PATH wants FERC to consolidate its recently-filed request to recover capital in abandoned plant with outstanding Challenges to their expenses in 2009 and 2010 because "administrative efficiency strongly supports consolidation of all issues in Docket Nos. ER09-1256-000 and ER12-2708-000."

The same way oil and water mix to create koolaid, I'm sure.  Read the Motion Opposing Consolidation filed October 29.

In typical PATH fashion, the filing wasn't properly served on parties and wasn't properly docketed in ER12-2708-000, so here's your unofficial notice.

West Virginia Consumer Advocate Byron Harris has a bad case of Halloween-itis.  In his comments on PATH's abandonment cost recovery case at FERC, Harris said of PATH:  "If you set out a big bowl of candy, people are going to reach their hands into it," said Byron Harris, director of the Consumer Advocate Division of the Public Service Commission of West Virginia. "That's what they're doing."

If Byron thinks that the $121M is "candy" that PATH is eating, he's wrong.  The candy got eaten by landowners who sold or optioned property, fancy $500/hr DC lawyers who were only too happy to do PATH's dirty work, government-parasite contractor The Louis Berger Group, snake oil salesman supply company Contract Land Services, perfidious public relations contractor Charles Ryan Associates, gun-jumping land clearing company Supreme Industries, and many other companies and individuals that had their hand in PATH's candy bowl.  They ate the candy and PATH is left with the empty bowl, which they now want to refill at consumer expense.

The $121M Byron is protesting is PATH's money that they (over)spent, without a care in the world.  After all, FERC had granted them an incentive guaranteeing  recovery of whatever they spent.  PATH's project managers, gladhanders and schmoozers neglected to read the fine print, however.  The fine print said "... prudently-incurred expenses if project is abandoned through no fault of the company."

Ut-oh, PATH, UT-OH!

Yesterday was the deadline for parties to intervene, comment or protest on PATH's proposal to collect its $121M investment in the PATH Project.  This amount is in addition to the $95M PATH has already collected from consumers in 13 states and the District of Columbia since 2008.  In order to collect on the abandonment incentive they were granted by FERC in 2008, PATH has to prove that the abandonment was beyond their control and that all costs they propose to collect were prudently incurred.  The burden is PATH's.  Of course, other parties can intervene and protest PATH's contentions.

And then the flood gates opened.  Thirty parties have intervened and some have filed comments and protests.  Nine state PSCs and/or consumer advocates intervened.  Many filed comments or protests.

The consumer advocates of six states (PA, VA, DE, WV, NJ & MD) filed a joint motion and protest.  In their protest, the Joint Consumer Advocates question the prudence of PATH's expenditures, especially in the last few years in light of the fact that PATH misfiled applications, withdrew and tolled their cases numerous times, and PJM's continuing analysis of the project pointed to serious questions about the need for the project.  The JCA question PATH's $30M expenditure on land in light of the fact that they had no permits to build.  They point out that PATH's proposed 5-year recovery period for the $121M will end up costing consumers an additional $25,782,017 of carrying costs & return.  The JCA dispute PATH's proposed ROE, both the base ROE of 10.4% and the .5% PJM membership adder.  They do some math to show that the amount PATH spent on its project is more than 1,000% higher than similar transmission projects that have applied for abandonment.  They also point out that the Commission has set all these other cases for hearing and therefore must set PATH's for hearing as well.

