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Preliminary Challenge of PATH's 2010 Annual Revenue Requirement Filed

11/23/2011

Alison Haverty and Keryn Newman filed a Preliminary Challenge amounting to around $2.3M of PATH's recovered 2010 Revenue Requirement with PATH Counsel today.

You can view the Challenge here.

PATH now has 21 days from the expiration of the review period (which is sometime next week) to work with the parties to resolve the issues raised. If issues are not resolved in within that time frame, Interested Parties will have an additional 21 days to file a Formal Challenge with the Commission.

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Illinois Commerce Commission Files Comments in PATH's Section 205 Docket

11/23/2011

2 Comments

The Illinois Commerce Commission filed comments this morning in Docket No. ER12-269-000. This is the docket for PATH's Section 205 filing to change the definition of "interested party" to exclude retail ratepayers.
Just go read it. I promise you'll enjoy it (unless you're one of those power company lookie-loos, in which case DON'T look, because it might make you lose your appetite).

2 Comments

PATH Makes Section 205 Filing at FERC to Change Definition of "Interested Party"

11/21/2011

8 Comments

PATH (and PJM, as administrator of the Tariff) made a Section 205 Filing at FERC on Oct. 31 to change the definition of "Interested Party." PATH says:

"While the existing phrase “other affected party” is not intended to cover individuals who do not have standing under Section 206 of the FPA, the PATH Companies are concerned that the phrase may be more broadly interpreted by some persons to apply to themselves as retail ratepayers or as individuals opposed to the PATH Project.5 The Commission’s exercise of its jurisdiction over the PATH Project does not directly affect these interests, and the PATH Companies therefore propose to revise the definition to more precisely reflect the scope of the Commission’s jurisdiction over the PATH Project."

And they footnote that statement with:

"See PATH LLC’s Motion to Dismiss the Formal Challenge and Motions to Compel filed by Keryn Newman and
Alison Haverty filed on October 20, 2011 in Docket No. ER08-386-000, et al."

Several parties have made motions to intervene in this docket: PJM (obligatory intervention); American Municipal Power, Inc.; llinois Commerce Commission; Old Dominion Electric Cooperative; Maryland's Office of People's Counsel; Alison Haverty and Keryn Newman. Deadline to intervene is today. Parties have 15 days to object to any Motion to Intervene.

And on and on we go...

8 Comments

The Other Shoe

11/7/2011

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Bill has the news on The Power Line here.

Sierra Club, Piedmont Environmental Council, Earth Justice and National Resources Defense Council have filed a brief at FERC.

Now if you'll pardon me, I'm going to go stick my toes back in the sand and order another fruity drink with a little umbrella in it.

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One Shoe Drops

11/3/2011

2 Comments

If you've been following PATH's activity at FERC, here are links to the Answers, filed at FERC this morning, to PATH's Motion to Dismiss the Formal Challenge and Motions to Compel Filed by Keryn Newman and Alison Haverty.

Joint Answer to Motion to Dismiss the Challenge

Keryn Newman's Answer to Motion to Dismiss the Motion to Compel

Alison Haverty's Answer to Motion to Dismiss the Motion to Compel

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Industry Lobbyists Try Again To Give FERC Transmission Permitting Authority With H.R. 3280

10/31/2011

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I'll give the investor owned utilities credit for their persistence. They simply refuse to give up on the idea of putting FERC in charge of high voltage electric transmission permitting and siting.

Less than three weeks ago, the Department of Energy declined to officially delegate their authority to designate National Interest Electric Transmission Corridors to FERC. This stunningly bad idea was the brainchild of former FERC Commissioner and current NextEra Energy lobbyist Joe Kelliher as a way to provide free transportation for his company's wind power resources to coastal load centers. Transmission lines aren't paid for by the utilities who invest their capital in the project, they are ultimately paid for by the ratepayers, with delicious double-digit incentive rates of return for the energy companies. Building unneeded new transmission lines is a cash cow for the utilities.

Today, Platts reports that new House legislation has been introduced that will give FERC the authority to site transmission lines and repeal the DOE's NIETC authority and replace it with a new FERC authority to designate transmission planning regions. Same stupid idea, different game plan.

This version of the game is credited to Jim Hoecker, former FERC chairman and lobbyist for the WIRES front group. Those former FERC Commissioners now raking in the millions by returning to the industry that spawned them in the first place are a dime a dozen.

Here's how it's supposed to work:

"These regions would then propose for FERC's approval high-votage transmission projects already included in the planning process.

Regional transmission planners could propose that FERC grant certificates for specific projects and the bill would require the commission to give these planners "substantial deference" for such requests.

The proposal also would permit FERC to issue permits to build interstate transmission lines.

The issuance of FERC certificates is modeled on FERC's gas pipeline siting authority, but the bill stops short of giving the commission eminent domain to order the construction of any line over the objection of affected landowners.

