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Carestream Health, Inc. v. Colorado Public Utilities Commission

Supreme Court of Colorado, En Banc

June 19, 2017

Carestream Health, Inc., Plaintiff-Appellant
v.
Colorado Public Utilities Commission, Defendant-Appellee and Public Service Company of Colorado. Intervenor-Appellee

         Appeal from the District Court District Court, City and County of Denver, Case No. 15CV32332 Honorable Elizabeth A. Starrs, Judge

          Attorneys for Plaintiff-Appellant: Lewis Brisbois Bisgaard & Smith LLP Mark T. Valentine Denver, Colorado.

          Attorneys for Defendant-Appellee: Cynthia H. Coffman, Attorney General Jessica L. Lowrey, Assistant Attorney General Denver, Colorado.

          Attorneys for Intervenor-Appellee: Gordon & Rees LLP Franz Hardy Lance J. Ream Denver, Colorado.

          OPINION

          HOOD JUSTICE.

         ¶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 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 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).

         ¶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 ...


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