Court Opinion

ID: 4180450
Source: CourtListenerOpinion
Date Created: 2017-06-23 16:08:05.757695+00
Date Added: 2024-06-11T07:46:47.969044
License: Public Domain

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6                                                            ADVANCE SHEET HEADNOTE
7                                                                          June 19, 2017
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9                                             2017 CO 75
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1   No. 16SA53, Carestream Health, Inc. v. Colo. Pub. Utils. Comm’n—Public Utilities—
2   Tariffs—Standing—Injury-in-Fact.
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4          The supreme court considers two issues in this appeal from the district court’s

5   review of a Colorado Public Utilities Commission (“the Commission”) decision. Both

6   issues pertain to a billing error that led Public Service Company of Colorado (“Public

7   Service”) to undercharge Carestream Health, Inc. (“Carestream”) for gas it received

8   over the course of a three-year period.

9          The first issue is whether the Commission properly interpreted Public Service’s

0   tariff, specifically the requirement to “exercise all reasonable means” to prevent billing

1   errors. The supreme court concludes that determining what means are “reasonable,” as

2   that term is used in the tariff, necessarily requires considering what errors are

3   foreseeable.   The supreme court therefore holds that the Commission properly

4   interpreted the tariff and acted pursuant to its authority.

5          The second issue is whether Carestream had standing to challenge Public

6   Service’s use of its tariff to recover a portion of the undercharge from its general
1   customer base.     Because Carestream suffered no injury from that action, it lacks

2   standing to challenge it.

3          The supreme court accordingly affirms the judgment of the district court.

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2                        The Supreme Court of the State of Colorado
3                          2 East 14th Avenue • Denver, Colorado 80203

4                                         2017 CO 75

5                               Supreme Court Case No. 16SA53
6                                  Appeal from the District Court
7                District Court, City and County of Denver, Case No. 15CV32332
8                              Honorable Elizabeth A. Starrs, Judge

9                                     Plaintiff-Appellant:
0                                   Carestream Health, Inc.,
1                                              v.
2                                    Defendant-Appellee:
3                            Colorado Public Utilities Commission,
4                                             and
5                                    Intervenor-Appellee:
6                            Public Service Company of Colorado.

7                                    Judgment Affirmed
8                                            en banc
9                                         June 19, 2017
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2   Attorneys for Plaintiff-Appellant:
3   Lewis Brisbois Bisgaard & Smith LLP
4   Mark T. Valentine
5    Denver, Colorado
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7   Attorneys for Defendant-Appellee:
8   Cynthia H. Coffman, Attorney General
9   Jessica L. Lowrey, Assistant Attorney General
0     Denver, Colorado
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2   Attorneys for Intervenor-Appellee:
3   Gordon & Rees LLP
4   Franz Hardy
5   Lance J. Ream
6    Denver, Colorado
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3   JUSTICE HOOD delivered the Opinion of the Court.

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¶1    In 2010, Carestream Health, Inc. began purchasing gas transportation services

from Public Service Company of Colorado. In 2013, Public Service discovered that it

had undercharged Carestream by approximately $1.26 million for those services. When

Public Service sought to recover a portion of that amount, Carestream refused to pay.

¶2    Carestream filed a complaint with the Colorado Public Utilities Commission,

claiming that Public Service had violated its tariff—a publicly filed document that sets

forth the rates a public utility will charge and the rules and regulations it must follow—

by failing to use “all reasonable means” to prevent billing errors, as required by the

tariff. The Commission disagreed, and the district court affirmed the Commission’s

decision.

¶3    Carestream seeks reversal of the district court’s judgment. Carestream argues

that the Commission, in effect, improperly added language to the tariff, thereby

exceeding the Commission’s constitutionally and statutorily granted authority.

Specifically, Carestream contends that the Commission added a requirement that billing

errors be foreseeable before Public Service is required to take means to prevent them.

Carestream also argues that the district court erred when it held that Carestream lacked

standing to pursue a separate claim that Public Service violated its tariff by recovering

from its general customer base that portion of the undercharge it was unable to recover

from Carestream.

