Pre-commercial costs are preliminary project costs incurred before being granted any approvals or incentives, such as surveys, plans and feasibility studies. In certain instances, it can also include legal fees and company formation and start-up costs. Without this incentive, these costs would be recovered as capitalized costs over the life of the project once it goes into service. With this incentive, these costs are expensed over a hypothetical 5 year construction period and earn a return on equity. Once again, FERC thinks this improves cash flows and financial metrics. (How do you know when someone's reaching? When they start using stupid buzzwords, but I digress.) It also removes any uncertainty about recovery of these costs... in case the project is abandoned and never built, or perhaps loses it's rebuttable presumption when the wheels come off the farce-wagon, isn't that right, PATH?
PATH has been expensing its pre-commercial costs since 2008. We're now in year 4 of the "5 year construction period." These costs have almost been completely recovered but PATH doesn't have active state applications and has been dropped from PJM's RTEP. They've regressed so far there's no chance that anything will be constructed during the "5 year construction period." And we continue to pay.
In the NOI, beginning on page 34, FERC discusses the pre-commercial cost recovery incentive and asks several specific questions. Now that you know what pre-commercial cost recovery is... go look at the questions and formulate your comments/suggestions for FERC. I'm sure you creative consumer "stakeholders" can make suggestions that the industry won't even ponder. The industry will be letting FERC know how they can and should sweeten the pot even further for them. It's up to you to provide balance with a little real world sanity.
We're pretty much done with the incentives now. There's one more that hasn't been used much, and another for which PATH doesn't even come close to qualifying. We'll cover them quickly and then move on to other aspects of the NOI. Isn't this fun? If someone had told me five years ago that I'd be doing this now, I would have laughed at them. Where's the escape hatch?
If you found this helpful in crafting your comments, you are encouraged to browse the entire FERC Transmission NOI category at StopPATHwv.com for other useful material. You don't have to comment on all aspects of the NOI if that's too burdensome. In fact, if you want to concentrate in detail on just one aspect that interests you and about which you have strong feelings, that's a perfectly acceptable approach to producing effective comments.