In addition, Mr. Nickell testified that it is not necessary for Public Service to
operate any new substation transformers that Boulder will own in order to serve customers up
until the Cut-Over date. He also explains that there is no need for any of the City’s new
substation facilities to be used by Public Service to provide service and they can be constructed
and ready to be placed in service without Public Service having any responsibilities (other than
temporarily providing load for testing).43 Likewise, he states that it is also not necessary for
Public Service to integrate Boulder’s distribution facilities outside of the substations in order to
serve customers before separation.44 Boulder agrees with Mr. Nickell, since the City takes the
position that operations of the system until the Cut-Over Date will “not require a departure from
the status quo until the systems are separated” and hence will not be the contrary to the public
interest.45
147. Based on the above, the Commission is reasonably assured that Public Service
will be able to provide safe, reliable, and effective service upon Boulder’s acquisition of the
feeders, particularly since decisions on substation configurations would be subject to the
transmission load interconnection process under Public Service’s own OATT. A safe, reliable,
and effective system is also enhanced if the Commission declines to order the joint use of poles,
as addressed below.
43 Hearing Exhibit 203, Nickell Cross Answer at 19.
44 Id. at 21.
45 Boulder SOP, 58.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
50
148. Accordingly, we hereby find that if Boulder acquires the distribution facilities
outside of the substations, through either a negotiated sale or condemnation, Boulder will have
the technical means (i.e., the facilities and associated property rights) to create a municipal
utility. Boulder will connect its distribution facilities to substations, where Boulder will receive
transmission service from Public Service. As a municipal electric utility, Boulder will have the
right to build new substations in order to serve the distribution facilities on the list of assets for
transfer in the event the City is unable to reach agreement with Public Service on the purchase
and/or reconfiguration of the existing substations through the normal transmission load
interconnection process.
C. Conditions on the Approval of Assets for Transfer
1. Access to Rights of Way and Other Real Property Rights
149. The creation of a municipal utility in Boulder will occur within a well-established
portion of Public Service’s existing service area, wherein the Company has already built a highly
integrated grid. Public Service will require significant facilities to be located within Boulder city
limits post-separation, and Public Service will require access to rights of way and other property
rights within Boulder city limits for those facilities, even though most Boulder City customers
will not be served by Public Service. Public Service also will be required to reconfigure certain
existing facilities and to construct new facilities in order to serve its customers after separation.
For example, new connections between substations within Boulder likely will be necessary for
“backing up” facilities used to serve Public Service customers post separation if Boulder
acquires distribution facilities within certain existing substations.
150. We therefore agree with Public Service that the separation of the systems will
require Public Service to secure permanent, non-exclusive easements and other necessary real
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
51
property rights for the location of its electric facilities within Boulder city limits that are
necessary for Public Service to provide service to its customers after separation. We further agree
with Public Service that non-permanent rights create the risk that Public Service will not be able
to continue to serve its customers post separation, a situation which could cause Public Service to
incur additional costs if Boulder requires Public Service to relocate, remove, or underground
facilities in the future on one or more occasions.46
151. As a condition to the designation of the assets for transfer outside the substations,
we require Boulder to 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 city limits that are necessary for Public
Service to provide service to its customers after separation. Such an agreement is essential to
preserving Public Service’s ability to serve its customers post-separation.
2. Addressing Deficiencies in the List of Identified Assets
152. We are persuaded by Public Service that Boulder’s list of identified assets for
transfer, even for items outside of the substations as provided in the record, is incomplete and
contains errors that must be corrected.
153. As a second condition to the designation of the assets for transfer outside the
substations, we require the filing of a revised list that is accurate and complete. The updated list
shall not include assets that Boulder proposes Public Service should retain; it shall include the
assets Boulder proposes to take that are outside Boulder city limits; and it shall not include
CenturyLink poles or Public Service transmission poles.
46 Public Service SOP at 147-148.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
52
154. It is not necessary for the updated list to itemize the ancillary assets and
appurtenances outside of the substations. We note that Public Service does not object to a
Commission order approving the transfer of smaller, associated distribution system assets by
description.47 The facilities listed by type may include customer meters, manholes, services and
secondaries, vaults, and fiber optic and communications facilities.
155. The updated list also shall include real property interests associated with the
assets Boulder seeks to acquire (e.g., the property rights outside of the Boulder rights of way).
We find that it is necessary for the Commission and Public Service to understand which property
rights Public Service risks losing through municipalization to be assured that Public Service will
retain its ability to provide safe, reliable, and effective service to its customers after separation.
156. While we decline to order either Public Service or Boulder to contract for the title
work necessary to identify all of Public Service’s real property rights associated with the assets
Boulder seeks to acquire (e.g., fee lands, easements, or licenses), Boulder shall be responsible for
the associated expenses to comply with this condition. Per its offer, Public Service shall work
with Boulder to identify any real property in which gas or transmission facilities are located with
electric facilities.48 Public Service also shall assist Boulder in identifying unrecorded claims to a
property interest associated with the facilities that would be owned by Boulder, post-separation
and the instances where Public Service’s gas facilities or transmission facilities share an
easement with the electric distribution facilities, including the portion of any such easement
Public Service must retain to provide gas or transmission services.
47 Id. at 200.
48 Id. at 194.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
53
3. Agreement(s) on Boulder’s Reimbursement of Public Service’s Costs
157. As a third condition to the designation of the assets for transfer outside the
substations, we require the filing of an agreement (or multiple agreements) between Boulder and
Public Service that addresses the payment by Boulder of costs incurred by Public Service to
effectuate the separation of the systems. Such an agreement(s) is necessary, since, as discussed
below in Section IV.D.3., we reject Boulder’s proposal that Public Service finance all work for
reimbursement just prior to the Cut-Over Date.
158. The required agreement(s) shall address both the reimbursement of costs incurred
by Public Service associated with Boulder’s compliance with these conditions tied to the
approval of the assets for transfer, pursuant to this Decision, and the costs associated with the
following: (1) the development of scope of work documents and detailed design drawings and
specifications; and (2) new construction and reconfiguration work costs incurred by Public
Service to effectuate the separation of the systems.
159. In recognition that Boulder may change its mind about municipalization after
construction and separation activities have begun, the agreement(s) also should address how
Public Service will recover from Boulder the costs that will be incurred to restore the two
systems to a single electric system, as suggested by Public Service.
160. The agreement(s) should also address the following: (1) respective
responsibilities for the repair and replacement of existing facilities while Public Service is still
providing service to customers within Boulder; (2) 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
(3) any other final “true up” at the Cut-Over Date not otherwise addressed by the condemnation
court.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
54
161. We conclude that the Commission’s review and approval of such an agreement(s)
is in the public interest, because it is the most reliable means for the Commission to protect
remaining Public Service ratepayers from paying costs that should be borne by Boulder. We note,
however, that the agreement(s) will not be jurisdictional to the Commission and, as addressed
more fully below, the Commission will not have authority to resolve disputes arising from the
compliance with the agreement(s).
4. Filing Deadline and Review of Compliance Conditions
162. Boulder shall submit no later than 90 days following the issuance of this Decision,
the filings required above for final approval of the designation of assets for transfer outside the
substations. Boulder shall make a single filing satisfying all requirements of the three conditions.
Boulder may file a request for additional time for good cause shown.
163. Any party may file a request for hearing on all or parts of the filings by Boulder
no later than 30 days after the filing is submitted. In the event that a party requests a hearing on
Boulder’s filing, the matter will be referred to an Administrative Law Judge (ALJ) for a
recommended decision on whether Boulder has satisfactorily met the conditions set forth above
and whether the Commission approves the designation of assets for transfer outside the
substations. The Commission will then address the recommended decision under § 40-6-109(2),
C.R.S. In the event no party requests a hearing on Boulder’s filing, the Commission will render a
decision granting final approval of the assets for transfer outside the substations.
164. As explained below, the approval of the assets for transfer by this Decision is
made in accordance with the Boulder District Court Decision. The decision rendered on the
assets for transfer will not be a preliminary approval of the transfer of assets under § 40-5-105,
C.R.S., as contemplated by the advocacy of certain parties. Final approval of the transfer of
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
55
assets under § 40-5-105, C.R.S., will be accomplished, as necessary, in a separate proceeding by
a joint filing of an application for voluntary transfer of assets from Public Service to Boulder.
IV. BOULDER’S PROPOSED ASSOCIATED AUTHORIZATIONS AND RELIEF
A. Joint Use of Poles
1. Boulder’s Proposal
165. Boulder proposes the joint use of existing poles when “above-ground”
infrastructure already exists and another circuit is required for the other utility. Boulder proposes
that Public Service would continue to own any poles jointly used by Boulder and Public Service.
Boulder would pay the joint use fee and all “make-ready costs” required to accommodate
Boulder’s system. Boulder states that, because Public Service had not provided the City with
information on the age and condition of existing infrastructure, Boulder has assumed that all of
the affected poles would be replaced.
166. Boulder argues that the joint use of poles prevents the duplication of facilities in
the same area and that it is common practice between utilities. Boulder also argues that having
two utilities on a pole does not, by itself, negatively affect reliability. To ensure system safety,
Boulder acknowledges that the joint use of poles requires a degree of coordination. Boulder
states that it is willing to abide by all of the restrictions placed by Public Service on other electric
utilities that have joint use arrangements with Public Service, as well as any other reasonable
terms and conditions as may be imposed by the Commission. Boulder states that the two electric
utilities will have to communicate and have a protocol for planned and emergency work on
feeders and equipment on joint use poles.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
56
167. Boulder argues that the Commission has the authority to require joint use of
regulated facilities. Boulder further argues that Public Service already engages in pole sharing
with other electric utilities as well as cable and phone companies.
168. Boulder estimates that undergrounding all of the joint-use-pole circuits proposed
in the separation plan would cost roughly $30 million, an increase of some 40 percent of the
present cost of the Separation Plan.
2. Public Service’s Position
169. Public Service explains that Boulder proposes 27.5 miles of new construction of
poles for joint use, plus 5.1 miles of existing double-circuit poles that would be split for joint use.
The proposed joint use poles would affect 15 of the 28 feeders that would provide service to
Boulder customers and would affect 8 of the 9 feeders that Public Service would use to provide
service to its customers post-separation.
170. According to Public Service, Boulder is proposing to remove the existing poles
(some of which are owned by CenturyLink) and replace them with new poles capable of holding
circuits for both Boulder and Public Service. The joint use poles within city limits would be used
both to serve Boulder’s circuits and to backup for Public Service, the ties between Substations C
and A. The joint use poles outside of the city limits would be used both to serve Public Service’s
circuits and to provide backup ties between “Boulder’s substations.”
171. Public Service raises numerous safety and reliability issues associated with joint
use poles. Public Service takes the position that there are significantly better designs that would
assure a higher level of the safety and reliability of service. The Company further states the
system would be inherently more risky and more likely to result in a safety incident, which
makes the proposal unacceptable to the Company. Public Service also argues that Boulder’s
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
57
proposal is not fully developed. For example, according to the Company, Boulder cannot
complete the proposed backup feeder on joint use poles for Public Service’s Substation A
transformer without acquiring the right to take CenturyLink poles and convert them to “joint
use” by Boulder and Public Service, with ownership by Public Service.
172. Public Service presented the testimony of Lawrence Gelbien, an independent
expert, who testified that the joint use of poles is not common in the industry because of safety
and reliability reasons and that the NESC establishes minimum requirements, not operational
goals, for safety.49 Mr. Camp, on behalf of Staff, agreed that the NESC provided an engineering
minimum standard, not a safety standard.50
173. From a legal perspective, Public Service argues that Boulder ’s proposed joint use
of poles is outside the scope of the joint use statute, i.e., § 40-4-105(1), C.R.S., in part because
Boulder is not requesting to use existing facilities, but is instead requesting that it be allowed to
use new poles that Public Service would be forced to construct, own, and maintain. Public
Service further argues that Boulder has never cited any legal authority for the Commission to
compel the joint use of poles.
3. Findings and Conclusions
174. We decline to compel Public Service to enter into any “joint use” of pole
arrangement. We conclude that if the joint use of poles is necessary in any particular
circumstance, the arrangement should be worked out with mutual consent by both Boulder and
Public Service.
49 Hearing Transcript, July 31, 2017, at 211-243.
50 Hearing Transcript, August 7, 2017, at 149-153.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
58
175. Public Service has provided reliable testimony that the joint use of poles will
likely decrease the safety and reliability of its electric distribution system. We therefore find that
the joint use of poles should only be implemented upon mutual agreement by both Boulder and
Public Service. Boulder has failed to persuade us that the “joint use" of poles is either necessary
or warranted at this time.
B. Detailed Design Drawings and Specifications
1. Boulder’s Proposal
176. Boulder requests that the Commission direct Public Service to contract with a
third-party engineering firm acceptable to Boulder to perform engineering work after the
Commission issues a Phase 1 decision that approves both Boulder’s assets for transfer and the
City’s proposed Separation Plan. Boulder envisions that the third-party engineering firm, Public
Service, and Boulder will work together to complete detailed design drawings and specifications
for the facilities located outside substations. The third-party engineering firm also would develop
a cost-estimate and an estimated timeline for the separation of the two systems and would solicit
bids for the construction required under the Separation Plan.
177. In its SOP, Boulder requests that the Commission direct Public Service and the
City to develop a scope of work for the detailed design drawings and specifications within
30 days following the Commission’s final order in this phase of the proceeding. Within
12 months (but with monthly progress reports), Public Service and Boulder then would be
directed by the Commission to engage in the following activities: (1) develop detailed design
drawings and specifications with cost estimates and proposed timelines; (2) negotiate any
required operation agreements to implement emergency backup arrangements and joint use
agreements; and (3) negotiate a cut-over agreement regarding when and how Boulder-owned
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
59
facilities will be physically integrated into the Public Service system and how such facilities will
be maintained before the Cut-Over Date. Following that 12-month process, Boulder states that it
will make a “Phase 2” filing seeking approval of those detailed design drawings and
specifications and agreements.51
178. Also in its SOP, Boulder states the City is willing to enter into a contract with
Public Service that requires the Company and, separately any Public Service contractors to the
extent they are employed for the design work, to invoice Boulder monthly for the “actually- and
prudently-incurred costs.” Boulder further agrees to pay those costs directly to Public Service
contractors and, if applicable, to the Company directly, on a monthly basis. Boulder argues that
there is no need to require Boulder to provide additional payment assurances or security other
than the proposed contract.52
2. Positions of the Intervening Parties
179. Public Service objects to using third-party design engineers to prepare scope of
work documents. Public Service takes the position that those decisions on scope of work, which
should encompass planning for the logistics of cut-over, should be made by the Company and
Boulder and not by third party design engineers, because it is Public Service and Boulder who
have interests at stake in those decisions. Public Service also suggests that once the scope of
work documents are done by the City’s and the Company’s engineers, at least as to Public
Service’s distribution work, it will not be necessary to have engineers prepare the detailed design
drawings, because the drawings can be completed by less expensive designers.
51 Boulder SOP at 14.
52 Id. at 16.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
60
180. Staff agrees that Public Service should be responsible for the development
of detailed drawings, the specifications bid package, and cost estimates for construction and
reconfiguration of the facilities that will exclusively serve Public Service’s customers after
separation. Likewise, Staff suggests that Boulder should be responsible for the development of
detailed drawings, the specifications bid package, and cost estimates for the construction and
reconfiguration of the facilities that will exclusively serve Boulder’s customers after separation.
3. Findings and Conclusions
181. The parties appear to have reached agreement that the development of a scope of
work is essential to an efficient development of detailed drawings and specifications. While we
concur with Public Service that decisions on scope of work should encompass the planning for
the eventual logistics of cut-over, and while we agree with the parties generally that Boulder and
Public Service will need detailed drawings and specifications to implement the separation of the
two systems, we are not convinced that it is necessary to compel Public Service to contract with
a third-party engineering firm or to direct the Company to take any other specific action in the
furtherance of this work. Moreover, the Commission lacks authority to compel Public Service to
enter into the types of arrangements proposed by Boulder.53 Setting aside such legal deficiencies
of Boulder’s proposal, we are not persuaded that ordering Public Service to contract with a
third-party engineering firm or any other consultant or agency is necessary or warranted. We are
persuaded by Public Service’s testimony, evidence, and experience that it is capable of creating
its own scope of work and detailed design drawings, as necessary, in order to maintain a safe,
reliable, and effective system.
53 See Arkansas Valley Smelting Co. v. Belden Mining Co., 127 U.S. 379, 387 (1888) (“everyone has a right
to select and determine with whom he will contract, and cannot have another person thrust upon him without his
consent.”)
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
61
182. We also decline to order Boulder and Public Service to file the detailed drawings
prior to the Go/No-Go Decision later in this Proceeding or as part of a separate future
proceeding. Review and consideration of approval of detailed specifications and drawings is well
beyond the normal scope of Commission regulation over electric utilities. As stated above, there
is no evidence that Public Service will not be able to continue to provide safe, reliable, and
effective service post separation in accordance with good utility practice and industry standards
in the design, construction, and operation of its system, provided that Boulder meets certain
conditions in compliance with this Decision and provided that the designation of assets for
transfer is limited to the assets outside the substations, as ordered herein.
C. Construction of New Facilities and Reconfiguration of Existing Facilities
1. Boulder’s Proposal
183. Boulder proposes that Public Service, its third-party contractors, and its
consultants, in coordination with the City, construct the facilities necessary to separate the
systems, consistent with the design drawing and specifications jointly prepared by Boulder and
Public Service as approved by the Commission in Phase 2 of this Proceeding. During the
construction phase and up until the Cut-Over Date, Boulder expects that Public Service will test,
energize, and use the newly constructed facilities as the operator of the system as parts of the
construction are completed.
184. Boulder estimates that the cost of construction and reconfiguration work will be
approximately $73 million.54 Public Service calculates the cost of the construction and
reconfiguration work to be approximately $107 to $109 million.55
54 Hearing Exhibit 101, Bailey Direct at 64.
55 Public Service SOP at 40.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
62
185. Boulder argues that it is prudent that just one utility operate the integrated
facilities until they are separated for safety and reliability reasons. Boulder adds that it “is logical
that Public Service would continue to operate the integrated facilities in parallel with managing
the design, construction, and reconfiguration required under the Separation Plan.”56
186. Boulder argues that requiring Public Service to “take the lead on construction,”
while continuing to own and operate the system within Boulder, ensures continued Commission
jurisdiction “over the facilities” until the Cut-Over Date. In contrast, Boulder asserts that if the
Commission requires Boulder to install and own its own facilities, those facilities would be
outside of the Commission’s jurisdiction, because they are assets of a municipal utility for
serving customers within City Limits. According to Boulder, a requirement that Boulder
complete its own construction work “raises additional concerns and complexities that are
avoided” if Public Service is responsible for construction and owns all the assets until the
Cut-Over Date.57
2. Positions of the Intervening Parties
187. According to Public Service, Boulder is proposing for itself five new distribution
substation transformers and five new feeder lines. Public Service states it is unwilling to design,
procure, construct, test, and commission Boulder’s facilities and cannot legally be ordered by the
Commission to do so. Public Service states that it: “is not in the business of designing, procuring,
constructing, testing or commissioning facilities for other utilities. Boulder can hire its own
56 Boulder SOP at 62.
57 Id. at 63.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
63
contractors to design and construct its facilities and can obtain (at a cost) from those contractors
the protections for cost overruns and delays it seeks to impose on Public Service.”58
188. Public Service argues that separation will require a large number of different
construction and reconfiguration activities to occur during the same timeframe, necessitating
extensive project management and coordination with Boulder to maintain service to existing
customers during the process. Public Service states that it also will be dependent on Boulder
placing its facilities and being ready to operate them. Public Service states that it will need the
flexibility to schedule work and adjust schedules as necessary to respond to conditions on a daily
basis. Public Service states that is not willing to function as a general contractor for Boulder.
Public Service argues that it needs to be able to make the same decisions on a daily basis that it
would make for any of its public utility projects and that it cannot stop and check or negotiate
with Boulder every step of the way or take the financial risk.
189. Regarding new facilities that Boulder would own post separation, Public Service
argues that there is no reason for Public Service to take on the risk of designing and constructing
new facilities for Boulder. Boulder can hire its own contractors to design and construct its
facilities and can obtain (at a cost) from those contractors the protections for cost overruns and
delays it seeks to impose on Public Service. Public Service also states that there is no reason
why Public Service should or can be required to design, procure, construct, test, and commission
new Boulder only facilities. Public Service argues that the services which Boulder is requesting
Public Service be ordered to provide are not regulated public utility services; rather, they are the
services general construction contractors provide under voluntarily negotiated private contracts.
58 Public Service SOP at 44.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
64
190. Public Service also takes the position that it is not necessary for Public Service to
operate any new substation transformers that Boulder will own in order to serve customers. The
Company explains that there is no need for any of the City’s new substation facilities to be used
by Public Service to provide service and they can be constructed and ready to be placed in
service without Public Service having any responsibilities (other than temporarily providing load
for testing). Likewise, Public Service states that it is also not necessary for Public Service to
integrate Boulder’s distribution facilities outside of the substations in order to serve customers
before separation.
191. Regarding new facilities that Public Service would own, Public Service states that
it has the right to design and construct the new facilities it will own after separation and that, in
order for Public Service to be able to continue to serve customers during the construction
process, Public Service must be able to decide how separation activities will be undertaken. This
includes moving feeders from an existing substation transformer to a new transformer, severing
feeders and reconnecting them to other feeders (new or existing), moving customers from one
feeder to another, and numerous other activities required to implement the separation.
192. Public Service argues that it cannot be required to use a third party contractor,
selected by competitive bidding and hired to also construct Boulder’s new facilities, to construct
its new facilities and do the separation work. Public Service states, however, that it would be
willing to undertake the construction work for its new facilities and the separation activities
subject to the Commission’s normal prudence review, but not subject to Boulder’s proposed
“guardrails and limitations.”
193. Staff takes the position that Public Service should not perform the services of
an engineering, procurement, and construction firm for Boulder, because it cannot be compelled
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
65
to engage in such unregulated activities on behalf of Boulder. Instead, Public Service
should contract with an electrical distribution construction contractor for construction and
reconfiguration of the facilities that will serve Public Service customers, and Boulder should
engage an electrical distribution construction contractor for the construction and reconfiguration
of facilities that will serve Boulder’s customers, at Boulder’s own expense.