¶4    We reject Carestream’s arguments on both counts.          First, we conclude that

determining what means are “reasonable,” as that term is used in Public Service’s tariff,

necessarily requires considering what errors are foreseeable. We therefore hold that the

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Commission properly interpreted the tariff and acted pursuant to its authority. Second,

we conclude that Carestream lacks standing to challenge Public Service’s recovery of

the undercharge from its general customer base because Carestream suffered no injury

from that action. Accordingly, we affirm the judgment of the district court.

                          I. Facts and Procedural History

¶5    Carestream Health, Inc. (“Carestream”) is a manufacturer of medical imaging

media and equipment.       The events giving rise to this case began in 2010, when

Carestream started purchasing gas transportation services from Public Service

Company of Colorado (“Public Service”).

¶6    Carestream became a Public Service customer when it purchased utility assets

from the Eastman Kodak Company (“Kodak”), an existing Public Service customer.

However, Carestream wanted a different type of service from the one Kodak had been

receiving. Kodak was a gas sales customer, which means it paid Public Service for both

natural gas and for pipeline services to transport the purchased gas to its facility.

Carestream wanted to be a gas transportation customer, purchasing natural gas from a

different supplier and paying Public Service for transportation only.

¶7    This is where things went awry. Although Carestream was a new customer,

Public Service used information from Kodak’s meter to set up Carestream’s account.

When it did so, Public Service miscalculated Carestream’s gas consumption,

underreporting it by approximately fifteen percent.1 Public Service did not discover the

1To determine its customers’ gas usage, Public Service collects data from its meters and
uploads that data to various automated programs.            These programs apply a

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error until March 2013, by which point it had undercharged Carestream by

approximately $1.26 million for the gas Carestream had consumed in the nearly three

years it had been a Public Service customer. Public Service does not dispute that it was

responsible for the error, and Carestream acknowledges it received the gas for which it

was undercharged.

¶8     After discovering the error, Public Service sought to collect a portion of the cost

from Carestream. Public Service’s tariff provides that in the event an error in billing

occurs, the utility has the right to collect from the customer the amount of any

undercharge.    This right to collection is limited to the twenty-four month period

immediately preceding the discovery of the billing error.       Public Service therefore

back-billed Carestream $716,919.71 for the period from March 2011 to March 2013.

Public Service recovered the remaining $510,000 of the undercharge from its customer

base through the Gas Cost Adjustment (“GCA”) permitted by its tariff. The GCA

allows a utility to adjust customers’ rates on an expedited basis to pass changes in gas

costs through to customers. Dep’t of Regulatory Agencies Regs. 4600, 4601(m), 4 Colo.

Code Regs. 723-4 (2017); Pub. Serv. Co. of Colo. v. Pub. Utils. Comm’n, 644 P.2d 933, 935

(Colo. 1982).

“pressure-based correction factor,” which is a number with a value of less than one that,
when applied to a customer’s reported gas usage, lowers the reported gas usage in
order to account for the temperature and compressability of the gas.                 The
pressure-based correction factor is applied to the accounts of both gas sales and gas
transportation customers. When Public Service set up Carestream’s account, it left
Kodak’s pressure-based correction factor in place, but it also added a new
pressure-based correction factor for Carestream. This resulted in a double application
of the pressure-based correction factor to Carestream’s account, lowering Carestream’s
reported gas usage below what it should have been.

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¶9     Carestream refused to pay the $716,919.71, and it filed a formal complaint against

Public Service with the Colorado Public Utilities Commission (“the Commission”).

Carestream noted that although Public Service’s tariff allows it to recover for billing

errors, the tariff requires the utility to “exercise all reasonable means to assure accurate

computation of all bills for gas service.” Carestream argued that Public Service did not

exercise all reasonable means to prevent the error that occurred in this case, and

therefore that Public Service had failed to comply with its tariff and could not back-bill

for the undercharge.

¶10    After a hearing, an administrative law judge (“ALJ”) issued a decision

recommending that Carestream’s complaint be denied because Carestream failed to

prove a direct violation of a tariff provision. The ALJ found that the situation giving

rise to the billing error in this case was unique.2 The record supports that finding.

¶11    Carestream filed exceptions to the recommended decision, but the Commission

denied them. The Commission agreed with the ALJ, reasoning that “Carestream did

not provide sufficient evidence from which it can be concluded that Public Service

should have foreseen the problem and thereby taken reasonable means to prevent it.”

