Steve Fleishman - Wolfe
And in the future, do most of your contracts have that clause, so new ones do or not older ones or vice versa?

Leila Vespoli - EVP, Markets, and Chief Legal Officer
I think it would be safe to say that we are going to be adding that language where we can in the future.

FERC said PJM's proposal met the commission's criteria for approving waivers, as doing so would remedy a "concrete problem," would not harm third parties and would be limited in scope.

"FERC transmission regulation provides forward-looking formula rates, true-up mechanisms and premium authorized returns on equity. Transmission owners face limited revenue risk, owing to strong counterparty relationships with the operating utilities and the regional transmission organization," Moody's said.

Sam Brownback, Republican Kanas Governor, and lawmakers in a dozen other US states who fought off cynical attacks to repeal state Renewable Portfolio Standards, which have catalysed thousands of wind and solar projects across the country and generated hundreds of thousands of jobs.

hero |ˈhi(ə)rō|
noun (pl. heroes)
1 a person, typically a man, who is admired or idealized for courage, outstanding achievements, or noble qualities: a war hero.

The recent disclosure of the manipulation of scientific evidence by climate researchers is exactly the kind of important information that needs to be brought to light. The emails and documents recently disclosed paint an alarming picture of the state of climate research. In the emails that have been disclosed we’ve seen evidence of manipulation, efforts to avoid freedom of act information requests, abuse of the peer review process and a research process that that is driven more by a political agenda than a quest for truth. [Brownback, DeMint, Ensign, Isakson, Vitter, and Wicker, 12/8/09]

Due to an exceptional amount of pressing business, the KCC inadvertently failed to notice the subject proceeding until after the date for timely intervention had passed.

...the KCC’s failure to file a timely intervention was based upon factors outside of its control.

[KCC] is the regulatory agency that has jurisdiction over the wholesale and retail rates that will be impacted by the proposed formula rate and incentive rate adders filed for approval in this docket.

The TrAIL Project originated in 2005 as part of PJM’s Project Mountaineer, whose objective was to enhance west-to-east transfer capability in the PJM transmission system.  PJM planned to use its RTEP process to identify a comprehensive plan for the project.  Following PJM’s announcement, Allegheny began reviewing transmission enhancement opportunities within the AP Zone of PJM that could expand west-to-east transfer capability and be incorporated in the RTEP.  On February 28, 2006, Allegheny formally proposed TrAIL to PJM as an effective solution to long-term reliability needs in the PJM region, and requested that PJM include this proposal in the RTEP as part of a major expansion of the PJM system.

Allegheny’s proposal described TrAIL as a 330-mile, 500-kV line stretching from the Wylie Ridge substation in the western panhandle of West Virginia to a new substation on the eastern side of the AP Zone in Frederick County, MD.  The project included installation of a static VAR compensator (SVC) of approximately 500-megavolt-ampere reactive power at Allegheny’s Meadow Brook Substation south of Winchester, VA.  The entire line would be in the AP Zone.  Allegheny proposed to begin initial engineering and planning in 2007, and to place the first phase in service in 2013.

On May 19, 2006, PJM released the 2006 RTEP Baseline report presenting its first 15-year regional transmission plan.  The report identified numerous facility overloads, voltage and thermal violations, and contingency overloads on Allegheny’s transmission system, and recommended enhancements to resolve them.  On June 22, 2006, the PJM Board approved the RTEP and directed construction of TrAIL with an in-service date of June 2011.
Allegheny filed its request for incentives for the TrAIL Project, in Docket No. EL06-54-000, concurrently with its proposal to PJM.

Reviewed materials on the Allegheny and FirstEnergy web sites and other key industry and news sources.

Analyzed the revised reconciliation that TrAILCo submitted December 19, 2011 to remove certain transaction costs related to the FirstEnergy-Allegheny merger improperly included in its 2011 formula rate.  Issued data requests to understand Allegheny’s procedures for tracking, accounting for, and allocating such merger-related costs to TrAILCo.  Examined how merger-related costs were improperly included in TrAILCo’s revenue requirement, how the error was detected, how TrAILCo worked with PJM to revise customer billings and refund the costs to customers.  Scheduled conference calls and interviewed TrAILCo staff during the site visit to clarify our understanding of these matters.

Audit staff found that TrAILCo included three categories of merger costs in its 2011 formula rate:  (1) $14,823 in postage, hotel rooms, security, and other outside services incorrectly charged to operating costs rather than to the special, non-recoverable accounts established for merger costs; (2) $347,654 in executive bonuses charged to recoverable accounts based on an incorrect determination by Allegheny’s accounting department that the bonuses were not merger-related; and (3) $43,718 in 2010 merger integration costs charged to recoverable accounts due to an incorrect interpretation that the Merger Order required only transaction-related costs to be excluded from rates.