3. Findings and Conclusions
194. We will not hold Public Service responsible for completing all of the construction
and reconfiguration work as proposed by Boulder. We agree with Public Service, Staff, and the
OCC that Boulder’s proposals suffer from jurisdictional infirmities. As we stated above with
respect to the completion of the scope of work documents and detailed design drawing, the
Commission lacks authority to compel Public Service to enter into the types of arrangements
proposed by Boulder.59 We are not persuaded that ordering Public Service to contract with a
particular construction firm or to complete the construction by any specific means is necessary or
warranted. Such a directive is, again, well beyond the normal scope of Commission regulation
over electric utilities.
195. We further agree with Staff that the Commission should hold Boulder responsible
for the construction and reconfiguration of facilities that will serve Boulder’s customers, at
Boulder’s own expense. Likewise, Public Service will be responsible for the construction and
reconfiguration of facilities that will serve Public Service’s customers; however, Public Service’s
construction and reconfiguration work will be completed at Boulder’s expense.
59 See Arkansas Valley Smelting Co., 127 U.S. at 387.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
66
D. Financing, Proposed Regulatory Asset, and Payment by Boulder
1. Boulder’s Proposal
196. Boulder requests that the Commission order Public Service to track, in a
regulatory asset, the costs related to the following: (1) the development of detailed design
drawings and specifications, a cost estimate and bid package, and a schedule for the construction
and reconfiguration work; (2) the solicitation of bids; and (3) the construction of the facilities,
subject to various conditions.
197. Boulder argues that appropriate categories of costs eligible for inclusion in
the regulatory asset include direct costs of planning, engineering, construction, materials,
transportation, and project management. Examples of costs that would not be appropriate for
inclusion in the regulatory asset are litigation expenses, campaigning, ballot initiatives, and
community outreach. Boulder argues that it should not pay the Company’s litigation costs.
198. Boulder states that the City agrees to pay the costs accounted for in the regulatory
asset, with interest accruing at Public Service’s weighted average cost of capital, when the
systems are fully separated. In the event the Commission rejects the proposed regulatory asset
approach for cost recovery from Boulder, the City argues that the determination of an appropriate
funding mechanism instead could be an issue to be addressed in Phase 2 of this Proceeding.
199. Boulder ties its proposal for financing the separation work to its proposed means
by which the Commission would retain “continued jurisdiction over the detailed design and
construction phases of the Separation Plan.”60 Specifically, Boulder wants Public Service “not
only continue to own, operate, and maintain the electric distribution system in Boulder,”61 but
60 Boulder SOP at 15.
61 Id.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
67
also to, as the owner of the system, “make certain modifications to its distribution system to
effectuate the Separation Plan.”62 Public Service would pay for this work, tracking its
expenditures in a regulatory asset. Then, at the Cut-Over Date, Boulder would acquire the newly
constructed facilities from Public Service, paying the amount in the regulatory asset for the
Post-Go/No-Go Costs, as well as interest on that amount calculated at Public Service’s weighted
average cost of capital.
200. In its SOP, however, Boulder states that, if the Commission does not “allow
Boulder to defer payment”63 of the construction and reconfiguration costs, Boulder should be
responsible for the acquisition of any equipment that will be owned by Boulder after the
Cut-Over Date and any construction associated with facilities that will be owned by Boulder
after the Cut-Over Date. Boulder states that it will finance those costs as it deems appropriate,
adding that Boulder has the ability to finance the construction necessary under the Separation
Plan, as well as to finance the acquisition of Public Service’s electric distribution assets after the
separation construction. Notably, Boulder states: “at this time, given the substantial uncertainties
regarding the level of the costs and the timeframe in which costs will be incurred, Boulder
cannot and should not be required to commit to the particular manner in which Boulder will
finance those costs, whether it be through general obligation bonds, revenue bond, certificates of
participation, a combination of any of those or otherwise.”64
201. Boulder also states in its SOP that with regard to the Post-Go/No-Go Costs, the
Commission should allow Public Service and Boulder to negotiate whether and the extent to
62 Id. at 15-16.
63 Id. at 17.
64 Id. at 67.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
68
which payment assurances or security should be required. Boulder proposes to report to the
Commission in Phase 2 what agreements have been reached on that issue.65
202. In the event Boulder does not have sufficient funds to pay Public Service for
all of its incurred costs, Boulder anticipates entering into a contract with the Company that
would establish the obligation to pay the acquisition costs as well as the actually- and
prudently-incurred separation costs on or just before the Cut-Over Date. Such contract would
discuss the method of payment and would be consistent with applicable law.66
2. Positions of the Intervening Parties
203. Public Service argues that it is not legally required to finance any part of the costs
required for Boulder to municipalize. Public Service further argues that there is nothing in
§ 40-5-101, C.R.S., or any other statute which would authorize the Commission to compel Public
Service to finance Boulder’s municipalization efforts. Public Service further argues that the
Commission has no jurisdiction to issue an order requiring Boulder to compensate Public Service
for the costs it incurs to complete the separation and construction work Boulder has proposed in
its Separation Plan. Public Service states that its capital is for the purpose of serving its
customers, not advancing Boulder’s municipalization plans.
204. Public Service states that it cannot be required to incur any costs or expenses until
legally enforceable arrangements are in place that will ensure repayment without financial risk or
the necessity to sue to get paid. According to the Company, any requirements on Public Service
require reimbursement arrangements acceptable to Public Service to be in place to cover all costs
and expenses.
65 Id. at 67-68.
66 Hearing Exhibit 112, Eichem Rebuttal at 20.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
69
205. Public Service further argues that knowing the terms and conditions of all
agreements necessary between Public Service and Boulder is critical to ensuring that all of the
costs of Boulder’s desire to municipalize are borne by Boulder and not by Public Service and its
remaining customers. Public Service also argues that it legally cannot be ordered by the
Commission to enter into any of the necessary agreements. Nevertheless, Public Service agrees
that the agreements should be subject to Commission approval. Public Service emphasizes that it
is the Company’s position that it is imperative that before Boulder is allowed to commence a
condemnation proceeding and the Commission loses jurisdiction, “the agreements must be
presented to and approved by the Commission before the Commission make its determination
that the separation plan will result in safe, reliable and effective service.”67
206. Public Service also raises a concern that Boulder is not proposing any security for
the funds it wants Public Service to advance, for either the design or the construction and
separation work.
207. Public Service states that it is willing to let Boulder pay for the costs of Public
Service’s new facilities and the separation costs as the work is done, subject to the parties
entering into an acceptable voluntary agreement and the furnishing of adequate security. Public
Service explains that provision would have to be made for the Company’s invoices to be paid
monthly, and the Company must be provided with security for nonpayment. This provision
would enable the Company to restore its system to a single system in the event Boulder changes
its mind about municipalization after construction and separation activities have begun.
Consistent with Public Service’s approach, Boulder would have to pay separately for the costs of
its own new facilities.
67 Public Service SOP, at 141. (Emphasis omitted)
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
70
208. Public Service argues that the creation of a regulatory asset account creates no
obligation on the part of Public Service to advance funds for Boulder ’s municipalization and that
the tracking of costs separately from the Company’s other accounts has nothing to do with who
has to pay those costs and when.
209. Staff states that, with respect to financing Boulder’s municipalization, the main
goal should be to ensure that Public Service’s ratepayers do not finance any aspect of
municipalization, whether it be during the detailed design phase or during construction work
occurring after Boulder’s Go/No Go decision.
210. Staff argues that Boulder should be responsible for funding all costs required to
design, procure, and construct the new municipal electric utility. Public Service should provide
Boulder with a monthly invoice of the municipalization-related expenses that Public Service
incurs (which Boulder pays each month). If Boulder disputes any expenses presented by Public
Service in the monthly invoices, it must submit those items to the Commission for resolution of
the dispute on a quarterly basis. Boulder should fully securitize the estimated cost of construction
and reconfiguration work that Public Service will bear, even with the requirement that Boulder
submit monthly payments.
3. Findings and Conclusions
211. We reject Boulder’s proposal for Public Service to finance the construction and
reconfiguration work. As Ms. Atkeson testified, multi-year fiscal obligations of a governmental
entity, such as Boulder, are not legally binding and enforceable, without a dedicated revenue
stream for repayment.68 There is too little benefit and too much risk to Public Service’s
68 Hearing Transcript, August 3, 2017, at 279-282.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
71
ratepayers if Public Service were to finance upfront the construction and reconfiguration work
without repayment from Boulder at least five years into the future. Moreover, the record,
including the testimony of Mr. Eichem, the Chief Financial Advisor to Boulder,69 supports a
finding that Boulder has alternative means to finance the construction and reconfiguration work
required for the separation of Public Service’s system.
212. We also agree with Public Service that the Company is not legally required to
finance any part of the costs required for Boulder to municipalize, nor do we possess the
authority to require Public Service to assume such a financial burden.70
213. We agree with Boulder that, because we are not adopting Boulder’s approach for
financing the work, Boulder must be responsible for the acquisition of any equipment that will be
owned by Boulder after the Cut-Over Date and any construction associated with facilities that
will be owned by Boulder after the Cut-Over Date. This approach will narrow the issue of cost
reimbursement to the new construction and reconfiguration work Public Service completes for
providing service to its customers post separation. We further agree with Boulder that the
Commission should allow Public Service and Boulder to negotiate whether, and the extent to
which, payment assurances or security should be required.
214. As explained above, we have required, as a condition for approval of the
designation of assets for transfer outside the substations, the filing of an agreement between
Boulder and Public Service that addresses the payment by Boulder to Public Service for costs
incurred by the Company associated with the development of scope of work documents, detailed
69 Hearing Transcript, August 1, 2017, at 205-212.
70 As Public Service continually points out, it is a regulated public utility and not a lender. It is not legally
required to finance any part of the costs required for Boulder to municipalize. There is nothing in the Public
Utilities Law—including § 40-5-101, C.R.S. (New Construction – Extension)—authorizing the Commission to
require Public Service to finance efforts that will ultimately not benefit Public Service’s ratepayers.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
72
design drawings, and specifications associated with the new construction and reconfiguration
work costs to effectuate the separation of the systems. This condition on the designation of
assets for transfer is essential to protecting Public Service’s ratepayers from being ultimately
responsible for the costs associated with Boulder’s municipalization efforts.
E. Dispute Resolution
215. Boulder argues that Public Service fundamentally does not want Boulder to
municipalize. Boulder adds that Public Service has little or no incentive to manage costs or keep
construction on schedule. Boulder therefore requests that the Commission establish a process, for
after the Go/No-Decision and prior to the Cut-Over Date, whereby Boulder or Public Service
could raise any issue or dispute that concerns matters within the jurisdiction of the Commission
to the Commission or an ALJ. Boulder recommends that the Commission require parties to raise
disputes only as needed, but no more frequently than quarterly.71
216. Public Service argues that while Boulder has asked the Commission to resolve
disputes up to the Cut-Over Date, the Commission may lack jurisdiction if the Phase 1 decision
gives Boulder transfer approval under § 40-5-105, C.R.S. Public Service adds that once the
Commission has fully exercised its transfer approval authority, it will lose its jurisdiction. Public
Service further argues that Boulder cannot create jurisdiction of the Commission by consent.
217. We cannot be sure at this time what disputes will arise between Boulder and
Public Service that will require resolution. However, it appears that many disputes would involve
contractual claims and disputes over costs and payments. To the extent that Boulder is asking the
Commission to hear and resolve such matters, we note that serving as the authority to resolve
such disputes would most likely require this Commission to step outside its scope of jurisdiction.
71 Boulder SOP at 15.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
73
As has been clearly stated by the Commission previously, while the Commission enjoys broad
authority over regulated public utilities, that jurisdiction is nevertheless limited. For example,
Administrative Law Judge Mana Jennings-Fader noted that the Commission was aware that its
jurisdiction was limited to the extent that it is characterized as a statutory tribunal:
The Commission is not the functional equivalent of a Colorado Constitution
article III court, which has general jurisdiction over common law claims and
which may award equitable and legal remedies, including monetary damages.
See, e.g. Paine, Webber, Jackson & Curtis, Inc. v. Adams, 718 P.2d 508, 513
(Colo. 1986) (powers of article III courts and of statutory courts). The Colorado
Supreme Court has held consistently that the Commission does not possess
general jurisdiction, that the Commission may not entertain tort and other
common law claims, and that the Commission may not create remedies which are
not authorized by statute. Thus, there is a clear point of demarcation between the
jurisdiction of the Commission and that of the article III courts.72 [Footnote 9
omitted]
Nor does the Commission possess the authority to hear claims of negligence, common law
breach of contract claims, causation, or to provide redress in the form of monetary damages for
claims that are grounded in an alleged violation of Public Utilities Law or a tariff, Commission
decision, or of Commission rules. Instead, the question of damages is an issue to be determined
in a court of competent jurisdiction in a private cause of action.73
218. These findings by the ALJ are buttressed further by case law that holds that
“[a]dministrative agencies cannot exceed the authority conferred upon them by statute.74 Acts of
72 Recommended Decision No. R14-0369, Proceeding No. 13F-0110EG issued April 9, 2014, ¶ 34. Also
citing, IREA v. Colorado Central Power Co., 307 P.2d 1101, 1104-05 (Colo. 1957); PUC v. Manley, 60 P.2d 913
(Colo. 1936); People v. Swena, 296 P. 271, 272 (Colo. 1931) (PUC’s statutory authority not that of an article III
court); and Public Service Company of Colo. V. Van Wyck, 27 P.3d 377, 384-85 (Colo. 2001); People ex rel.
Hubbard v. PUC, 178 P. 6, 14-15 (Colo. 1918) (Commission may not create remedies which are not authorized by
statute).
73 Id.
74 City and County of Denver v. Gibson, 546 P.2d 974, 975-76 (1975) (internal citations omitted)
(overturning Denver Civil Service Commission order to promote a candidate unfairly prejudiced in his examination
by the action of his superior, since the Commission had no statutory authority to issue such an order).
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
74
administrative agencies that exceed the scope of their delegated powers are void, regardless of
the equities involved.75 Therefore, while the Commission’s jurisdiction is broad in the realm of
the Public Utilities Law, it is not boundless, and must be tempered according to its statutory
strictures, or it runs the risk of acting ultra vires.
219. We conclude that it is unnecessary and potentially cumbersome for the
Commission to adopt Boulder’s proposed dispute resolution process. Boulder’s Application
contains several requests that the Commission cannot grant due to a lack of subject matter
jurisdiction. We also agree with the intervening parties who argue that consent of the parties,
express or implied, cannot create subject matter jurisdiction that the Commission is otherwise
lacking.76
V. SERVICE TO IBM
A. IBM’s Position
220. IBM claims that the lack of detail in Boulder’s Application is a sufficient basis to
deny the application in its entirety. IBM offers that if the Commission is not yet prepared to
make that determination, it can and should decide the IBM-specific issue, and deny the
Application as to IBM. According to IBM, Boulder has not proven that it can adequately operate
an electric utility and provide IBM with the reliable service it needs. Thus, the Commission
should not approve any separation plan that allows Boulder to serve IBM.77
221. IBM Witness Leo Ladaga states: “The data center marketplace is very competitive
and near perfect reliability is not an aspiration or goal, it is a non-negotiable commitment.”78
75 Id.
76 Id.
77 IBM SOP at 3.
78 Hearing Exhibit 500, Ladaga Answer at 14.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
75
Mr. Ladaga states that IBM’s customer contract is for 99.9 plus percent “availability” and that
ensuring reliability is critical to not only IBM’s clients but to the public in general, because of the
nature of IBM’s services on the Boulder campus.79 Mr. Ladaga goes on to explain that the
Boulder campus houses IBM’s Global Technology Services and Resiliency Services, as well as
one of two IBM global command centers, multiple call centers, data archival services, and a
product literature production facility.80 IBM’s more than 10,500 resiliency services clients range
widely in industries that require near-perfect reliability, including 75 percent of the top 35 banks
in the world.81 In the event that IBM fails to meet service levels, it is subject to penalties that can
range to millions of dollars.82
222. IBM witness Brody Wilson testified that Boulder lacks an operations plan and,
even if there are no changes at Substation F, Boulder’s distribution utility will not “see into”
Public Service’s transmission system, and vice versa.83 IBM witness Eugene Shlatz also testified
that the specific shortcomings of Boulder’s proposal include Boulder’s lack of operational
history and experience in operating an electric utility; Boulder’s failure to demonstrate that it will
have adequate resources to restore the system during outages and emergencies; Boulder’s lack of
centralized communications and control facilities; and Boulder’s lack of trained staff.84
223. IBM argues that it is the Commission’s duty to assure that future Boulder
customers will receive safe, adequate, and reliable service, before it permits the separation of
Public Service assets, service territory, and customers for which Boulder seeks Commission
79 Id. at 2. Mr. Ladaga uses the term “availability” throughout his testimony, but IBM uses the word
“reliability” in its SOP.
80 Id. at 6.
81 Id. at 10-11.
82 Id. at 14.
83 Hearing Transcript, August 7, 2017 at 45.
84 Hearing Exhibit 503, Shlatz Answer, Attachment ELS-7.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
76
approval. According to IBM, under the Boulder District Court Decision and City of Fort Morgan
v. Pub. Utils. Comm’n, 159 P.3d 87 (Colo. 2007), the Commission must exercise this duty now,
and not after Boulder begins operating its municipal utility and IBM loses service or reliability.85
IBM asserts that these cases give the Commission the authority to make a determination that
Boulder is unwilling or unable to provide substantially adequate service to IBM post-separation,
therefore the Commission “must be able to make this same assessment, now, before separation
occurs, particularly given that these customers are currently served by Public Service, an entity
already possessing a CPCN to serve customers in Boulder.”86 IBM further argues that, because
all of Boulder’s future customers are current Public Service customers, the Commission has a
duty to ensure that the creation of a Boulder municipal utility will not harm these customers.
224. IBM believes that the law requires Boulder, at the very least, to make a showing
of operational and financial fitness before the Commission can determine whether Boulder’s
separation plan will result in safe, effective, and reliable service for all current customers of
Public Service, including those who would become future Boulder customers. According to
IBM, Boulder has not provided any evidence that it is capable of providing adequate service to
IBM when Boulder takes title to Public Service’s assets. IBM asserts that Boulder “failed to
address or explain many functions and capabilities that are required to safely and reliability
operate an electric utility distribution system.”87 IBM argues that Boulder has not proven in this
Proceeding that it will be able to protect the system’s effectiveness, reliability, and safety,
and provide adequate service to IBM under its separation plan. IBM cautions the Commission
that Boulder proposes not to provide any meaningful financial or operational detail until after
85 IBM SOP at 27-30.
86 Id. at 2. (Emphasis omitted)
87 Id. at 13.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
77
the “Go/No-Go” decision, when the Commission will have less authority (if any) over the
municipalization process. IBM therefore asks the Commission to deny Boulder’s application as
to IBM. However, recognizing Boulder’s right to create a municipal utility, IBM proposes a
compromise: if Boulder receives all necessary approvals to proceed with its municipal utility,
IBM proposes that it would not initially be a Boulder customer, or, in other words, the
Commission would deny Boulder’s Application specific to IBM. But the Commission also would
expressly recognize that Boulder would be allowed to subsequently reapply to add IBM to its
service territory, seeking such further separations from the Public Service system as might be
necessary, after Boulder had established a track record for providing safe, effective, and reliable
service. IBM believes that five years of operational detail is sufficient to establish that track
record.
B. Boulder’s Response
225. Boulder states that it is willing to provide IBM with the same level of service and
reliability that IBM receives from Public Service.88 Boulder has also stated that it will consider
not changing Substation F, which would obviate IBM’s concerns about power losses during
construction.89
226. Boulder asserts that it has a constitutional right to serve IBM because IBM is
located entirely within Boulder’s municipal boundaries. According to Boulder, after it begins
operating its municipal utility, the Commission may consider whether it is able to provide
adequate service to any of Boulder’s customers—not before. Boulder notes that in the
Fort Morgan case, the City had the opportunity to provide utility service before the Commission
88 Boulder SOP at 80.
89 Id. at 12.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
78
determined that the service was inadequate. Boulder further argues that it has demonstrated that
the Separation Plan would result in a reliable, effective, and safe system that would be capable of
serving IBM’s needs, and that the Separation Plan will provide equal or greater capacity and
voltage and increased redundancy and reliability for IBM. Boulder also states that it has
specifically modified the Separation Plan to meet IBM’s needs and address IBM’s concerns.
Finally, according to Boulder, IBM’s request for special treatment is not lawful under the
doctrine of regulated monopoly.
C. Positions of Other Parties
227. According to Public Service, if Boulder is permitted to serve IBM, and the
Commission determines later that Boulder’s service is not adequate for IBM, Public Service
cannot resume provision of service to IBM without building a new substation. Public Service
states that it cannot be a “backstop” for Boulder because it will not have the facilities necessary
to serve customers in Boulder. Public Service argues that “[i]t follows from the rationale and
holding of Fort Morgan that until a municipal utility is able to provide adequate service, the
status quo with the existing utility must be maintained.”90 Accordingly, Public Service opines that
IBM’s compromise proposal—for a five-year waiting period to allow Boulder to develop a track
record of reliable service before Boulder can serve IBM—is reasonable.
228. Staff generally agrees with Boulder that it is premature for the Commission to
make a decision about whether Boulder is willing and able to provide reliable service to IBM
under Fort Morgan. According to Staff, the Commission does not yet possess adequate
information to evaluate concerns related to Boulder’s operational viability. Additionally, Staff
notes that in Fort Morgan, a public utility had applied for a CPCN to serve the customers inside
90 Public Service SOP at 64. (Emphasis in original)
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
79
Fort Morgan’s municipal boundaries, but no utility has sought such permission yet. Staff
concludes that the possibility that Boulder is unable to serve the customers within its planned
service area adequately is too theoretical to review at this time.
229. Staff recommends that the Commission reject IBM’s proposal that would allow
Public Service to continue to serve IBM for five years until Boulder can prove that it can provide
reliable electric service to IBM. Although Staff acknowledges that IBM requires a reliable source
of electricity for its Boulder-based data center operations, Staff notes that there are also other
Boulder-based business customers that cannot afford electric power outages either, such as
hospitals. Staff warns that structuring the municipalization of Boulder’s electric utility so that
IBM receives special treatment poses both legal challenges and questions of fundamental
fairness to other electric customers. However, Staff suggests that the Commission reserve its
ability to consider Boulder’s operational capability before a transfer of assets to Boulder occurs.
