TrAILCo recently made a filing with the WV Public Service Commission requesting blanket permission to divest itself of real property it currently owns that is "not useful or necessary to TrAILCo’s performance of its public service obligations." Why would TrAILCo have imprudently spent ratepayers' money purchasing property that wasn't useful or necessary? Some (but not all) of these properties are ones that TrAILCo was obligated to purchase, at owner's option, under one of the stipulations in its settlement. In order to buy itself the necessary Certificate of Public Convenience & Necessity it needed from the WV PSC, former Gov. Joe Manchin engineered what were called "concessions" from the company. The rest of us may view them as bribes. The cost of these "concessions" to West Virginia were then recovered from ratepayers throughout the 13-state PJM region, except for TrAILCo parent company subsidiaries Mon Power and Potomac Edison's customers in West Virginia. In another stipulaton, the parent company agreed to absorb those customers' cost of the TrAIL Project for a period of 7 years. That date with a big rate hike is looming just over the horizon for those electric consumers, who will not be easing into the cost of TrAIL gradually over a period of years during construction as the other ratepayers did, but all at once. The rate shock is coming, my friends.
The stipulation causing TrAILCo's current filing reads:
Staff General Condition #2 - “The Company shall purchase any property containing residences that are within 400 feet of the centerline if the owner desires to sell their property.”
TrAILCo accepts this condition, provided that in each case the property owner will have until the first anniversary of the inservice date of the West Virginia Segments of TrAIL to notify TrAILCo in writing that the property owner has elected to exercise the option to require TrAILCo to purchase the property at a fair market value based on the median of three appraisals. One appraisal shall be prepared by a qualified appraiser selected by the property owner, another appraisal shall be prepared by a qualified appraiser selected by TrAILCo and a third appraisal shall be prepared by a qualified appraiser selected by agreement of the two other appraisers. TrAILCo shall pay the reasonable costs of all three appraisals.
So far, TrAILCo says it has purchased 24 properties, although they admit that they purchased some of these properties "through [their] own initiative." The properties purchased at TrAILCo's own initiative were not a requirement of the stipulation. Why are ratepayers subject to the cost of "unneeded and useless" property that TrAILCo voluntarily elected to purchase? Exactly how much unneeded property did they purchase on their real estate buying spree? The offer to buy properties under the stipulation is valid until May 18, 2012. How many more unneeded properties will TrAILCo buy and add to its "unneeded and useless property" list before the deadline?
TrAILCo does not put a purchase value on these properties in their filing, although the amount is certainly known. The stipulation required TrAILCo to purchase these properties at "fair market value." However, in its filing, TrAILCo says the properties will be revalued at "fair market value" before selling. So, which "fair market value" is actually "fair market value?" Apparently it's not the "fair market value" at which they purchased the properties. Were these landowners cheated out of true "fair market value?"
TrAILCo's filing is made necessary by WV Code that requires approval of any sale of utility property by the WV PSC. In order to consider the sale, the PSC requires all the information listed in TITLE 150 PROCEDURAL RULES PUBLIC SERVICE COMMISSION, Sec. 10.6. Sale of franchises, permits and plant. However, TrAILCo does not provide all of the information and claims in their filing that the information "has little bearing, if any, on the Commission’s decision."
Some important, required information that TrAILCo conveniently omits from their filing is:
10.6.e. accounting history of the franchises, licenses, equipment etc., to be sold, assigned, etc., including the account numbers used, the original cost, and the date of purchase by the petitioner,
10.6.f. the proposed journal entries associated with the sale of the franchises, licenses, equipment etc., to be sold, assigned, etc., including account numbers and amounts,
This information is crucial to the Commission's decision since "Any gains or losses incurred will be recorded below the line, protecting ratepayers from any adverse impact from the sales. Further, as TrAILCo will not include any costs, gains or losses associated with selling the Properties in its revenue requirement, TrAILCo’s customers will not be adversely impacted by the Properties’ sale." TrAILCo says sale of the properties "will have no adverse impact upon TrAILCo, West Virginia ratepayers, or other public utilities within the Commission’s jurisdiction."
But what about the ratepayers in the other 13 states? TrAILCo's claims of "no impact" are not necessarily true. The "gains or losses" are to be recorded "below the line." Below the line expenses are those that are absorbed by the company and not recovered from ratepayers. Conversely, above the line expenses are those that are the responsibility of ratepayers and are recovered through rates. TrAILCo does not provide a clear picture of where the expense of purchasing the properties, maintaining the properties, paying taxes on the properties, and other costs such as the demolition of several buildings on the properties, was originally booked. TrAILCo merely states, "TrAILCo will record each sale of Property in accordance with the Uniform System of Accounts." That's hollow assurance, since TrAILCo's parent's accounting practices have been proved incorrect in numerous corrections to its FERC Formula Rate filings, and TrAILCo is currently the subject of an audit being performed by FERC's Office of Enforcement. TrAILCo is seeking the West Virginia PSC's permission for rate accounting over which they have no jurisdiction. TrAILCo wants to book any gains on the sale of these properties below the line. The proceeds will go directly to TrAILCo's shareholders, which happens to be the parent company, FirstEnergy. If the property purchase and expenses were the responsibility of ratepayers, any gains should flow back to ratepayers, not to FirstEnergy's pocket.
TrAILCo insists, "TrAILCo needs to sell the Properties in order to prevent deterioration and to maximize their resale value." Isn't it ironic that TrAILCo's related subsidiary's PATH Project has purchased numerous properties at ratepayer expense that they continue to hold, year after year, while those properties "deteriorate" while that project sits "in abeyance." PATH is in no hurry to sell properties it purchased in order to protect ratepayers' investment.