It also would retain states' authority to make decisions in the siting of local transmission lines."

Okay, so they have given FERC the authority to issue permits, and then "retain states' authority" by making them the bad guys who grant eminent domain to the power companies. No matter how they sugar-coat it, THIS PREEMPTS EXISTING STATE AUTHORITY, just like the industry lobbyists' last plan!

Once again, the investor owned utilities who stand to rake in huge profits with a new, free and easy, FERC-run, national siting and permitting policy state that:

"Sensenbrenner (who sponsored this wonderful *awful* idea) "appears to recognize that the national interest transmission corridor designation process is broken," Hoecker said."

And

"There is latitude on the part of the agencies but this would be a departure from the broad geographic approach implemented under the Energy Policy Act of 2005 and therefore would likely draw congressional attention," Plaushin said."

Awww... cut the false modesty. It's going to draw lots more attention than just that of Congress...

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PATH Files Motion to Dismiss at FERC

10/24/2011

6 Comments

Late last week, PATH filed a Motion to Dismiss the Formal Challenge and Motions to Compel Filed by Keryn Newman and Alison Haverty.

I can't comment here right now, but stay tuned if you want to see how this one turns out. The rest of you can comment your little fingers into bloody nubs, if you so choose.

If you're unaware of what's been happening at FERC, you can catch up on the filings here. Change the date range to previous 5 months, and type in Docket No. "ER08-386" and separately "ER09-1256." Different things have been filed on both dockets.

I'm going to be busy this week, but nothing I can't handle. However, there may be a dearth of news here while I do other things, so go entertain yourselves at The Coalition for Reliable Power's Blog or The Power Line. Or you could further amuse yourselves by totaling up the typos and errors in PATH's Motion. First one to come up with the correct total wins bragging rights as StopPATH's frustrated wanna-be English teacher (well, unless you actually ARE an English teacher)!

6 Comments

PATH Representatives Push Each Other Under the Bus at 2012 PTRR Meeting

10/19/2011

2 Comments

Even PATH doesn't take itself seriously anymore, if today's 2012 PTRR "Open Meeting" is any indication. The meeting was a total farce and they got so busy pushing each other in front of the speeding Interested Party Express Line bus that they didn't even stick to their make-believe "agenda." They also cut the meeting short by pretending there were no more questions and hanging up real quick.

Scared much, fellas? I could have sworn that at the beginning of the phone call we were told that there would be some additional presentations, and the agenda had an item called "closing comments," but PATH pushed the PANIC button instead and the operator announced there were no more questions, even though there were more questions in the queue (but somebody kept canceling them). Comedy at it's finest!

On the call were PATH counsel Randy Palmer and Becky Bruner (well, at least Randy said she was there, but we never heard her say a word -- they should have tossed her under the bus once or twice, just to get something in return for that billable hour), Milo Pokrajac, who is apparently not the one holding PATH's bag any longer, and some new accounting patsy named Dave Griffing.

It started out bad when Patience Wait asked them if the $14.7M return (profit) on the PTRR was reflective of PATH's old 14.3% ROE, or their new, lower 12.4% ROE. Of course it's based on the old one, because they haven't filed the revised PTRR for the new one yet. They pretended that they had no idea what the new return amount would be.

Ali Haverty presented them with the dilemma of the amazing, un-depreciating rate base whereby PATH's "suspension" keeps the amount in the rate base stagnant and as a result PATH does nothing but collect a profit year after year. *crickets* I think this is where Dave and Milo threw Randy under the bus for a change. Randy went blathering on about a whole bunch of nothing but basically alluding to the fact that abandonment of the PATH project is just around the corner. No real shocker, right? We all saw that coming.

Robin Huyett Thomas quizzed them about CWIP balances bouncing around like a yo-yo in 2012. They keep trying to blame it on forfeited option payments that are being expensed, but really, they didn't make much sense. Just another question they couldn't answer.

Continuing the theme, Steve Smith tried to get some detail out of them regarding the amount of depreciation showing in the rate template under "Overhead conductors and devices" (for a line that's not been constructed?). Milo told him it was just a small amount that didn't really matter, however Steve countered that $8,500 bucks isn't chump change to him.

Debbie Royalty quizzed them about PATH's A&G expenses in 2012. They're showing $2.4 million in expenses for a project that's sitting on a shelf. Randy said that the $2.4M consisted of, "this call, the ongoing financial review process and 'those types of things.'" Considering that Chorus Call cut the meeting off after the allotted, obligatory hour, maybe someone should ask Randy just how much they're paying him to put on his game face and pretend that PATH is following the Formula Rate Protocols, or that they give a crap at all anymore, $2,399,910.05?