D. Legal Analysis
230. A municipal utility cannot be prohibited from serving customers located in its
municipal boundaries, unless it is unwilling or unable to provide substantially adequate service to
the customer or area.91 In this way, municipal utilities are treated the same under the law as
public utilities; they have the same right to continue providing service in their service territories
unless it is shown that they are unwilling or unable to provide substantially adequate service.92 In
91 Fort Morgan v. Pub. Utils. Comm’n, 159 P.3d 87 (Colo. 2007).
92 See, e.g., Durango Transp., Inc. v. Pub. Utils. Comm’n, 122 P.3d 244 (Colo. 2005); RAM Broadcasting
of Colo., Inc. v. Pub. Utils. Comm’n, 702 P.2d 746 (Colo. 1985); Pub. Serv. Co. v. Pub. Utils. Comm’n, 485 P.2d
123 (Colo. 1971); Pub. Serv. Co. v. Pub. Utils. Comm’n, 483 P.2d 1337 (Colo. 1971); Fountain v. Pub. Utils.
Comm’n, 447 P.2d 527 (Colo. 1968). Southeast Colo. Power Ass’n v. Pub. Utils. Comm’n, 428 P.2d 939
(Colo. 1967); Ephraim Freightways, Inc. v. Pub. Utils. Comm’n, 380 P.2d 228 (Colo. 1963) (cases upholding the
principle that a public electric utility in Colorado has the exclusive right to serve all customers inside its certificated
service territory, unless the public utility is unwilling or unable to provide substantially adequate service to the
customer or area).
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
80
all of the cases upholding the principle that a public electric utility in Colorado has the exclusive
right to serve all customers inside its certificated service territory, unless the public utility is
unwilling or unable to provide substantially adequate service to the customer or area, the
applicant seeking to serve a customer or area inside the service territory of a certificated public
utility or of a municipal utility had the burden to prove that the service currently provided was
not substantially adequate.
231. A municipal electric utility, however, is not jurisdictional to the Commission
when it is serving only customers inside its municipal boundaries.93 Unlike a public utility that is
under the Commission’s jurisdiction, a municipal utility does not need to prove that the public
convenience and necessity requires the provision of service before it can serve its customers.94
Under Fort Morgan and the doctrine of regulated monopoly, Boulder has the right to serve IBM
because IBM is located within Boulder’s municipal boundaries.
232. Under Colorado Const. art XXV, the Commission has very limited jurisdiction to
allow a public utility to provide service inside the boundaries of a municipal utility. However,
the Fort Morgan court held that, the Commission has the authority to ensure adequate service to
all utility customers, regardless of whether the customer is being serviced by a regulated public
utility or not.95
233. In Fort Morgan, the Colorado Supreme Court stated that the Colorado
Constitution strikes a balance between local government authority over a municipal utility and
93 Colo. Const. art. V, § 35, and art. XXV; § 40-1-103(1)(b)(II), C.R.S. (exempting municipal utilities from
the definition of public utility); § 40-3-101(1), C.R.S. (exempting municipal utilities from rate regulation by the
Commission).
94 See Fort Morgan, 159 P.3d at 94 (stating that the Commission cannot require a municipal utility to obtain
a CPCN when it is operating within its municipal boundaries).
95 Fort Morgan, 159 P.3d at 95-97.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
81
the Commission’s authority to ensure adequate electric service across Colorado.96 The court
further held that the Commission has the authority to determine whether a municipal utility is
unwilling or unable to provide substantially adequate service inside its municipal boundaries,
even though the Commission does not have jurisdiction over the services, facilities, and rates of
municipal utilities.97 Fort Morgan’s tariff only allowed for interruptible service but the customers
needed firm service for their food processing businesses.98 The court upheld the Commission’s
decision that interruptible service was inadequate service, and thus allowed a different public
utility to serve those customers.99
234. In contrast to Fort Morgan, where the customer at issue was inside the municipal
boundaries, in Fountain, the municipal utility had a certificated service territory outside of its
municipal boundaries.100 The Commission’s jurisdiction over Fountain’s provision of service in
its certificated service territory was the same as the Commission’s jurisdiction over a public
utility.101 The Fountain Court upheld the Commission’s decision that Fountain had inadequately
served part of its service territory because it could not economically provide service to customers
in the far eastern part of its service territory and prices were so high that it was “tantamount to
denial of service.”102
235. These are the tests the Commission must apply if all or part of a public utility’s
CPCN—or a municipal utility’s right to serve—is to be taken away.
96 Fort Morgan, 159 P.3d at 95-97.
97 Id. at 97.
98 Id.
99 Id.
100 Fountain, 447 P.2d at 528.
101 See Pub. Utils. Comm’n v. Loveland, 289 P. 1090, 1094 (Colo. 1930 (“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.”).
102 Fountain, 447 P.2d at 530-31.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
82
E. Findings and Conclusions
236. We conclude that there is insufficient evidence in the record for the Commission
to conclude at this time that Boulder is unwilling or unable to provide substantially adequate
service to IBM. In both Fort Morgan and Fountain, the municipal utilities had the opportunity
to provide service before the Commission determined that the service was inadequate. Boulder
currently is not in a position to serve any customers as a municipal electric utility, so it is
premature for the Commission to enter a finding on whether Boulder is willing and able to
adequately serve IBM under the Fort Morgan case. We find that IBM’s specific operational and
financial concerns can be addressed as Boulder and Public Service develop the plans for
substation configurations and as Boulder continues to create the operations plan for its municipal
utility.
237. Further, because we have elected not to approve Boulder’s proposed Separation
Plan, it is not necessary to find that the Separation Plan will result in substantially adequate
service to IBM. However, IBM is not precluded from bringing additional evidence to the
Commission at a later time—based on Boulder’s future operations plan—that it believes
demonstrates that Boulder is unable to provide adequate service to IBM.
238. Boulder and Public Service (and IBM and/or Tri-State, if necessary) have shared
interests in working cooperatively towards resolving the detailed design, siting, and construction
issues associated with providing electric service to IBM under the new Boulder municipal utility.
A mutual resolution should minimize construction-related disruptions to IBM’s electric service.
239. While we agree with Staff regarding the need for fairness in the treatment of all
customers, IBM has a unique service quality arrangement negotiated with Public Service.
Furthermore, IBM has put forth a substantial effort in this Proceeding to articulate the magnitude
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
83
and severity of its concerns regarding the continued delivery of safe, reliable, and effective
service during and after the proposed municipalization of electric service. The Commission
noted, during deliberations, that while Boulder has a responsibility to provide safe, reliable, and
effective service to its residential customers, Boulder also has large customers that are economic
drivers for the state as whole. Thus, the Commission calls upon Boulder to pay particular heed
to IBM’s concerns and make all reasonable efforts to engage, not only IBM, but also the other
customers that Boulder intends to serve.
VI. DIRECTIVES TO PUBLIC SERVICE
A. Good Faith Cooperation with Boulder
240. Public Service witness David Eves states that Public Service acknowledges that
Boulder has a right under the Colorado Constitution, subject to certain property owner
protections and conditions, to acquire Public Service’s facilities in order to form a municipal
utility. Mr. Eves also states that Public Service would prefer that Boulder ultimately opt not to
pursue the path of forming a municipal utility. However, given the possibility that Boulder may
create a municipal electric utility, Mr. Eves states that Public Service’s “sole interest in this case
is that the proper separation be planned and implemented correctly to ensure the safety,
reliability and effectiveness of [Public Service’s] system and in a manner that gives the
Commission proper oversight consistent with the Colorado Public Utilities Law.”103
241. According to Mr. Eves, the end state of the municipalization process: “should be a
reconfigured system where, on the date Boulder takes possession, [Public Service] can open and
close breakers and Boulder will have a fully operational distribution system. This process will
require work on our system both inside and outside of Boulder to preserve [Public Service’s]
103 Hearing Exhibit 200, Eves Answer at 8.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
84
present level of reliability for our remaining customers, but I believe Boulder customers will
benefit as well.”104
242. At hearing, Mr. Eves explained that Public Service has submitted significant
amounts of testimony, with suggestions, information, and alternatives to Boulder’s proposal,
such that the Company could “continue to work on those things to help Boulder find solutions
and negotiate with us to create the best plan.”105 He also committed Public Service to working in
good faith with Boulder to address real property descriptions that Public Service argues are
necessary to include in the identification of the assets for transfer.106
243. Mr. Eves also testified that Boulder and Public Service have reached a point
where, regardless of whether the Commission denies the Application, the issues raised in this
Proceeding could be resolved through “good fair work” and negotiations.107 Mr. Eves stated that
he is prepared to commit Public Service to work with Boulder now that it is engaged in
advancing a plan that is “closer to being doable and right” and that if municipalization is going to
happen, Public Service “want[s] to make sure that it is properly done, our customers are not
affected and that we get compensated for it.”108
244. We intend to hold Public Service to the commitments made by Mr. Eves. We
expect Public Service to work in good faith with Boulder to assist the City in being able to
satisfy the three conditions for Boulder to secure final approval of the designation of assets for
transfer outside of the substations. We further expect Public Service to work with Boulder
104 Id. at 9.
105 Hearing Transcript, August 2, 2017 at 53.
106 Id. at 117.
107 Id. at. 33-34.
108 Id. at. 125.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
85
pursuant to the transmission load interconnection process under the Company’s OATT to resolve
the issues surrounding the six substations. Public Service’s cooperation is critical to avoiding
unnecessary delay in Boulder’s attempts to comply with the conditions set forth in this Decision.
Delay will not advance Public Service’s ability to provide safe and reliable service to its
customers post-separation.
B. Obligation to Serve Until Cut-Over
245. Boulder requests that the Commission order Public Service to continue to own,
possess, operate, maintain, and improve the electric distribution system in Boulder until the
Cut-Over Date.109
246. At hearing, Mr. Eves confirmed that Public Service will continue to operate its
system to serve customers in Boulder during the construction and separation time period and
agreed that Public Service will endeavor to provide the same level of safe, effective, and reliable
service that it does today during the construction and separation.110
247. We find that it is undisputed among the parties that Public Service is obligated to
serve customers in Boulder until the Cut-Over Date. Boulder’s request is hereby granted.
C. Cost Accounting
248. The OCC contends that non-Boulder Public Service ratepayers should suffer no
harm as to costs, or, in other words, no rate increases directly or indirectly from Boulder’s
municipalization efforts. Along these lines, the OCC takes the position that litigation costs
incurred by Public Service with regard to Boulder’s municipalization efforts should be a cost
paid by Boulder and not passed on to ratepayers.
109 Application, 13.
110 Hearing Transcript, August 2, 2017 at 61-62.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
86
249. CU-Boulder requests that the Commission order that Boulder only pay prudently-
and actually-incurred costs of construction and separation, which order should be implemented
through a transparent, fair, and periodic Commission-administered process which is largely
consistent with Boulder’s positions in this case.
250. Climax argues that the Commission should prevent Public Service’s customers
outside Boulder City Limits from bearing any costs resulting from the City’s efforts to create a
municipal electric utility, whether those costs have already been incurred or will be incurred
before or after the City’s Go/No-Go decision. Climax states that none of the costs incurred by
the City or the Company as a result of the City’s efforts to municipalize, whether the City is
successful or not, have been or will be caused by the “remaining customers.” Climax states that
rates recovering costs that are not caused by, for the benefit of, or necessary to provide adequate,
reliable, and effective service to the remaining customers are not just and reasonable.
251. Evraz similarly requests that the Commission issue an order precluding Public
Service from passing any costs of municipalization through to ratepayers remaining on the
Company system. Evraz is concerned that the protracted dispute between Public Service and
Boulder will lead to increased rates for Public Service customers. Evraz thus requests that the
Commission, as part of its order in this Proceeding, require that Public Service pass no costs
related to municipalization on to its customers.
252. Staff states that the main goal for the Commission should be to ensure that Public
Service’s ratepayers do not finance any aspect of Boulder’s municipalization, whether during the
detailed design phase or during the construction work after Boulder’s Go/No Go decision.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
87
253. At hearing, Public Service witness Eves suggested that an order from the
Commission was necessary for the Company to begin keeping track of its direct and indirect
costs associated with Boulder’s municipalization efforts.111
254. We direct Public Service to account for the costs it incurs associated with
Boulder’s municipalization efforts for purpose of review in future rate cases by the Commission,
Staff, and all other parties to those proceedings. The record in this Proceeding is devoid of any
information regarding the amount of costs Public Service has incurred to date, either in total or
by cost category. Decisions on what costs may or may not be included in Public Service’s
revenue requirements for establishing rates shall be made in the Company’s future rate
proceedings. Any decision on the allocation of costs and benefits between Public Service’s
shareholders and customers must be deferred until after Boulder and Public Service file for final
approval of the transfer of assets pursuant to § 40-5-105, C.R.S.
VII. PROCEEDINGS BEFORE THE COMMISSION
255. Boulder’s proposed phasing of this Proceeding is denied. This Proceeding will
continue in order to address Boulder’s and Public Service’s compliance with the conditions and
directives rendered in this Decision.
256. In the event that construction is required at a substation to be owned by Public
Service, Public Service shall file for a Commission determination of whether the proposal is in
the ordinary course or instead requires a CPCN application pursuant to Rule 4 CCR 723-3-3206.
111 Hearing Transcript, August 2, 2017 at 153.
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
88
257. As explained above, it also may be necessary for Public Service and Boulder to
file jointly for approval of a voluntary transfer of assets inside substations under § 40-5-105,
C.R.S.
258. Boulder and Public Service shall file, pursuant to § 40-5-105, C.R.S., an
application in a separate proceeding for the final Commission approval of the transfer of assets
prior to the Cut-Over date. This Decision shall not be used by either party as a preliminary
approval of the transfer of assets. Nothing in this Decision shall be used by either party in any
condemnation proceeding as a finding or opinion of the Commission as to whether or not there
are damages to any remainder interest of Public Service in the assets.
VIII. ORDER
A. It is Ordered That:
1. The Third Supplemental Verified Application (Application) filed by the City of
Boulder (Boulder) on May 12, 2017 is granted, in part and with conditions, and denied, in part,
consistent with the discussion above.
2. The designation of assets for transfer outside of the six substations at issue in this
Proceeding is approved, subject to Boulder satisfying three conditions. To secure final approval
of the designation of these assets for transfer, Boulder shall: (1) file an agreement(s) reached
between Boulder and Public Service Company of Colorado (Public Service) that provides Public
Service permanent non-exclusive easements and other necessary 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 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
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
89
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. The filing of the
agreements and revised list of assets for transfer shall be made no later than 90 days from the
effective date of this Decision. Boulder may file a request for additional time for good cause
shown.
3. Any party in this Proceeding may file a request for hearing on all or parts of the
filings submitted by Boulder in accordance with this Decision no later than 30 days after
Boulder’s filing being submitted. In the event that a party requests a hearing on Boulder’s filing,
the matter will be referred to an Administrative Law Judge for a recommended decision on
whether Boulder has satisfactorily met the conditions and whether the Commission approves the
assets for transfer outside the substations.
4. Consistent with the discussion above, Public Service is directed to assist Boulder
in good faith in Boulder’s efforts to satisfy the conditions set forth in this Decision for securing
the final approval of the designation of assets for transfer outside of the substations.
5. Public Service shall work with Boulder in good faith pursuant to the transmission
load interconnection process under its Open Access Transmission Tariff, consistent with the
discussion above.
6. Public Service shall account for the costs it incurs associated with Boulder’s
municipalization efforts for purpose of review in future rate cases, consistent with the discussion
above.
7. Boulder and Public Service shall file, pursuant to § 40-5-105, C.R.S., an
application in a separate proceeding for the final Commission approval of the transfer of assets
Before the Public Utilities Commission of the State of Colorado
Decision No. C17-0750 PROCEEDING NO. 15A-0589E
90
prior to Boulder beginning operations as a municipal electric utility, consistent with the
discussion above.
8. All requests made by Boulder or any intervening party in this Proceeding that is
not addressed by this Decision are denied.
9. The 20-day time period provided pursuant to § 40-6-114, 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.
10. This Decision is effective upon its Mailed Date.
B. ADOPTED IN COMMISSIONERS’ DELIBERATIONS MEETING
August 30, 2017.
(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
________________________________
WENDY M. MOSER
________________________________
Commissioners
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
______________________________________________________________________
PUBLIC SERVICE COMPANY OF COLORADO’S RESPONSE
TO THE CITY OF BOULDER’S NOTICE OF PROPOSED PROCEDURES AND TO
THE COMBINED RESPONSE IN OPPOSITION FILED JUNE 12
______________________________________________________________________
Public Service Company of Colorado (“Public Service” or “the Company”),
pursuant to Decision C19-0151-I, hereby responds to the two filings the City of Boulder
made on June 12, 2019: (1) Notice Regarding Proposed Procedures to Address and
Resolve Outstanding Issues (the “Notice”); and (2) The City of Boulder’s Combined
Response in Opposition to: (i) Petition for Declaratory Orders; and (ii) 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 (“Combined Response in Opposition”).
I.INTRODUCTION
At this point in time, with numerous procedural, factual and legal arguments
pending before this Commission, we need to pause for a moment and ask ourselves
what is the task pending before us and why is it important? Judge LaBuda of Boulder
District Court, in Case Number 14CV30047, found:
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
ATTACHMENT C
- 2 -
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.1
[Emphasis added]
Therefore, Public Service respectfully submits that this ongoing and complex
proceeding is properly back before the Commission because the stakes are high: the
Commission is charged with making critical determinations to protect the electric
distribution “system’s effectiveness, reliability and safety.” And while the basis of
Boulder’s filings are arguments largely premised on a strong desire to proceed to a
condemnation court action at this time,2 the District Court was clear: the Commission’s
determinations “must be made prior to” the City’s condemnation of property for utility
municipalization.
The City states in its Combined Response in Opposition “the City has satisfied all
conditions precedent to filing a petition in condemnation.”3 Public Service disagrees.
The Commission has not been provided an opportunity to review or approve the final
product of the “conditions work” which it required with respect to assets outside of
substations.4 Likewise, the Commission has not been afforded an opportunity to
conduct a review of the potential asset transfers inside substations, or the agreements
related thereto. The current and proposed future state of issues inside substations will
be especially important for the Commission’s review, given that at the time the
Commission issued its decision on Boulder’s separate application, Decision C17-0750
1 Judge LaBuda’s Order at pg. 12. 2 Many, including some Boulder City Council members, have questioned whether a vote in 2020 was truly
achievable, given the amount of work which needed to be done before such a vote. 3 City’s Combined Response, Section III.A. starting at pg. 20, citing Decision ¶4. 4 See Decision ¶¶5 and 149-163 and Ordering paragraphs VIII.A.2 and 3.
- 3 -
(the “Decision”), the Commission found that there was “compelling evidence” it was
“premature” to designate any substation assets for transfer.5
Public Service has diligently worked, and remains working, on these materials.
We have done so in good faith, drawing on dozens of Company employees and outside
consultants, while at the same time conducting the business of the largest electric utility
in the state. This effort has yielded a great deal of progress since the Decision was
issued.6 In particular, with respect to assets outside substations, several executed
agreements are now in place between the Company and the City and pending before
the Commission for approval, the Asset List (Exhibits 5A and 5B) is nearing final form7,
scopes of work have been completed, and detailed design work is in process. As to
assets inside substations, several executed agreements have been negotiated,
numerous aspects of substation technical analyses have been undertaken (some
completed8 and some in process9) and work is underway on the issues surrounding
potential future co-location in existing substations which were not designed for this
purpose.10
However, while Boulder’s exploration of a potential Municipalization before the
Commission approaches an end, the necessary and appropriate documentation still
5 Decision ¶¶6, 128 (as to Substations A,B, C, and E), 131 (as to Substation D), 132 (as to Substation F). 6 Decision ¶4 states, “[n]ow being fully advised in this matter, the Commission grants, in part and with
conditions, and denies, in part, the Application.” The part granted with conditions was as to assets
outside substations. Decision ¶5. The part denied, as premature, was as to assets inside substations.
Decision ¶6. 7 As Public Service has committed, this week it will be sending Boulder a revised draft Exhibit 5B. 8 This includes two System Impact Study Reports. 9 This includes a Facilities Study and detailed technical work needed for the Cost Responsibility,
Operations and Maintenance Agreements or “COM Agreements”. 10 Public Service anticipates sending Boulder draft COM agreements this week or next, with select
placeholders. The Company has had personnel from substation and transmission planning, siting and
land rights, operations and other groups working on various aspects of potential co-location in order to
prepare drafts of these agreements in the mid-to-late June timeframe. However, it should be recognized
that Public Service is not solely in control of the time required for the ultimate negotiation of substation co-
location agreements with the City.
- 4 -
needs to be finalized and submitted to the Commission and parties must be afforded
due process before the Commission as it makes the critical determination about
whether the resulting system is effective, reliable and safe. A decision of that
magnitude should not be rushed, let alone sidestepped altogether. And, as Judge
LaBuda recognized, timing is key –the Commission’s determinations must be made
“prior to” Boulder beginning a condemnation action.
II. BOULDER’S PROPOSED PROCEDURES
While Public Service appreciates much of what the City is trying to accomplish
with its Notice, the Company respectfully disagrees that the Notice complies with the
Commission Decision Co. C19-0151-I, at paragraph 25, which states, “…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…”
Public Service and Boulder have worked together and consulted with other
parties in an attempt to propose a mutually acceptable path forward for Commission
consideration. That said, fundamental disagreements remain on the process around
how to address and resolve the outstanding issues and pleadings related to assets
inside substations.
Boulder’s Notice does not offer proposed procedures to address or resolve these
issues. The reason for the absence is clear –the City does not believe any process or
approvals are needed from the Commission as to assets inside substations.11 Public
11 See also the Motion approved by the Boulder City Council on June 4 which removed all references to
the real property portion of the List of Assets Outside Substations (i.e., Exhibit 5B) on the grounds that
finalizing this exhibit is not necessary for condemnation and also confirmed the City’s intent to proceed
with condemnation solely on the basis of preliminary exhibits to the substation System Impact Study
- 5 -
Service disagrees with this viewpoint and we are not the only ones. Our position, set
forth in our Petition for Declaratory Orders, is supported in whole or in part by Staff of
the Commission, IBM and Tri-State.12 13 In short, we (along with other parties) believe
that the Commission previously found Boulder may not commence condemnation
proceedings to acquire any Public Service assets inside substations (real or personal)
unless and until (1) Boulder and Public Service reach mutual agreement on the transfer
of assets inside existing Public Service substations, and (2) an application requesting
the designation of assets inside substations is filed and granted.14
At this time, the Company submits that the most administratively efficient course
is for the Commission to take up Public Service’s Petition while we continue the current
Reports. The System Impact Study Reports do not address substation co-location issues or determine
substation ownership and easements and the terms and conditions of easements. A copy of the Motion
and Staff Report is attached as Exhibit 1. 12 IBM stated in response to Public Service’s Petition:
Clarification from the Commission confirming that Boulder does not have Commission approval at
this time to move forward with seeking to condemn assets and property inside substations,
particularly Substation F. Clarification from the Commission concerning the procedural steps
Boulder must take prior to initiating the acquisition process with respect to assets and property
within the substations, particularly substation F. For example, the Commission should at a
minimum impose the same conditions on Boulder with respect to assets and property inside the
substations as it did for assets and property outside the substations.
