KMI stated that it made a corporate decision not to track merger-related labor costs not due to the lack of process or system, but rather due to the fact that management did not consider the labor-related costs to be incremental costs. Also, KMI asserted that no existing employee costs were shifted to merger activities, since all pipelines continued to receive the same level of service before the
merger and all merger activities were completed as well as employees' regular tasks. KMI stated that more than 300 employees made meaningful contributions to merger activities and received a bonus for their efforts.

Audit staff noted that KMI had the requisite processes, accounting practices, and systems to track the cost of labor for merger activities. However, audit staff found written communication specifically instructing employees not to record any labor costs as a cost related to the merger. By not tracking merger-related labor expenses for more than 300 employees, the KMI jurisdictional entities were unable to accurately record the allocation of labor costs to various USofA accounts based on the time engaged in various classes of work during the period of merger activity.

Audit staff also noted that activities for pursuing, considering, and consummating a corporate merger are nonoperating, so their costs should be recorded in Account 426.5, which includes miscellaneous items that are nonoperating in nature. For accounting purposes, the Commission has consistently stated that costs involving mergers of public utilities are nonoperating and are to be recorded in Account 426.5. By not tracking the cost of employees involved in merger activity, the KMI jurisdictional entities could not distinguish the cost of labor related to the merger from labor costs for pipeline operations. As a result, the KMI jurisdictional entities failed to record such costs consistent with their nature, and the entities were unable to properly allocate labor costs to utility and nonutility operations as required by General Instruction No. 10. This resulted in the KMI jurisdictional entities recording internal labor costs in operating expense accounts that should have been recorded in Account 426.5.
While audit staff believes that the KMI jurisdictional entities should have recorded merger-related labor costs in a nonoperating expense account, KMI stated that the accounting misclassification did not affect customers' rates. Audit staff also did not find that this misclassification affected rates for jurisdictional customers.

1. Determine if the former Chairman violated the Confidentiality of Investigations requirement and ascertain what, if any, sanctions are available to address the former Chairman's actions.
   
   
2. Determine if the Commission currently has the necessary authorities it needs to prevent the disclosure or misuse of sensitive or nonpublic information; and, the authorities to impose sanctions on those who engage in such action, whether employed at FERC currently or in a postemployment status. If statutory or regulatory changes are needed in this regard, take appropriate action to expedite such changes.
   
   
3. Expedite the current effort to update and strengthen the Commission's postemployment guidance and exit processes, including ensuring that departing Commission members and other employees are aware of what constitutes "nonpublic information" and their ethical duty to protect such information after they depart.
   

5 CFR § 2635.703
 
§2635.703   Use of nonpublic information.
(a) Prohibition. An employee shall not engage in a financial transaction using nonpublic information, nor allow the improper use of nonpublic information to further his own private interest or that of another, whether through advice or recommendation, or by knowing unauthorized disclosure.
(b) Definition of nonpublic information. For purposes of this section, nonpublic information is information that the employee gains by reason of Federal employment and that he knows or reasonably should know has not been made available to the general public. It includes information that he knows or reasonably should know:
(1) Is routinely exempt from disclosure under 5 U.S.C. 552 or otherwise protected from disclosure by statute, Executive order or regulation;
(2) Is designated as confidential by an agency; or
(3) Has not actually been disseminated to the general public and is not authorized to be made available to the public on request.
…
Example 5: An employee of the Army Corps of Engineers is actively involved in the activities of an organization whose goals relate to protection of the environment. The employee may not, other than as permitted by agency procedures, give the organization or a newspaper reporter nonpublic information about long-range plans to build a particular dam.
 
18 USC § 2071(b)
 
(a) Whoever willfully and unlawfully conceals, removes, mutilates, obliterates, or destroys, or attempts to do so, or, with intent to do so takes and carries away any record, proceeding, map, book, paper, document, or other thing, filed or deposited with any clerk or officer of any court of the United States, or in any public office, or with any judicial or public officer of the United States, shall be fined under this title or imprisoned not more than three years, or both.
(b) Whoever, having the custody of any such record, proceeding, map, book, document, paper, or other thing, willfully and unlawfully conceals, removes, mutilates, obliterates, falsifies, or destroys the same, shall be fined under this title or imprisoned not more than three years, or both; and shall forfeit his office and be disqualified from holding any office under the United States. As used in this subsection, the term “office” does not include the office held by any person as a retired officer of the Armed Forces of the United States.
 
