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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