The Colorado Consumer Counsel, the City of Boulder, and two industrial customers of Xcel Energy, had opposed the request, which was rejected by a judge, reports Associated Press.
Officials of Public Utilities Commission (PUC) ruled that Xcel Energy could recover about $30m of its costs.
However, they noted that $16.6m more could not be recouped until the energy supplier shows it had completed the project, which would help all of its Colorado customers.
The project connects 23,000 households in Boulder, Colorado with smart meters using computers to manage electricity distribution.
Now the case has gone back to the PUC to take the final decision, meanwhile, Xcel officials said they may renew their request.