Tri-State stated in response to Public Service’s Petition:
Tri-State concurs with IBM’s request that the Commission: clarify that Boulder does not yet have
Commission approval to condemn assets and property located inside substations, particularly
Substation F; clarify the required procedure Boulder must comply with before acquiring assets
and property within substations, particularly Substation F; and hold a status conference to
establish the procedures for addressing these issues.
Staff of the Commission stated in response to Public Service’s Petition:
It is now abundantly clear that the existing utility and the aspiring municipal utility ascribe
completely opposite interpretations to the same Commission decision on all matters concerning
substations. ... Fortunately, as the table below demonstrates, termination of the controversy
requires the Commission to accept Public Service’s petition and issue a declaratory order
resolving only two, well-defined issues. 13 Boulder alleges at pg. 11 of its Combined Response that the Petition is an untimely RRR. This is not
accurate. Rule 1304(i)(II) states: “The Commission may issue a declaratory order to terminate a
controversy or to remove an uncertainty…with regard to any ... order” and that is what is being sought
through the Petition and by those that support it. 14 See Decision ¶¶ 128, 130, and 257. Note that a transfer application for facilities inside substations is
not the same as the application for final transfer approval prior to Cut Over referenced in ¶¶ 258 and
VIII.A.7.
- 6 -
work on finalizing Exhibit 5B and negotiating substation agreements. A Commission
ruling on the Petition would be much appreciated as; it will affect what is to be filed in
the substantive package of materials, anticipated in a few weeks,15 and would remove
the potential need for additional supplemental filings and/or disagreements after that
substantive filing is submitted.
To be clear, Public Service generally agrees with the work plan in Boulder’s
Notice and has been executing on that work plan since the Commission’s Stay Decision
was entered.16 Public Service’s principle concerns lie with the City’s attempt to bypass
the Commission (in that Boulder does not seek to attain the necessary determinations
prior to commencing condemnation) as well as its attempt to limit the involvement of the
Commission and the parties in their review of the appropriate materials. Conversely,
our changes to the proposed procedural process below honor the Order of Judge
LaBuda, retain the proper role of the Commission, and afford parties due process. In
addition to the Commission ruling on the Petition for Declaratory Orders, Public Service
respectfully submits the following processes for the Commission’s consideration:
a. As to assets outside substations, once Exhibit 5A (with the textual
explanation regarding the tips of distribution feeders inside substations 17) and the
revised real property exhibit (Exhibit 5B) are filed,18 then the stay could be lifted
15 For example, if the Commission agrees with Public Service (ie. that the Commission has the
responsibility to ensure that the ultimate “agreement” reached, which has not been secured at this point,
will result in safety, reliability and effectiveness of service being preserved) then a narrative explanation
and factual presentation of evidence, through testimony, needs to be provided to the Commission. 16 Public Service would have written certain portions of the work plan differently. 17 This is needed on Exhibit 5A because the Commission did not approve the transfer of any assets inside
substations, including the tips of distribution feeders. 18 The Company would note there may be a limited need for some modifications to the original pleadings
and exhibits at the time the revised Exhibits 5A and 5B are filed. For example, the Easement Sharing
Agreement (Exhibit 6) refers to the original Exhibit 5B and should be amended to refer to the Revised
Exhibit 5B.
- 7 -
as to Boulder’s Motion for Final Designation of Assets Outside Substations and
the merits decided by the Commission as provided in paragraph 163 of the
Decision. However, the parties should first be given the same 30-day opportunity
to comment on these revised exhibits as Decision C17-0750 gave them in the
first instance as provided in paragraph 163 of the Decision.
b. As to assets inside substations, Decision C17-0750 provided that if
the parties reached agreement as to the transfer of assets inside substations, an
application for transfer of assets inside substations under § 40-5-105, C.R.S.,
would need to be filed.19 While a new application filing would normally initiate a
new proceeding, since this proceeding (i) is still ongoing, (ii) interested parties
are already in this proceeding, and (iii) the levels of confidentiality and
confidentiality orders necessary to receive evidence concerning substations are
already in place in this proceeding, Public Service does not object to the
substation-related filing being made in this proceeding, if acceptable to the
Commission. However, as stated above, Public Service does not agree that the
filing of the necessary materials should equate to a mere informational or Notice
filing.20 The filing should be treated like any other application for transfer of
public utility assets including notice (possibly shortened) and affording the parties
19 Decision ¶¶ 128, 130, and 257. See Section II of Public Service’s Petition for Declaratory Orders for a
more detailed analysis of why an application for transfer of assets inside substations, and Commission
designation of assets inside substations for potential approval, is required prior to condemnation. 20 Boulder’s June 12th Notice with its proposed procedures does not request that the Commission do
anything with the substation-related filings. In the Notice, Boulder states that it will share “drafts” of the
co-location agreements (pg. 7, subparagraph b; pg. 8, subparagraph ii) and leaves out the substation co-
location agreements from the list of documents to be filed (paragraph 10). Public Service presented
extensive evidence regarding the risks associated with Boulder acquiring distribution facilities inside
existing substations and co-locating with the Company’s transmission facilities inside existing substations
that were not designed for co-location (for example, physical separation of facilities is not possible). It
appears from the Notice and Combined Response that the City does not consider co-location agreements
to be necessary before it proceeds to condemnation.
- 8 -
an opportunity to request a hearing, conduct discovery, and present evidence.
Public Service anticipates that it would be possible to do this in a shorter time
frame than for typical applications but Public Service does not agree with
Boulder’s proposal that parties have only 14 days to comment on the substation-
related documents.21
c. In the interest of administrative efficiency, it is Public Service’s
recommendation that the Commission require the revised Asset List be filed at
the same time as the necessary and appropriate materials related to assets
inside substations, so that the Commission can conduct a singular future
proceeding and make one combined determination (on issues inside and outside
substations) with respect to safety, reliability and effectiveness.
III. COMMISSION DETERMINATIONS REQUIRED PRIOR TO CONDEMNATION
Boulder provides various explanations as to why it believes that it can proceed to
condemnation without approvals by this Commission notwithstanding Commission
Decisions C13-1350 and C13-1550 in Proceeding 13D-0498E, Judge LaBuda’s Order
21 Boulder asserts, in Section B starting on pg. 12 of its Combined Response, that the Commission
decided to not make the safety, reliability and effectiveness determinations it is required to with respect to
assets inside substations. Instead Boulder believes the Commission’s Decision defers all such decision-
making to the FERC-regulated OATT process. That this is not an accurate interpretation of the
Commission’s Decision and is addressed in our Petition. The Commission’s repeated use of the word
“premature” in connection with its denying the designation of substation assets (based on its finding of
compelling evidence) does not support Boulder’s interpretation that the Commission decided to
permanently give up its designation for transfer approval jurisdiction.
Boulder further asserts in ¶78 of its Combined Response that the various substation agreements “will be
shared with the parties and filed with the Commission as they are completed, but their approval is within
and subject to FERC’s jurisdiction.” This is not a wholly accurate statement and is inapposite of the
point. While joint use and substation operation agreements may be filed with the FERC, the Commission
must make determinations with respect the end-state of an electric distribution system in a post-
separation Boulder future. For example, such agreements cannot result in Public Service Company or
Colorado, or its customers, not bearing risk. The Commission must be comfortable with that risk to
safety, reliability and effectiveness of the system.
- 9 -
affirming these two Commission Decisions 22; and Decision C17-0750 issued on
September 14, 2017, in this proceeding.23 These explanations fall into three general
categories: (i) Boulder’s right to file condemnation is independent of anything this
Commission might do,24 (ii) the City has already satisfied Judge LaBuda’s Order and,
therefore, may proceed to condemnation,25 or (iii) condemnation and this PUC
proceeding can proceed on parallel paths and preliminary matters in condemnation can
be litigated pending remaining action by this Commission.26 We address each in turn.
i) Condemnation is Independent of Commission Action
The argument that condemnation can proceed because it is independent of
anything this Commission might do has been argued repeatedly by Boulder27 and
repeatedly rejected by the Commission and Judge LaBuda. In fact, Boulder has been
advancing this argument, to no avail since Public Service filed its Petition for
Declaratory Orders in Proceeding No. 13D-0498E on May 13, 2013. .
22 Boulder District Court, Case Number 14CV30047, Division 2, Courtroom Q, Order Re: Judicial Review
of the Colorado Public Utilities Commission Decisions 23 In the Combined Response in Opposition, Boulder states at p. 6, para. 10, it intends to file a petition in
condemnation shortly after June 26, 2019, if Boulder believes negotiations are futile. 24 Combined Response, paragraph 9 on pg. 6. This paragraph confirms that Boulder does not recognize
any jurisdiction at this Commission over the transfer of assets inside substations and considers the
Commission’s only role to give final transfer approval prior to Cut-Over, a point in time too late for
consideration of whether transfer of distribution facilities inside existing substations and co-location with
Public Service transmission infrastructure will preserve safety, reliability and effectiveness. See also
Section II.B. of the Combined Response asserting that this Commission gave up its jurisdiction over the
transfer of assets inside substations and the Motion approved by the City Council on June 4, 2019. 25 Combined Response Section III.A. starting on pg. 20. 26 Combined Response, paragraph 9 on pg. 6 ((While the City has exercised restraint and not pursued
the condemnation process, the time has now come to begin that process. There is no reason why the two
processes cannot run in parallel….) 27 The gist of the argument relies on the case of Miller v Public Service Company, 272 P.2d 283 (Colo.
1954). As issue in the Miller case was the right of Public Service to proceed under the eminent domain
statute to condemn property for the purpose of constructing a new electric generating plant. The
landowner, Miller, filed five motions in opposition to the petition in condemnation, none of which were
granted. Miller then appealed. On appeal to the Colorado Supreme Court, Miller argued that the rule and
order in the condemnation case should be reversed because there was no allegation in the petition that
Public Service had a certificate of necessity and permission from the PUC to construct the generating
plant, and there was no allegation in the petition that the proposed plant and location had been approved
by the Planning Commission of Adams County.
- 10 -
Judge LaBuda squarely addressed this argument when reaching her
determination that the Commission must make determinations “prior to the City’s
condemnation.” In so doing, Judge LaBuda relied, in part, on the sound rationale set
forth in Colorado and Southern Railway Company v. District Court, 493 P.2d 657 (Colo.
1972), 28 which provides:
The Court stated, “the Public 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.29
The Supreme Court’s holding in Colorado and Southern is particularly on-point in
this situation because it refused to apply the Miller holding - that a condemnation action
may precede the Commission’s issuance of a CPCN for construction of facilities -
because, “the location of the crossing point was essential to determining the property to
be condemned and was subject to the Commission’s approval authority.”30 This is the
same situation at issue in this proceeding - the property Boulder seeks to condemn is
property over which the Commission has jurisdiction and approval authority. Judge
LaBuda recognized that central fact and properly distinguished this situation from one
that involved the condemnation of land over which the PUC did not already have
jurisdiction. In other words, not only has Boulder’s argument been repeatedly made and
28 In that 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. This Commission
has exclusive jurisdiction over railroad crossings. The District Court dismissed the condemnation action
on the grounds that it did not have jurisdiction to proceed because this Commission first had to determine
where the crossing would be located. The dismissal was upheld on appeal to the Colorado Supreme
Court. 29 Judge LaBuda’s Order at pgs. 9-10. 30 Colorado and Southern, 493 P.2d at 659.
- 11 -
repeatedly rejected – but Judge LaBuda and the Commission’s reasons for doing so
were well-grounded in well-established law and the facts of this case.
Condemnation is not an independent action divorced from this proceeding. As
Judge LaBuda held, Boulder may not proceed to condemnation until this Commission
has determined how “facilities should be assigned, divided, or jointly used to protect the
system’s effectiveness, reliability, and safety.” Notably, Boulder has (until recently)
consistently tied this proceeding (and the assets being evaluated as part of it) to its
discussions of condemnation when speaking with its City Council 31 and in its formal
Notice of Intent letters 32 (letters which precede the filing of a condemnation action).
ii) Boulder has satisfied Judge LaBuda’s Order
As to the second rationale for the City proceeding with condemnation prior to any
further action from this Commission, Boulder asserts it “has satisfied all conditions
precedent to filing a petition in condemnation.”33 While Boulder makes this
proclamation without condition, its own argument betrays the actual state of the record.
In particular, throughout its own argument, Boulder acknowledges the Commission has
not yet made determinations/ruled-on the “conditions” information submitted, or yet to
be submitted. In other words, Boulder fails to even support its own satisfaction
argument – a few examples will suffice to prove the point.34
31 See Ordinance 8302 and the City Memo in support thereof filed as Exhibit A to Public Service’s Petition
for Declaratory Orders. 32 Notice of Intent dated January 31, 2019 indicated that the real property interests to be acquired were
identified on Exhibit 5B. This position was reaffirmed in correspondence dated March 7, 2019, and April
10, 2019 from Boulder’s negotiator Lyman Ho.. 33 Combined Response in Opposition at pgs. 20-25. 34 “Thus, the Commission should deem this condition met.” (p. 21); “Thus, the Commission should also
deem this condition met.” (p. 21); “Thus, there is no material dispute regarding Exhibit 5A. The
Commission should also deem the condition relating to physical assets to be satisfied.” (p. 22); “The
objective served by this condition related to the list of assets has been met, and the Commission should
accordingly deem this final condition to be satisfied.” (p. 25) [Emphasis Added]
- 12 -
Boulder asserts, for instance, that it has fully complied with Judge LaBuda’s
Order by citing to ¶4 of the Decision. This is incorrect. The Commission’s partial
approval with respect to the City’s request for assets outside substations was done so
“subject to Boulder demonstrating compliance with three conditions.”35 It is impossible
to conclude from paragraph numbered 4 that Boulder may proceed to condemnation as
to assets outside substations without a Commission finding that it has satisfied those
conditions.36 The second condition in particular, to file a revised list of assets outside
substations that is accurate and complete and that includes the real property interests
associated with the assets Boulder seeks to acquire,37 cannot be argued to have been
satisfied at this point in time. Exhibit 5B - the real property interest portion of the list of
assets - is undergoing significant revision to remove interests and to add interests.
Boulder’s Motion for Final Designation of Assets Outside Substations, required by
paragraph 162 and 163 of the Decision is currently stayed. The Commission must
approve the conditions work in order to satisfy, in part, Judge LaBuda’s Order.
The part of the City’s application that was denied in Decision C17-0750 is the
City’s request for designation of assets inside substations.38 As to assets inside
substations, the Commission specifically found that Public Service had provided
“compelling evidence” that the Company required retaining the existing distribution
assets within Substations A, B, C, and E39 and that it was premature to designate
assets for transfer as to Substations D40 and F.41 In the Decision, the Commission
35 Decision ¶5. 36 Decision ¶163. 37 The second condition can be found in paragraphs 152 - 156 of Decision C17-0750. 38 Decision ¶6. 39 Decision ¶128. 40 Decision ¶131.
- 13 -
recognized that Boulder and Public Service might reach agreement on a transfer of
assets within any or all of the six substations.42 The Commission anticipated that the
context for the parties attempting to resolve substation issues would be the transmission
to load interconnection request process.43 However, contrary to Boulder’s arguments, if
such agreement was achieved, the Decision then requires a new transfer application to
be filed as to existing transformers and other distribution equipment with substations.44
Absent “agreement” with Public Service, the Decision requires Boulder to construct its
own substations in lieu of acquiring distribution facilities inside the Company’s existing
substations.45
Agreement concerning the joint use or transfer of assets within any of the six
substations as of today does not exist. Technical work is underway, contracts are
currently under negotiation. The City’s declaration, in its condemnation Ordinance 8302
adopted on December 4, 2018, that receipt of System Impact Study Reports from Public
Service meant that it had completed the “OATT Process” is incorrect. System Impact
Studies are the first step, not the last step, of what needs to be completed in order for
there to be an agreement as to any substation. Public Service and Boulder have
completed the second step - the negotiation of a Facilities Study and Detailed
Engineering Design Agreement which was filed with FERC on May 7, 2019- and the
Company plans to have that study completed in the first part of July.
41 Decision ¶132. 42 Decision at ¶128. 43 Decision ¶129. “It is reasonable for Public Service and Boulder to rely upon the transmission load
interconnection request process, and also the NITS process, to attempt to resolve the required
configurations and ownership arrangements inside the substations.” [Emphasis added.] 44 Decision ¶130. 45 Decision ¶148.
- 14 -
However, the most vital contracts for the Commission to review are yet to be
negotiated. These are the co-location agreements for the substations (referred to as
the Cost Responsibility, Operations and Maintenance Agreements or “COM
Agreements). These are the contracts needed to address the significant safety and
reliability issues inside the existing substations that were not built for the co-location that
Boulder is requesting.46 Identification of the real property interests associated with the
assets inside substations that Boulder seeks to acquire cannot be determined until the
co-location agreements are negotiated.47 Lastly, the City and Public Service must
agree on the terms of an Amendment to the Agreement for Payment of Costs and a list
of assets (real and personal) inside substations. Boulder acknowledges in its Notice
these contracts must be negotiated and filed to resolve the existing issues pending
before the Commission.48
If agreement is reached, and these contracts are successfully negotiated, then
merely giving them to the parties and submitting them to the Commission is not enough
to satisfy Judge LaBuda’s Order. It is not up to the City of Boulder and Public Service to
decide whether their negotiated agreements will protect the system’s effectiveness,
reliability, and safety. That determination is exclusively within the jurisdiction of the
46 We anticipate that the most difficult co-location agreements to be negotiated will be for Substation B
and Substation F which is shared with Tri-State and serves IBM’s load. Substation co-location in general
and the critical nature of Substation B are discussed in detail on pages 125 to 135 of Public Service’s
Statement of Position. See pages 66 - 67 of Public Service’s Statement of Position as to risks to IBM. 47 Ownership of substations and easement locations and terms and conditions have yet to be negotiated.
The “demarcation lines” on the general arrangement diagram exhibits to the SIS Reports merely draw a
“circle” around the distribution assets inside substations to distinguish them from transmission facilities.
They are not easements lines. 48 See pages 9-10 of Boulder’s Notice.
- 15 -
Commission. The Commission must exercise its transfer jurisdiction with respect to
substation assets as well, and allowed the parties to participate.49
iii) Parallel Paths
The third rationale Boulder presents for why it can proceed to condemnation prior
to any further Commission decisions in this proceeding is the claim that the
condemnation action and this proceeding can proceed on parallel paths.50 Boulder
asserts “preliminary” matters can be taken care of in the condemnation case while
waiting for the Commission’s decisions. This is clearly contrary to Judge LaBuda’s
order and not correct as a matter of law. The most basic condemnation requirement -
that the petitioner identify with specificity, in the petition for condemnation, the property
it seeks to condemn - cannot be met by Boulder until after the work outlined in Boulder’s
Proposed Process is done, the filings made, and the Commission designates for
potential transfer the property outside and inside substations that Boulder may seek to
acquire. It is inappropriate to presume Commission approval. Boulder is presuming
Commission approval even before the necessary and appropriate work is completed
and filings are made with the Commission. The reality is that the Commission can and
may disagree with what is filed. That is the meaning of having jurisdiction.
Public Service also does not believe Boulder can proceed to condemnation until
the work is done, filings made, and the Commission has rendered its determinations.
As the Supreme Court held in Colorado and Southern Railway Company v. District
49 Decision ¶130 and ¶257. Boulder argues that the application for transfer of assets inside substations is
the same as the application the Decision requires be filed prior to cut over. The prior to cut over
application is a different application to request final transfer approval. Compare ¶257 (transfer application
if agreement is reached as to substations assets) and ¶10 and ¶258 (final transfer approval prior to
cutover). See also Public Service’s Petition for Declaratory Orders With Regard to the Portion of
Commission Decision C17-0750 Concerning Public Service Assets (Real and Personal) Inside
Substations for a more detailed analysis of Decision C17-0750. 50 Combined Response in Opposition at p. 6, paragraph 9.
- 16 -
Court, the district court in a condemnation case does not have jurisdiction until after this
Commission has rendered its decisions.51
IV. EXHIBIT 5B
i) Importance of Exhibit 5B
The purpose of Exhibit 5B is to identify the real property rights that Boulder may
seek to acquire and to identify Public Service’s real property rights as it pertains to other
facilities. These rights, and the manner in which they may be shared, raise safety and
reliability issues which the Commission properly recognized in its Decision.52
Consistent with Judge LaBuda’s Order and as one of three conditions to the
Commission’s designation of assets outside substations for potential transfer to
Boulder, the Commission found that the list of identified assets for transfer which
Boulder had filed in Proceeding 15A-0589E was incomplete and contained errors that
must be corrected. The Commission required that a revised list be filed that is accurate
and complete. As to real property interests associated with the electric distribution
system assets serving city customers, the Commission rejected the City’s request for an
order simply stating that it be authorized to acquire the real property interests
associated with the list of physical assets.53 Instead, the Commission held:
155. The updated list also shall include real property interests associated with the
assets Boulder seeks to acquire (e.g., the property rights outside of the Boulder
rights of way). We find that it is necessary for the Commission and Public
Service to understand which property rights Public Service risks losing through
municipalization to be assured that Public Service will retain its ability to provide
safe, reliable, and effective service to its customers after separation.
51 493 P.2d at 659. 52 Decision ¶155. 53 See paragraph 140 of Decision C17-0750 for the Commission’s description of Boulder’s request as to
real property. See Direct Testimony of Mr. Catanach at pg. 50 for the only statement regarding Boulder’s
request as to real property interests.