In order to get any real answers to their questions, they were instructed to submit discovery questions (pssst... you don't get real answers that way either, but it's good for a giggle).

PATH also verified again that the piddling amount of land they have already purchased, some $30M of the rate base, would have NEVER depreciated. That $30M only represents a handful of the thousands of properties PATH would have had to pay for, one way or another, if their project had been built. The un-depreciating land just sits in the rate base, year after year, earning (now) 12.4% return (profit) for the PATH Companies. This means you would have been stuck paying for PATH... for eternity. So, thanks, victorious PATH opponents, for kicking this hole in everyone's wallet to the curb.

Now, can't we just get to the flippin' abandonment already and quit torturing each other? How about it, PATH?

Pictures from the PATH Breakfast Meeting Party -- more coming later, we're currently experiencing an "abeyance" of technical cohesion:

2 Comments

DOE Declines to Designate its Authority to FERC (at least officially)

10/11/2011

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U.S. Energy Secretary Steven Chu declined today to pass DOE's authority to designate National Interest Electric Transmission Corridors to the Federal Energy Regulatory Commission. A scheme for FERC to take over corridor designation was proposed by energy company lobbyists earlier this year and recently championed by FERC, the industry and certain "environmental" groups whose misguided enthusiasm for renewable energy turned them into the perfect patsies for championing new long distance transmission lines. Individual states, who have always had authority over transmission lines within their borders, along with a member of Congress and other environmental organizations who live in the real world, vehemently opposed the transfer of authority.

Don't kid yourself by thinking the battle is over. DOE's statement says they "will work more closely with the FERC in reviewing proposed electric transmission projects under section 216 of the Federal Power Act (FPA), as an alternative to delegating additional authority to FERC."

So, in other words, instead of officially giving FERC the authority, DOE is just going to let FERC unofficially run the show. FERC's plans included allowing transmission developers to designate corridors at will when proposing a new transmission project. DOE's plan includes this as well. In addition, DOE says they will:

Begin immediately to identify targeted areas of congestion based on the evaluation of existing information and on comments submitted by stakeholders;
Identify narrower areas of congestion than the broad areas previously studied; and
Solicit statements of interest from transmission developers while considering what National Corridors to designate.

Just because a transmission developer wants to build a project does not mean "congestion" exists. As well, transmission is probably the most expensive, most environmentally unfriendly, and least "reliable" solution to "congestion."

At the same time, you've got FERC considering an update of their transmission incentives through a Notice of Inquiry. Over a hundred sets of comments were submitted in that docket (RM11-26-000) and present a clear picture of what's driving development of new transmission development. Money. Transmission projects, whether they are "needed" or not, provide a tidy income for energy corporations and investors. Since transmission projects are funded in their totality by electric consumers, the building of unnecessary transmission infrastructure has the potential to send electric rates skyrocketing.

Keep watching this one to see how much of FERC's original plan to anoint itself with federal transmission siting and permitting authority ends up being carried out in DOE's name.

This charlie foxtrot has reached critical mass. Why are we still operating under 6 year old energy policy? Six years ago, FERC, regional grid operator PJM, politicians and the energy industry thought expanded uses for coal fired resources was a good idea. Energy and how we use it has come a long way since then. The only smart solution is for Congress to develop new energy policy instead of observing and complaining while the energy industry, their lobbyists and the government political appointees manipulate bad policy to continue on this transmission highway to hell at electric consumer expense.

Radix malorum est cupiditas.

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PATH's Latest Tale of Woe - FERC Settlement Lowers ROE

10/10/2011

5 Comments

It's been a year in coming, but PATH's ROE Settlement was finally made public on Friday. No more 14.3% ROE!

Here's a summary of what's in the Settlement (warning, gigantic file).

PATH's base ROE will change from 12.3% to 10.4%, effective January 1, 2011. That was the only part of the ROE that was subject to change as per FERC order. The 200 incentive points they were awarded back in 2008 (50 pts. for membership in PJM and 150 pts. for the "risks and challenges" of the project) will not change. When the existing 200 pt. incentive ROE adders are added to the new base ROE, this brings PATH's ROE down to 12.4%.
PATH will pay the PJM ratepayers a lump sum refund of $2,741,000.55, which includes interest, on the difference between the 14.3% that has been collected since March 2008 and the new 12.4% ROE that was effective January 1, 2011. This refund will be made in the next billing cycle after approval of the settlement by FERC.
Within 7 days of approval by FERC, PATH will file a Re-Revised 2011 Projected Transmission Revenue Requirement, which will include a refund of the difference between the 14.3% ROE they have collected thus far this year and the new 12.4% ROE.
Within 14 days of approval by FERC, PATH will file a Revised 2012 Projected Transmission Revenue Requirement reflecting the new, lower ROE.
PATH will also file a revision to their 2010 Actual Transmission Revenue Requirement within 14 days of approval. The settlement states that this will change the refund of over recovered revenue to ratepayers from $4,899,780.42 to $4,597,741.90. I'm not sure why PATH is now keeping $300K of the refund they owed to us, but the filing should tell us eventually.
None of the settling parties can request a change to PATH's base ROE or incentive adders for 4 years. However, in the event PATH is cancelled, this will not affect the rights of any party to argue what ROE (if any) should be applied to abandoned plant costs.

