Colorado Rejects Claims of Commissioner Bias

An electric rate case before the Colorado Public Utilities Commission has become a setting for a politically charged dispute leading to two commissioners (Frances A. Koncilja and Wendy M. Moser) being the subject of separate motions asking for the recusal of each of the commissioners. The two motions for recusal had been filed at different points in a revenue requirement case for Black Hills/Colorado Electric Utility Company (BHCE). The latest chapter in the controversy arose in connection with the utility’s request for rehearing of the commission’s rate decision, which had been issued last December. In that rate order, the commission had denied more than 90% of BHCE’s proposed increase in rates. However, in a strongly worded dissent, Commissioner Koncilja had criticized her fellow commissioners for not cutting enough of the rate request. 

In seeking rehearing, BHCE charged that it had been deprived of an objective and unbiased decision based on the alleged less-than-impartial conduct of Commissioner Koncilja “… as demonstrated by the results of the case.” The company requested that the commission review its findings therein, including (1) establishment of a separate capital structure and cost of debt for a new generating facility, (2) a cap on rate case expenses, and (3) the 9.37% return on equity (ROE) used in setting base rates. According to the utility’s petition, that 9.37% ROE was unjustly low and represented disparate treatment between it and another utility, Public Service Company of Colorado, which had recently been authorized a 9.5% ROE. 

Black Hills also reiterated its concerns about Commissioner Koncilja, observing that it actually had sought her recusal at the same time it filed its original rate application. However, the commission had previously dismissed that motion for recusal. The commission reached the same conclusion when BHCE petitioned for Commissioner Koncilja to disqualify herself from the rate appeal. 

The commission remarked that the utility had failed to show that a commissioner’s votes to deny the company all the rate relief requested was tantamount to personal bias. The commission thus rejected the request for Commissioner Koncilja’s recusal. Interestingly, Commissioner Moser dissented. 

In the same BHCE proceeding, Pueblo County, whose residents are served by the utility, filed a competing motion for disqualification, this one directed at Commissioner Moser, not Commissioner Koncilja. The county contended that state utility law imposed upon Commissioner Moser a duty to withdraw from hearing the rate case due to her recent past employment by the subject utility. The county argued that Commissioner Moser had been with BHCE during the course of other related rate cases and resource planning proceedings, raising concerns about her ability to remain impartial. 

More particularly, Pueblo County advanced the position that Commissioner Moser, as a supervising attorney of BHCE’s employees, had gained personal knowledge of disputed evidentiary facts through her employment. The county pointed out that Commissioner Moser had been employed by BHCE as Vice President of Regulatory Services and Resource Planning from March 2011 through September 2014, which encompasses the time that the utility’s previous rate case was litigated, wherein many of the same matters were at issue as in the instant rate case. 

The commission, however, was unmoved by the county’s protests. The commission stressed that Commissioner Moser was not employed by Black Hills during the 2015 calendar year, the test year upon which the company’s latest revenue requirement proposal rested. Further, the commission said, the generating unit for which a separate cost of capital was set forth had not commenced commercial operation until late 2016, well past the term of Commissioner Moser’s employment with BHCE. 

The commission concluded that Pueblo County’s motion failed to offer a sufficient nexus between what the utility had requested in its rate application and any bias Commissioner Moser might have harbored based on her previous work status at the company. But Commissioner Koncilja once again dissented, suggesting that Commissioner Moser should not have participated in the proceeding because she has a direct conflict of interest. 

Commissioner Koncilja stated that Commissioner Moser had, in fact, demonstrated a bias in favor of Black Hills and that her participation created the appearance of impropriety. Commissioner Koncilja also opined that Commissioner Moser was not “a mere employee,” but rather a Vice President of Regulatory Affairs, which bestowed upon her responsibility for providing strategic direction and regulatory guidance in rate case content and development. 

The commissioner commented that ratepayers have an acute interest in seeing an unbiased decision in BHCE’s rate case given that one of the primary issues in the case was how and to what extent ratepayers must compensate the utility for its decision to build a $63 million peaking unit that will be used only one or two days a year. Commissioner Koncilja drew attention to the fact that Commissioner Moser had been with BHCE during the time the company was developing its plans for the new generating facility. 

Commissioner Koncilja’s observations notwithstanding, the other commissioners continued to voice support for Commissioner Moser and found no basis for requiring her to disqualify herself. It is clear, however, that relations between the various Colorado commissioners are apt to remain tense. Re Black Hills/ Colorado Electric Utility Co., LP, Proceeding No. 16AL-0326E, Decision No. C17-0454, June 7, 2017 (Colo.P.U.C.).