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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 8-K

              Current Report Pursuant to Section 13 or 15(d) of
                       The Securities Exchange Act of 1934



          Date of Report (date earliest event reported) May 21, 1996


                       Public Service Company of Colorado
               (Exact name of registrant as specified in charter)


                                    Colorado
                         (State or other jurisdiction of
                         incorporation or organization)


            1-3280                                           84-0296600
       (Commission File                                     (IRS Employer
             No.)                                        Identification No.)


 1225 17th Street, Denver, Colorado                             80202
(Address of principal executive offices)                     (Zip Code)


Registrant's Telephone Number, including area code: (303) 571-7511

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Item 5.     Other Information

      In April 1992, the Company acquired  interests in the two generating units
at the Hayden Steam Electric  Generating Station located near Hayden,  Colorado.
The Company is the operator of the Hayden station and owns an undivided interest
in each of the two  generating  units at the  station  which  in  total  average
approximately 53%.

      On August 18, 1993, a conservation  organization  filed a complaint in the
U.S.  District  Court for the  District of Colorado  ("U.  S.  District  Court")
pursuant to Section 304 of the  Federal  Clean Air Act,  against the Company and
the other joint owners of the Hayden station. The plaintiff alleged that: 1) the
station  exceeded  the 20%  opacity  limitations  in excess of 19,000 six minute
intervals  during the period  extending  from the last  quarter of 1988  through
mid-1993  based on the data and reports  obtained from the station's  continuous
opacity monitors ("COMs"),  which measure average emission stream opacity in six
minute intervals on a continuous basis, 2) the station was operated for over two
weeks in late  1992  without  a  functioning  electrostatic  precipitator  which
constituted a modification of the station without the requisite  permit from the
Colorado  Department  of Public  Health and  Environment  ("CDPHE"),  and 3) the
owners  failed to  operate  the  station  in a manner  consistent  with good air
pollution control  practices.  The complaint sought,  among other things,  civil
monetary  penalties  and  injunctive  relief.  The joint  owners of the  station
contested all of these claims and contended that there were no violations of the
opacity limitation.

      Discovery  was completed and oral  arguments on summary  judgment  motions
were heard in mid-May 1995. On July 21, 1995,  the U.S.  District  Court entered
partial  summary  judgment  on  liability  issues in favor of the  plaintiff  in
regards  to the  claims  described  in  items  1) and 3) above  and  denied  the
plaintiff's  motion in regards to the claims described in item 2) above. On July
31, 1995, the joint owners filed a petition for an interlocutory appeal with the
10th Circuit Court of Appeals.  On August 21, 1995,  the joint owners'  petition
for  permission  to appeal  was  denied.  Subsequent  to the denial of the joint
owners'  petition,  the U.S.  District Court  dismissed the  plaintiffs'  claims
described in item 2) above.

      Additionally, the Company had received and responded to a request from the
EPA for  information  related to the plant and,  on January  18,  1996,  the EPA
issued a notice of violation stating that the plant had exceeded the 20% opacity
limitations  in excess of 10,000  additional  six-minute  intervals  during  the
period extending from mid-1993 to mid-1995.

      On May 21,  1996,  the Company  and the other  joint  owners of the Hayden
station  reached an agreement in principle with the  conservation  organization,
the CDPHE and the EPA which  provides  for a complete  and final  release of all
civil  claims  for  the  violations  alleged  in  the  complaints  filed  by the
conservation  organization,  the EPA  and  the  CDPHE  through  the  date of the
agreement and further addresses future environmental compliance requirements and
issues.  The  primary  provisions  of the  agreement,  subject to certain  final
approvals by the EPA, the State of Colorado,  the  Department of Justice and the
U.  S.  District  Court,  include:  1) the  installation  of  pollution  control
equipment  on both  generating  units to reduce  future  particulate  (opacity),
sulfur  dioxide  ("SO2") and nitrogen  oxide  ("NOx")  emissions to be completed
during 1998 and 1999 or  conversion  of the facility to natural gas as a primary
fuel supply,  2) a payment of $2 million to be paid to the U. S. Treasury,  3) a
contribution of $2 million to a "Land Trust Fund" to be used for the purchase of
land and/or  conservation  easements  in the Yampa Valley to protect and enhance
the air quality in the region,  4) a contribution of $250,000 to be used for the
conversion  of vehicles  and/or wood  burning  appliances  to natural gas in the
Yampa Valley,  and 5) stipulated future penalties for failure to comply with the
terms  of the  agreement,  including  specific  provisions  related  to  meeting
construction  deadlines associated with the installation of additional pollution
control  equipment  and  complying  with  particulate,  SO2  and  NOx  emissions
limitations.  Additionally,  the joint owners have agreed that these limitations
will be determined using data from the continuous  emissions  monitors installed
on each generating unit. The Company will be responsible for  approximately  53%
of the  costs  described  above  in  items 2 - 4 and,  in  anticipation  of such
settlement,  the Company made  adequate  provision for such amounts in the first
quarter of 1996.

      The joint  owners  have begun  planning  efforts for the  installation  of
additional  pollution  control equipment and have up to six months from the date
of the agreement to decide whether to pursue  conversion of the Hayden station's
primary fuel source from coal to natural gas.  Assuming coal remains the primary
fuel source,  the joint owners  estimate that the cost of  installing  pollution
control equipment capable of reducing the emissions to the levels required under
the agreement,  consisting of fabric filter dust  collectors,  lime spray dryers

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and low NOx burners on both units, is approximately  $120-$130 million, with the
Company's portion totaling  approximately $60-$70 million. At December 31, 1995,
the Company  included  approximately  $46 million in its five year  construction
estimates  for certain  additional  pollution  control  equipment  at the Hayden
station.  While the  alternative  of natural gas as a primary  fuel source would
eliminate the need for certain additional pollution control equipment,  it would
require the construction of a natural gas pipeline to the generating facility as
well as certain boiler changes. In general,  assuming natural gas is the primary
fuel source,  the initial  capital  investment in additional  pollution  control
equipment  may be  less;  however,  it is  expected  that the  on-going  cost of
operating the facility would be higher.

      The  Company   believes  that,   consistent  with  historical   regulatory
treatment,  any costs for pollution  control  equipment to comply with pollution
control regulations would be recovered from its customers. However, no assurance
can be given that this practice will continue in the future.


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                                    SIGNATURE


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.


                                          PUBLIC SERVICE COMPANY OF COLORADO


                                          By:      /s/ R. C. Kelly
                                                    R. C. Kelly
                                          Senior Vice President, Finance,
                                       Treasurer and Chief Financial Officer

Dated:  May 22, 1996



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