On a last quarterly call, we had just announced Project Compass, a proposed 725 mile transmission line through the shale gas regions of Pennsylvania and into New York and New Jersey and Maryland.

We’ve been meeting with officials at the state PUCs and governor's offices in the states where customers will benefit, Pennsylvania, New Jersey, New York and Maryland. Those meetings have gone well overall and we plan to have continuing dialogues on the project benefits. We're also meeting with other key agencies and other transmission operators in the region. We will continue to update you as we reach project milestones.

“This transmission line provides a significant opportunity to improve reliability and grid security and also provides benefits to customers,” Paul Wirth, spokesman for PPL Electric, said this morning. “When you add another path for power to flow, then that increases reliability because you are not relying as much on a single substation or power line.”

Another goal is to provide an estimated savings of at least $200 million per year for New York consumers by reducing transmission congestion.

Who will pay for the first segment of Project Compass?

According to the FERC guidelines for cost allocation, those who benefit from a new power line should pay its costs. The first segment would be paid for by electric customers in New York who will get the benefit of lower power prices. The costs would be paid over a period of many years on customers’ electric bills.

Shah Pourreza - Guggenheim Securities LLC
I appreciate the new disclosures around the Compass Project. So how should we think about the remaining miles? Are you looking to potentially segment the rest? And then, is there an opportunity to potentially JV with some of the neighboring utilities to smooth out the process?

William H. Spence - Chairman, President & Chief Executive Officer
Sure. I think in both cases the answer would be yes. So there's an ability to continue to segment the line as well as partnering with adjacent or utilities that the project goes through their service territory. So I think in both cases we would look to do that.

Daniel Eggers - Credit Suisse Securities (USA) LLC (Broker)
Okay. Very good. I got that. And then just on Compass real quick. I know it's ways off, but does this get caught up in this Order 1000 workout because it's an economic line instead of a reliability line? Do you get more competition, and people prospectively bid away the cost of capital? Or how do you think you're going to be able to reserve some sort of competitive advantage in this line?

William H. Spence - Chairman, President & Chief Executive Officer
I'll let Greg take that question.

Gregory N. Dudkin - President, PPL Electric Utilities, PPL Corp.
Yes. So the way this is set up currently under New York law, this would not be considered a FERC 1000 Project, so we are going and making interconnection requests and will be filing our Article VII now. So if the approval path goes down that path there may be an opportunity for competition, but the probability is little bit lower. If the PSC opens up economic window next year then there could be competition, so we'll see how it plays out.

William H. Spence - Chairman, President & Chief Executive Officer
I think relative to the competitive nature of this, obviously just having completed a very major line essentially in the same region, I think our capability to be very competitive should we get to that point should be strong.

However, what I would say is the compass project, which is not included in our CapEx program, would be a program or a project if you will that would take advantage of some of the opportunities in the Marcellus shale to basically instead of bringing the gas pipelines across, we'd be bringing electric lines across to the potentially new power stations that could be built. So that would be our opportunity, if you will, that's shale gas-related.

What approvals will be required for the first segment?

The first segment will require approval from various regulatory and regional planning entities including the public utility commissions of Pennsylvania and New York, New York Independent System Operator, PJM Interconnection, and FERC. Siting and construction of the line will require permits from appropriate environmental and resource agencies.

Where does the name “Compass” come from?

This project charts a new course in the way we think about and plan the electrical grid of the future.

The U.S. Department of Energy's Office of Inspector General has given a big thumbs-up to the way FERC's Office of Enforcement is conducting its investigations.

"Based on our review, nothing came to our attention to indicate that [Office of Enforcement] had not performed enforcement activities in accordance with relevant policies and procedures," the inspector general said in a special report.

However, one of FERC's biggest critics in that regard assailed the inspector general for focusing on whether FERC complies with its own policies without discussing whether those policies are flawed or violate due process in the first place.

"That takes damning with faint praise to new heights," William Scherman, a former FERC general counsel and partner with the firm Gibson Dunn, said in an interview. The lawyer also said the inspector general appears to be inviting Congress to address the problem, "and hopefully they will" in the energy bills moving thru the Legislature.

7 closed investigations, 20 closed hotline cases, and 10 closed cases regarding potential violations, which had been self-reported by regulated entities.

Also, we specifically evaluated an allegation that the settlement of an enforcement action involving Constellation Energy Commodities Group, Inc., (Constellation) was inappropriately linked to a then-pending request for a merger between Constellation and the Exelon Corporation (Exelon). Specifically, the Senators expressed their concern that Constellation's agreement to settle the enforcement action was provided in exchange for FERC's approval of the merger (referred to as quid pro quo).

We found that that the Constellation-Exelon merger was specifically mentioned in the terms of the FERC/Constellation settlement agreement. Further, we determined that even before the merger was approved, Exelon executives were directly involved in the settlement negotiations. Finally, we note that the approval of the merger by FERC and the consummation of the enforcement settlement agreement took place on the same day. The lingering question was whether these actions represented an inappropriate quid pro quo. While these actions may have raised understandable concerns, the evidence did not support such a conclusion. In fact, we found that Exelon had specifically asked for language in the settlement agreement that linked the effective date of the settlement with the effective date of FERC's approval of its merger with Constellation.

In addition to the issues we specifically evaluated, there were several that we were unable to review. Those concerns related to what was essentially the basic fairness of FERC's enforcement authority/processes. We concluded that these matters were public policy questions which, as important as they may be, are best addressed by policy makers and as such, were outside the purview of the OIG.

