FERC issued an Order on Remand last Friday.

Back in 2007, while gearing up for the billions of dollars that PJM's coal-fired Project Mountaineer transmission projects would cost, FERC issued Order No. 494, which socialized the cost of these exorbitantly expensive, unneeded projects over a larger customer base. Once authorized by FERC in the Order, PJM changed its cost allocation methods to adopt the “postage-stamp” method of allocating the cost of new transmission in its RTEP that operates at or above 500 kV.  Prior to Order No. 494, all new transmission was paid for through a “license plate” methodology whereby those who directly benefited from the project would shoulder the cost.

Under a license-plate (or zonal) rate design, a customer pays the embedded cost of transmission facilities that are located in the same zone as the customer. A customer does not pay for other transmission facilities outside of the zone, even if the customer engages in transactions that rely on those zones.

Under a region-wide, postage-stamp methodology, all transmission service customers in a region pay a uniform rate per unit-of-service, based on the aggregated costs of all covered transmission facilities in the region.

Due to these new postage stamp rates, a high percentage of regional load, and the  wide geographic reach of the PJM region, customers in Illinois suddenly found themselves being charged the second highest percentage of eastern PJM’s Project Mountaineer costs.

“However, the cost shifts that would be incurred by switching from the DFAX methodology to the postage-stamp methodology are significant, resulting in western zones paying between 1,260 percent and 22,500 percent more for these facilities.”

The Illinois Commerce Commission objected to this inordinate cost, compared to “benefits” received, and the issue ended up before the 7th Circuit Court of Appeals.  In October of 2009, the Court remanded the rate methodology back to FERC, finding that the Commission had not provided sufficient record evidence to justify its findings that the existing allocation practice for new facilities at and above 500 kV was unjust and unreasonable, and the Commission had not adequately supported its conclusion that the postage-stamp methodology was just and reasonable. The court found that the Commission’s reliance on the difficulty of measuring benefits for above 500 kV facilities, and the resulting likelihood of litigation, failed to justify the Commission’s decision. The court stated that the Commission had failed to show “the absence of any indication that the difficulty exceeds that of measuring benefits to particular utilities of a smaller-capacity transmission line.” The court further found that the Commission failed to justify requiring PJM to adopt a region-wide, postage-stamp cost allocation methodology for new transmission facilities that operate at or above 500 kV.

However, the court also recognized that, in comparing costs and benefits, the Commission “does not have to calculate benefits to the last penny, or for that matter to the last million or ten million or perhaps hundred million dollars.”  FERC seems to have taken this to heart in their Order on Remand, issued on Friday.  To summarize, the Order determined that allocating costs of transmission enhancements that operate at or above 500 kV to utility zones using a postage-stamp cost allocation methodology is a just, reasonable and not unduly discriminatory method of allocating the costs of these new facilities.

In order to get there, FERC provided what it feels is the justification the court found missing in Order No. 494.

“In summary, ComEd, along with the other western utilities, will receive significant benefits from the new 500 kV and above projects that prevent the degradation of the PJM transmission system and maintain the capability to continue to produce up to $2.2 billion in estimated system-wide savings each year, as indicated by the ISO/RTO metrics report, along with additional estimated annual savings associated with decreased service interruptions and power quality disturbances, reduced line losses, and reduced congestion. These estimated annual, system-wide savings totaling approximately $2.2 billion compare favorably to the annual, system wide costs of approximately $1.3 billion for the facilities at issue here. In total, PJM’s transmission system provides ComEd’s customers with access to savings of approximately $320 million to $468 million each year.  While we recognize that there is imprecision in valuing the benefits of new 500 kV and above facilities, these estimated savings identified herein provide sufficient justification for allocating approximately $198 million per year in costs to ComEd under the postage stamp methodology for new transmission facilities necessary to maintain the integrity and reliability of the existing system so that customers will continue to have access to savings and to provide for future needs.”

As I'm sure you all remember quite fondly, last year around this time, the PATH Project was "held in abeyance" by PJM, who also said they would continue to evaluate the project for inclusion in a future RTEP.  What they also said at that time was that they were embarking on a process to retool the way they do their planning. 

Here's the result of PJM's work over the past year.

PJM uses PATH (and MAPP) as an example of how their planning process "ha[s] impeded PJM’s ability to plan for its system with any certainty."  PJM ended up with a whole bunch of egg on their face when they persisted with their Project Mountaineer plan to use their RTEP process as a vehicle to promote purely economic projects as reliability projects.  It was embarrassing and inconvenient for PJM and its profit-driven transmission owner "stakeholders" to have the projects they determined were "needed" drop out of the RTEP in future years because they weren't "needed."  PJM's planning process was too rigid and based on clearly defined criteria with no room for opaque, subjective camouflage of superfluous projects.  PJM set out to create a new process where a project, once included in the RTEP, could never be omitted.

