Boulder witness urges tying utility returns to reliability as parties debate capital bias and PIM design

A principal theme of cross‑examination centered on whether the settlement and the wider regulatory framework do enough to reverse an alleged utility "capital bias" — the claim that utilities have incentives to favor large capital projects while suppressing O&M and personnel spending that produce near‑term customer service and reliability benefits.

Matthew Lairman, senior policy adviser for energy utilities for the City of Boulder, told the commission his opposition testimony argued that the settlement does too little to address reliability and cost‑containment. Lairman proposed a mechanism tying part of the authorized return on equity to measured improvements in reliability (SAD/SAIFI/CAIDI metrics, with and without major event days), saying the commission could set a floor and allow the company to earn incremental ROE for measurable improvements. "You can set a benchmark year for reliability ... and for every X% improvement you could achieve a 50‑to‑100 basis‑point adjustment," he testified.

Lairman also criticized a reduction in O&M and customer‑facing personnel, arguing those cuts coincided with degraded customer service and higher complaint rates. He outlined proposals such as an investor‑capitalized business recovery fund to compensate businesses harmed by planned outages and a pilot for claims adjudication overseen by the commission.

Company cross‑examiners and other parties pressed on details: how to measure reliability for large customers (momentary outages and voltage sags are poorly captured by systemwide indices), how to avoid perverse outcomes where some customers improve and others worsen, and how to calculate mechanical annual adjustments to rates if ROE were to change year to year. Staff and intervenors said those questions are solvable but require careful rulemaking and holistic PIM design — not piecemeal changes. Miss King (Colorado Energy Consumers) and commissioners sought clarification on implementation mechanics and potential unintended consequences, including how cost of debt would be recalculated if ROE changes annually.

What happens next: Commissioners asked staff and parties to continue PIM and QSP design work in workshops and rulemaking; several commissioners encouraged bigger QSP penalties and clearer metrics as near‑term actions while rulemaking proceeds.