PATH got taken to the cleaners in this settlement! Hats off to the other power companies who engineered this settlement while "our" state consumer advocates sat on their hands instead of protecting our interests. PATH should have been paying attention to the enemies they were making when they insisted on keeping all the gold in their own pot way back when.

PATH's original award of incentives was completely ridiculous, and everyone's been aware of that for over three years. PATH's 14.3% ROE was way outside of any other project's ROE. So, let's see how PATH's ROE stacks up now when compared with its three sister Project Mountaineer projects, who were also awarded incentives in 2007 & 2008:

Susquehanna-Roseland 12.93%
MAPP 12.8%
TrAIL 12.7%
PATH 12.4%

How does it feel to go from the top of the heap to the bottom of the pile, PATH?

Look at it this way -- PATH's ROE fell by 1.9%, which nearly equals their 2% incentive adders and pretty much negates them in their entirety. PATH isn't as profitable as it once was, so why doesn't AEP & FirstEnergy just take their ball and go home? We all know this project is never going to happen. However, until the project is officially "cancelled," they will continue to collect this ROE on the amount they have invested in the project. The difference between ROEs is going to lower their yearly return (profit) by about a million bucks.

Here's how it works (which I was trying to explain in vain in Bill's comments over the weekend):

The amount of money PATH invests in project assets will be returned to them through depreciation over the life of the transmission line. PATH has invested $138,773,015 in the project through the end of 2012. In exchange for investing their capital in the transmission project, PATH will earn a return (profit or interest) on their money yearly. The amount they earn each year is determined in their Formula Rate template and based on the incentives they were granted back in 2008. PATH was granted a hypothetical capital structure of 50% equity and 50% debt. This means that until the project is actually completed, no one knows how much of the cost will be equity (PATH's money) and how much they will have to borrow to finance it (debt). FERC has set the percentages at 50-50. This means every year PATH will now earn 12.4% on the hypothetical equity half of the amount in the rate base, and a much lower percentage on the half that is hypothetically debt, or borrowed money. The debt percentages are 6.64% for the PATH-WV (AEP) half of the project and 6.76% for the PATH-Allegheny (FE) half of the project. As shown on this redlined template sheet from PATH's settlement, the two different percentages are averaged and the resulting percentage is applied to the rate base and becomes PATH's yearly return, or profit, which is recovered along with all other yearly expenses (such as marketing, administrative costs, a share of PATH's parent company expenses, a portion of their start-up costs incurred prior to incentives being granted in 2008, taxes and depreciation) every year. As a result of the settlement, PATH's yearly profit margin has dropped from 10.47% on PATH-WV's half and 10.53% on PATH-Allegheny's half to 9.52% for PATH-WV and 9.58% for PATH-Allegheny.

If you actually look at the new templates submitted as an attachment to the settlement, you will notice that PATH neglected to change these numbers in the template, however, mistakes like that seem to be par for the course for PATH and its team of crack accountants.

What some of us are wondering now is if the filing of another revised PTRR for 2011 and a revised ATRR for 2010 will extend the discovery period currently underway on previous filings. Since PATH's Formula Rate Implementation Protocols sets out a 150 day discovery period for interested parties to request information, and another 30 days to file a Challenge, a whole bunch of new filings near or after the closing of discovery on the original filings leaves no time for interested parties to avail themselves of the procedures outlined in the protocols. As we've found out over the past couple of years, when the protocols are put into practice they are quite inadequate as written, aren't they? No one ever envisioned the sticky situations PATH has gotten itself into in the past couple of years, apparently. Planning for the unexpected should have been a "best practice" when planning an unneeded transmission project.

Any questions? Or is it still about as clear as mud?

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Forward>>

Preliminary Challenge of PATH's 2010 Annual Revenue Requirement Filed

Illinois Commerce Commission Files Comments in PATH's Section 205 Docket

PATH Makes Section 205 Filing at FERC to Change Definition of "Interested Party"

The Other Shoe

One Shoe Drops

Industry Lobbyists Try Again To Give FERC Transmission Permitting Authority With H.R. 3280

PATH Files Motion to Dismiss at FERC

PATH Representatives Push Each Other Under the Bus at 2012 PTRR Meeting

DOE Declines to Designate its Authority to FERC (at least officially)

PATH's Latest Tale of Woe - FERC Settlement Lowers ROE

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