Yesterday, the Commission granted rehearing on its previous order denying PATH the continued benefit of a .5% return on equity incentive for membership in PJM during the amortization period for recovery of abandoned plant.
So, what does this mean? Not much. It simply means PATH is hog-tied and can't proceed on appeal to the D.C. Circuit and waste even more of our money having a legal tantrum over .5% interest that it's not entitled to.
The Commission will take another look at its previous decision and decide whether or not to change its mind. There's no time limit on how long the Commission can take to make its decision. It could be years. Meanwhile, PATH can shut up and sit down.
If the Commission had denied the request for rehearing, PATH would have been given the green light to appeal FERC's decision in federal court. Now PATH can't proceed until the Commission reconsiders and issues another order on the issue. The Commission can change its mind, or simply confirm its original decision.
Here's the issue: In the Energy Policy Act of 2005, Congress instituted certain financial incentives to encourage investment in transmission for the purposes of benefiting consumers. Congress tasked FERC with coming up with policy and awarding incentives. One of the incentives Congress specifically mentioned was financial reward for a transmission builder who joined a regional transmission organization and turned control of its facilities over to the organization. FERC put this into practice in the form of an additional .5% interest on each project that applied for it, if the owner joined or continued an existing membership in an RTO. Therefore, a company with membership in an RTO could be awarded this incentive on each project it owned as long as it maintained its membership.
AEP and Allegheny (now FirstEnergy) set PATH up as a joint venture and created a bunch of single-purpose shell companies. The parent companies did this because a "new" company produced tax and financial benefit and it could be awarded a higher incentive return on equity because this independent "start-up" company was taking a greater risk than it would if each established parent company owned its own portion of the project. PATH tried to pretend it was an independent company whose stock just happened to be owned by its parents. PATH chose this corporate structure because it benefited the parent companies. Nobody forced PATH to do it.
Now that PATH's one and only project has been abandoned without being built, the Commission determined that the company will never have anything to turn over to an RTO, and there is no benefit to consumers from PATH's continued membership in PJM, and therefore denied continuation of this incentive.
PATH is arguing that the Commission is punishing it for its choice of business construct. PATH says that its parent companies have other transmission projects that have been turned over to PJM, so therefore the parent company actions entitle PATH to the same benefit. All of a sudden, PATH wants to be a part of its parent companies. But wait... PATH separated itself from its parent companies when it benefited financially. Now PATH wants to be included with its parent companies when it can financially benefit from that construct. Can you smell the desperation?
PATH also complains that the Commission is being inconsistent because other transmission projects that have been abandoned managed to keep the RTO membership incentive, therefore PATH is entitled to do so as well. PATH feels it should have been put on notice that it would lose this incentive if it abandoned the project. *sniff, sniffle, whine*
Other transmission projects have kept this incentive because they aren't single-purpose entities and their companies will continue to exist and maintain membership in an RTO. There is no point to PATH's continued membership in PJM because it doesn't own any transmission and will cease to exist as soon as the abandoned plant debt is paid off.
Despite a rule prohibiting answers to requests for rehearing, the Joint Consumer Advocates filed an answer supporting the Commission's original decision and arguing against continuation of this incentive.
The Commission's granting of rehearing won't affect the scheduled settlement conference coming up at the end of February, since that issue was never set for hearing but decided in the original Order. However, parties will be aware that a reversal of the Order could grant PATH an additional .5% return at any time in the future and may keep that in mind while negotiating a settlement. Happy now, PATH? :-)
So, what does this mean? Not much. It simply means PATH is hog-tied and can't proceed on appeal to the D.C. Circuit and waste even more of our money having a legal tantrum over .5% interest that it's not entitled to.
The Commission will take another look at its previous decision and decide whether or not to change its mind. There's no time limit on how long the Commission can take to make its decision. It could be years. Meanwhile, PATH can shut up and sit down.
If the Commission had denied the request for rehearing, PATH would have been given the green light to appeal FERC's decision in federal court. Now PATH can't proceed until the Commission reconsiders and issues another order on the issue. The Commission can change its mind, or simply confirm its original decision.
Here's the issue: In the Energy Policy Act of 2005, Congress instituted certain financial incentives to encourage investment in transmission for the purposes of benefiting consumers. Congress tasked FERC with coming up with policy and awarding incentives. One of the incentives Congress specifically mentioned was financial reward for a transmission builder who joined a regional transmission organization and turned control of its facilities over to the organization. FERC put this into practice in the form of an additional .5% interest on each project that applied for it, if the owner joined or continued an existing membership in an RTO. Therefore, a company with membership in an RTO could be awarded this incentive on each project it owned as long as it maintained its membership.
AEP and Allegheny (now FirstEnergy) set PATH up as a joint venture and created a bunch of single-purpose shell companies. The parent companies did this because a "new" company produced tax and financial benefit and it could be awarded a higher incentive return on equity because this independent "start-up" company was taking a greater risk than it would if each established parent company owned its own portion of the project. PATH tried to pretend it was an independent company whose stock just happened to be owned by its parents. PATH chose this corporate structure because it benefited the parent companies. Nobody forced PATH to do it.
Now that PATH's one and only project has been abandoned without being built, the Commission determined that the company will never have anything to turn over to an RTO, and there is no benefit to consumers from PATH's continued membership in PJM, and therefore denied continuation of this incentive.
PATH is arguing that the Commission is punishing it for its choice of business construct. PATH says that its parent companies have other transmission projects that have been turned over to PJM, so therefore the parent company actions entitle PATH to the same benefit. All of a sudden, PATH wants to be a part of its parent companies. But wait... PATH separated itself from its parent companies when it benefited financially. Now PATH wants to be included with its parent companies when it can financially benefit from that construct. Can you smell the desperation?
PATH also complains that the Commission is being inconsistent because other transmission projects that have been abandoned managed to keep the RTO membership incentive, therefore PATH is entitled to do so as well. PATH feels it should have been put on notice that it would lose this incentive if it abandoned the project. *sniff, sniffle, whine*
Other transmission projects have kept this incentive because they aren't single-purpose entities and their companies will continue to exist and maintain membership in an RTO. There is no point to PATH's continued membership in PJM because it doesn't own any transmission and will cease to exist as soon as the abandoned plant debt is paid off.
Despite a rule prohibiting answers to requests for rehearing, the Joint Consumer Advocates filed an answer supporting the Commission's original decision and arguing against continuation of this incentive.
The Commission's granting of rehearing won't affect the scheduled settlement conference coming up at the end of February, since that issue was never set for hearing but decided in the original Order. However, parties will be aware that a reversal of the Order could grant PATH an additional .5% return at any time in the future and may keep that in mind while negotiating a settlement. Happy now, PATH? :-)
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