It didn't turn out much different than I thought it would.

PJM has added what they call "sensitivity studies, modeling assumption variations and scenario analysis" to their process.  In the future, when need for a dead dog like PATH becomes shaky, PJM will have the ability to just add a few more mystery spices to the planning pot in order to create a new reason to continue to pursue a loser project.  It's not just about "reliability" anymore:

"PJM believes there is merit in allowing for flexible planning criteria and proposes to expand its analyses
beyond a strict application of the reliability criteria in order to identify the most effective transmission system upgrades to satisfy the needs of the system. This proposed balanced approach starts with defined criteria and then allows PJM to look further to identify and evaluate potential transmission system needs using sensitivity studies, modeling assumption variations and scenario analyses, including Public Policy Objectives."

And about those "public policy objectives"...  PJM isn't just going to consider "public policy requirements" of state (or federal) mandates that are actually enacted statutes and regulations, but also "public policy objectives" that are "public policy initiatives of state or federal entities that have not been codified into law or regulation but which nonetheless may have important impacts on long term planning considerations."  So, as if it's not bad enough that you may end up having your property taken for a transmission line made necessary by the laws of another state, you may now also lose your property to a transmission line made necessary by the idea for a "public policy" in another state.  I can't wait to see this tested in a court.  I'm sure the wait won't be long.

PJM has also made a couple other changes, in order to show FERC how impartial, open, transparent and loved their planning process turned out.  PJM has added a new committee to their stable of "stakeholders."  The "Organization of PJM States, Inc. (“OPSI”), by unanimous resolution officially endorsed forming an Independent State Agencies Committee (“ISAC”) comprised of interested state agencies within the PJM footprint."  This committee will be composed of state public service commissions, who are still your only official line of defense against unneeded, prohibitively expensive, greed-driven transmission projects.  Despite PJM's attempt to make it sound like the states are enthusiastically supporting their new planning process and their new role at PJM, it looks like the states are suspicious.  And they should be.  Their authority to permit and site transmission projects within their borders has been under constant attack by the industry, FERC and PJM, who are pushing for a single federal transmission siting and permitting process whereby the states and citizens have a very limited voice.

PJM also proposes that they will "expand and enhance its planning procedures with respect to the communications and interaction around all phases of the process":

"The Transmission Expansion Advisory Committee shall be open to participation by: (i) all Transmission Customers, as that term is defined in the PJM Tariff, and applicants for transmission service; (ii) any other entity proposing to provide Transmission Facilities to be integrated into the PJM Region; (iii) all Members; (iv) the electric utility regulatory agencies within the States in the PJM Regional and the State Consumer Advocates; and (v) any other interested entities or persons."

Yeah, they talk a big game, but they get madder than a wet cat when a mere ratepayer intrudes into their playground.

Because PJM's new plan is a Section 205 filing, anyone, including YOU can comment, protest or intervene within the next 21 days.  If you need more info. about these processes, let me know.

FERC's Commissioners rubber stamped PATH's ROE Settlement today.  No surprise there.  The 14.3% ROE they were originally awarded is history, replaced by 12.4% and bolstered by a refund to ratepayers of over $2M.  Watch for it in your next bill ;-)  (I'm being sarcastic here folks, you're not going to notice any difference).

The small bit of news came from the Commissioners' attempts to do a little housekeeping on PATH's open FERC dockets.

In their letter order, FERC wants to inform all of you citizen ratepayers who submitted comments about PATH's suspension last year that the comments are "beyond the scope of the proceeding, and therefore will not be addressed in this proceeding."  I think that means that you are dismissed, but read it for yourself.  The "you" referred to by FERC is our pal Randy Palmer.

"On March 7, 2011, you also filed in Docket No. ER08-386-000, for informational purposes only, an update on the status of the PATH Project (Project Update). You indicate that PJM Interconnection, L.L.C. directed PATH to suspend development of the PATH Project other than activities needed to maintain the  PATH Project in its current state. Several individuals filed comments in response to this informational filing on the
Project Update, and PATH filed answer to these comments. These comments raise various challenges regarding the location of the Project, the need for the Project, and its costs. These comments raise issues which are beyond the scope of this proceeding, and
therefore will not be addressed in this proceeding."

I guess the Commissioners missed those parts of certain comments where it was pointed out that PATH's rebuttable presumption, upon which the granting of incentives was based, has run away from home.