The Commission continued: “For this reason, we conclude that Carestream did not

carry its burden of proving that Public Service did not comply with the tariff by

‘exercis[ing] all reasonable means to assure accurate computation of all bills for gas

service.’”

2It was not typical for a new customer to take over the account of an existing gas sales
customer and then transition to being a gas transportation customer, as Carestream did
here.

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¶12      Carestream obtained district court review of the Commission’s decision pursuant

to section 40-6-115(1), C.R.S. (2016).     The district court affirmed the Commission’s

decision after finding that its interpretation was consistent with the language of the

tariff and was not unjust or unreasonable. Before the district court, Carestream also

argued that Public Service had violated its tariff by charging its customers, through the

GCA, for services they did not use. The district court rejected this claim and explained

that even if there had been a violation, Carestream lacked standing to argue it before the

court because Carestream had not been injured by Public Service’s use of the GCA.

¶13      Carestream appealed the district court’s order to this court pursuant to section

40-6-115(5), C.R.S. (2016).3

                                  II. Standard of Review

¶14      Judicial review of a Commission decision is limited by statute to determining

whether the Commission has “regularly pursued its authority”—that is, whether the

Commission has acted pursuant to its constitutionally and statutorily granted authority,

whether the Commission’s decision violates any of a petitioner’s constitutional rights,

3   Carestream presents the following two issues for this court’s review:
         1. Whether the District Court correctly ruled that the Commission
            properly interpreted Public Service’s tariff by determining that the
            tariff language “exercise all reasonable means to assure accurate
            computation of all bills for gas service” is limited to foreseeable errors,
            when that language is not in the tariff.
         2. Whether the District Court correctly determined that Carestream did
            not have standing to argue on behalf of the general body of retail
            customers, and that therefore the Commission’s decision on the
            $510,000 paid by retail customers should be upheld.

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and whether the decision is just and reasonable and its conclusions are in accordance

with the evidence.      § 40-6-115(3), C.R.S. (2016); Trans Shuttle, Inc. v. Pub. Utils.

Comm’n, 89 P.3d 398, 407 (Colo. 2004); see Jarco, Inc. v. Pub. Utils. Comm’n, 2 P.3d 116,

118 (Colo. 2000) (“[The supreme court] appl[ies] the same standard as the district court

in reviewing Commission decisions.”).

¶15    In reviewing the Commission’s decision, this court determines questions of law

de novo.    Eddie’s Leaf Spring Shop & Towing LLC v. Colo. Pub. Utils. Comm’n,

218 P.3d 326, 330 (Colo. 2009). Nevertheless, because the Commission is the agency that

administers public utilities statutes and regulations, we should defer to its

interpretation of those authorities. Id.

¶16    Unless the decision is challenged on constitutional grounds, the Commission’s

findings of fact are final and not subject to review. § 40-6-115(2), C.R.S. (2016); see

Durango Transp., Inc. v. Colo. Pub. Utils. Comm’n, 122 P.3d 244, 247 (Colo. 2005).

                                       III. Analysis

¶17    We address two issues. First, we consider whether the Commission properly

interpreted Public Service’s tariff, specifically the requirement to “exercise all

reasonable means” to prevent billing errors. We conclude that determining what means

are “reasonable,” as that term is used in the tariff, necessarily requires considering what

errors are foreseeable.    Second, we consider whether Carestream has standing to

challenge Public Service’s use of the GCA to recoup the remainder of the undercharge

from its general customer base. Because Carestream suffered no injury, we conclude

that it lacks standing to pursue its claim.

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             A. Determining What Means Are “Reasonable” Requires
                    Considering What Errors Are Foreseeable

¶18    In its order adopting the ALJ’s recommended decision, the Commission focused

on whether Public Service could have foreseen the billing error at issue.                   The

Commission explained:

       We agree with [the] ALJ . . . that Carestream did not provide sufficient
       evidence from which it can be concluded that Public Service should have
       foreseen the problem and thereby taken reasonable means to prevent it.
       For this reason, we conclude that Carestream did not carry its burden of
       proving that Public Service did not comply with the tariff by “exercis[ing]
       all reasonable means to assure accurate computation of all bills for gas
       service.”