- 17 -
The Commission further required Public Service to identify, “where Public
Service’s gas facilities or transmission facilities share an easement with the electric
distribution facilities, including the portion of any such easement Public Service must
retain to provide gas or transmission services.”54
Requiring an accurate and complete list of real property interests with information
regarding whether Public Service also has other facilities associated with the same real
property interest is necessary:
(1) To protect the system’s effectiveness, reliability and safety and to satisfy
the condition precedent, affirmed by Judge LaBuda, for Boulder to be able
to proceed to acquire (by voluntary agreement or condemnation) assets
outside substations,55
(2) To prevent the cloud on Public Service and third party real property rights
that would be associated with Boulder’s alternative of a vague request to
acquire real property interests associated with Public Service’s physical
assets,56
(3) To identify multi-use easements for safety, reliability and effectiveness
purposes.57
54 Decision C17-0750, ¶156. 55 An accurate and complete real property exhibit would comply with Judge LaBuda’s Order and allow
Boulder to meet the condemnation requirements to adequately identify the property it is seeking to
condemn. Boulder’s position that the real property list of assets (Exhibit 5B) is irrelevant to condemnation
and it is sufficient for condemnation purposes to simply request all associated or necessary real property
interests ignores the previously mentioned Southern Railway Company v. District Court, 493 P.2d 657
(Colo. 1972) holding; Judge LaBuda’s Order; and condemnation law concerning the requirement to
identify property with sufficient specificity. 56 Mr. Skogg, Boulder’s condemnation witness at the hearing in Proceeding 15A-0589E, acknowledged
during cross examination that Boulder would need to identify real property interests in preparation for
condemnation. He stated that he certainly expected that Boulder would look up the recorded easements
as it prepares for the next phase, the condemnation phase. Tr. Vol. 4, 7/31/17, pg. 74, lines 1-6. 57 This identification is necessary to allow Boulder and Public Service to know where the Multi-Use
Easement Agreement (filed as Exhibit 6 with the Commission on November 19, 2018) applies.
- 18 -
A more detailed explanation of the importance of an accurate and complete real
property list of assets was included on pages 148 - 154 of the Company’s Statement of
Position.
ii) State of Exhibit 5B when Originally Filed, Withdrawal and Moving Forward
Much is said in Boulder’s Combined Response in Opposition disputing what was
known by which party when, concerns about the amount of time and effort Public
Service has dedicated to provide the Commission with the complete and accurate
Exhibit List that Commission Decision C17-0750 requires, and Boulder’s supposed
interest in continuing to work to define real property interest despite Public Service’s
statement to the contrary.
At this point in time, there can be no dispute that the original Asset List filed back
in October of last year had significant errors, omissions and oversights. Boulder’s filing
on January 29, 2019, of Hearing Exhibit 801, a significantly revised Exhibit 5B on which
Boulder proposed to remove over 600 rows from the Exhibit, alone demonstrates this.
Examples of errors on the original Asset List were provided in Exhibit 4 to the
Company’s Notice of Withdrawal and Objections to the List of Assets. In the Combined
Response, Boulder admits that the list of Public Service recorded easements it provided
in 2018 only included real property interests through 2012.58 Public Service was not
advised of this at the time the list was provided; Public Service discovered this as it
researched the issues and concerns that were being raised after the list had been filed.
Relevant recorded Public Service real property interests in the City have subsequently
been discovered and analyzed by the Company since it began its work after the Notice
58 Combined Response ¶19.
- 19 -
of Withdrawal was filed. The revised Exhibit 5B will include over 300 additional
recorded easements (recorded both before and after 2012) that were not on the original
exhibit.
While Public Service takes issue with several of the characterizations made by
Boulder in its Combined Response, and is frustrated by the lack of acknowledgement as
to the time and efforts Public Service has undertaken to correct the real property list of
assets the Commission requested in order to satisfy the conditions imposed upon
Boulder, Public Service is focused on identifying a constructive path forward. To the
extent the Commission wants a detailed history of Exhibit 5B, the Company can provide
that in a supplement filing.59
However, Public Service believes the thrust of that discussion and those disputes
can and should be put behind us now so that we may focus on moving forward and
resolving the necessary tasks at hand. Public Service took upon itself, with the
assistance of Boulder in some capacity,60 doing the detailed technical work the
Company believes the Commission required in order to have an Exhibit 5B it can be
comfortable approving, with some limited qualifying language. Public Service
encourages the Commission and the parties to review the Exhibit when filed and ask
questions, as the Company strongly believes this Exhibit is of key importance for the
59 For example, Boulder states in its Combined Response it has seen nothing with regards to the Revised
Exhibit 5B, however Public Service has completed sections of the revised Exhibit 5B and forwarded those
to the City The City has seen, and in fact responded to such distributions, by saying is not going to review
the revisions. 60 Since the Company filed the Notice of Withdrawal, Boulder has provided: (1) GIS layer of utility and
other easements shown on subdivision plats which PSCo is using in connection with revising Exhibit 5B;
and (2) a GIS layer that separates by color coding the facilities Boulder proposes to acquire and the
facilities PSCo will be keeping which PSCo is using in connection with revising Exhibit 5B.
- 20 -
Commission to be able to make determinations of the system’s effectiveness, reliability
and safety in a post-separation world as required by the District Court Order.
V. REQUEST FOR ORAL ARGUMENT
It is unclear what the City wishes oral argument conducted on: (1) proposed
procedures; (2) legal argument on the Petition for Declaratory Orders; and/or (3) Asset
List status and issues, for example. However, Public Service does not oppose
appearing before the Commission to discuss any or all issues the Commission wishes
to have discussed in oral argument, if helpful to the Commission. Should the
Commission desire to proceed in such a manner, the Company would appreciate some
direction from the Commission in advance of the argument on what specific questions,
or at least topical areas, the Commission would like to explore, so it can have
appropriate personnel present and be sufficiently prepared to discuss.
VI. CONCLUSION
The City’s statements in its Combined Response in Opposition, its proposed
procedures in its Notice, and its representations to City Council demonstrate that
Boulder believes it may proceed to a condemnation action on Public Service’s assets,
outside or inside substations, prior to any further Commission determinations.
As to assets outside substations, Public Service respectfully requests that its
Notice of Withdrawal and Notice of Objections be granted and that, when the revised
Exhibits 5A and 5B are filed with the Commission, the stay be lifted, the parties be given
the same 30 days to review the filings, and we proceed as provided in paragraph 163 of
the Decision.
As to assets inside substations, Public Service respectfully requests that the
Commission take up its Petition at this time. The Company further requests that the
- 21 -
Commission declare that Public Service assets inside substations may not be taken
without Boulder first obtaining a designation of assets inside substations for transfer,
and Boulder may not unilaterally decide when a sufficient “agreement” with Public
Service on the transfer of assets inside substations has been reached.61
As stated above, it is Public Service’s recommendation that the Commission
require the revised Asset List be filed at the same time as the necessary and
appropriate materials related to assets inside substations, so that the Commission can
conduct a singular future proceeding and make one combined determination (on issues
inside and outside substations) with respect to safety, reliability and effectiveness.
Respectfully submitted this 19th day of June, 2019.
PUBLIC SERVICE COMPANY OF
COLORADO
By: /s/ Christopher M. Irby
Christopher M. Irby, #35778
Assistant General Counsel
Xcel Energy Services Inc.
1800 Larimer Street, Suite 1100
Denver, Colorado 80202
Phone: (303) 294-2504 (Irby)
Email: christopher.m.irby@xcelenergy.com
Judith M. Matlock, #12405
Davis Graham & Stubbs, LLP
1550 17th Street, Suite 500
Denver, CO 80202
Phone: (303) 892-9400
Fax: (303) 893-1379
Email: Judith.Matlock@dgslaw.com
Its Attorneys
61 See Section III of Public Service’s Petition for a discussion of the second controversy - when is there an
agreement as to assets inside substations.
4541679.1
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
______________________________________________________________________
PETITION FOR DECLARATORY ORDERS WITH REGARD TO THE PORTION OF
COMMISSION DECISION C17-0750 CONCERNING
PUBLIC SERVICE ASSETS (REAL AND PERSONAL) INSIDE SUBSTATIONS
______________________________________________________________________
Public Service Company of Colorado (“Public Service” or “the Company”),
submits this Petition for Declaratory Orders (“Petition”) pursuant to Rules 1001 and
1304(i) of the Commission’s Rules of Practice and Procedure, 4 C.C.R. §723-1. The
purpose of this Petition is to terminate controversies 1 concerning the portions of
Commission Decision C17-0750 (“Decision”) that address Public Service’s assets (real
and personal) inside substations. Public Service is seeking declarations that the
Decision provides that the City of Boulder (“City” or “Boulder”) may not commence
condemnation proceedings to acquire any Public Service assets inside substations (real
or personal) unless and until (1) Boulder and Public Service reach mutual agreement on
the transfer of assets inside existing Public Service substations, and (2) an application
requesting the designation of assets inside substations is filed and granted.
In support of this Petition, Public Service state as follows:
I.DECISION NO. C17-0750
1 Rule 1304(i)(II) states: “The Commission may issue a declaratory order to terminate a controversy or to
remove an uncertainty affecting a petitioner with regard to any tariff, statutory provision, or Commission
rule, regulation, or order.”
ATTACHMENT D
- 2 -
1. On May 12, 2017, Boulder filed its Third Supplemental Verified Application
(“Application”) in this proceeding. The filing presented Boulder’s Separation Plan for
both assets inside substations and assets outside substations. Boulder requested that
the Commission designate for transfer all of the assets on the list of physical assets it
filed.2 Boulder also requested that the Commission designate for transfer “all
associated real property interests.”3 No list of associated real property interests was
filed with the Application.
2. The Decision granted, in part and with conditions, and denied, in part, the
Application. The part of the Application that was granted was the request for
designation for potential transfer (by agreement with Public Service or condemnation) of
specific assets located outside of substations, subject to Boulder demonstrating
compliance with three conditions. ¶5 and Ordering Paragraph VIII.A.2. The
Commission ordered that certain agreements and information to satisfy these conditions
be filed with the Commission and be subject to requests for hearing.
3. One of the parts of the Application that was denied was Boulder’s request
for the designation of assets inside substations. The Commission found that it was
“premature to designate” any facilities inside substations for potential transfer to Boulder
from Public Service.4
2 Attachment SDC-18. 3 Direct Testimony of Mr. Catanach, (Hr. Ex. 105) at pg. 50 of 182, lines 1-10 (“The City is asking for an
Order from this Commission authorizing Boulder to acquire the real property rights it will need associated
with the assets it seeks to acquire.”) 4 Decision at ¶ 6 (premature to designate any facilities inside substations for potential transfer to Boulder
from Public Service), ¶114 (the designation of assets for transfer is limited, at this time, to the assets
outside the substations that presently serve the Boulder area); ¶128 (premature to authorize the
inclusion of facilities inside the substations on the designated list of assets for transfer; Public Service has
provided compelling evidence that it requires the existing distribution assets within Substations A, B, C,
and E), ¶131 (premature as to Substation D assets), ¶132 (premature as to Substation F assets), ¶144
(in accordance with our decision above, Public Service will retain the substations that serve its feeder
- 3 -
4. In the Decision, the Commission specifically found that Public Service had
provided “compelling evidence” that it requires the existing distribution assets within
Substations A, B, C, and E to serve customers that Public Service will continue to serve
upon separation.5 As to Substation D, the Commission also found that it was
“premature to designate” assets for transfer although it appeared likely, based upon
testimony, that Public Service and Boulder would be able to work out arrangements for
Substation D through the transmission load interconnection and NITS processes.6 As to
Substation F, the Commission found that designation of assets for transfer was
“premature” because the continued examination of the Alt_EF proposal could change
the configuration and use of Substation F.7
5. In the Decision, the Commission recognized that Boulder and Public
Service might reach agreement on a transfer of assets within any or all of the six
substations.8 The catalyst to attempting to resolve substation issues would be the
transmission to load interconnection request process.9
lines); and ¶145 (this Decision results in no change in substation configurations at this time). [emphasis
added] 5 Decision ¶128. 6 Decision ¶131. 7 Decision ¶132. 8 Decision at ¶128 (We recognize that Boulder and Public Service may reach agreement on a transfer of
assets at any or all of these substations; it is further possible that Public Service could no longer require
distribution facilities at a particular substation (e.g., Substation B); ¶130 (Alternatively, Public Service and
Boulder may reach agreement on the sale to Boulder of existing transformers and other distribution
equipment within the substations); and ¶131 (…it appears likely that Public Service and Boulder will be
able to work out arrangements for Substation D through the transmission load interconnection and NITS
processes). 9 Decision ¶129. “It is reasonable for Public Service and Boulder to rely upon the transmission load
interconnection request process, and also the NITS process, to attempt to resolve the required
configurations and ownership arrangements inside the substations.” [Emphasis added.]
- 4 -
6. In the event no agreement was reached as to facilities inside substations,
the Decision found that Boulder would need to, and would have the right to, build its
own new substations in order to serve its customers.10
7. In the event Boulder and Public Service did reach agreement on the
transfer of existing substation assets, then the Commission would review such
agreement and determine whether to designate assets inside substations for potential
transfer (ie. it would no longer be premature for them to do so). The Decision expressly
requires the filing of an application in the event the parties reach agreement as to
assets inside substations.11 The requirement to file an application for the designation of
transfer of assets inside substations is stated in ¶130 and ¶257 12 of the Decision.13
This application for designation of transfer of assets inside substations creates a
10 Decision ¶130: “The outcomes of these transmission load interconnection requests and NITS
applications also may determine that Boulder will need to construct new substations in order to begin
operations as a municipal utility.” Decision ¶148: “...As a municipal electric utility, Boulder will have the
right to build new substations in order to serve the distribution facilities on the list of assets for transfer in
the event the City is unable to reach agreement with Public Service on the purchase and/or
reconfiguration of the existing substations through the normal transmission load interconnection process.” 11 Decision ¶130, “... Alternatively, Public Service and Boulder may reach agreement on the sale to
Boulder of existing transformers and other distribution equipment within the substations. The Commission
can approve the transfer of facilities inside substations at a later time, because sales of facilities to
Boulder will require Public Service to file application(s) under § 40-5-105, C.R.S.” This is the same
statutory authority under which the Commission designated the assets outside substations for potential
transfer to Boulder. See ¶93 and ¶101 of the Decision (As related to the transfer of Public Service assets
to Boulder, the applicable standard of review is set forth in § 40-5-105(1), C.R.S.) A designation by the
Commission of assets for potential transfer has been held by the Colorado Supreme Court to be a
prerequisite to the filing of a condemnation action. See, Colorado and Southern Railway Co., Inc. v.
District Court, 493 P.2d 657 (Colo. 1972) holding that Commission approval must precede a
condemnation action. See also, the Order of Judge LaBuda of the Boulder County District Court in Case
No. 14CV30047. 12 ¶257 of the Decision provides, ““As explained above, it also may be necessary for Public Service and
Boulder to file jointly for approval of a voluntary transfer of assets inside substations under § 40-5-105,
C.R.S.” The “as explained above” phrase refers to ¶130, the “may” is for if an agreement is reached. 13 In contrast to the description in ¶130 of the application filing being a Public Service obligation, in ¶257,
the requirement is stated as a joint obligation of Public Service and Boulder. Since the application is
required if an agreement regarding substation assets has been reached between Boulder and Public
Service, a joint application is appropriate although, because it is Public Service who is the regulated
entity, an application solely by Public Service would also be appropriate. The important point is that an
application for transfer of assets inside substations is required because no assets inside substations have
yet been designated for transfer.
- 5 -
process similar to that the Commission utilized for the designation of assets outside
substations for potential transfer.
II. THE FIRST CONTROVERSY - Filing of an application for the designation of
assets inside substations
8. On December 4, 2018, the City of Boulder adopted Ordinance 8302
authorizing the acquisition of property interests used or owned by Public Service for the
electric distribution facilities to serve the City, by negotiation and purchase or through
the power of eminent domain. A copy of the signed Ordinance and the Staff
Memorandum and draft Ordinance in the December 4, 2018, City Council Meeting
Packet are attached as Exhibit A.
9. Paragraph H of Ordinance 8302 states:
H. Rather than appeal the district court decision, the city proceeded with a
case before the PUC for transfer of electric distribution assets from Xcel. The
Commission issued a decision on September 14, 2017, (the “PUC Separation
Decision”) conditionally approving the transfer of assets outside the substations,
and for the transfer of property inside substations in accordance with
proceedings under Xcel’s Open Access Transmission Tariff (the “OATT”) that
has been approved by the Federal Energy Regulatory Commission.[Emphasis
added.]14
This language of the Ordinance stands in stark contrast with the Decision’s
findings that (1) it was “premature to designate” any assets inside substations for
potential transfer to Boulder “at this time” and (2) the requirement in paragraphs 130
and 257 that, if the City and Public Service reach agreement on the transfer of any
assets inside substations, an application must be filed. The interpretation of the
Decision, as stated in the Ordinance, that the Commission has already authorized the
14 To avoid any confusion about the wording in Paragraph H of Ordinance 8302, please note that Xcel’s
OATT has been approved by FERC. There has been no proceeding and no approval by FERC for the
transfer of property inside substations.
- 6 -
“transfer of property inside substations in accordance with the proceedings under Xcel’s
[OATT]” does not contemplate a further role for the Commission to designate assets
inside substations prior to Boulder proceeding to condemnation. 15
10. Paragraph O of Ordinance 8302 states that, “[t]he Substation Property
Interests and Assets the city intends to acquire are identified in the System Impact
Study Report dated October 31, 2018 that was prepared by Xcel.” However, Paragraph
O conflicts with the City Staff Memorandum which acknowledged that, “the final location
of Boulder facilities at two of the substations will be resolved in the “near” future under
the SIS [System Impact Study process].”16[Emphasis added] This goes to the status of
one aspect of an “agreement” between Public Service and Boulder on assets inside
substations (i.e., a lack of agreement on the engineering).
11. On December 17, 2018, three parties (Trial Staff, IBM, and Tri-State)
made filings addressing the provisions of Boulder’s Ordinance 8302 concerning the
Commission’s Decision as to substations. These parties raised concerns about whether
Boulder was intending to move forward with acquiring, through condemnation or
negotiated sale, property and assets inside the substations without first the filing of an
application to obtain a Commission designation for potential transfer to Boulder of any
substation assets. Trial Staff suggested that there might be a misunderstanding on the
part of Boulder regarding the requirements of the Decision as they relate to substation
assets.
15 Public Service would note that the Ordinance does not mention the requirement of the Decision for the
filing of any application under § 40-5-105, C.R.S. 16 See the page numbered 302 of 544 in Exhibit A. Public Service would note additional engineering work
will be part of the next stage of the process.
- 7 -
12. On December 28, 2018, the City of Boulder responded to the December
17, 2018, pleadings and stated Boulder’s position on the language of the Decision.
Boulder’s Response removed any doubt about Boulder’s understanding of the Decision.
Boulder intends to move forward with acquiring Public Service’s substation assets
without any further Commission process or designation of assets inside substations,
such as the filing of an application.17 A copy of Boulder’s December 28, 2018,
Response (“Response”) is attached as Exhibit B.
13. Boulder states on pg. 3 of its Response:
Once the few remaining open issues identified in the System Impact Study are
resolved by the City and PSCo and the Commission has approved the Motion for
Final Approval [of Designation of Assets Outside Substations], per Decision No.
C17-0750, the City will have satisfied the Commission’s prerequisites to proceed
forward with its municipalization efforts. Contrary to IBM’s suggestion, there is
no need for a further Commission proceeding at this time to review the
conclusions of the OATT process.[Emphasis added.]18
This statement makes clear that: (1) Boulder believes it does not need to seek
any Commission designation of assets inside substations before Boulder proceeds with
the acquisition of such assets by negotiated sale or condemnation; and (2) Boulder
believes its acceptance, or successful negotiation of, system impact studies results,
should that occur in the future, constitutes a sufficient “agreement” for the transfer of
assets inside substations. (This second Boulder position is the second controversy and
is discussed in more detail in Section III of this Petition.)
17 Boulder’s Response acknowledges that ¶256 of the Decision requires Public Service to file an
application pursuant to Rule 4 CCR 723-3-3206, in the event that construction is required at a substation
to be owned by Public Service. The purpose of Rule 3206 is to give the Commission the opportunity to
determine whether the construction or extension of transmission facilities or projects requires a certificate
of public convenience and necessity. A Rule 3206 proceeding does not concern whether the transfer of
assets inside substations will preserve Public Service’s ability to provide safe, reliable and effective
service. That is the purpose of a proceeding under §40-5-105, C.R.S. 18 In its Response, Boulder focused on the pleading IBM however little was done to address the fact Tri-
State and Trial Staff also raised concerns about the Ordinance and Boulder’s intentions as to substations.
- 8 -
14. Boulder states on pg. 6 of its Response that ¶130 of the Decision required
the filing of an application under § 40-5-105, C.R.S. for transfer of assets inside
substations but asserts in its Response that this application filing does not have to be
made until Cut-Over (years after the condemnation or negotiated sale of assets inside
substations and all of the reconfiguration and construction associated with substations
has occurred).19 Boulder cites Ordering Paragraph 7 of the Decision as referring to the
application filing requirement of ¶130. Public Service believes this is in error.
15. Boulder’s position that it may go directly to condemnation on assets inside
substations, prior to the filing and granting of an application designating assets inside
substations for potential transfer, is in direct conflict with the Commission’s Decision. It
is true that the Decision necessitates an application to be filed prior to Cut-Over,20 but
that is not the same application filing requirement as the application required for transfer
of assets inside substations; these are two different application proceedings with
different purposes.
16. The application required by ¶¶ 130 and 257 of the Decision is referring to
a designation of assets inside substations for potential transfer to Boulder. This is the
same type of designation for approval that is now pending in front of Administrative Law
Judge Adams as to assets outside substations 21 but which the Commission found was
premature to give to Boulder as to assets inside substations. The purpose of requiring
19 Public Service would note, in addition to the construction which will be required inside of substations
there will be construction outside of substations dependent on how substation locations and
configurations are ultimately resolved. 20 This application will also have its roots in § 40-5-105, C.R.S. The provisions of the Decision that
address the filing of an application prior to Cut-Over are in ¶¶10, 164, 258, and Ordering Paragraph
VII.A.7. These provisions require the filing of an application to obtain final transfer approval as to the
assets outside substations prior to Cut-Over 21 Decision No R19-0075-I set for hearing “whether Boulder has satisfactorily met the conditions and
whether the Commission approves the assets for transfer outside the substations.” See ¶11 and pgs. 3-4
of the Interim Decision, citing Decision No C17-0750 at p. 89.
- 9 -
this application, once an agreement has been reached with Public Service, is to allow
interested parties (such as IBM and Tri-State as to Substation F) to review and weigh-in
on the agreement of Boulder and Public Service and to allow the Commission to
determine whether to designate assets inside substations for potential transfer to
Boulder. Because the condition precedent to the filing of the application is an
agreement between Boulder and Public Service, the application proceeding would
hopefully be uncontested and the Commission would be able to make its determinations
in a relatively short period of time.
