# Funding and Cost Recovery Mechanism

- **operation:** document
- **citation:** 4 CCR 723-4 Rule 4757
- **title:** Funding and Cost Recovery Mechanism
- **source type:** regulation
- **agency:** Colorado Public Utilities Commission
- **status:** current
- **official:** true
- **published on:** Not available
- **effective on:** Not available
- **summary:** The purpose of the G-DSMCA is to enable utilities to recover prudently incurred gas DSM program expenses without requiring a change in their base rates for gas sales. All such costs, plus any G-DSM bonus approved by the Commission, shall be recovered through the G-DSMCA that is set on an annual basi
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- **app url:** https://regulus.evalyn.ai/document/co-ccr-4-723-4-4757
- **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:**

The purpose of the G-DSMCA is to enable utilities to recover prudently incurred gas
DSM program expenses without requiring a change in their base rates for gas sales. All
such costs, plus any G-DSM bonus approved by the Commission, shall be recovered
through the G-DSMCA that is set on an annual basis, and collected from July 1 through
June 30. The G-DSMCA allows for prospective recovery of prudently incurred costs of
DSM programs within the DSM program expenditure target approved by the
Commission in order to provide for funding of the utility’s DSM programs, as well as
recovery of deferred G-DSMCA costs, without having to file a rate case.
(a) A utility may spend a disproportionate share of total expenditures on one or more
classes of customers, provided, however, that cost recovery for programs
directed at residential customers are to be collected from residential customers
only and that cost recovery for programs directed at nonresidential customers are
to be collected from nonresidential customers only, except as provided for in
paragraph 4757(f).
(b) The utility may recover its DSM program expenditures either through expensing
or by adding DSM program expenditures to base rates as a part of, or outside of,
a rate case, with an amortization period as set forth in rule 4756.
(c) There shall be no financial penalty assessed on a utility for failing to reach its
approved DSM program expenditure target, nor shall there be a bonus simply for
meeting its DSM program expenditure target. All prudently incurred expenditures
for the utility’s portfolio of DSM programs are recoverable. However, the portion
of costs yielding a modified TRC test value below 1.0 loses its presumption of
prudence and is subject to review.
(d) Amounts not spent under the DSM program expenditure target shall not roll-over
to the next DSM period.
(e) A utility has the discretion and the responsibility of managing the portfolio of DSM
programs to meet the benefit to cost ratio and the energy and savings targets. In
implementing DSM programs, a utility shall use reasonable efforts to maximize
energy savings consistent with the approved DSM plan.

(f) A utility may continue DSM programs that were in existence on or before May 22,
2007, the effective date of § 40-3.2-103, C.R.S., concerning measures to
promote energy efficiency, and shall not be required to obtain approval from the
Commission for recovery of costs associated with such programs. Any new
expenditure for such programs must be included in the annual DSM plan filing
and G-DSMCA application. Existing low-income DSM programs that recover
costs from all customer classes shall continue such recovery.
(g) A utility shall file a request to adjust its G-DSMCA factor either through an
application or an advice letter and tariffs, pursuant to the relevant provisions of
title 40, articles 1 through 7 of the Colorado Public Utilities Law and of the
Commission rules. The G-DSMCA shall be filed pursuant to the schedule
provided in rule 4752.
(h) The G-DSMCA filing shall include information and attachments as required in
rule 4758. If the M & V evaluation required by rule 4755 yields benefit/costs test
results that impact the allowable recovery of costs or currently approved bonus,
then the utility shall include such adjustments in the G-DSMCA filing and tariffs.
(i) If the projected DSM program costs have changed from those used to calculate
the currently effective G-DSMCA cost or if a utility’s deferred G-DSMCA cost
balance increases or decreases sufficiently, the utility may file an application to
revise its currently effective G-DSMCA factor to reflect such changes, provided
that the resulting change to the G-DSMCA factor equates to a base rate change
of at least one cent ($0.01) per Mcf or Dth. A utility has the burden of proof to
justify any interim G-DSMCA filings and the Commission has the discretion to
consolidate the interim G-DSMCA filing with the next regularly scheduled annual
G-DSMCA filing.
(j) Applicability of the G-DSMCA factor. The G-DSMCA factor shall be separately
calculated and applied to the utility sales gas base rate schedules of residential
and non-residential customers.
(k) Return on DSM program expenditures to be amortized. For utilities that choose
to amortize the DSM program expenditure, the balance of a utility’s investments
in cost-effective DSM programs shall earn a return equal to the utility’s current
after-tax weighted average cost of capital.
(l) Interest on under- or over-recovery. The amount of net interest accrued on the
average monthly balance in sub-accounts of Account No. 186 (whether positive
or negative), is determined by multiplying the monthly balance by an interest rate
equal to the Commission-authorized after-tax weighted average cost of capital.
(m) Calculation of the G-DSMCA factor. The G-DSMCA factor shall be calculated
separately for residential and non-residential customers to at least the accuracy
of two significant places.
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