In addition, TrAILCo claims that the information required in Sec. 10.6.h (description of how purchaser became aware of TrAILCo’s intent to sell the Property) "would have little, if any, impact..." That requirement is in there to ensure that all sales are "arm's length" transactions.
TrAILCo states, "The sales of the Properties will benefit TrAILCo..." Well, that much is clear. The rest remains ambiguous.
The stipulation causing TrAILCo's current filing reads:
Staff General Condition #2 - “The Company shall purchase any property containing residences that are within 400 feet of the centerline if the owner desires to sell their property.”
TrAILCo accepts this condition, provided that in each case the property owner will have until the first anniversary of the inservice date of the West Virginia Segments of TrAIL to notify TrAILCo in writing that the property owner has elected to exercise the option to require TrAILCo to purchase the property at a fair market value based on the median of three appraisals. One appraisal shall be prepared by a qualified appraiser selected by the property owner, another appraisal shall be prepared by a qualified appraiser selected by TrAILCo and a third appraisal shall be prepared by a qualified appraiser selected by agreement of the two other appraisers. TrAILCo shall pay the reasonable costs of all three appraisals.
So far, TrAILCo says it has purchased 24 properties, although they admit that they purchased some of these properties "through [their] own initiative." The properties purchased at TrAILCo's own initiative were not a requirement of the stipulation. Why are ratepayers subject to the cost of "unneeded and useless" property that TrAILCo voluntarily elected to purchase? Exactly how much unneeded property did they purchase on their real estate buying spree? The offer to buy properties under the stipulation is valid until May 18, 2012. How many more unneeded properties will TrAILCo buy and add to its "unneeded and useless property" list before the deadline?
TrAILCo does not put a purchase value on these properties in their filing, although the amount is certainly known. The stipulation required TrAILCo to purchase these properties at "fair market value." However, in its filing, TrAILCo says the properties will be revalued at "fair market value" before selling. So, which "fair market value" is actually "fair market value?" Apparently it's not the "fair market value" at which they purchased the properties. Were these landowners cheated out of true "fair market value?"
TrAILCo's filing is made necessary by WV Code that requires approval of any sale of utility property by the WV PSC. In order to consider the sale, the PSC requires all the information listed in TITLE 150 PROCEDURAL RULES PUBLIC SERVICE COMMISSION, Sec. 10.6. Sale of franchises, permits and plant. However, TrAILCo does not provide all of the information and claims in their filing that the information "has little bearing, if any, on the Commission’s decision."
Some important, required information that TrAILCo conveniently omits from their filing is:
10.6.e. accounting history of the franchises, licenses, equipment etc., to be sold, assigned, etc., including the account numbers used, the original cost, and the date of purchase by the petitioner,
10.6.f. the proposed journal entries associated with the sale of the franchises, licenses, equipment etc., to be sold, assigned, etc., including account numbers and amounts,
This information is crucial to the Commission's decision since "Any gains or losses incurred will be recorded below the line, protecting ratepayers from any adverse impact from the sales. Further, as TrAILCo will not include any costs, gains or losses associated with selling the Properties in its revenue requirement, TrAILCo’s customers will not be adversely impacted by the Properties’ sale." TrAILCo says sale of the properties "will have no adverse impact upon TrAILCo, West Virginia ratepayers, or other public utilities within the Commission’s jurisdiction."
But what about the ratepayers in the other 13 states? TrAILCo's claims of "no impact" are not necessarily true. The "gains or losses" are to be recorded "below the line." Below the line expenses are those that are absorbed by the company and not recovered from ratepayers. Conversely, above the line expenses are those that are the responsibility of ratepayers and are recovered through rates. TrAILCo does not provide a clear picture of where the expense of purchasing the properties, maintaining the properties, paying taxes on the properties, and other costs such as the demolition of several buildings on the properties, was originally booked. TrAILCo merely states, "TrAILCo will record each sale of Property in accordance with the Uniform System of Accounts." That's hollow assurance, since TrAILCo's parent's accounting practices have been proved incorrect in numerous corrections to its FERC Formula Rate filings, and TrAILCo is currently the subject of an audit being performed by FERC's Office of Enforcement. TrAILCo is seeking the West Virginia PSC's permission for rate accounting over which they have no jurisdiction. TrAILCo wants to book any gains on the sale of these properties below the line. The proceeds will go directly to TrAILCo's shareholders, which happens to be the parent company, FirstEnergy. If the property purchase and expenses were the responsibility of ratepayers, any gains should flow back to ratepayers, not to FirstEnergy's pocket.
TrAILCo insists, "TrAILCo needs to sell the Properties in order to prevent deterioration and to maximize their resale value." Isn't it ironic that TrAILCo's related subsidiary's PATH Project has purchased numerous properties at ratepayer expense that they continue to hold, year after year, while those properties "deteriorate" while that project sits "in abeyance." PATH is in no hurry to sell properties it purchased in order to protect ratepayers' investment.
In addition, TrAILCo claims that the information required in Sec. 10.6.h (description of how purchaser became aware of TrAILCo’s intent to sell the Property) "would have little, if any, impact..." That requirement is in there to ensure that all sales are "arm's length" transactions.
TrAILCo states, "The sales of the Properties will benefit TrAILCo..." Well, that much is clear. The rest remains ambiguous.
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