17. Given that the Commission found Public Service presented compelling
evidence at the evidentiary hearing that the Company needed to keep its substation
assets to serve its own customers, it is perfectly appropriate and, in fact, required for the
reasons stated in Judge Labuda’s Boulder District Court Order, for this Commission to
review any future “agreement” reached between Public Service and Boulder as to the
transfer of assets inside substations. The Commission has the responsibility to ensure
that the “agreement” will result in safety, reliability and effectiveness of service being
preserved. Boulder’s reading of the Decision, however, would have the Commission
abdicate this obligation; not designate assets inside substation; and have the
Commission review the agreement for the transfer of assets inside substations, for the
first time at Cut-Over.22
22 Recall, for example, the testimony regarding the critical nature of the transmission infrastructure inside
Substation B and Public Service’s concerns about the close proximity of the distribution and transmission
facilities to each other inside that Substation which was not built with co-location in mind. Consistent with
Judge LaBuda’s decision, it is for the Commission, not Boulder and/or Public Service, to determine
whether any assets inside Substation B can be designated for potential transfer to Boulder if Boulder and
Public Service reach agreement as to any such transfer.
- 10 -
18. In contrast, the transfer application that the Decision provides has to be
filed prior to Cut-Over concerns the assets outside substations that were designated by
the Decision for potential transfer. See paragraph 164 which states:
As explained below, the approval of the assets for transfer by this
Decision is made in accordance with the Boulder District Court Decision.
The decision rendered on the assets for transfer will not be a preliminary
approval of the transfer of assets under § 40-5-105, C.R.S., as
contemplated by the advocacy of certain parties. Final approval of the
transfer of assets under § 40-5-105, C.R.S., will be accomplished, as
necessary, in a separate proceeding by a joint filing of an application for
voluntary transfer of assets from Public Service to Boulder. [Emphasis
Added]
The only assets approved for transfer by the Decision were the assets outside of
substations and, therefore, the Decisions’ requirement for a joint filing for final approval
of the transfer of assets is limited to the assets outside substations.
19. The application for final transfer prior to Cut-Over has an entirely different
purpose than the application required by ¶¶ 130 and 257 for assets inside substations.
In the “t Cut-Over” Application proceeding, the Commission will be able to determine if
Boulder is ready and able to begin operations before the Company hands over the
responsibility to serve the citizens of Boulder through the Commission approved transfer
of assets.
III. THE SECOND CONTROVERSY - Agreement between the City and Public
Service as to assets inside substations
20. There is also a controversy regarding what constitutes “agreement” by
Public Service to the transfer of assets inside substations. From the language of the
Ordinance and Boulder’s Response pleading filed on December 28, 2019, it appears
Boulder is prepared to unilaterally assert that completion and Boulder’s acceptance of
- 11 -
system impact study results (if and when that occurs) constitutes an “agreement” by
Public Service to the transfer of assets inside substations.23 This is not correct. The
Decision requires that an agreement be reached by the City “with Public Service,”24
something that cannot be achieved unilaterally.
21. The System Impact Study Report for Request #T-2018-1 that was issued
on October 31, 2018, expressly stated that the report was not an agreement to transfer
any interest in Public Service property to Boulder. The report states:
As between PSCo and the COB [City of Boulder], land ownership, easements
and costs will be addressed at a later time and PSCo reserves all of its, remedies
and protections regarding the same. Nothing in this Report shall be deemed to
be an agreement to transfer any interests in PSCo property to COB.25
[Emphasis added.] Copies of the pages of the System Impact Study Report for Request
#T-2018-1 where these statements are made are attached as Exhibit C.
22. It is important to note, both Boulder and Public Service acknowledged in
their Statements of Position that substation sharing agreements would need to be
negotiated as part of the OATT process. In fact, Boulder asked the Commission to
order that “PSCo and Boulder negotiate substation co-location agreements while the
NITS application is being processed” and, following the NITS process, “[t]he City make
a compliance filing with the Commission describing the substation configurations
23 Boulder stated on pg. 3 of its Response, “Once the few remaining open issues identified in the System
Impact Study are resolved by the City and PSCo and the Commission has approved the Motion for Final
Approval [of Designation of Assets Outside Substations], per Decision No. C17-0750, the City will have
satisfied the Commission’s prerequisites to proceed forward with its municipalization efforts.” [emphasis
added] 24 Decision ¶148 25 See pages 10 (Substation B), 23 (Substation D), 34 (Substation C), 48 (Substation E), 62 (Substation
A) and 72 (Substation F) of the First System Impact Study Report.
- 12 -
approved in the NITS process and providing the substation co-location agreements.”26
These Boulder requests are summarized in the Decision in ¶ 120.
23. Public Service, in its Statement of Position, also took the position that
substation sharing agreements are required. Public Service stated that, “[t]he physical
configuration at all substations must be known (load interconnection request a first step)
and substation sharing agreements must be negotiated so that risks can be
evaluated.”27 Public Service further argued that Boulder needed to apply for and
complete the transmission load interconnection request.
24. Boulder’s Ordinance 8302 and Boulder’s Response filed on December 28,
2018, declare that the City may proceed to acquire assets inside substations based
solely on the System Impact Study Reports. The system impact study process is
ongoing28 and Boulder acknowledges that there are open issues.29 A significant open
issue is Boulder and Public Service’s fundamental disagreements on two of the six
substations. Furthermore, Public Service reports that some additional engineering
discussions are still needed with Boulder, no substation sharing and/or co-location
agreements have been negotiated30 and there is not currently in place a cost
reimbursement agreement to protect Public Service and its ratepayers from the
substation and transmission-related costs of Boulder’s municipalization.31
IV. PETITION FOR DECLARATORY ORDERS
26 Boulder Statement of Position, pgs. 18-19, pg. 62. 27 Public Service Statement of Position, pg. 72. 28 Boulder’s Response stated this on pg. 2. 29 Id. 30 Substation sharing agreements are needed to address co-location inside substations including, but not
limited to, the terms and conditions of all easements (those to be acquired by Boulder and those to be
retained by Public Service) and the costs and responsibilities of each party associated with each
substation. 31 Public Service will be sending a draft of such agreement to the City next week.
- 13 -
25. Public Service incorporate and re-allege Paragraphs 1-24.
26. The legal basis for the request for declaratory orders is premised upon the
following Commission and Colorado rules. Rule 1304(i) of the Commission's Rules of
Practice and Procedure, 4 C.C.R. § 723-1, provides that a petition may be made
“seeking a declaratory order ... in a pending proceeding; the Commission may issue a
declaratory order to “terminate a controversy or to remove an uncertainty affecting a
petitioner with regard to any... Commission ... order.” In turn, Commission Rule 1001
provides that "[w]here not otherwise inconsistent with Title 40 or these rules, the
Commission, a hearing commissioner, or an administrative law judge may seek
guidance from or employ the Colorado Rules of Civil Procedure." 4 CCR 723-1-1001.
27. C.R.C.P. Rule 57 provides such guidance. C.R.C.P. Rule 57 permits a
party "whose rights, status, or other legal relations are affected by a statute" to ask a
court to determine its "rights, status and other legal relations" and further provides that
"[n]o action or proceedings shall be open to objection on the ground that a declaratory
judgment or decree is prayed for." Rule 57(k) further declares that the rule is "remedial;
its purpose is to settle and to afford relief from uncertainty and insecurity with respect to
rights, status, and other legal relation; and is to be liberally construed and
administered."
28. As discussed above, there are existing controversies concerning whether
Boulder may proceed to acquire, by negotiated sale or condemnation, Public Service
assets inside substations without first obtaining a designation of assets inside
substations for transfer, and whether Boulder may unilaterally decide when a sufficient
“agreement” with Public Service on the transfer of assets inside substations has been
- 14 -
reached.
29. Public Service believe Boulder’s position that the application for transfer
approval for assets inside substations is not required to be filed until Cut-Over is
incorrect. Judge LaBuda confirmed that, “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.”32 In finding, in the
Decision, that it was “premature” to designate assets inside substations for potential
transfer to Boulder, the Commission was not leaving it up to the City and Public Service
or to the OATT process to protect the system’s effectiveness, reliability, and safety.
Just as the Decision provided that the Commission will decide whether the conditions
have been met for the designation of assets outside substations, the Decision required
the filing of an application for transfer of assets inside substations so that the
Commission could decide whether to designate assets inside substations for potential
transfer after reviewing any agreements reached by the City and Public Service.
30. The statement in ¶130 that “[t]he Commission can approve the transfer of
facilities inside substations at a later time,” refers to the prior sentence in ¶130 regarding
Public Service and Boulder reaching agreement on the sale to Boulder of existing
transformers and other distribution equipment within the substations. The “later time”
when the application for assets inside substations needs to be filed is when agreement
is reached between Public Service and Boulder.
32 Judge LaBuda Order at pg. 12.
- 15 -
31. These two different applications are discussed in separate, consecutive
paragraphs in the Decision- ¶257 for the application pertaining to transfer of assets
inside substations and ¶258 for a final transfer approval application for the assets
outside substations that the Commission already designated for potential transfer - and
only the latter application is filed prior to Cut-Over.
32. Public Service notes that there is one sentence in the Decision that refers
to Boulder proceeding to condemnation on assets within substations. It is the last
sentence in paragraph 6 in the Commission’s Opening Statement in the Decision which
states, “[w]e conclude that it is reasonable for Public Service and Boulder to rely upon
the normal load interconnection request process that is available to Boulder as a
prospective transmission customer of Public Service. We expect the transmission load
interconnection process will establish the required configurations and ownership
arrangements within the substations without requiring further action by the Commission
before Boulder proceeds to condemnation.”
33. The phrase “without requiring further action by the Commission before
Boulder proceeds to condemnation” refers to the Commission not expecting to have to
call the “balls and strikes” to decide between the various substation proposals that had
been brought before it in Proceeding 15A-0589E. The Commission’s expectation was
agreement, not another litigated proceeding on substation proposals. During the hearing
that led to the Decision, there was extensive written and oral testimony regarding
substations and substation alternatives (i.e., A, Alt_A, C, Alt_C, E, F, Alt_EF, and
whether co-location inside Substation B was possible at all given the critical
transmission facilities in that Substation). Both Boulder and Public Service asked the
- 16 -
Commission to issue an order deciding between these alternatives. The Commission
declined to do so and, as reflected in paragraph 6, expected the transmission load
interconnection process would establish the required configurations and ownership
arrangements within the substations.” This expectation is further expressly stated by
the Commission in paragraph 129 which provides that, “It is reasonable for Public
Service and Boulder to rely upon the transmission load interconnection request process,
and also the NITS process, to attempt to resolve the required configurations and
ownership arrangements inside the substations.” [Emphasis added.]
34. The phrase “without requiring further action by the Commission” cannot be
read as a relinquishment to Boulder and Public Service or to the OATT process of the
Commission’s obligation, as confirmed by Judge LaBuda, to designate assets inside
substations before Boulder proceeds to condemnation. If that had been the
Commission’s intent, it would not have said repeatedly in the Decision that it was
“premature at this time” for it to designate assets inside substations. Instead, the
Commission would have said that it would not be necessary for the Commission to
designate assets inside substations. Instead, paragraphs 130 and 257 expressly
provide that if Boulder and Public Service reach agreement regarding assets inside
substations, an application has to be filed with the Commission. Boulder may not
proceed to condemnation absent agreement with Public Service and the Commission
granting an application designating for potential transfer to Boulder, the assets inside
substations that are the subject of such an agreement.
35. Public Service is also requesting a Declaratory Order to address the
controversy regarding what constitutes “agreement” between Public Service and the
- 17 -
City as to the transfer of assets inside substations. It appears from the City’s language
in its Ordinance and the language of its Response, that the City intends to take the
results of the System Impact Study, accept some of them, and then state the City has a
sufficient “agreement” with Public Service on the transfer of assets inside substations.
The Company disagrees. While engineering design is critical, so are the terms and
conditions of sharing and/or co-location (including details regarding easements such as
whether they are exclusive or non-exclusive) and payment of costs. If and when there
is mutual agreement on the transfer of assets inside substations, the Commission will
be able to determine whether that agreement will protect the system’s effectiveness,
reliability, and safety.
V. CONCLUSION
36. By determining it was premature to designate any assets inside
substations for potential transfer to Boulder, the Commission gave Boulder and Public
Service the opportunity to attempt to reach agreement regarding the transfer of assets
inside substations. By requiring that if the parties did reach agreement, an application
for transfer of assets inside substations had to be filed, the Commission retained the
jurisdiction Judge LaBuda confirmed the Commission has to review the agreement(s)
reached and, if satisfied that safety, reliability and effectiveness will be preserved, to
designate assets inside substations for potential transfer to Boulder. The Decision does
not authorize Boulder to declare, when the system impact study process is completed,
that “agreement” has been reached and it does not authorize Boulder to proceed to
acquire assets inside substations without the filing and granting of an application for
designation of assets inside substations.
- 18 -
WHEREFORE, Public Service respectfully requests that the Commission grant
this Petition and enter the following declaratory orders:
(1) That the Decision provides that the City of Boulder may not commence
condemnation proceedings to acquire any Public Service assets inside
substations (real or personal) unless and until:
a) Boulder and Public Service reach mutual agreement on a transfer
of assets inside existing Public Service substations, and
b) An application designating for potential transfer to Boulder of assets
inside substations is filed and granted.
Respectfully submitted this 25th day of January, 2019.
PUBLIC SERVICE COMPANY OF
COLORADO
By: /s/ Christopher M. Irby
Christopher M. Irby, #35778
Assistant General Counsel
Xcel Energy Services Inc.
1800 Larimer Street, Suite 1100
Denver, Colorado 80202
Phone: (303) 294-2504 (Irby)
Email: christopher.m.irby@xcelenergy.com
Judith M. Matlock, #12405
Davis Graham & Stubbs, LLP
1550 17th Street, Suite 500
Denver, CO 80202
Phone: (303) 892-9400
Fax: (303) 893-1379
Email: Judith.Matlock@dgslaw.com
Its Attorneys
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
IBM’S NOTICE OF SUPPORT AND JOINDER OF RELIEF SOUGHT IN PETITION
FOR DECLARATORY ORDER
Consistent with Colorado Public Utilities Commission (“Commission”) Rules of Practice
and Procedure 4 CCR 723-1-1304(i)(II), IBM, Corp. (“IBM”) submits this Notice of Support and
Joinder of the Relief Sought by Public Service Company of Colorado (“Public Service”) in its
January 25, 2019 Petition for Declaratory Order filed in the above-captioned proceeding (the
“Petition”). IBM states as follows:
In its Petition, Public Service requests the Commission declare that consistent with
Decision No. C17-0750 (“Decision”), the City of Boulder (“Boulder”):
may not commence condemnation proceedings to acquire any
Public Service assets inside substations (real or personal) unless
and until (1) Boulder and Public Service reach mutual agreement
on the transfer of assets inside existing Public Service substations,
and (2) an application requesting the designation of assets inside
substations is filed and granted.1
For the reasons set forth below and in its December 17, 2018 Response, Request for
Hearing, Request for Clarification, and Request for Status Conference (the “December 17
Response”) IBM agrees there is significant controversy or uncertainty with respect to one or
1 Petition, at 1 and 17.
ATTACHMENT E
2
more Commission “rule[s], regulation[s], or order[s]”—specifically, how facilities and real
property within substations “should be assigned, divided or jointly used to protect the system’s
effectiveness, reliability, and safety.”2
As the Petition correctly recognizes, Judge LaBuda’s Decision affirms the Commission’s
constitutional authority and obligation to ensure that all electrical facilities are “assigned, divided
or jointly used” in a manner that protects “the system’s effectiveness, reliability and safety.”3
While the Commission’s Decision provided conditional approval for Boulder to proceed with
assets outside substations, the Decision found it “premature” for Boulder to acquire assets inside
substations, holding “this Decision results in no change in substation configurations, at this
time.”4 Since issuing its Decision, Boulder has not demonstrated nor has the Commission found
that Boulder’s proposed separation will maintain reliability for IBM, or that Boulder’s proposed
division of assets inside substations will “protect the system’s effectiveness, reliability, and
safety,” despite the fact that Judge LaBuda’s Decision requires that “[s]uch a determination must
be made prior to the City’s condemnation of property for utility municipalization.”5
Second, the Commission directed Boulder and Public Service to follow the “transmission
load interconnection request process, and also the NITS process, to attempt to resolve the
required configurations and ownership arrangements inside the substations.”6 While the
Commission directed Boulder to work with Public Service through Public Service’s Open
Access Transmission Tariff (“OATT”) and NITS process 7 to see if they could reach mutual
2 City of Boulder v. Pub. Utils. Comm’n, Case No. 14CV30047 (Boulder Dist. Ct., Jan. 14, 2015) (City of
Boulder) at 7-8 (emphasis added).
3 City of Boulder, at 12. 4 Decision, ¶ 145. 5 City of Boulder, at 12.
6 Decision, ¶ 129. 7 IBM would further note that the Commission Decision also directed Boulder to engage with IBM with
respect to Substation F and no such outreach has occurred to date.
3
resolution with respect to substations, the Decision went so far as to contemplate that Boulder
need not necessarily acquire Public Service’s substations in order to carry out its legal right to
form a municipal utility. Instead, the Decision found that, “if Boulder acquires the distribution
facilities outside of the substations … Boulder will have the technical means (i.e., the facilities
and associated property rights) to create a municipal utility.”8 The Decision went on to hold that
Boulder has “the right to build new substations … in the event the City is unable to reach
agreement with Public Service on the purpose and/or reconfiguration of the existing
substations.”9
Agreement cannot be created via unilateral imposition—only by mutual consent. As
affirmed by Public Service’s Petition, Boulder and Public Service have not reached any
agreement concerning division of assets and property located within the substations. While the
OATT process has not concluded, the System Impact Study (“SIS”) published on October 31,
2018 confirms that significant areas of uncertainty and dispute remain with respect to the
configuration and transfer of substation assets—especially at Substation F.10 Indeed, the SIS
concludes that the cost for the necessary upgrades at all substation facilities is $61.5 million.11
Approximately two-thirds of those costs—$39.2 million—are attributable to Boulder’s proposed
construction and reconfiguration activities at Substations E and F.12 The SIS also reflects that
significant uncertainty remains as to the proposed configurations at Substations E and F and the
specific property and assets that Boulder seeks to acquire. For example, the SIS indicates:
The Interconnection Request proposes locating two transformers
within the [Substation E] property. This will require extensive
modifications to the [Substation E] footprint, which would include
8 Decision, ¶ 148. 9 Id.
10 December 17 Response, at 11-13. 11 See December 17 Response, Highly Confidential Attachment C, at 1. 12 Id.
4
expanding the substation fence to the edge of the property adjacent
to the homeowners on the western edge of the property boundary.
The expansion of the [Substation E] will require a local land use
permit and approval by the County of Boulder. The expansion may
be opposed by adjacent landowners, which could either result in
denial of the County land use permit or result in increased
requirements (and costs) to screen the expansion of the [Substation
E] from local homeowners. Other locations may provide better
options for [Boulder], including a new distribution substation
located at its Waste Water Treatment Plant location or expanding
[Substation F]. Either may reduce the overall cost to [Boulder]
compared to an expansion of [Substation E].13
Despite Boulder’s claims, the SIS was not intended to identify any easements or real
property interests within PSCo substations. According to the SIS Agreement between Boulder
and Public Service, “[a]ssuming the City proceeds with separation, any easements or other real
property interests Boulder needs within PSCo substations (as well as any related access to
substations through other PSCo property) would need to be identified and co-location
agreements and compensation would need to be identified.”14
Finally, numerous steps remain in the OATT process. For instance, Public Service has
yet to conduct a Facilities Study, which could be used to determine the detailed engineering
design and final requirements for an interconnection to proceed, in addition to configuration
costs.15
For the forgoing reasons and as set forth in its December 17, 2018 Response, IBM
supports the relief requested in Public Service’s Petition and joins Public Service in requesting
13 December 17 Response, Highly Confidential Attachment C, at 46 (emphasis added). 14 December 17 Response, Highly Confidential Attachment D, at 8. Highly Confidential Attachment D is
an excerpt from Public Service’s filing with the Federal Energy Regulatory Commission to submit the
Transmission-to-Load Interconnection System Impact Study Agreement (FERC Docket No. ER18-1502,
filed May 2, 2018). Though the filing with FERC was designated as Public, IBM is filing this excerpt as
Highly Confidential as it contains substation names identified as Highly Confidential pursuant to the
protective order(s) issued in this proceeding.
15 See Xcel Energy Interconnection Guidelines for Transmission Interconnected Customer Loads Version
7.0, p. 26, available at
https://www.transmission.xcelenergy.com/staticfiles/microsites/Transmission/Files/PDF/Interconnection/I
nterconnections-POL-TransmissionInterconnectedCustLoads.pdf.
5
Commission declare that the City of Boulder may not commence condemnation proceedings to
acquire any Public Service assets inside substations (real or personal) unless and until (1)
Boulder and Public Service reach mutual agreement on the transfer of assets inside existing
Public Service substations, and (2) an application requesting the designation of assets inside
substations is filed and granted.
DATED this 29th day of January 2019.
Respectfully submitted,
/s/ Caitlin M. Shields
Raymond Gifford, #21853
Caitlin Shields, #41539
WILKINSON BARKER KNAUER, LLP
1755 Blake Street, Suite 470
Denver, Colorado 80202
Telephone: 303.626.2350
Email: rgifford@wbklaw.com
cshields@wbklaw.com
ATTORNEYS FOR IBM, CORP.
CERTIFICATE OF SERVICE
I hereby certify that on January 29, 2019 the foregoing document was filed with the
Commission via e-file and served on those parties shown on the Commission’s Certificate of
Service accompanying such filing.