18 USC § 641
 
Whoever embezzles, steals, purloins, or knowingly converts to his use or the use of another, or without authority, sells, conveys or disposes of any record, voucher, money, or thing of value of the United States or of any department or agency thereof, or any property made or being made under contract for the United States or any department or agency thereof; or
Whoever receives, conceals, or retains the same with intent to convert it to his use or gain, knowing it to have been embezzled, stolen, purloined or converted--
Shall be fined under this title or imprisoned not more than ten years, or both; but if the value of such property in the aggregate, combining amounts from all the counts for which the defendant is convicted in a single case, does not exceed the sum of $1,000, he shall be fined under this title or imprisoned not more than one year, or both.
The word “value” means face, par, or market value, or cost price, either wholesale or retail, whichever is greater.

According to the memorandum, Mr. Wellinghoff stated that his computer "crashed" and all of his documents were permanently lost. A Commission attorney who participated in the March 20 telephone call told us that Mr. Wellinghoff had indicated his computer crashed in February 2015 and that all of his documents were lost. However, we were told that Mr. Wellinghoff used a personal computing device to show the video clip during the March 9 presentation, despite having told Commission attorneys that all of his documents were lost due to the computer crash. Thus, despite Mr. Wellinghoff's assertions about the loss of materials in February 2015, the events of March 2015 suggest that additional documents may remain on other personal computing devices. We were unable to reconcile this inconsistency. Despite multiple attempts on our part, Mr. Wellinghoff declined to speak with us regarding this matter.

Some commissioners expressed concern Tuesday that it would be a more expensive form of energy. Commissioner Bill Kenney, who said he plans to vote against construction, cast doubts on the economic impact it would have in the state.

“I do not see the benefit to Missourians,” Kenney said.

“We’re thrilled,” said Jennifer Gatrel, who heads the group Block Grain Belt Express. “We think this is a great win for representative democracy, grass-roots activism and landowner rights.”

If the PSC does reject the project, Lawlor said Clean Line won’t give up. It could pursue federal eminent domain authority through the Energy Department, an approach it is pursuing in Arkansas after the state declined to approve another of its routes.

The issue is bigger than Missouri or the Grain Belt project in particular, said Mark Lawlor, Clean Line’s director of development. The country is trying to figure out how to reduce carbon pollution linked to climate change under new federal regulations, which many say will require a large buildout of transmission infrastructure.

“How do we get stuff built?” Lawlor said. “If the ‘no’ was because people didn’t like it, landowners didn’t like it, then how are we going to build transmission? It kind of goes beyond this one project.”

“These projects are too valuable and too much in demand (to walk away from),” Lawlor said. “We remain confident in their value and we’ll look at everything we can.”

As California moves beyond its 33 percent Renewable Portfolio Standard goal [?--Ed.] and strives for deeper reductions in harmful emissions...

Bowring, Gates’ Consultant Spar over PJM Traders’ Obligations on Loopholes

ATLANTIC CITY, N.J. — To shake or not to shake the Money Tree?

That was the question Independent Market Monitor Joe Bowring posed during his Year in Review presentation at PJM’s Annual Meeting last week, setting off a lively debate with one of the consultants that Richard and Kevin Gates, enlisted in their high profile defense against market manipulation allegations.

“If the rules are imperfect, is it OK to do anything not explicitly prohibited?” Bowring asked.

He quickly provided his own answer. “It is not permissible,” he said, citing what he called the “duty” of market participants to inform RTO officials and federal regulators of such “money trees.”

Landowners, a developer, or a governmental entity could initiate a TCD proceeding. The initiating party approaches the planning agency to determine if the transmission line promotes reliability, economic development, or public policy (e.g., a renewable energy portfolio standard). In this initial  discussion with the planning agency, the initiating entity proposes a study area for the transmission corridor to the planning agency. Alternatively, the planning agency could determine that there is a need for a transmission project and initiate the TCD proceeding on its own.
For TCD proceedings, the planning agency would likely be a public utility commission (PUC). This is necessary because the placement and construction of power lines is almost always under the purview of the states, which then designate siting and approval responsibilities to the PUC or state  equivalent. Alternatively, the planning agency could be a federal or regional entity to promote interstate development.
Upon approval from the planning agency, the initiating party and planning agency work together to educate the potentially affected
members of the public about the benefits and negative effects of the proposed project.

Additionally, FERC Orders 890 and 1000 encourage robust public participation. The orders accomplish this by requiring transmission planners to seek comment from customers and stakeholders in regional planning. Though the orders are silent in the context of assembling land for specific transmission lines, the wisdom of the orders should be applied to individual projects.