However, the two outstanding Formal Challenges live on:

"Consistent with the Commission’s delegated letter order issued in Potomac-Appalachian Highline Transmission, L.L.C., Docket No. ER09-1256-000 at 2-3 (February 2, 2010), PATH’s Annual Updates and any related  challenges filed in the above dockets and Docket No. ER09-1256-000 will be addressed in Docket No. ER09-
1256-000, consistent with the formula rate  implementation protocols providing specific procedures for notice, review, and challenges to these Annual  Updates."

FERC also wanted to let Randy know:

"The Commission retains the right to investigate the rates, terms, and conditions under the just and reasonable and not unduly discriminatory or preferential standard of section 206 of the Federal Power Act, 16 U.S.C. § 824e (2006)."

And I think that will about do it for now.

Pam Kasey did a great article about the PATH Formal Challenge in today's State Journal.  Easily one of the brightest and most knowledgeable reporters I have been interviewed by regarding the Challenge, Pam also asked the most pointed questions.  She spent a little time reading some of the background documents and investigating before calling.  She's a shining example of true investigative journalism.

I love the way she ended with my favorite quote from PATH's Answer.  Yeah, Randy, we'll see just who "fails to grasp the distinction between efforts to influence decision makers during the process of obtaining approval to construct a transmission project, and broad-based activities and distribution of information intended to educate government officials, business and community leaders, and the public at large...," won't we?

PATH has been so busy painting a pretty picture of their bookkeeping prowess for FERC that they neglected to look over their shoulder and see where they were headed -- right into a corner.

See Keryn & Ali's Response to PATH's latest Answer (answer to an answer to an answer to an answer).  The exhibit to the Response can be found here.

Unfortunately, it gets pretty far afield into the technical, accounting weeds, but if you've been following along, it might just click.  In summation, if PATH's previous X = Y equation is true, they've got a lot of explaining to do, and continuing to file Answers before the Commission is the wrong procedure to reveal and correct PATH's continual errors.  Challengers end with another request for FERC to audit PATH's "books and records."

Now let's see what happens when PATH tries to tippy-toe out of that corner they have painted themselves into...

PATH filed an Answer to Ali & Keryn's Response to PATH's Answer to the Formal Challenge on Friday (if you're keeping score this is an answer to an answer to an answer).

In this Answer, PATH explains that they (purportedly) cheated themselves out of $12K in 2010.

Subtlety is lost on these ninnies.  I guess someone is going to have to clobber them over the head with it.  How embarrassing for PATH!  Color me exasperated.

But, I'm sure you'll all be thrilled to know that Ali has been elevated to one-name celebrity status with this filing!  That's right, she's now to be known simply as "Alison."

More to come...

A Response to PATH's Answer to the Formal Challenge was filed at FERC today.

PATH's got lots of problems, but probably the simplest to explain here is that their accountants don't know whether to add or subtract.  It does make a difference!

Instead of learning when to add and when to subtract, PATH wastes the Commission's time whining that:  "Clearly, Challengers Newman and Haverty are individuals who are opposed to the PATH Project. (Footnoted:  Challenge p. 14 ("the PATH Project can no longer be justified."); see also http://www.stoppathwv.com/stoppathwv-blog.html. (Stop PATH WV, Inc. is an organization comprised of citizens who object to the PATH Project)." PATH should be ashamed of themselves for incorrectly quoting small portions of larger sentences without proper indication, and for calling the "wahhhhmbulance" again.  The complete quote that they cherry picked from reads "Stop PATH WV, Inc. is a registered 501(c)4 social justice grassroots organization comprised of ordinary citizens who object to the Potomac-Appalachian Transmission Highline because it is not needed, it is not wanted, it is destructive to West Virginia, and it is an obstacle to meaningful reform of U.S. energy policy." And the page they got it from (which was not the Blog) contains the title "www.stoppathwv.com - Jefferson County, WV" (not Calhoun Co., WV).

Perhaps PATH should spend more time learning proper format for quotes in legal documents and the difference between debits and credits, and less time reading StopPATHWV Blog.  Does anyone's opposition to the PATH Project cause Allegheny/FirstEnergy to make incredibly stupid accounting mistakes?  No, they make those all on their own.  The only assistance they get from StopPATH is a little publicity. 

Newman and Haverty have filed both Formal Challenges pro se, as individuals.  Neither are representing StopPATH WV, Inc. in the matter, because then they'd have to be lawyers.  StopPATH WV, Inc. has NOTHING to do with any of PATH's problems at FERC.  While Newman is a member of StopPATH WV, Inc., Haverty is not.  But, both Challengers are also members of lots of other organizations that PATH failed to mention, and for which they did not provide the FERC Commissioners with web links.  PATH's lawyers need to do a little more research, in order to find other member organizations to which Challengers belong and whine about those organizations too in their legal filings.