*Matthew S. Larson mlarson@wbklaw.com Boulder Chamber of Commerce
*Adam M. Peters apeters@wbklaw.com Boulder Chamber of Commerce
John Tayer john.tayer@boulderchamber.com Boulder Chamber of Commerce
*Richard L. Fanyo rfanyo@polsinelli.com Climax
Rose Tinnell rtinnell@polsinelli.com Climax
Vivian Lehan vlehan@polsinelli.com Climax
*Mark T. Valentine mark.valentine@lewisbrisbois.com CF&I
Randolph W. Starr randy@starrwestbrook.com PVREA
+*Thomas J. Dougherty tdougherty@lrrlaw.com Tri-State (green as to Gunbarrel)
+*Gregory E. Bunker gregory.bunker@state.co.us OCC
+*Thomas Dixon thomas.dixon@state.co.us OCC
+*Ron Fernandez ron.fernandez@state.co.us OCC
Tim Villarosa tim.villarosa@state.co.us OCC
+*Cindy Schonhaut cindy.schonhaut@state.co.us OCC
+*Ingrid Hassell ingrid.hassell@state.co.us OCC
Hector Arreola hector.arreola@state.co.us OCC
+*Ray Gifford rgifford@wbklaw.com Leave BoCo Out/ IBM
+*Caitlin M. Shields cshields@wbklaw.com Leave BoCo Out/ IBM
John M. Dorsey jdorsey6224@msn.com Leave BoCo Out
+*Hannah Bucher hbucher@wbklaw.com IBM
Andrew Heyman aheyman@us.ibm.com IBM
+*Karl F. Kumli, III karlk@dietzedavis.com CU Boulder
+*Mark D. Detsky mdetsky@dietzedavis.com CU Boulder
+*Gabriella Stockmayer gstockmayer@dietzedavis.com CU Boulder
Julie A. Wolfe Julie@dietzedavis.com CU Boulder
+*Robin W. Kube robkube@dietzedavis.com CU Boulder
Delia Patterson dpatterson@publicpower.org APPA
+*Judith M. Matlock judith.matlock@dgslaw.com PSCo
+*Christopher M. Irby christopher.m.irby@xcelenergy.com PSCo
+*Jack Ihle jack.ihle@xcelenergy.com PSCo
+*Stephanie Voss stephanie.t.voss@xcelenergy.com PSCo
+* Joani Mauro joani.m.mauro@xcelenergy.com PSCo
Glenda Richey glenda.richey@xcelenergy.com PSCo
+*Anne K. Botterud anne.botterud@coag.gov Staff
+* Paul J. Kyed paul.kyed@coag.gov Staff
+*Charlotte Powers charlotte.powers@coag.gov Staff
+*Gene Camp gene.camp@state.co.us Trial Staff
+*Sharon Podein sharon.podein@state.co.us Trial Staff
+*Radhika Sowrirajan radhika.sowrirajan@state.co.us Trial Staff
+*Ron Davis ron.davis@state.co.us Advisory Staff
+*Ellie Friedman ellie.friedman@state.co.us Advisory Staff
+*Paul Caldara paul.caldara@state.co.us Advisory Staff
+*Paul Gomez paul.Gomez@coag.gov Commission Counsel
+*Matt Lindsay matt.Lindsay@coag.gov Commission Counsel
Mark W. Williams mwilliams@shermanhoward.com United Power
Mike Chiropolos mike@chiropoloslaw.com Twin Lakes Action Group
David L. Rechberger dave@dmrgroupllc.com Twin Lakes Action Group
Naomi Perera nperera@laborlawdenver.com IBEW Local No. 111
+*Debra Kalish kalishd@bouldercolorado.gov City of Boulder
+*Laurie Nading NadingL@bouldercolorado.gov City of Boulder
+* Kathy Haddock HaddockK@bouldercolorado.gov City of Boulder
+*Steven D. Catanach catanachs@bouldercolorado.gov City of Boulder
+*Sarah Bennett BennettS@bouldercolorado.gov City of Boulder
+*Thorvald A. Nelson tnelson@hollandhart.com City of Boulder
+*Michelle B. King mbking@hollandhart.com City of Boulder
+*Nikolas S. Stoffel nsstoffel@hollandhart.com City of Boulder
+*Adele C. Lee aclee@hollandhart.com City of Boulder
Patti Penn ppenn@hollandhart.com City of Boulder
+*Connie Scribner cmscribner@hollandhart.com City of Boulder
+*Maureen Witt mwitt@hollandhart.com City of Boulder
+*Dorina O’Toole dotoole@hollandhart.com City of Boulder
*Denotes persons eligible to receive confidential proprietary information pursuant to the Commission’s rules on confidentiality, 4
CCR 723-1100-1102
+Denotes persons eligible to receive highly confidential proprietary information pursuant to Commission Order No. C16-0336-I
/s/ Hannah Bucher
Hannah Bucher
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 SystemATTACHMENT F
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
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
THE CITY OF BOULDER’S NOTICE REGARDING PROPOSED PROCESS TO
ADDRESS AND RESOLVE OUTSTANDING ISSUES
The City of Boulder (the “City” or “Boulder”), by and through its undersigned
attorneys and pursuant to the Public Utilities Commission (the “Commission”) Decision
C19-0151-I, files this Notice Regarding Proposed Process to Address and Resolve
Outstanding Issues (“Notice”). By this Notice, Boulder:
•Summarizes the progress that the City and Public Service Company of Colorado
(“PSCo”) have made since the Commission issued Decision C19-0151-I (the
“February Decision”) to resolve the issues between them and as identified by the
parties to this proceeding, and describes the work Boulder and PSCo are continuing
to do to reach a resolution on the outstanding issues;
•Describes generally a filing anticipated to be made by the City in mid- to late-June
2019 regarding the designation of assets outside the substations that are eligible
for transfer; and
•Describes generally a simultaneous filing to be made by the City also in mid- to
late-June 2019 regarding the assets inside the substations.Colorado PUC E-Filings SystemATTACHMENT G
City of Boulder’s Notice Regarding Procedures and Intent to File Response
Application for Transfer of Assets
Proceeding No. 15A-0589E
June 12, 2019
Page 2 of 11
STATEMENT OF CONFERRAL
Prior to the filing of this Notice and pursuant to the February Decision, Boulder provided
a copy of this Notice to all parties to the proceeding and is authorized to state that trial staff
of the Commission (“Trial Staff”), Tri-State Generation & Transmission Association, Inc.
(“Tri-State”), CF&I Steel LP (“EVRAZ”), Climax Molybdenum Company (“Climax”),
Leave BoCo Out, Twin Lakes Action Group, the Boulder Chamber of Commerce and the
University of Colorado take no position on the Notice. The Office of Consumer Counsel
(the “OCC”), IBM and PSCo take no position on the Notice at this time, but plan to file a
response to the Notice as provided in Ordering Paragraph 7 of the February Decision.
NOTICE
1. In Decision No. C17-0750 (the “September 2017 Decision”), the
Commission approved the designation of assets for transfer outside the six substations at
issue in this Proceeding, subject to Boulder satisfying three conditions: (1) filing an
agreement related to real property interests (“Condition 1”); correcting the errors and
omissions from the list of assets for transfer outside substations (“Condition 2”); and filing
an agreement(s) between Boulder and PSCo addressing Boulder’s payment of costs
(“Condition 3”).
2. On October 26, 2018 and November 16, 2018, Boulder and PSCo filed
several documents intended to fulfill these three conditions: a permanent easement
agreement (Exhibit 1), an Interim Cost Agreement (Exhibit 2), an Agreement for Payment
of Costs (Exhibit 4), a list of facilities outside substations (Exhibit 5A), a list of real
City of Boulder’s Notice Regarding Procedures and Intent to File Response
Application for Transfer of Assets
Proceeding No. 15A-0589E
June 12, 2019
Page 3 of 11
property interests (Exhibit 5B), and an Easement Sharing Agreement (Exhibit 6).1 Three
parties, Trial Staff, Tri-State, and IBM, filed responses to that joint filing.
3. On February 8, 2019, the Commission issued the February Decision, which
stayed this proceeding, directed Boulder to confer with the parties to develop and to file a
proposal for addressing and resolving all outstanding issues and pleadings, and authorized
Boulder to respond to PSCo’s Notice of Withdrawal and Petition for Declaratory Orders.
4. The issues raised by the parties in the pleadings filed in December 2018 2
and January 2019 3 included:
(i) whether Boulder intends to take any assets or property owned by IBM;
(ii) whether any substation assets were included on Exhibit 5A;
(iii) whether Exhibit 5B was complete and accurate; and
(iv) the process for the transfer of assets and property interests inside
substations.
No issues were raised with regard to the Agreement Concerning Permanent, Non-Exclusive
Easements and Other Necessary Real Property Rights, filed in response to Condition 1 of
the September 2017 Decision, to the Interim Agreement for Payment of Certain
1 Due to an administrative error, there was no Exhibit 3 filed.
2 IBM Response, Request for Hearing, Request for Clarification, and Request for Status Conference, filed
December 17, 2018; Tri-State Generation and Transmission Associations, Inc.’s Response, Request for
Clarification, and Request for Status Conference, filed December 17, 2018; and Staff’s Request for a
Hearing, filed December 17, 2018.
3 Notice of Public Service Company of Colorado’s Withdrawal from the Joint Motion for Modification of
Commission December C17-0750; Notice of the Company’s Objections to the List of Assets; or in the
Alternative, Motion for Leave to File Out of Time Objections to the Asset List and Request for Hearing,
filed January 18, 2019; Petition for Declaratory Orders with Regard to the Portion of Commission Decision
C17-0750 Concerning Public Service Assets (Real and Personal) Inside Substations, filed January 25,
2019; IBM’s Notice of Support and Joinder of Relief Sought in Petition for Declaratory Order, filed
January 29, 2019; and Staff’s Notice Concerning Public Service Company’s Petition for a Declaratory
Order, filed January 29, 2019.
City of Boulder’s Notice Regarding Procedures and Intent to File Response
Application for Transfer of Assets
Proceeding No. 15A-0589E
June 12, 2019
Page 4 of 11
Municipalization Costs (Conditions Work) or the Agreement for Payment of Costs, both
filed in response to Condition 3 of the September 2017 Decision.4 Further, no objection
was filed to the Easement Sharing Agreement, filed in response to Condition 2.
5. Following the Commission’s issuance of the February Decision, the City
has worked diligently to address the parties’ concerns. The status of this work is discussed
below.
6. With regard to concerns (i) and (ii), above, related to Exhibit 5A, the list of
assets outside substations, Boulder and PSCo have committed to IBM that no IBM-owned
facilities in substation F are included in Exhibit 5A. With respect to PSCo’s concern that
some of the facilities included on Exhibit 5A were physically located within substations,
that has been isolated to the “tips of distribution feeders,” i.e., the underground distribution
feeder cables that connect to the substation switchgear, pass under the substation surface,
and exit under the substation perimeter fence. Boulder and PSCo have agreed that this
concern may be addressed by the inclusion of an explanatory note on Exhibit 5A. No other
objection was raised regarding Exhibit 5A. Boulder and PSCo anticipate filing Exhibit 5A,
with the added explanatory note, in mid- to late-June 2019.
7. With regard to concern (iii), above, related to the completeness and
accuracy of Exhibit 5B (list of documents of real property interests associated with
distribution facilities on Exhibit 5A outside substations), PSCo is working to identify
4 As stated above, in Decision No. C17-0750, the Commission approved the designation of assets for
transfer outside the six substations at issue in this Proceeding, subject to Boulder satisfying three
conditions: (1) filing an agreement related to real property interests (“Condition 1”); correcting the errors
and omissions from the list of assets for transfer outside substations (“Condition 2”); and filing an
agreement(s) between Boulder and Public Service addressing Boulder’s payment of costs (“Condition 3”).
No issues have been raised regarding the agreements filed in response to Conditions 1 or 3.
City of Boulder’s Notice Regarding Procedures and Intent to File Response
Application for Transfer of Assets
Proceeding No. 15A-0589E
June 12, 2019
Page 5 of 11
recorded and unrecorded conveyances to PSCo associated with the facilities listed on
Exhibit 5A to ensure that only real property interests associated with the facilities listed on
Exhibit 5A are included.
8. Additionally, PSCo has advised Boulder it reformatted Exhibit 5B and,
given the example PSCo provided to the City, the reformatted exhibit is expected to include
the typical information in a real property exhibit, including: grantor, grantee, document
type (easement, agreement, or deed), section, township, range, recording information, and
PSCo document identification numbers, where available. PSCo also provided copies of
this example to Commission Staff, the Office of Consumer Counsel, IBM and Tri-State. It
is further expected that the revised Exhibit 5B will be searchable to allow the parties to
search the fields. Based on PSCo’s representation that it will provide a draft of Exhibit 5B
for Boulder to review during the week of June 17 Boulder anticipates filing the revised
Exhibit 5B in mid- to late-June 2019.
9. With regard to concern (iv), above, the process for the transfer of assets and
property interests inside substations, Boulder and PSCo, in addition to developing this plan
to share with the parties, have been working diligently to identify the assets and property
interests and to reach agreements regarding co-location, operations, maintenance, and
costs.
a. The City submitted its Load to Interconnection Application to PSCo
pursuant to its Open Access Transmission Tariff (“OATT”) on January 9, 2018.
The first step in the OATT process, the System Impact Study Report, were provided
to Boulder by PSCo for substations A, B, C, D, F on October 31, 2018 and a new
City of Boulder’s Notice Regarding Procedures and Intent to File Response
Application for Transfer of Assets
Proceeding No. 15A-0589E
June 12, 2019
Page 6 of 11
substation to be located at the Boulder Wastewater Treatment Plant on December
19, 2018 (collectively, the “SIS Report”). The SIS Report provides for the City to
build three new substations (one adjacent to Substation A, the second adjacent to
Substation C, and the third on property owned by the City), for the City to acquire
all of the distribution facilities in Substations B and D, and for the City to acquire
PSCo’s distribution facilities in Substation F. Importantly, none of the City’s
distribution facilities will be co-located with PSCo distribution facilities in any of
the substations. The City will also pay for PSCo to build new Electric Equipment
Enclosures (“EEEs”) for PSCo at Substations C, D and F. The SIS Report included
a list of the existing equipment that would become part of the Boulder System. The
SIS Report also included the location of that equipment inside the existing
substations and where new equipment for Boulder would be located in the existing
and new substations and where the Boulder distribution system would interconnect
with PSCo’s transmission system. The City has created, and provided to PSCo on
March 1, 2019, an exhibit identifying the equipment and property interests
contained in the SIS Report. The only co-location that will occur in the substations
will be between the City’s distribution facilities and PSCo’s transmission facilities,
and in one instance, between the City’s distribution facilities and Poudre Valley
Rural Electric Association’s distribution facilities. Based on the substantial
progress made to date, Boulder anticipates that the finalized exhibit, identifying for
transfer facilities and property interests inside substations, and the final SIS Report
City of Boulder’s Notice Regarding Procedures and Intent to File Response
Application for Transfer of Assets
Proceeding No. 15A-0589E
June 12, 2019
Page 7 of 11
will be shared with the parties and filed with the Commission in mid- to late-June
2019.
b. In addition to this list of facilities and property interests, Boulder
anticipates sharing several agreements with the parties in mid- to late-June 2019: a
Facilities Study and Detailed Engineering Design Agreement for the six substations
(“Facilities Studies Agreement”) (the second step in the Load to Transmission
Interconnection process); drafts of six co-location, operations and maintenance
agreements (“COM Agreements”); and an Amendment to the Agreement for
Payment of Costs.
i. The Facilities Studies Agreement, which authorizes PSCo to
conduct Facilities Studies at Boulder’s expense and to then
move on to detailed design, became effective May 7, 2019. The
Facilities Studies Agreement requires the Facilities Studies to be
completed by July 8, 2019. Facilities Studies typically provides
greater detail than the System Impact Studies; however, because
of the level of detail initially provided to PSCo by Boulder, the
difference between the SIS Report and Facilities Studies will be
minimal. The purpose of the detailed design portion of the
Facilities Studies Agreement is for Boulder to have a
construction cost estimate to evaluate prior to the Go/No-Go
decision, and not to change the designation or location of
existing facilities to be transferred. Tri-State will also perform
City of Boulder’s Notice Regarding Procedures and Intent to File Response
Application for Transfer of Assets
Proceeding No. 15A-0589E
June 12, 2019
Page 8 of 11
a Facilities Study for Substation F, at Boulder’s expense,
pursuant to an agreement negotiated between PSCo and Tri-
State. Counsel for Tri-State has advised that the Substation F
Facilities Study is expected to be completed in early to mid-
August. Copies of the Facilities Studies Agreement have been
provided to the parties.
ii. The COM Agreements will address cost responsibilities for
construction work at the six substations; the ownership,
operations, maintenance and replacement of facilities at the six
substations; and the terms and conditions of access rights and
easements to the six substations. Boulder and PSCo are
negotiating the terms of those agreements and will share drafts
of the agreements with the parties upon their completion.
iii. The Amendment to the existing Agreement for Payment of
Costs will apply to the extent the treatment of costs related to
substations are not already covered by other agreements in the
FERC process. The Amendment will become effective and
these costs would only be incurred if Boulder determines to
proceed with municipalization after the Go/No-Go vote.
Collectively, these agreements are intended to ensure that the existing facilities
within the substations can be transferred, and the existing and new facilities can be
designed, constructed, and operated in a manner that ensures safe, reliable, and
City of Boulder’s Notice Regarding Procedures and Intent to File Response
Application for Transfer of Assets
Proceeding No. 15A-0589E
June 12, 2019
Page 9 of 11
effective service to customers both within the City, and to those customers PSCo
will continue to serve.
10. To summarize, based on the substantial progress made to date, and
Boulder’s and PSCo’s respective commitments to work together in good faith to complete
these documents, Boulder anticipates it will file with the Commission in mid- to late-June:
• Exhibit 5A, with the additional note regarding distribution feeders that originate
at substations B and D;
• the revised Exhibit 5B, as described above;
• the SIS Reports;
• the list of property and facilities inside the substations defined in the SIS Report
provided by PSCo;
• the Facilities Study Agreement; and
• the Amendment to the Agreement for Payment of Costs.
Prior to their filing, Boulder will share these exhibits and agreements with the parties.
11. In response to the February Decision, Boulder has conferred with the parties
to develop and file a proposal for addressing and resolving all outstanding issues. Boulder
and PSCo have met jointly with representatives of IBM, the OCC, Tri-State, and Trial Staff
to discuss the ongoing work performed to date and the proposal for resolving the issues
raised. To the extent those parties have raised issues with this proposed process, Boulder
has attempted to take those concerns into account in this filing. The proposed process, as
discussed at the meetings, for resolving issues related to Exhibits 5A and 5B and for
identifying assets and real property interests inside substations is as follows:
City of Boulder’s Notice Regarding Procedures and Intent to File Response
Application for Transfer of Assets
Proceeding No. 15A-0589E
June 12, 2019
Page 10 of 11
• Boulder files this Notice;
• Boulder files its Combined Response to the PSCo Notice and the PSCo Petition;
• Parties provide any comments regarding these filings to the Commission within
seven days;
• Boulder shares the Facilities Studies Agreement with all parties;
• Boulder and PSCo continue the development of the Amendment to the Cost
Agreement and Boulder shares this document with all parties upon its
completion;
• Boulder and PSCo reach agreement on the list of assets and real property
interests inside substations and Boulder shares this list with all parties when
completed;
• Boulder provides the COM Agreements to the parties as they are completed;
and
• Boulder files Exhibit 5A with the additional note and the revised Exhibit 5B,
the list of substation facilities and real property interests, the Facilities Study
Agreement and any other completed substation agreements with the
Commission and the parties have fourteen days to respond to these filings.
City of Boulder’s Notice Regarding Procedures and Intent to File Response
Application for Transfer of Assets
Proceeding No. 15A-0589E
June 12, 2019
Page 11 of 11
WHEREFORE, Boulder respectfully requests that the Commission accept the
City’s Notice.
Respectfully submitted this 12th day of June 2019.
CITY OF BOULDER
By: /s/ Debra S. Kalish
Debra S. Kalish, Senior Counsel #18858
Thomas A. Carr, City Attorney #42170
Kathleen E. Haddock, Senior Counsel
#16011
City of Boulder
Box 791
1777 Broadway
Boulder, CO 80306-0791
Telephone: (303) 441-3020
kalishd@bouldercolorado.gov
carrt@bouldercolorado.gov
haddockk@bouldercolorado.gov
HOLLAND & HART LLP
Thorvald A. Nelson, # 24715
Michelle Brandt King, # 35048
Nikolas S. Stoffel, #44815
6380 S. Fiddlers Green Circle, Suite 500
Greenwood Village, CO 80111
Telephone: (303) 290-1601
tnelson@hollandhart.com
mbking@hollandhart.com
nsstoffel@hollandhart.com
ATTORNEYS FOR THE CITY OF
BOULDER
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
IBM’S RESPONSE TO
THE CITY OF BOULDER’S COMBINED RESPONSE IN OPPOSITION AND
REQUEST THE COMMISSION CONTINUE TO HEAR THIS MATTER EN BANC
IBM, Corp. (“IBM”) submits this Response to the City of Boulder’s (“City” or
“Boulder”) Combined Response in Opposition (“Combined Response”) and Notice Regarding
Proposed Process (“Notice”) filed in this proceeding on June 12, 2019. The Combined Response
urges the Colorado Public Utilities Commission (“Commission”) to deny the Petition for
Declaratory Orders filed by Public Service Company of Colorado (“Public Service”) on January
25, 2019, supported and joined by IBM, and to reject Public Service’s Notice of Withdrawal
filed on January 18, 2019. The Notice purports to propose a process “for resolving issues related
to Exhibits 5A and 5B and for identifying assets and real property interests inside substations.”1
IBM urges the Commission to reject the relief requested by Boulder in the Combined Response.
The proposal set forth by Boulder in the Notice is premature, as the Commission has not yet
ruled on the Petition for Declaratory Orders, and it seeks findings regarding documents that do
not yet exist.
1 Notice at ¶ 11.
ATTACHMENT H
2
I. INTRODUCTION
IBM appreciates the efforts Boulder and Public Service have made to date, however,
from a customer perspective, it is obvious significant work remains. Regardless of what has
transpired between Public Service and Boulder since the Commission issued its Decision
authorizing conditional approval for assets outside substations, the Commission must not lose
sight of the fact that Boulder still has not shown that its proposed separation plan, particularly
with respect to assets and real property inside substations, will ensure safe, effective, and reliable
electric service to IBM’s facility. This is especially important in light of Boulder’s recent
representations that it plans to file for condemnation of Public Service’s assets in June or July
2019.2
IBM requires highly reliable electric service. IBM and IBM’s customers stand to suffer
irreparable harm – both commercially and operationally – if Boulder’s separation of facilities
diminishes or threatens to diminish the reliability of service IBM receives. IBM sells reliability,
and any mark on IBM’s reliability record would impact its credibility and ability to attract new
business and retain existing business. IBM’s customers routinely negotiate liability limitations
that can extend into the tens of millions of dollars; thus, an extended outage at IBM’s Boulder
facility could financially impact the entire IBM Corporation.3 Given the nature of customers
IBM serves in Boulder, a significant interruption to IBM’s facility could impact IBM and its
customers, the public at large, and would likely compromise local, state, and national security.4
IBM’s ability to provide its own customers with uninterrupted, round-the-clock service at its data
center depends on reliable and uninterrupted power supply. As a transmission-voltage customer
2 Boulder City Council, Local Power Presentation, at 11 (June 18, 2019), available at https://www-
static.bouldercolorado.gov/docs/5A_Local_Power_Presentation-1-201906181609.pdf.
