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Holcim U.S. v. Colorado Public Utilities & Black Hills Colorado Electric
In this appeal, Holcim U.S. Inc. contended that the Colorado Public Utilities Commission set an unjust and unreasonable charge for electricity over a five-day period because the charge allegedly had no relationship to the electricity that Holcim used during that time and disproportionately allocated utility costs to Holcim.
Holcim also argued the PUC committed a taking in violation of the Fifth Amendment when it purportedly set an excessive charge for Holcim without evidence that the charge reflected the cost of service rendered by the electric utility, Black Hills Colorado Electric LLC.
From Feb. 13 through Feb. 17, 2021, Black Hills and other utilities serving Colorado customers faced a severe arctic cold weather event called Winter Storm Uri. During this weather event, natural gas wells and production and processing facilities in parts of the U.S. froze off, taking a major portion of the nation’s gas supply offline. At the same time, the record-breaking cold temperatures led to increased demand for natural gas.
To ensure sufficient natural gas supplies to allow it to continue providing electric service to its customers during the extreme weather event, Black Hills made spot market purchases for the four-day period beginning on Feb. 13, 2021. Black Hills didn’t make any daily gas purchases on Feb. 16 for delivery on Feb. 17. Due to the extreme and persistent cold temperatures, Black Hills made these purchases based on the highest of its forecasted requirements for the ensuing four-day period.
In accordance with the PUC’s order, Black Hills filed a verified application to recover the extraordinary costs that it had incurred. PUC Trial Staff, the Colorado Office of the Utility Consumer Advocate and the Colorado Energy Office then intervened as of right in the proceeding that Black Hills had initiated, Holcim permissively intervened and the PUC referred the matter to an administrative law judge for consideration.
The ALJ reviewed proposed settlement agreements from all parties. Under Holcim’s proposal, approximately $2 million of Black Hills’s extraordinary costs would have shifted to the residential class, while the costs to be paid by Holcim would have decreased substantially. The ALJ rejected Holcim’s proposal, concluding that it was not in the public interest.
Applying the deferential standard of review that the Colorado Supreme Court noted it affords the PUC, the court concluded that the charge that the PUC imposed was just and reasonable. It also concluded that although Holcim didn’t adequately develop its takings claim, it did present a due process claim. As to that claim, the state’s high court determined that Holcim didn’t establish a violation of its due process rights in this case.
The court affirmed the district court’s judgment upholding the PUC’s determination.