The Atlantic Building 950 F Street, NW Washington, DC 20004-1404 202-239-3300 Fax: 202-239-3333 Secretary Federal Energy Regulatory Commission 888 First Street, N.E. Washington, DC 20426 Re: Potomac-Appalachian Transmission Highline, LLC PJM Interconnection, L.L.C. Docket Nos. ER09-1256-005 ER12-2708-007 Refund Report In response to the Commission s January 17, 2019 order in these dockets, 1 Potomac- Appalachian Transmission Highline, LLC ( PATH ) and its operating companies, PATH West Virginia Transmission Company, LLC ( PATH-WV ) and PATH Allegheny Transmission Company, LLC ( PATH-AYE ) (together, the PATH Companies ), submit this Refund Report. 2 I. Background A. The PATH Project and Opinion No. 554 As reconfigured in 2008, the PATH Project was to be a 275 mile, 765 kv line from Amos Substation in West Virginia through Virginia to the new Kemptown Substation in Maryland. In 2012, prior to the commencement of construction, PJM directed the termination of the PATH Project. On September 28, 2012 in Docket No. ER12-2708-000, the PATH Companies filed seeking to recover approximately $121.5 million in abandonment costs associated with the 1 Potomac-Appalachian Transmission Highline, LLC and PJM Interconnection, L.L.C., 166 FERC 61,035 (2019) ( January 17 Order ). 2 Pursuant to Order No. 714, this filing is submitted by PJM on behalf of PATH as part of an XML filing package that conforms to the Commission s regulations. PJM has agreed to make all filings on behalf of the PJM Transmission Owners in order to retain administrative control over the PJM Tariff. Thus, PATH requested that PJM submit this refund report in the etariff system as part of PJM s electronic Intra-PJM Tariffs.
Page 2 PATH Project, for the period of January 1, 2008 through August 31, 2012. 3 On November 30, 2012, the Commission accepted in part and rejected in part the non-roe aspects of the PATH Companies abandonment filing. 4 The Commission also set all issues raised in protests and challenges to the PATH Companies 2010, 2011 and 2012 Annual Updates for hearing and settlement judge procedures. 5 After hearings and an Initial Decision, 6 on January 19, 2017, the Commission issued Opinion No. 554. 7 In Opinion No. 554, the Commission affirmed in part and reversed in part the determinations of the Initial Decision, including those on certain formal challenges, prudence, Return on Equity ( ROE ), legal fees, the closing out of transactions and the regulatory asset amortization period effective date. In response to Opinion No. 554, the PATH Companies submitted a number of filings, including a rehearing request, compliance filings, reply comments and Annual Updates. These filings are described in detail in the PATH Companies February 19 Compliance Filing discussed in section I(C) below. B. The January 17, 2019 Order In the January 17 Order, the Commission addressed five of the filings that the PATH Companies submitted in compliance with Opinion No. 554, and found that the PATH Companies complied in part, and did not comply in part, with Opinion No. 554. It identified three areas that required further information from the PATH Companies. These three areas were: (i) Account 930.1 Advertising Expenses; (ii) Land Transactions; and (iii) the PATH Companies plan for ending operations and a timeline for when they intend to file a notice of cancellation of their transmission formula rates. 8 In the January 17 Order, the Commission also directed the PATH Companies to file a refund report within 60 days of the date of the order, presenting their calculations of refunds paid or to be paid based on the Commission s findings in the order. 9 3 The Commission granted the PATH Companies the authority to recover 100 percent of prudently-incurred costs associated with abandonment of the PATH Project, subject to a demonstration that abandonment was a result of factors beyond the control of the PATH Companies. See Potomac-Appalachian Transmission Highline, LLC, 122 FERC 61,188 at P 45 (2008), order on reh g, 133 FERC 61,152 (2010). 4 PJM Interconnection, L.L.C., 141 FERC 61,177 at P 60 (2012) (authorizing the Chief Judge to consolidate the PATH Companies abandonment filing with Pro Se Challengers formal challenges docket). 5 Id. 6 Potomac-Appalachian Transmission Highline, LLC, 152 FERC 63,025 (2015). 7 Potomac-Appalachian Transmission Highline, LLC and PJM Interconnection, L.L.C., Opinion No. 554, 158 FERC 61,050 (2017) ( Opinion No. 554 ). 8 January 17 Order at PP 31, 44 and 49. 9 Id. at P 48.