3 Ladaga Answer Testimony, p. 14, lines 12-14.
4 Ladaga Answer Testimony, p. 11, lines 5-9.
3
served through a substation situated on IBM-owned land with predominantly IBM-dedicated
facilities, it is of the utmost importance that the Commission not authorize any transfer of
substation assets until IBM has vetted, and the Commission has determined, that any assignment,
division, or joint use of substation facilities will protect the electric system’s effectiveness,
reliability, and safety, and ensure adequate service to IBM.5
As reflected below, IBM is concerned that Boulder’s lack of concern and diligence to
date will negatively impact IBM and its data center operations in Boulder. The Commission has
a constitutional obligation to ensure that all electrical facilities are “assigned, divided or jointly
used” in a manner that protects “the system’s effectiveness, reliability and safety.”6 The length of
time needed for Boulder to develop a sound plan should not be artificially limited simply to
accommodate local political schedules.
II. THE PETITION FOR DECLARATORY ORDERS DOES NOT CONSTITUTE
AN UNTIMELY APPLICATION FOR REHEARING, REARGUMENT, OR
RECONSIDERATION (“RRR”)
Boulder’s Combined Response misapprehends the requests in the Petition for Declaratory
Orders and Notice of Withdrawal. Boulder states that Public Service’s requests, which IBM has
joined, constitute an “untimely Application for [RRR] of Commission Decision No. C17-0750,”
arguing that Public Service effectively seeks to modify or “unwind the language of the
Decision.”7
The Petition for Declaratory Orders does not challenge Decision No. C17-0750 and does
not seek to modify or “unwind” any aspect of the Decision. In fact, a Commission decision on
the Petition for Declaratory Orders will give full effect to the Decision by providing the parties
5 City of Boulder v. Pub. Utils. Comm’n, Case No. 14CV30047 (Boulder Dist. Ct., Jan. 14, 2015) (“City of
Boulder”), slip op. at 12; City of Fort Morgan v. Pub. Utils. Comm’n, 159 P.3d 87, 95 (Colo. 2007) (“City of Fort
Morgan”).
6 City of Boulder, slip op. at 12.
7 Combined Response at ¶¶ 1, 12.
4
with information necessary to move forward. Specifically, the Petition for Declaratory Orders
requests the Commission declare that consistent with Decision No. C17-0750, Boulder:
may not commence condemnation proceedings to acquire any
Public Service assets inside substations (real or personal) unless
and until (1) Boulder and Public Service reach mutual agreement
on the transfer of assets inside existing Public Service substations,
and (2) an application requesting the designation of assets inside
substations is filed and granted.8
This is not a challenge to the Decision or a request to modify it. This clarification is
needed to protect customers like IBM and ensure that IBM will receive safe, effective, and
reliable electric service.
III. BOULDER’S REQUESTS IN THE COMBINED RESPONSE ARE
INCONSISTENT WITH DECISION NO. C17-0750
Boulder claims that it can proceed to condemnation of property with no further
Commission action, and has publicly represented that it intends to file its case within the coming
weeks.9 Boulder also claims that Decision No. C17-0750 “provides that the Commission does
not expect the City to return to the Commission for designation of assets inside the substations
prior to condemnation”10 and that the Decision “was intended to remove any barrier to the
commencement of condemnation proceedings, while at the same time asserting continuing
jurisdiction over the final transfer of assets.”11
The City selectively quotes from Decision No. C17-0750 to support its argument. The
Decision states that it would be “premature to authorize the inclusion of facilities inside the
substations on the designated list of assets for transfer.”12 And second, the Decision states that it
8 Public Service Petition for Declaratory Orders, at 1 and 17.
9 Combined Response at ¶¶ 3, 26.
10 Combined Response at ¶ 42.
11 Combined Response at ¶ 45.
12 Decision No. C17-0750 at ¶ 128.
5
“results in no change in substation configurations, at this time.”13 Notwithstanding the
Commission’s finding that it was premature to approve any transfer of assets inside substations,
Boulder alleges that the Commission intended to permit Boulder to take such assets through
condemnation without Commission approval. This assertion not only defies logic, but also
ignores clear legal precedent.
The scope of the Commission’s authority to evaluate and approve the transfer of assets
both inside and outside substations is well-grounded in the Colorado Constitution and
interpreting case law. Pursuant to the Commission’s Article XXV charge, the General Assembly
has found that “[a] reliable supply of electric power … statewide is of vital importance to the
health, safety, and welfare of the people of Colorado.”14 In finding that electric power is
transmitted across an interconnected grid that covers the entire state, the legislature has
recognized that impacts on the grid in one area may have impacts on other areas of the state
grid.15 Consistent with these tenets, the Colorado Supreme Court has concluded that the
Commission has a duty to ensure customers of municipal utilities receive adequate service.16
More recently, Judge LaBuda of the Boulder District Court held that the City is not
permitted to proceed to condemnation without the Commission first “investigat[ing] and
determin[ing] 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.”17 Moreover, and contrary to Boulder’s proposed procedures, “the actual facilities to be
taken cannot be identified until it is known what parts of the system will be retained by Public
13 Decision No. C17-0750 at ¶ 145.
14 Section 29-20-108, C.R.S.; see also § 40-3-101(2), C.R.S. (stating that public utilities shall furnish, provide, and
maintain service that is adequate, efficient, just, and reasonable).
15 Id. at § 29-20-108(1), C.R.S.
16 City of Fort Morgan, 159 P.3d at 95.
17 City of Boulder, slip op. at 8.
6
Service; only then can the proper assets be transferred to the City.”18 These determinations must
be made by the Commission. Judge LaBuda previously rejected Boulder’s argument that
“condemnation may occur prior to PUC approval.”19 The Court’s decision “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.”20
In its own Decision on the issue, the Commission concluded that there was “insufficient
evidence in the record for the Commission at this time that Boulder is unwilling or unable to
provide substantially adequate service to IBM.”21 (Emphasis in Original.) The Commission
went on to hold that “IBM’s specific operational and financial concerns can be addressed as
Boulder and Public Service develop the plans for substation configurations and as Boulder
continues to create the operations plan for its municipal utility,” and directed Boulder “to pay
particular heed to IBM’s concerns and make all reasonable efforts to engage, not only IBM, but
also the other customers that Boulder intends to serve.”22
IBM’s concerns have not been addressed. IBM still has significant concerns about how
Boulder’s proposed separation plan, particularly with respect to assets and real property inside
Substation F, will impact IBM’s facility. For example:
• Does Boulder plan to install a new Supervisory Control and Data Acquisition
(“SCADA”) system?
• How will Boulder’s SCADA system interact with Public Service’s SCADA system?
• Will IBM be forced to operate on a single-source transmission line during Cut-Over?
• How long will that last?
18 City of Boulder, slip op. at 10.
19 City of Boulder, slip op. at 10. “[T]he property to be 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.” City of Boulder, slip op. at 10-11.
20 City of Boulder, slip op. at 11.
21 Decision No. C17-0750, ¶ 236.
22 Id., ¶ 237-39.
7
• Will Boulder have mobile or spare transformers available if IBM experiences an outage?
• Will Boulder comply with IBM’s freeze/thaw schedule in performing substation work?
• Who will perform the construction work inside Substation F?
• What is the proposed reconfiguration of Substation F?
• Who will have access to Substation F?
These are just a few of the questions IBM has asked over the past four years and which
remain unanswered. Given that many questions remain with respect to the safety, effectiveness,
and reliability of substation assets, and that Boulder has yet to meaningfully engage with IBM on
these issues, it is only appropriate that the Commission grant the Petition for Declaratory Orders
and hold that Boulder cannot yet commence condemnation proceedings to acquire any Public
Service assets inside substations.
IV. IBM IS CONCERNED BY BOULDER’S PROPOSED PROCESSES AND
STATEMENTS REGARDING THE EXHIBITS AND DOCUMENTS
Boulder filed its Notice in response to Decision No. C19-0151-I;23 however, the Notice
does not fully comply with the Commission’s directive. Although IBM appreciates that “Boulder
and PSCo have been working diligently to follow the Commission’s direction regarding assets
inside of the substations,”24 IBM has serious concerns regarding the proposed processes in the
Notice as well as statements made by Boulder in the Combined Response.
First, with respect to assets and real property outside substations, although Decision No.
C19-0151-I directed the City to file a proposed process regarding outstanding issues in this
Proceeding, Boulder has put the cart before the horse. The Notice’s proposal is premature since
Exhibits 5A and 5B are not final and have not been filed with the Commission. The Notice is
23 See Decision No. C19-0151-I at ¶ 25 (directing 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”).
24 Combined Response at ¶ 31.
8
supposed to identify a process to resolve remaining issues. However, because neither Boulder
nor Public Service purport to have finalized the list of facilities and/or assets to be transferred
and included in Exhibits 5A and 5B, the universe of potential remaining issues is still open. With
the remaining open issues not yet fully developed, it is unclear what, if anything, Boulder is
seeking approval of by filing the Notice.
To the extent Boulder seeks approval of the “schedule” set forth in paragraph 11 of the
Notice, it is impossible for the parties to provide their consent when they have not seen any of
the listed documents (except for the Notice and Combined Response filed on June 12, 2019).25
Boulder states that it will file final versions of Exhibits 5A and 5B in mid-to-late June 2019.26
IBM looks forward to reviewing these Exhibits, but it cannot stipulate to their contents or agree
to a schedule regarding their review without knowing what may be in them.
The City also purports to present a summary of the issues raised by parties with respect to
assets and property subject to condemnation by Boulder.27 In the Combined Response, Boulder
claims, among other things, that “[t]he only objections to Exhibit 5A were raised by IBM, which
questioned whether Exhibit 5A included any facilities owned by IBM in substation F, and by
[Public Service] regarding whether Exhibit 5A included assets inside substations.”28 Boulder
represents that it and Public Service have committed that Exhibit 5A will contain no IBM-owned
facilities in substation F.29 Furthermore, Boulder makes numerous representations regarding
Exhibits 5A and 5B, including that “there really is no remaining issue with regard to the list of
facilities inside substations.”30
25 IBM agrees that parties are required to file responses to the Notice and Combined Response by June 19, 2019,
consistent with Decision No. C19-0151-I.
26 Notice at ¶¶ 7-8.
27 Notice at ¶ 4.
28 Combined Response at ¶ 16.
29 Combined Response at ¶ 17; Notice at ¶ 6.
30 Combined Response at ¶¶ 22, 53.
9
Even to the extent that the limited scope of issues identified in the Notice constitutes a
comprehensive list based on the draft documents, such list should be given little weight. Boulder
and Public Service have not filed a final version of Exhibit 5A (or Exhibit 5B) with the
Commission or shared final versions of these Exhibits with the parties. Without final versions of
the Exhibits, any conclusions regarding the scope of issues are premature. IBM does not have
any factual assurance regarding which facilities will be included in Exhibit 5A. Furthermore,
earlier drafts of Exhibits 5A and 5B were prepared in such a way that IBM would not be able to
readily identify whether its property was at issue. Per the Commission’s directive in Decision
No. C17-0750, IBM and the parties have a right to review these documents, respond to them, and
request a hearing on the material in the documents within 30 days of the filing.31 This is
particularly true if either list contains assets or real property located inside substations, which is
subject to the ongoing Petition for Declaratory Orders. Fundamental fairness and due process
require the parties to have adequate time to review the identified documents, submit written
response to the Commission, and request a hearing (if necessary).
Second, with respect to assets inside substations, in Decision No. C17-0750, the
Commission directed Boulder and Public Service to follow the “transmission load
interconnection request process, and also the NITS process, to attempt to resolve the required
configurations and ownership arrangements inside the substations.”32 IBM understands that the
Transmission-to-Load interconnection process is subject to the Federal Energy Regulatory
Commission’s (“FERC”) jurisdiction over interstate transmission and that the Transmission-to-
Load system impact study (“SIS”) agreement and facility study agreement for the Boulder
interconnection(s) have been filed with FERC in Docket Nos. ER19-141 and ER19-1784,
31 Decision No. C17-0750, Ordering ¶ 3.
32 Decision No. C17-0750 at ¶ 129.
10
respectively. IBM has filed a motion to intervene in the latter docket regarding the facilities
study agreement. In the Combined Response, Boulder describes the interconnection process with
Public Service, including the SIS conducted by Public Service.33 IBM understands that Public
Service is now conducting the Facilities Study, and that Tri-State Generation & Transmission
Association, Inc. (“Tri-State”) is in the process of negotiating a Facilities Study Agreement with
Public Service.34
IBM has several concerns; importantly, Boulder’s Notice does not contemplate providing
interested parties, such as IBM, the opportunity to review and comment on the Facilities Studies,
or suggest that the Facilities Studies will be filed with the Commission. Because the Facilities
Study process will impact the facilities at Substation F, on June 14, 2019, IBM asked Public
Service, Tri-State, and Boulder that it be included in the interconnection study process (see
Attachment A). Both Public Service and Tri-State responded in the affirmative, but IBM has not
received a response from Boulder.
Boulder also states that co-location, operations, and maintenance (“COM”) agreements
for substations will be shared by parties by the end of the month.35 IBM is similarly concerned
that Boulder’s Notice does not contemplate that IBM will be party to such agreement, or
contemplate that the COM agreements will be filed with the Commission. As reflected in
Attachment A, IBM expects to participate in the development of the COM agreement for
Substation F, and has requested an opportunity to participate. Public Service and Tri-State have
responded in the affirmative, but Boulder has not responded to IBM’s request. Boulder states in
the Notice that “none of the City’s distribution facilities will be co-located with PSCo
33 Combined Response at ¶¶ 29-35.
34 Combined Response at ¶¶ 36-37.
35 Combined Response at ¶ 36.
11
distribution facilities in any of the substations.”36 Later in the same paragraph, Boulder states:
“The City has created, and provided to PSCo on March 1, 2019, an exhibit identifying the
equipment and property interests contained in the SIS Report. The only co-location that will
occur in the substations will be between the City’s distribution facilities and PSCO’s
transmission facilities, and in one instance, between the City’s distribution facilities and Poudre
Valley Rural Electric Association’s distribution facilities.”37 Without the final Exhibits, IBM
cannot confirm the accuracy of these statements or meaningfully participate in the development
of the COM agreements.
Although the Transmission-to-Load interconnection process is ongoing, Boulder and
Public Service have not reached agreement concerning division of assets and property located
within the substations. While the Commission directed Boulder to work with Public Service to
see if they could reach mutual resolution with respect to substation property, the Decision went
so far as to contemplate that Boulder need not necessarily acquire Public Service’s substations in
order to carry out its legal right to form a municipal utility. Instead, the Decision found that, “if
Boulder acquires the distribution facilities outside of the substations … Boulder will have the
technical means (i.e., the facilities and associated property rights) to create a municipal utility.”38
The Decision went on to hold that Boulder has “the right to build new substations … in the event
the City is unable to reach agreement with Public Service on the purpose and/or reconfiguration
of the existing substations.”39 The SIS Report published on October 31, 2018 confirms that
significant areas of uncertainty and dispute remain with respect to the configuration and transfer
of substation assets.
36 Notice at ¶ 9a.
37 Notice at ¶ 9a.
38 Decision No. C17-0750 at ¶ 148.
39 Decision No. C17-0750 at ¶ 148.
12
This lack of certainty and the unavailability of the relevant documents demonstrates why
the process outlined in the Notice is premature and inadequate, and why the Commission should
issue a decision on Public Service’s Petition for Declaratory Orders before the condemnation
process can proceed.
V. RESPONSE TO BOULDER’S REQUEST FOR ORAL ARGUMENT
With respect to Boulder’s request for oral argument, IBM notes it is unclear which
specific issues Boulder is requesting oral argument for, why it is necessary, or how it will
facilitate the Commission’s decision-making. IBM also finds it premature to hold oral argument
given that Boulder has yet to comply with the conditions established in Decision No. C17-0750.
However, to the extent the Commission determines oral argument would aid it in its decision-
making, IBM requests that all parties in this proceeding have equal opportunity to participate,
and that the Commission identify the specific issues it desires oral argument on.
VI. REQUEST THAT THE COMMISSION CONTINUE TO HEAR THIS MATTER
EN BANC
Finally, given the complexity of issues involved in this proceeding, and the lengthy
procedural history, IBM respectfully requests that this matter, including the Petition for
Declaratory Orders, continue to be heard en banc by the full Commission. IBM believes this
will facilitate a more efficient review, while affording greater continuity to a nuanced proceeding
that straddles unique regulatory, political, and legal issues – many of first impression.
* * *
For the forgoing reasons and as set forth in its Notice of Support and Joinder of the Relief
Sought by Public Service Company of Colorado filed on January 29, 2019, IBM urges the
Commission to reject Boulder’s Combined Response and continues to support the relief
13
requested in Public Service’s Petition for Declaratory Orders. Finally, IBM requests that the
Commission continue to hear this matter en banc.
DATED this 19th day of June 2019.
Respectfully submitted,
/s/ Caitlin M. Shields
Raymond Gifford, #21853
Caitlin Shields, #41539
WILKINSON BARKER KNAUER, LLP
1755 Blake Street, Suite 470
Denver, Colorado 80202
Telephone: 303.626.2350
Email: rgifford@wbklaw.com
cshields@wbklaw.com
ATTORNEYS FOR IBM, CORP.
CERTIFICATE OF SERVICE
I hereby certify that on June 19, 2019 the foregoing document was filed with the
Commission via e-file and served on the following parties.
*Matthew S. Larson mlarson@wbklaw.com Boulder Chamber of Commerce
*Adam M. Peters apeters@wbklaw.com Boulder Chamber of Commerce
John Tayer john.tayer@boulderchamber.com Boulder Chamber of Commerce
*Richard L. Fanyo rfanyo@polsinelli.com Climax
Rose Tinnell rtinnell@polsinelli.com Climax
Vivian Lehan vlehan@polsinelli.com Climax
*Mark T. Valentine mark.valentine@lewisbrisbois.com CF&I
Randolph W. Starr randy@starrwestbrook.com PVREA
+*Thomas J. Dougherty tdougherty@lrrlaw.com Tri-State
+*Gregory E. Bunker gregory.bunker@state.co.us OCC
+*Thomas Dixon thomas.dixon@state.co.us OCC
+*Ron Fernandez ron.fernandez@state.co.us OCC
Tim Villarosa tim.villarosa@state.co.us OCC
+*Cindy Schonhaut cindy.schonhaut@state.co.us OCC
+*Ingrid Hassell ingrid.hassell@state.co.us OCC
Hector Arreola hector.arreola@state.co.us OCC
+*Ray Gifford rgifford@wbklaw.com Leave BoCo Out/ IBM
+*Caitlin M. Shields cshields@wbklaw.com Leave BoCo Out/ IBM
John M. Dorsey jdorsey6224@msn.com Leave BoCo Out
+*Hannah Bucher hbucher@wbklaw.com IBM
Andrew Heyman aheyman@us.ibm.com IBM
+*Karl F. Kumli, III karlk@dietzedavis.com CU Boulder
+*Mark D. Detsky mdetsky@dietzedavis.com CU Boulder
+*Gabriella Stockmayer gstockmayer@dietzedavis.com CU Boulder
Julie A. Wolfe Julie@dietzedavis.com CU Boulder
+*Robin W. Kube robkube@dietzedavis.com CU Boulder
Delia Patterson dpatterson@publicpower.org APPA
+*Judith M. Matlock judith.matlock@dgslaw.com PSCo
+*Christopher M. Irby christopher.m.irby@xcelenergy.com PSCo
+*Jack Ihle jack.ihle@xcelenergy.com PSCo
+*Stephanie Voss stephanie.t.voss@xcelenergy.com PSCo
+* Joani Mauro joani.m.mauro@xcelenergy.com PSCo
Glenda Richey glenda.richey@xcelenergy.com PSCo
+*Anne K. Botterud anne.botterud@coag.gov Staff
+* Paul J. Kyed paul.kyed@coag.gov Staff
+*Charlotte Powers charlotte.powers@coag.gov Staff
+*Gene Camp gene.camp@state.co.us Trial Staff
+*Sharon Podein sharon.podein@state.co.us Trial Staff
+*Radhika Sowrirajan radhika.sowrirajan@state.co.us Trial Staff
+*Ron Davis ron.davis@state.co.us Advisory Staff
+*Ellie Friedman ellie.friedman@state.co.us Advisory Staff
+*Paul Caldara paul.caldara@state.co.us Advisory Staff
+*Paul Gomez paul.Gomez@coag.gov Commission Counsel
+*Matt Lindsay matt.Lindsay@coag.gov Commission Counsel
Mark W. Williams mwilliams@shermanhoward.com United Power
Mike Chiropolos mike@chiropoloslaw.com Twin Lakes Action Group
David L. Rechberger dave@dmrgroupllc.com Twin Lakes Action Group
Naomi Perera nperera@laborlawdenver.com IBEW Local No. 111
+*Debra Kalish kalishd@bouldercolorado.gov City of Boulder
+*Laurie Nading NadingL@bouldercolorado.gov City of Boulder
+* Kathy Haddock HaddockK@bouldercolorado.gov City of Boulder
+*Steven D. Catanach catanachs@bouldercolorado.gov City of Boulder
+*Sarah Bennett BennettS@bouldercolorado.gov City of Boulder
+*Thorvald A. Nelson tnelson@hollandhart.com City of Boulder
+*Michelle B. King mbking@hollandhart.com City of Boulder
+*Nikolas S. Stoffel nsstoffel@hollandhart.com City of Boulder
+*Adele C. Lee aclee@hollandhart.com City of Boulder
Patti Penn ppenn@hollandhart.com City of Boulder
+*Connie Scribner cmscribner@hollandhart.com City of Boulder
+*Maureen Witt mwitt@hollandhart.com City of Boulder
+*Dorina O’Toole dotoole@hollandhart.com City of Boulder
*Denotes persons eligible to receive confidential proprietary information pursuant to the Commission’s rules on confidentiality, 4
CCR 723-1100-1102
+Denotes persons eligible to receive highly confidential proprietary information pursuant to Commission Order No. C16-0336-I
/s/ Hannah Bucher
Hannah Bucher