¶19    Carestream claims the Commission’s interpretation adds language to the tariff,

by requiring errors to be foreseeable in order for Public Service to be required to take

action to prevent those errors. Carestream also asserts that the Commission’s novel

approach deprived it of due process: Because Carestream had no reason to anticipate

the issue of foreseeability, it did not present evidence regarding whether Public Service

should have foreseen the billing error that occurred here.

¶20    Public Service, as a public utility, is subject to regulation by the Commission. See

§ 40-1-103(1)(a)(I), C.R.S. (2016); Pub. Serv. Co. of Colo. v. Van Wyk, 27 P.3d 377, 383

(Colo. 2001).    The Commission requires public utilities to file and make publicly

available schedules, referred to as tariffs, which show “all rates, tolls, rentals, charges,

and classifications collected or enforced, or to be collected and enforced, together with

all rules, regulations, contracts, privileges, and facilities that in any manner affect or

relate to rates, tolls, rentals, classifications, or service.” § 40-3-103, C.R.S. (2016).

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¶21      The relevant portion of the tariff at issue here essentially establishes the standard

of care for billing:

         The Company will exercise all reasonable means to assure accurate
         computation of all bills for gas service. Customer agrees to accept the
         Company’s accounting for gas measurement and billing. In the event
         errors in billing occur, Company shall refund to customer the amount of
         any overcharge having resulted therefrom and, likewise, shall have the
         right to collect from customer the amount of any undercharge as set forth
         hereunder.

(Emphasis added.)

¶22      Carestream’s argument requires us to consider the definition and scope of “all

reasonable means.” Black’s Law Dictionary defines “reasonable” as “[f]air, proper, or

moderate under the circumstances.”         Reasonable, Black’s Law Dictionary (10th ed.

2014).    Thus, the use of the term “reasonable” shows that rather than requiring

compliance with some bright-line rule, the tariff calls for appropriate measures to be

taken given the circumstances. See Ritzert v. Bd. of Educ., 2015 CO 66, ¶ 44, 361 P.3d

966, 975–76 (stating that “[i]n other contexts, we have recognized that an inquiry into

what     is reasonable     necessarily   requires an examination        of the underlying

circumstances” and citing cases in support of that point).

¶23      Therefore, we consider the circumstances here. Public Service, a large public

utility serving millions of customers, had to use “all reasonable means” to accurately

compute bills for gas service. In this context, what is reasonable—that is to say, what is

fair, proper, and moderate—must necessarily be judged by what is foreseeable. Public

Service cannot be expected to prevent errors it cannot foresee. This interpretation is

consistent with Public Service’s tariff construed as a whole, which contemplates that

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there will be situations in which a customer is undercharged and Public Service must

back-bill in order to recover its costs. That is, the tariff recognizes that Public Service

cannot prevent all errors. A foreseeability requirement confines the inquiry to those

errors Public Service could have taken reasonable steps to avoid.

¶24    Carestream’s due process argument likewise fails.            Due process requires

“adequate advance notice and an opportunity to be heard prior to state action resulting

in deprivation of a significant property interest.” Mountain States Tel. & Tel. Co. v.

Dep’t of Labor & Emp’t, 520 P.2d 586, 588 (Colo. 1974). Carestream initiated this case

by filing a complaint with the Commission and has since had ample opportunity to

prove that Public Service failed to exercise all reasonable means to prevent billing errors

as required by its tariff. Because determining what means are “reasonable” as that term

is used in the tariff requires taking the foreseeability of errors into account, Carestream

was not deprived of notice or an opportunity to be heard on foreseeability. Just because

Carestream disagrees with the Commission’s interpretation of “reasonable” does not

mean Carestream was deprived of the opportunity to advocate its position before the

Commission or at any other point in these proceedings.

¶25    Moreover, even if we accept Carestream’s argument that it did not know

foreseeability would be taken into account in the Commission’s decision, Carestream

cannot now claim it was deprived of due process when Carestream failed to seek

rehearing, reargument, or reconsideration of the decision as allowed by section

40-6-114(1), C.R.S. (2016).   If Carestream wished to present additional evidence

concerning the foreseeability of the error that occurred in this case, it could have

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requested that the Commission revisit its case. Carestream did not do so, and it cannot

now claim that it lacked notice and an opportunity to be heard.

¶26    We turn now to the standing issue.