The Illinois Commerce Commission filed a motion to intervene and comments.  The ICC takes issue with PATH's assertion that costs were prudently incurred.  The ICC wants the Commission to assert some control over PATH's sale or transfer of assets to maximize the sale proceeds, such as requiring PATH to sell them via public auction or requiring PATH to file FMV determination documents before a sale.  The ICC argues that PATH did not make a proper showing that its proposed ROE is just and reasonable.  They also bring up all the same old cost allocation arguments that aren't particularly germane to this proceeding, but still valid arguments.  Then they went a bit crazy talking about having the prudence of PATH's costs challenged yearly through the Formula Rate Protocols.  Obviously they don't understand the process or the fact that the bulk of the costs aren't going to change year to year and that perhaps they should have been involved in the process all along.  Just because PATH filed for abandonment does not mean ICC cannot monitor and challenge the prudence of costs in successive formula rate filings.  The process is still going to be there, and has been there all along.  But ICC isn't the only state that doesn't seem to understand FERC formula rates, and sadly none of the states seem inclined to learn the process.  As long as the states that supposedly protect consumers continue to fail to educate themselves and get involved in this process, transmission owners will continue to rip off consumers.  States complain that they do not have in-house expertise or funds to hire any so therefore they don't get involved.  It ain't rocket science, and if the JCA can get together to file a joint petition in this matter, what's stopping them from joining together to fund joint participation in formula rate filings on a yearly basis?

The Maryland Public Service Commission filed a protest and comments.  The PSC questions the prudence of PATH's expenses and other requests and asks that the Commission set the matter for hearing.  They also take the opportunity to continue their opposition to FERC's transmission incentives policy as "overly generous and incompatible with the risks faced by project developers," and suggest that FERC consider the quarter billion dollar waste of consumer money the PATH project represents as they continue their deliberations about the incentives Notice of Inquiry currently in progress.

The Virginia State Corporation Commission filed a motion to intervene and protest.  The SCC protests PATH's proposed 10.9% ROE and, like the ICC, contends that PATH did not make a showing to support it.  They further argue that that the risks and need to raise capital upon which PATH's original ROE was based have died with the project.  Then the SCC urges the Commission to compel an audit of PATH to ensure the prudence of the $121M to make sure PATH wasn't "throwing good money after bad."  That's what the Formula Rate Protocols are for - the VA-SCC should have been participating all along.  Now because the SCC hasn't been doing its due diligence, they want FERC staff to do it for them.  Perhaps the SCC should raise this issue with FERC enforcement staff because the Commission said in P. 27 of a recent order that only OE decides who to audit when.  The SCC also asks that FERC staff monitor PATH's sale and transfer of assets.

The Indiana Utility Regulatory Commission filed a motion to intervene and protest.  The URC states that PATH has not supported the prudence of their expenses nor explained why it kept moving toward completion of its project despite in-service delays.  They point out that PATH witnesses used the word "aggressive" six times in their testimony to describe the project schedule, but failed to provide a copy of the schedule.  URC believes PATH put the cart before the horse when they purchased land before receiving a CPCN in any state.

In addition, to the above, the Ohio Consumer's Counsel, the Pennsylvania Public Utilities Commission and the West Virginia Public Service Commission filed motions to intervene without comment or protest.

Four consumers from West Virginia and eight from Maryland also filed motions to intervene, some with protests.

Ken Sanders, Dave Fenstermacher, Catherine Combs, Ginny MacColl, Ricky Young, Lisa Jarosinski, Brent Simmons and Mary Ann Aellen from the Frederick area filed petitions to intervene.

Bill Howley of Chloe, WV filed a motion to intervene and protest.  Bill questions whether PATH's abandonment was beyond PATH's control and points out that PATH failed to disclose PJM trends and analysis that undermined their state CPCN cases.  Bill questions whether any of PATH's costs after 2009 were prudent due to PATH's failure to support their cases at the PSCs.  He questions PATH's purchase of the Kemptown substation property before fully exploring Frederick County's zoning requirements.

Patience Wait of Shepherdstown, WV filed a motion to intervene and protest.  Patience contends that PATH has not carried its burden in its filing.  Patience says "...there is evidence to indicate that PATH incurred excessive costs in order to manipulate state-level  regulatory processes, to try to create a sense of “inevitability” to the project and avoid rejection of their application – which would indicate, to a “reasonable person,” that PATH recognized its justification for the project was fatally flawed."  She documents her contentions with examples from each state, including PATH's February 25, 2011 purchase of property in Hardy County, WV (just 3 days before the suspension) and PATH's premature clearing of land at their Welton Springs Substation before PATH had a permit, a violation of WV law.

