ferc grants rehearing in path project case

FERC recently issued Opinion 554-A related to the Path (Potomac-Appalachian Transmission Highline, LLC) transmission project, which was cancelled by PJM in 2011.  The PATH Project was to be a 275-mile 765 kV line from Amos Substation in West Virginia through Virginia to a new Kemptown Substation in Maryland.  In Opinion 554, FERC had found that PATH’s base ROE should be reduced from 10.4% to 8.11% to reflect reduced risks (FERC found that, in the abandonment phase of the PATH Project, PATH's risk profile had decreased significantly as compared to the proxy group companies that face ongoing business risks).  Additionally, FERC disallowed certain civic, political and related costs from recovery.  PATH requested rehearing of Opinion 554.  FERC granted rehearing for the following items:

1. ROE:  Consistent with its approach in the New England (Coakley) Briefing Order and MISO Briefing Order, FERC established a paper hearing and directed the participants to submit briefs regarding FERC’s methodology proposed in the New England Briefing Order (average of four ROE approaches) and MISO Briefing Order (average of two ROE approaches) for determining whether an existing ROE is unjust and unreasonable and for determining a new just and reasonable ROE when an existing ROE has been found to be unjust and unreasonable, and whether and how that revised methodology should apply to the facts of these proceedings.  FERC’s proposed revised base ROE methodology, and the additional briefing in this proceeding addressing it, may affect the determinations as to whether PATH’s 10.4% base ROE is unjust and unreasonable and, if so, what is a just and reasonable ROE for PATH.  It is important to note that FERC is looking for ROE analyses using both the four-approach average from the New England case and the recently ordered two-approach average from MISO.    
2. Civic, political and related expenditures:  Opinion No. 554 found that PATH’s Formula Rates, did not permit recovery of expenditures for the purpose of influencing public opinion that are properly recorded in Account 426.4 (Expenditures for Certain Civic, Political and Related Activities).  Opinion No. 554 then found that PATH improperly shifted such expenditures to accounts that were in PATH’s Formula Rates, namely, Account 107 (Construction Work in Progress), Account 923 (Outside Services Employed), Account 930.1 (General Advertising Expenses), and Account 930.2 (Miscellaneous General Expenses).  Further, Opinion No. 554 ruled that PATH’s Formula Rates limit PATH’s recovery of Account 930.1 (General Advertising) costs to only those that are “Safety Related Advertising, Education and Out Reach [sic] Cost Support.”  FERC granted rehearing as to the recovery of these expenditures.