The first time this problem reared its ugly head was during the July 2011 PATH Open Meeting to review its 2010 actual transmission revenue requirement. At this phone "meeting" I notified PATH that I had found expenses of the Allegheny Energy/FirstEnergy merger in its PATH rates.
In September, FirstEnergy subsidiaries PATH and TrAILCo made entries to their quarterly FERC financial filings to effect a credit for amounts wrongly charged to ratepayers in violation of the company's "hold harmless" guarantee to the Commission that it would not charge merger expenses to ratepayers except under certain circumstances. Over a million dollars was credited, but because PATH and TrAILCo made the correction in the normal course of business, it did not credit ratepayers for interest on the amounts wrongly recovered.
Throughout the fall of 2011, PATH counsel continued to argue with me in discovery about recovery of merger expenses, refusing to own up to the fact that other merger expenses had been recovered. In October, PATH filed a motion to dismiss the first formal challenge, claiming that the involvement of Ali Haverty and myself in its annual update review was costly to ratepayers. In response, I pointed FERC to the more than $1M savings ratepayers had realized due to my identification of merger costs wrongly included in PATH's revenue requirement that were subsequently reclassed on the company's Form No. 1 filings.
Shortly thereafter, FERC notified FirstEnergy that it was commencing an audit to determine if the company had complied with the Commission's order in the merger case.
In December, TrAILCo filed a revision to its revenue requirements to correct merger costs "inadvertently" recovered. It claimed this error had been noticed during an "internal staff review." Right....
If you take time to read FERC's FirstEnergy merger order, you will see that parties to that case had argued that adequate safeguards did not exist at FERC to prevent FirstEnergy from ignoring the hold harmless stipulation and recovering merger costs. FERC poo-poo'd this idea, insisting that their processes would be adequate to catch any wrongful recovery.
And then FirstEnergy went ahead and recovered the merger costs anyhow! Did FERC's processes identify this wrongful recovery? No, I did. How embarrassing!
FirstEnergy made a whole bunch of promises it never intended to keep in order to get its merger with Allegheny Energy approved. In addition to wrongly recovering merger costs in FERC jurisdictional rates, the company has saddled its West Virginia ratepayers with "acquisition adjustment" premiums flowing from its merger, as well as causing hardship to a whole bunch of distribution customers by cutting its meter reading services that resulted in huge erroneous bills and service shut offs.
FirstEnergy's past bad deeds seem to be catching up with them lately, and the group of people and entities enjoying the show keeps growing.