Alison Haverty of Chloe, WV, filed a motion to intervene and protest.  Ali contrasts PATH's continued project spending to PSEG's curtailment of spending on another project they subsequently abandoned.  Ali states, "PSEG didn't wait for PJM to do their thinking for them."  Ali also contends that PATH did not seek a refund for amounts paid prospectively to the NPS and NFS for the EIS process, after PATH delayed that process.  Ali contrasts PATH's lack of detail with the TrAILCo Prexy abandonment filing, where 10 pages of cost detail was included.  Ali asks the Commission to suspend PATH's rates and replace the tariff sheets at a later date.

Keryn Newman of Shepherdstown, WV, filed a motion to intervene and protest.  (exhibits to filing can be found here.)   Keryn states that the PATH project will cost consumers $242,559,680.48, nearly a quarter billion dollars and deserves the Commission's scrutiny.  She also raises the issue of PATH's recently filed 2013 Projected Transmission Revenue Requirement, which she calls "completely invented" because PATH has recently transferred all CWIP totals to a regulatory asset account.  She asks the Commission to suspend PATH's rates until this matter is settled.  Keryn contends that PATH had fault in the abandonment, bungled state permitting and made no showing of the prudence of their expenses.  She also contends that "a reasonable utility manager" would not have purchased property before receipt of a CPCN, and provides several examples of other utilities that do not purchase land until CPCN completes.  Among the examples are PATH parent AEP's transmission line construction time table.  Keryn provides a list of the properties PATH purchased or optioned and presents specific examples backing up her contention that, "PATH had ulterior motives for purchasing or optioning certain properties at inflated prices that had nothing to do with simply acquiring necessary ROW," including PATH's land purchases in the River's Edge subdivision and an inflated option price in Jefferson County, WV.  Keryn contends that PATH has serious accounting deficiencies, protests PATH's proposed ROE, and compares PATH's abandonment to other recent cases, showing that PATH's $121M expenditure was incongruent with other cases.

Old Dominion Electric Cooperative filed a motion to intervene and protest.  ODEC protests PATH's proposed ROE.

In addition, American Municipal Power and the North Carolina Electric Membership Corporation filed motions to intervene.  These are non-profit municipal electric cooperatives.

The PJM Industrial Customer Coalition filed a motion to intervene.  This "coalition" includes large, industrial power customers who will pay a portion of the rate set in this proceeding.

The following investor-owned utilities filed motions to intervene:  PSE&G, Dominion, Exelon, Rockland Electric Co. and LSP Transmission Holdings.

And, of course, the PJM cartel, the ultimate perpetrator of this whole stinking mess, filed a motion to intervene.

I don't envy the Commission here.  The thirty parties raised a lot of issues to be considered.  What is obvious here is that there's no way FERC is going to approve PATH's filing before January, which is the absurd contention Becky Bruner was making on PATH's 2013 PTRR "Open meeting" phone conference last week.  I wonder if she's still insisting to her PATH masters that collecting this $121M is a "sure thing?"

PATH made a filing at FERC today to collect their stranded investment in the PATH Project over a 5 year period.  This $121M is in addition to the $95M PATH will have collected from ratepayers through the end of 2012, and the $20M they propose to collect from ratepayers in 2013.  That's a total of $236M, for a project that was never built.  PATH even has the audacity to ask for a return on the abandoned project costs over the 60 month amortization period.

PATH says:

"The PATH Project was abandoned for reasons beyond the control of PATH LLC, the PATH Companies or their upstream owners, and the Commission previously determined that the PATH Companies may recover their prudently-incurred costs under such circumstances.
Accordingly, the PATH Companies seek authorization to recover abandoned plant costs over a sixty-month amortization period, including a return on the average unamortized balance under the transmission cost-of-service formula rates contained in Attachment H-19A of the PJM Tariff (“Formula Rate”), as revised herein, effective December 1, 2012. The abandonment plant costs for which the PATH Companies seek recovery are previously unrecovered costs incurred from January 1, 2008 through August 31, 2012, of approximately $121 million, subject to goingforward  accounting entries to reflect proceeds and costs associated with the orderly closing of transactions, including transfers or sales of land acquired by the PATH Companies for development of the PATH Project (“Abandonment Costs”)."