Audit staff’s review showed that TrAILCo reported cumulative spending on TrAIL in its FERC-730 reports rather than actual spending in the latest calendar year, as the FERC-730 instructions on the Commission’s web site require.  For example, in its first FERC-730, TrAILCo reported spending $2.3 million on TrAIL during 2006.  For 2007 through 2011, TrAILCo reported spending $32.9 million, $105.9 million, $546.0 million, $930.6 million, and $1.009 billion, respectively.  These figures total $2.63 billion, 2.6 times the amount TrAILCo charged to Project work orders in 2006-2011.

Compliance Trends
During the past several years, DAA observed noncompliance in certain areas that warrant highlighting for jurisdictional entities and their corporate officials. Although there are other areas of noncompliance associated with the topics presented below, the areas discussed relate to areas where DAA has found consistent patterns of noncompliance. Greater attention is needed in these areas to prevent noncompliance and to avoid enforcement action.

Formula Rate Matters. DAA rigorously examines the accounting that populates formula rate recovery mechanisms that are used in determining billings to wholesale customers. In recent formula rate audits, DAA observed certain patterns of noncompliance in the following areas:
Merger Goodwill – including goodwill in the equity component of the capital
structure absent Commission approval;
Depreciation Rates – using state-approved, rather than Commission-approved,
depreciation rates;
Merger Costs – including merger consummation costs (e.g., internal labor and other general and administrative costs) without Commission approval;
Tax Prepayments – incorrectly recording tax overpayments which are not applied
to a future tax year’s obligation as a prepayment leading to excess recoveries
through working capital;
Asset Retirement Obligation (ARO) – including ARO amounts in formula rates,
without explicit Commission approval;
Below-the-Line Costs – attempting to move below-the-line costs into formula rates (e.g., lobbying, charitable contributions, fines and penalties, and compromise settlements arising from discriminatory employment practices); and
Improper Capitalization – seeking to include in rate base (and earn a return on) costs that should be expensed.

Mr. Glotfelty also noted that there could be circumstances under which the Grain Belt Project could find it necessary to depart from the cost recovery model described and instead seek cost recovery through regional or inter-regional cost allocation mechanisms.

Mr. Berry testified that while Petitioner currently has no plans to seek cost recovery for this Project through regional cost  allocation, Petitioner is not in a position to make an irrevocable commitment not to seek cost allocation. He stated that such a  commitment would be premature and would potentially go against the public interest. If regulations change in the future, an irrevocable commitment not to recover costs in a certain manner may compromise the ability of Petitioner to complete the Project.

D. Public Outreach
Public outreach and active stakeholder involvement are key components of Applicant’s approach to development of the Project. Beginning in 2010, Grain Belt Express implemented an extensive, methodical, multi-level public outreach strategy across Kansas, Missouri, Illinois, and Indiana, which has resulted in more than 1,000 in-person meetings across the Project area as of November 2013. Grain Belt Express also has maintained an active presence online and through social media. The Project’s website, www.grainbeltexpresscleanline.com, has been actively updated since the beginning of the Project in 2010. Among other information, the website contains: a project video that describes the need for the Project and how Grain Belt Express will bring significant economic benefit to states through much-needed transmission expansion for new wind energy projects; an FAQ section for all stakeholders to learn greater details about the Project; a section on how local businesses can learn about opportunities to participate in the construction of the Project; and information regarding Project meetings, maps, studies, regulatory filings, and third-party resources. In addition, Grain Belt Express distributes a newsletter on a regular basis to hundreds of stakeholders. These newsletters provide information on Project milestones, recent events and meetings, as well as upcoming Project activities. The newsletter is available to anyone who is interested in receiving a copy. Applicant’s participation in multiple state regulatory proceedings also has publicized information regarding the Project.
E. Project Schedule
Applicant continues to work closely with land use and routing experts as well as landowners, local government officials, state and federal agencies, and other stakeholders in the areas where the Project will be built in order to gather input and determine the specific route for the transmission line in each state that it will traverse. Applicant is consulting experts on topics such as threatened and endangered species, archaeology, and cultural resources to ensure that appropriate considerations are taken into account in the routing decisions. Applicant expects to obtain all necessary authorizations from federal, state, and local governments and agencies for the Project by 2016.

Applicant is assuming all market risk associated with the development and construction of the Project, and Applicant does not have and will not have any captive customers. Accordingly, Applicant has no ability to pass through the Project’s costs to captive ratepayers.

Once the Project is completed, Applicant will turn over operational control of the Project to an RTO, which will operate the line pursuant to a FERC-approved non-discriminatory rate schedule filed under the RTO’s OATT.