# Costs Prohibited from Rates

- **operation:** document
- **citation:** 4 CCR 723-4 Rule 4351
- **title:** Costs Prohibited from Rates
- **source type:** regulation
- **agency:** Colorado Public Utilities Commission
- **status:** current
- **official:** true
- **published on:** Not available
- **effective on:** Not available
- **summary:** (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 unreg
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- **app url:** https://regulus.evalyn.ai/document/co-ccr-4-723-4-4351
- **source url:** https://www.sos.state.co.us/CCR/DisplayRule.do?action=ruleinfo&ruleId=2260&deptID=18&agencyID=96&deptName=Department%20of%20Regulatory%20Agencies&agencyName=Public%20Utilities%20Commission&seriesNum=4%20CCR%20723-4
**body:**

(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.
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