Read the whole 200 page filing here.

A lot of you have been wondering what FERC's Order last Thursday means, but your eyes glaze over around page 2 of the 36-page order.  If that describes you, here's your "real world" explanation.

In 2010, a group of electric consumers who were paying PATH's transmission charges in their electric bill attended an "open meeting" in DC regarding the rate they were forced to pay.  PATH welcomed these consumers (and the consumers were the only ones who actually showed up for the meeting!) to the process as "interested parties" as defined in the legal protocols that govern PATH's rate setting process, which is under FERC's federal jurisdiction.

Two of the consumers, Ali and Keryn, continued looking into the rates, through the processes set in the protocols, by submitting requests and receiving information from PATH.

At the end of the examination phase, Ali and Keryn filed a formal challenge of $3.3M of PATH's expenditures and recovery from ratepayers during 2009.  The challenge process is specifically set out in PATH's protocols as the proper avenue to challenge rates.

In 2011, Ali and Keryn once again examined PATH's rates under the protocols.  Disputes over discovery, and Ali and Keryn's standing as end-use consumers, soon erupted.  PATH wasn't so eager to provide the same information Ali and Keryn had used in their first formal challenge as it related to PATH's 2010 expenditures.  PATH began to claim that Ali and Keryn had no legal standing to file challenges or participate in the examination process.  It was an unsuccessful attempt to avoid providing information that could be used in another challenge.  A second formal challenge was filed at the end of the second examination period that totaled an additional $2.5M of expenditures improperly recovered from ratepayers in 2010.

In order to prevail in a valid challenge to PATH's rates before FERC, Ali and Keryn had to raise "serious doubt" about the accuracy of PATH's rate calculations and/or the prudence of the expenditures.  Once a challenge is filed, the burden of proving the rate is accurate shifts to PATH.  PATH provided little defense and absolutely no evidence in their answer to the challenges.

FERC granted the challenges, finding that Ali and Keryn carried their burden of raising "serious doubt."  In the order, FERC takes the next step, which is to set the accuracy and prudence of the challenged expenditures for a public, trial-type, evidentiary hearing before a FERC administrative law judge.  However, standard practice at FERC is to avoid hearings in favor of a settlement between the parties.  The parties here are PATH and Ali & Keryn.  Therefore, FERC has ordered settlement judge proceedings to explore whether this matter can be resolved without a hearing.

The expenditures FERC found questionable are:  lobbying, advertising, PATH's "Reliable Power Coalitions" and "PEAT" program, PATH's membership expenditures, shared parent company costs charged in PATH's rates, and donations and civic, political and related activities.  In addition, FERC also set some "double counting" of expenses for hearing.  In that instance, PATH recorded invoices in more than one account, increasing recovery over and above the amount they paid for the service.  FERC dismissed prudence challenges totaling $100K for PATH's three-year contract for right-of-way maintenance with the National Wild Turkey Federation, however FERC also believes PATH recorded that expenditure in the wrong account and set that issue for hearing.  FERC also set discovery procedures for hearing.

