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FERC Sets PATH Project Abandonment for Hearing

11/30/2012

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In an order issued today, FERC set the prudence of every last penny of PATH's claimed $121.5M of abandoned project cost for settlement and hearing.

What this means is that despite PATH's claims in their abandonment filing that all expenses were prudently incurred, and although PATH enjoys a presumption of prudence, contentions and evidence submitted by intervenors in the case raised enough doubt to set the matter for a trial-type evidentiary hearing by a FERC Administrative Law Judge.

FERC found that PATH had not demonstrated the prudence of costs it incurred while trying to site and permit its project.  Every issue raised by intervenors was set for settlement and hearing.  Intervenors raised doubt in every category of cost, therefore, the entire cost will be examined.

The only point PATH won was the finding that abandonment of the project was beyond the company's control (blamed on PJM).  Therefore, PATH can collect abandonment costs that are prudent.  The prudence of PATH's expenses will be examined to determine the amount they will be able to collect from ratepayers over the next 5 years.

The ordered hearing has been held in abeyance so parties can attempt a negotiated settlement before spending time and money on a hearing.  Settlement conferences will be conducted at FERC, administered by an Administrative Law Judge, and are confidential, so don't expect to be reading any news about what's going on in settlement.  Settlement could last a while.

In addition to the prudence of expenses, FERC also set the issue of PATH's disposal of land for settlement and hearing, where certain controls can be placed on how PATH disposes of land it currently owns.

FERC also found that PATH is no longer entitled to the 50 point adder for continued membership in PJM because the PATH Project will never be built and turned over to PJM, which was the intent of the incentive.  The extra half percent interest that this incentive adds to a transmission project's ROE has now been attached to the specific project.  If the project is not built and turned over to the RTO for control, then it cannot be continued.  PATH was at a distinct disadvantage here because the company had only one project.  When the one and only project died, there was nothing to turn over to PJM.  This reduces PATH's ROE to 10.4% (from the previous 12.4%).  The PATH project has now lost ALL their above-cost incentive ROE adders.  No rewards for failure, PATH!

FERC was not convinced to consolidate the abandonment with the ongoing formal challenges settlement and hearing in its Order.  Instead, the Commissioners punted that off to the Chief Administrative Law Judge to decide in the future.

In addition, FERC determined that PATH had made errors in its proposed changes to the formula rate and erred in transferring abandoned plant to create a regulatory asset.  FERC ordered PATH to correct its accounting mistakes, submit additional detail of project costs for which PATH had requested a waiver, and resubmit its proposed rate within 30 days.  Merry Christmas, PATH!  :-)

PATH has been reduced to nothing but a contentious battle about money.  But isn't that what it's always been about?
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    About the Author

    Keryn Newman blogs here at StopPATH WV about energy issues, transmission policy, misguided regulation, our greedy energy companies and their corporate spin.
    In 2008, AEP & Allegheny Energy's PATH joint venture used their transmission line routing etch-a-sketch to draw a 765kV line across the street from her house. Oooops! And the rest is history.

    About
    StopPATH Blog

    StopPATH Blog began as a forum for information and opinion about the PATH transmission project.  The PATH project was abandoned in 2012, however, this blog was not.

    StopPATH Blog continues to bring you energy policy news and opinion from a consumer's point of view.  If it's sometimes snarky and oftentimes irreverent, just remember that the truth isn't pretty.  People come here because they want the truth, instead of the usual dreadful lies this industry continues to tell itself.  If you keep reading, I'll keep writing.


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