PATH seems to think that we go out of our way to make them look bad when the reality is that PATH manages to look bad all by itself, no assistance needed.  Finding errors in PATH's financial filings is like shooting fish in a barrel.

Yesterday was the deadline for PATH to try to defend itself and answer the Formal Challenge of $2.5M of their claimed $24.6M 2010 revenue requirement at FERC.
Here's what PATH filed.  (Note:  3.9MB file -- give it time to load.  It's the best I could do to clean up the 10MB file PATH submitted, but that's another story.)

If you've read and understand the Formal Challenge that was filed on December 23, get ready to laugh.  PATH counsel insults the Commission's intelligence by pretending:  1) the Commission didn't read the Challenge; 2) the Commission didn't understand the legal basis of the Challenge; and 3) the Commission didn't see or understand any of the evidence submitted as exhibits to the Challenge.  PATH's attempt at performing a Vulcan mind meld on FERC's Commissioners fails miserably.  This is PATH.

It's almost like PATH is embarrassed by their "Answer" and doesn't want anyone to see it.  Why else would they have turned a 20 page word document and a two page spreadsheet exhibit into a 10MB pdf image file that chokes FERC's e-library and takes forever to download?  PATH printed paper copies of the files and then ran them through a copy machine to result in a humongous, unweildy 10MB file that was uploaded to FERC.  At least they didn't go so far as to "serve" it on the 80+ parties on the docket's service list and choke up everyone's email, but one could question whether "service" was actually effected ("I hereby certify that I have this day served the foregoing document by electronic service a copy of this filing...") by "serving" parties with a link to FERC's e-library that didn't work.

I'm not going to get into an analysis of just how bad PATH's "answer" is, but I will point out the funniest line in the whole document:

"In the wake of highly orchestrated and vocal opposition to the Project, PATH had a responsibility as the Project's developer to educate government officials, civic, community and business leaders, and the public at large, about the reliability benefits of improved transmission infrastructure in general, and the PATH Project in particular."

To fully appreciate the humor here, you've got to consider how PATH uses the term "highly orchestrated."
Orchestrate:  arrange or direct the elements of (a situation) to produce a desired effect, esp. surreptitiously.  Now isn't that the pot calling the kettle black?

And with that, we'll leave it in FERC's capable hands...
 

I know there's another topic started for this list, but it's slipped quite a ways down the page, thanks to TrAILCo's shenanigans, so let's start another one because the weeklies are publishing now.

Here's an article in The Shepherdstown Chronicle.  Reporter Kelly Cambrel does a great job with a difficult subject, but contrary to what's stated in the article, the January 2011 Challenge detailed 2009 expenses, and the December 2011 Challenge detailed PATH's 2010 expenses.  We haven't gotten to their 2011 expenses yet.

Here's an article in The Spirit of Jefferson.

"An official with American Electric Power said the company is entitled to recover reasonable
expenses of the PATH project.
"It is certainly their right to intervene. They have a different view on recoverable expenses," said Geri Matheney, a director of corporate communications for Appalachian Power, a subsidiary of American Electric Power. "It is certainly their right to question the expenses.  FERC will decide whether there is merit in their complaints or not. We are entitled to recover
the reasonable and prudent expenses of the PATH project.'"

Well, that certainly blows a few holes in all Randy's legal efforts at FERC over the past 3 months, insisting that we don't have standing and are not interested parties.  Now we find out that AEP doesn't agree with Randy and PATH's legal team.  Isn't that refreshing news?  Maybe Jeri should take a few notes from Todd "the school girl" Meyers and adopt the "no comment" thing.  But then again, she's probably not likely to get stuck in an elevator or accidentally meet up in the Men's Room with Mr. Personality either.  Jeri just doesn't know when to shut up.  :-)

More to come...

Once again, the FERC Challenge of PATH's over collection of expenses from electric consumers in 13 states and the District of Columbia has been picked up by the Associated Press.

The same basic article is breaking in news outlets all over the country.  Here's a version of it that just popped up on The Washington Post:

Power line foes in W.Va. file new challenge of PATH charges for ads, PR campaigns

For a longer story, see today's article in the Frederick News-Post.

Story in the Hur Herald featuring Ali Haverty.  Yes, she does look like Julia Roberts (and now you're thinking "Erin Brokovich" and how she doggedly fought for a bunch of ordinary folks and brought a huge energy corporation to justice, right?  Is there really any such thing as coincidence?)

This one's a giggle:  See this article and this article in the ultra-exciting "Transmission Hub."

Lots more to come...