In a separate but related matter, FERC also granted two complaints filed by Ali and Keryn.  Remember how PATH asked FERC to dismiss the challenges because they contended that Ali and Keryn did not have legal standing to file the challenges, nor participate in the examination of PATH's rate?  PATH kept ratcheting up their incorrect "determination" that end-use consumers do not have standing, culminating this summer in a refusal to allow consumers to attend PATH's "open meeting" conference calls or to provide any information requested by consumers under the protocols.  In response, separate complaints were filed.  FERC agreed with Ali and Keryn that end-use consumers who pay transmission rates as part of their electric bill do have legal standing under section 206 of the Federal Power Act.  PATH had complained in one of their filings that if FERC found that consumers have standing, it would open the door for "all of the millions of retail customers in the PJM footprint that may be indirectly charged some portion of [PATH's] transmission rates" to participate in examination of these rates and create an administrative "quagmire."  Indeed, that is what FERC found.  Any one of the 61 million consumers in PJM who pay a portion of a transmission rate have standing to examine and challenge that rate.  PATH imagines that it (and other transmission owners) will now be deluged with information requests from every one of the 61 million consumers in the PJM footprint who fund their transmission projects.  However, it's never happened before, and is unlikely to happen in the future.  Formula rates are complicated and examining them is tedious.

In summary, consumers have standing to participate in the examination and challenge of transmission rates they pay, and PATH's 2009/10 recovery of $5.8M in inaccurate or imprudent expenditures from 61 million PJM consumers will now head to settlement and hearing for possible refund.

... AT FERC.

I don't have the orders yet, but here's FERC's summary of what they voted on at this morning's Commission meeting:

FERC grants in part, and dismisses in part, formal challenges; grants complaints, establishes hearing and settlement judge procedures

E-21, Potomac-Appalachian Transmission Highline, LLC, Docket No. ER09-1256-000, Alison Haverty v. Potomac-Appalachian Transmission Highline, LLC,
Docket No. EL12-79-000, Keryn Newman v. Potomac-Appalachian Transmission Highline, LLC, Docket No. EL12-85-000.

The order in Docket No. ER09-1256 sets for hearing challenges to PATH’s last two annual informational filings to update its transmission revenue requirement; the challenges are in accordance with special protocols that the Commission accepted as part of the formula rate in PATH’s tariff.
The order in Docket Nos. EL12-79-000 and EL12-85-000 grants the two complaints, each filed by a private citizen who wishes to participate as a party in PATH’s annual transmission revenue requirement review, due to their status as ratepayers.

Be sure to send in your RSVP for PATH's Oct. 16 open meeting, if you haven't yet, because FERC says you can attend.

Mood music!

Read a copy of FERC's Order here.

Once a month, the Federal Energy Regulatory Commission holds a public meeting where they vote and issue decisions on matters of some significance. 

The Commission will be meeting on September 20th.  Here is a link to their agenda.

Item E-21 on page three reads:

E-21
ER09-1256-000:  Potomac-Appalachian Transmission Highline, LLC
EL12-79-000:  Alison Haverty v. Potomac-Appalachian Transmission Highline, LLC
EL12-85-000:  Keryn Newman v. Potomac-Appalachian Transmission Highline, LLC

Summary of EL12-79-000:  Alison Haverty (Complainant) filed a formal complaint against Potomac-Appalachian Transmission Highline, LLC (Respondent), alleging that the Respondent has informed the  Complainant that she may not participate in a meeting on the Respondent’s Annual Transmission Revenue Requirement, despite having an interest in the outcome of the proceedings.

Summary of EL12-85-000:  Keryn Newman  (Complainant) filed a formal complaint against Potomac-
Appalachian Transmission Highline, LLC (Respondent) alleging that Respondent violated its Formula Rate Implementation Protocols by refusing to provide information properly requested by an Interested Party in accordance with Section VI of the Protocols.

ER09-1256-000 is harder to summarize because there are several issues pending on that docket, including the two formal challenges filed by Ali and Keryn, PATH's motion to dismiss the challenges, several motions to compel production of documents, a motion for issuance of a protective order, and a whole bunch of your letters to FERC about PATH's antics over the past several years.  FERC may rule on any or all of these issues.

The Commission meeting is webcast and begins at 10:00 a.m. on Thursday, Sept. 20.  You can watch the meeting here.  The agenda is voted on as a whole and individual matters are not always discussed.  What the Commissioners actually discuss during the meeting could be anything on the agenda.  Once the meeting concludes, written decisions are issued through e-service.