As a general proposition, the cases that are discussed above suggest that when utilities are seeking selection or CPCN approvals from governmental entities, the utilities should rely on the established governmental approval processes to persuade the officials and not indulge in collateral efforts such as public education, outreach, and advertising activities.  If a utility should rely on  these collateral activities while pursuing selection or CPCN processes, then it will risk the chance that these costs may not be recovered from ratepayers.  If the selection or CPCN application has merit, the governmental selection process provides a sufficient vehicle for the utilities to present their engineering, marketing and economic studies and thereby hope to merit the vote of approval from these officials.  In this regard the PATH Companies spent over $8 million on attorney fees to prosecute the CPCNs before the respective governmental bodies, which begs the need for these collateral expenses.

NERC has filed a settlement for your  [Commission] review and approval in NP15-31 regarding Entergy. The settlement
involves six separate violations for two reliability standard requirements. The total penalty is $55,000. These violations had durations of multiple years.

This violation is classified as Medium/Moderate on the VRF/VSL Table, which would associate to a base penalty range of $4,000 to $100,000 pursuant to Appendix A of NERC ROP App 4B.

By my math, that is eight years and twelve days, or 2,934 days. Therefore, the base range should be $11,736,0004 to $293,400,000.

Venue is also governed by FPA section 317, 16 U.S.C. § 825p, which provides that “[a]ny suit or action to enforce any liability or duty  created by . . . this Act, or any rule, regulation, or order thereunder may be  brought in [the district wherein any act or  transaction constituting the violation occurred] or in the district wherein the defendant is an inhabitant.”

Respondents’ unlawful scheme resulted in
the misdirection and capture of over $10 million in PJM market payments, including
approximately $1,147,087 that would otherwise have flowed to Dominion Virginia Power and inured to the benefit of Dominion and its ratepayers, including ratepayers in this District.

The Federal Energy Regulatory Commission (Commission) hereby gives notice
that members of the Commission and/or Commission staff may attend the following
meetings:
North American Electric Reliability Corporation
Member Representatives Committee and Board of Trustees Meetings
Board of Trustees Corporate Governance and Human Resources
Committee, Finance and Audit Committee, Compliance Committee, and
Standards Oversight and Technology Committee Meetings

The Ritz Carlton Toronto
181 Wellington Street West
Toronto, ON M5V 3G7

SEC. 4211. FERC OFFICE OF COMPLIANCE ASSISTANCE AND PUBLIC PARTICIPATION.
Section 319 of the Federal Power Act (16  U.S.C. 825q–1) is amended to read as follows:

‘‘SEC. 319. OFFICE OF COMPLIANCE ASSISTANCE AND PUBLIC PARTICIPATION.

‘‘(a) ESTABLISHMENT.—There is established within the Commission an Office of Compliance Assistance and Public Participation (referred to in this section as the ‘Office’). The Office shall be headed by a Director.

‘‘(b) DUTIES OF DIRECTOR.--
‘‘(1) IN GENERAL.—The Director of the Office
shall promote improved compliance with Commission rules and orders by—

‘‘(A) making recommendations to the Commission regarding—

‘‘(i) the protection of consumers;

‘‘(ii) market integrity and support for the development of responsible market behavior;

‘‘(iii) the application of Commission rules and orders in a manner that ensures that—

‘‘(I) rates and charges for, or in connection with, the transmission or sale of electric energy subject to the jurisdiction of the Commission shall be just and reasonable and not unduly discriminatory or preferential; and

‘‘(II) markets for such transmission and sale of electric energy are not impaired and consumers are not damaged; and

‘‘(iv) the impact of existing and proposed Commission rules and orders on small entities, as defined in section 601 of title 5, United States Code (commonly known as the Regulatory Flexibility Act);

‘‘(B) providing entities subject to regulation by the Commission the opportunity to obtain timely guidance for compliance with Com- mission rules and orders; and

‘‘(C) providing information to the Commission and Congress to inform policy with respect to energy issues under the jurisdiction of the Commission.

‘‘(2) REPORTS AND GUIDANCE.—The Director shall, as the Director determines appropriate, issue reports and guidance to the Commission and to entities subject to regulation by the Commission, regarding market practices, proposing improvements in Commission monitoring of market practices, and addressing potential improvements to both industry and Commission practices.

‘‘(3) OUTREACH.—The Director shall promote
improved compliance with Commission rules and orders through outreach, publications, and, where appropriate, direct communication with entities regulated by the Commission.’’.

1. 
   

1. (b) TRANSMISSION OMBUDSPERSON.—
   (1) ESTABLISHMENT.—To enhance and ensure the reliability of the electric grid, there is established within the Council on Environmental Quality the position of Transmission Ombudsperson (referred to in this subsection as the ‘‘Ombudsperson’’), to provide a unified point of contact for—
   

1. (A) resolving interagency or intra-agency issues or delays with respect to electric transmission infrastructure permits; and
   (B) receiving and resolving complaints
   from parties with outstanding or in-process applications relating to electric transmission infrastructure.
   (2) DUTIES.—The Ombudsperson shall—
   (A) establish a process for--
   (i) facilitating the permitting process  for performance of maintenance and upgrades to electric transmission lines on Federal land and non-Federal land, with a special emphasis on facilitating access for immediate maintenance, repair, and vegetation management needs;
   (ii) resolving complaints filed with the
   Ombudsperson with respect to in-process electric transmission infrastructure permits; and
   (iii) issuing recommended resolutions
   to address the complaints filed with the
   Ombudsperson; and
   (B) hear, compile, and share any com-
   plaints filed with Ombudsperson relating to in-process electric transmission infrastructure permits.