Costs Prohibited from Rates

(a)Base rates and rate adjustment mechanisms shall not recover the following costs:#

(I)expenses related to marketing and administration or customer service for unregulated products or services provided or sold by the utility or the utility's affiliates in accordance with the rules addressing unregulated goods and services 4 CCR 723-3-3500, et seq.;#

(II)entertainment or gift expenses;#

(III)penalties or fines related to taxes;#

(IV)investor-relation expenses;#

(V)expenses associated with lobbying or other activities meant to influence the outcome of any local, state, or federal legislation, ordinance, resolution, or ballot measure. For the purpose of a base rate proceeding and related reporting, lobbying means directly, or through the solicitation of others, communicating with a person that is in a position to make a policy decision in order to influence the outcome of local, state, or federal legislation;#

(VI)organizational dues, membership dues, or other contributions to any organization, association, institution, corporation, or other entity that engages in lobbying or other similar activities meant to influence the outcome of any local, state, or federal legislation, ordinance, resolution, or ballot measure;#

(VII)advertising and public relations expenses incurred to promote or improve the utility's brand, to influence public opinion about the utility, to create good will toward the utility from the general public. Advertising regarding service interruptions, safety measures, emergency conditions, or employment opportunities with the utility may be included in a revenue requirement for any test year as determined by the Commission;#

(VIII)advertising and public relations expenses not directly related to a purpose or program that is required or authorized under statute, rule, or order. Advertising or other consumer education expenses directly related to income-based rates and services, including special rates, pilot programs, energy efficiency, beneficial electrification, renewable energy, and transportation electrification, may be included in a revenue requirement for any test year as determined by the Commission;#

(IX)charitable giving expenses, including contributions to organizations qualified under Section 501(c)(3) or 501(c)(4) of the federal "Internal Revenue Code of 1986", 26 U.S.C. Sec. 501, as amended;#

(X)contributions to political candidates, campaign committees, issue committees, or independent expenditure committees or similar political expenses;#

(XI)travel, lodging, food, and beverage expenses of the utility's officers;#

(XII)travel, lodging, food, and beverage expenses and no more than 50 percent of all other reimbursed expenses of the utility's board of directors;#

(XIII)expenses related to any owned, leased, or chartered aircraft for the utility's board of directors and officers, where aircraft has the meaning set forth in § 41-23-101(1), C.R.S.; and#

(XIV)more than 50 percent of compensation to the utility's board of directors.#

(b)Required data in base rate case.#

(I)A utility shall provide in any base rate case where the Commission has suspended the proposed tariff and ordered a hearing, at minimum, the following information to enable a determination by the Commission that the utility is not seeking to recover from its customers any of the prohibited costs identified in subparagraphs (a)(I) through (a)(XIV) of this rule:#

(A)disaggregated data that identifies the portion of total annual compensation excluded from cost recovery for each individual employee (identified at least by position and title) who conducted activities during the applicable test year period that are prohibited for recovery; and#

(B)disaggregated data that identifies all amounts paid by the investor- owned utility to outside vendors (including but not limited to consultants and legal counsel) to conduct activities during the applicable test year period that are prohibited for recovery.#

(II)This information shall be filed by the utility into the administrative record for the proceeding no later than 30 days after the issued date of the Commission decision setting the matter for hearing and shall be updated, as applicable, at the time of filing rebuttal testimony.#

(c)Reporting. For the purpose of demonstrating compliance with § 40-3-114, C.R.S., on or before April 30th of each year, each utility shall file with the Commission a report that identifies any costs prohibited by paragraph 4351(a) that the utility sought to include in base rates or in a rate adjustment mechanism but the Commission found, in a written decision, are not permitted to be recovered from customers. The report must include, for each prohibited cost required to be reported, the purpose of the expenses corresponding to subparagraphs 4351(a)(I) through (XIV), and the payee and amount of the expenses the Commission found are not permitted to be recovered from customers. The report shall be filed concurrently with and in the same proceeding as the investor- owned utility's annual report filed in accordance with rule 4006.#

(d)Penalties. If the Commission determines that an investor-owned utility improperly recovered through rates any of the prohibited costs or expenditures listed in paragraph 4353(a), the Commission may assess a civil penalty against the utility pursuant to rules 4009 and 4010.#

(e)Refunds. If the Commission assesses a civil penalty against the utility in accordance with paragraph 4351(d), the Commission shall also order the utility to submit for approval a refund plan pursuant to rule 4410. The utility shall refund the amount of prohibited costs or expenditures improperly recovered through rates, plus interest, to customers.#