          B. Carestream Lacks Standing to Challenge Public Service’s
          Use of the GCA to Recoup its Costs from its Customer Base

¶27    Carestream argues that Public Service also violated its tariff by using the tariff’s

GCA provisions to recover from its general customer base the $510,000 it could not

recover from Carestream. We need not address the merits of this claim, because we

conclude that Carestream lacks standing to make it.

¶28   Section 40-6-115(1) authorizes any party to a proceeding before the Commission

to seek review of a final Commission decision in that proceeding. But in order to

establish standing, that party still must demonstrate that it satisfies the general

requirements articulated in Wimberly v. Ettenberg, 570 P.2d 535 (Colo. 1977).          See

Maurer v. Young Life, 779 P.2d 1317, 1323 (Colo. 1989). The Wimberly standing inquiry

requires a court to determine (1) whether the plaintiff was injured in fact, and (2)

whether the injury was to a legally protected right. Wimberly, 570 P.2d at 539.

¶29   To argue that it satisfies the injury-in-fact requirement, Carestream relies on

O’Bryant v. Public Utilities Commission, 778 P.2d 648 (Colo. 1989). In that case, the

petitioner, O’Bryant, filed a complaint with the Commission when his telephone

company disconnected his telephone service. Id. at 649. The Commission issued a

decision finding that the company had violated a Commission rule. See id. at 650–51.

The company reconnected O’Bryant’s service. Id. at 650. The company sought district

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court review of the Commission decision but then reached a settlement agreement with

the Commission that modified the decision. Id. at 651–52. The district court dismissed

the case over the objection of O’Bryant, who was not a party to and objected to the

settlement agreement. Id. at 652.

¶30    O’Bryant appealed the dismissal to this court, and the company and the

Commission argued that he lacked standing to pursue his claim. Id. We noted that

O’Bryant asserted both economic and noneconomic injuries to satisfy the injury-in-fact

requirement. Id. at 653. We explained:

       The asserted noneconomic injury is the impairment of O’Bryant’s interest,
       as a member of the public and as a public utility customer, to require the
       public utility to conform its actions to applicable [Commission] rules and
       to ensure that the [Commission] enforces its rules against public utilities
       in a manner consistent with the [C]ommission’s statutory responsibilities.

Id. The economic injury was O’Bryant’s loss of opportunity to seek damages from the

company for violating a Commission rule and to recover attorney fees for successfully

litigating his complaint before the Commission. Id. We stated that these asserted

injuries “cannot be characterized as so indeterminate, indirect, or trivial as unlikely to

be redressed by a favorable judicial decision,” and we “therefore accept[ed] O’Bryant’s

assertion of injury-in-fact.” Id.

¶31    Carestream claims that its interests are equivalent to O’Bryant’s. It argues that it

benefits when utilities properly adhere to their tariffs and to public utility law, and that

it may seek attorney fees if its argument on behalf of the public succeeds. But unlike

O’Bryant’s asserted injuries, Carestream’s are indirect and speculative. While O’Bryant

had already prevailed in a Commission proceeding and sought to prevent the resulting

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Commission decision from being modified by a settlement to which he was not a party,

Carestream seeks to challenge an action undertaken by Public Service that had no

impact—pecuniary or otherwise—on Carestream. O’Bryant still had skin in the game,

so to speak, but Carestream does not. Carestream therefore fails to show an injury-in-

fact. See id. (“What is required for an injury-in-fact, therefore, is that the alleged injury

be sufficiently direct and palpable to allow a court to say with fair assurance that there

is an actual controversy proper for judicial resolution.”).

¶32    Carestream is unable to show any injury from the Commission’s use of the GCA

to recover costs from its retail customers, and so Carestream is unable to meet the first

prong of the Wimberly test. We therefore conclude that Carestream lacks standing to

pursue this claim.

                                     IV. Conclusion

¶33    We conclude that determining what means are “reasonable,” as that term is used

in Public Service’s tariff, necessarily requires considering what errors are foreseeable.

We therefore hold that the Commission properly interpreted the tariff and acted

pursuant to its authority. We also conclude that Carestream lacks standing to challenge

Public Service’s recovery of the undercharge from its general customer base because

Carestream suffered no injury from that action. Accordingly, we affirm the judgment of

the district court.

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