Page 3 C. The February 19 Compliance Filing On February 19, 2019, the PATH Companies submitted a compliance filing addressing the three areas that the Commission found required further action i.e., (i) Account 930.1 Advertising Expenses; (ii) Land Transactions; and (iii) a plan for ending the PATH Companies operations and a timeline for when they intend to file a notice of cancellation of their transmission formula rates ( February 19 Compliance Filing ). In the February 19 Compliance Filing, the PATH Companies submitted Form No. 1 Adjustment Summaries, adjusted revenue requirement calculations, a refund calculation, information concerning land sale transactions and the PATH Companies plan for ending operations and canceling their formula rates. II. Refund Report As noted above, in the January 17 Order, the Commission directed the PATH Companies to file a refund report within 60 days of the date of the order, presenting their calculations of refunds paid or to be paid based on the Commission s findings in the order. 10 In order to comply with the January 17 Order, the PATH Companies are submitting this refund report. As explained in the PATH Companies February 19 Compliance Filing, the only refunds due under the January 17 Order relate to Account 930.1 expenses for Rate Years 2008 and 2009, even though the amounts for those years were not specifically challenged and arguably are beyond the scope of Opinion No. 554. 11 In Opinion No. 554, the Commission instructed the PATH Companies to calculate estimated amounts to be refunded in accordance with section VIII of the PATH Formula Rate Protocols, and make refunds in connection with their Formula Rate Annual Updates. 12 The PATH Companies have complied with this approach with respect to the amounts identified in their previous compliance filings. 13 However, in this case with respect to refunds associated with the Advertising Expenses for Rate Years 2008 and 2009, the PATH Companies propose to expedite refunds. Accordingly, within 30 days after the Commission issues a final order accepting the February 19 Compliance Filing and this Refund Report without hearing, modification, condition or further compliance requirements and confirmation that there are no further orders in this 10 Id. 11 February 19 Compliance Filing at p. 6. 12 Opinion No. 554 at PP 86 and 192; January 17 Order at P 6 (citing Opinion No. 554, 158 FERC 61,050 at PP 86, 190, 192, Ordering Paragraph C). 13 See e.g., Compliance Filing, submitted March 20, 2017.
Page 4 proceeding requiring refunds, the PATH Companies, through PJM, will provide refunds, with interest calculated in accordance with section 35.19a of the Commission s regulations, to the appropriate customers under the PJM Open Access Transmission Tariff. In summary, after updating the revenue requirement calculations to remove the Account 930.1 expenses, the principal amount to be refunded for Rate Year 2008 is $787,022 and the principal amount to be refunded for Rate Year 2009 is $351,882. The details of these principal calculations are shown in Attachment A (Refund Calculation Excluding Interest). However, because interest on the refund amounts will accrue up to the date the refunds are made, the PATH Companies do not know the final interest amounts at this time. Thus, the PATH Companies commit to file a supplemental refund report with the Commission within 15 days of making refunds. This supplemental refund report will specify the date(s) the refunds were made and the refund and interest amounts. As such, it will provide the Commission and all interested parties with a complete accounting of the final refund and interest amounts. III. Additional Information A. Communications Communications with respect to this filing should be directed to the following persons: P. Nikhil Rao Morgan E. Parke Attorney Associate General Counsel FirstEnergy Service Company FirstEnergy Service Company 76 South Main Street 76 South Main Street Akron, Ohio 44308 Akron, Ohio 44308 pnrao@firstenergycorp.com mparke@firstenergycorp.com Hector Garcia Amanda R. Conner Senior Counsel Senior Counsel Regulatory Services American Electric Power American Electric Power Service Corporation Service Corporation 1 Riverside Plaza, 29th Floor 801 Pennsylvania Ave. NW, Ste. 735 Columbus, OH 43215 Washington, D.C. 20004 hgarcia1@aep.com arconner@aep.com Kenneth G. Jaffe Richard P. Sparling Alston & Bird LLP 950 F Street, NW Washington, DC 20004 (202) 239-3300 kenneth.jaffe@alston.com richard.sparling@alston.com
Page 5 B. Service Copies of this filing, including all attachments, have been served on the parties listed on the official service lists for this proceeding. In addition, an electronic version of this response has been sent by email to: Mr. Vince Mareino at vince.mareino@ferc.gov, Ms. Alina Halay at alina.halay@ferc.gov, Ms. Rachel Spiker at rachel.spiker@ferc.gov, and Mr. Olubode Sanni at olubode.sanni@ferc.gov. IV. Conclusion This refund report along with the February 19 Compliance Filing and the PATH Companies earlier filings in these dockets satisfy the Commission s directive in Opinion No. 554 that the PATH Companies demonstrate how they will adjust their rates pursuant to the Formula Rate Protocols to reflect the Commission s rulings in that decision. 14 Consequently, the Commission should find that the PATH Companies have complied with the directives of Opinion No. 554, and accept these filings without further modification, condition or action. As discussed in the February 19 Compliance Filing, the Commission s acceptance of these filings is a necessary step in the PATH Companies plans for ending operations and cancelling their formula rates. Attachment Please contact the undersigned if you have any questions. Respectfully submitted, /s/ Kenneth G. Jaffe Kenneth G. Jaffe Richard P. Sparling Alston & Bird LLP 950 F Street, NW Washington, DC 20004 Attorneys for Potomac-Appalachian Transmission Highline, LLC 14 Opinion 554 at P 275.
ATTACHMENT Potomac-Appalachian Transmission Highline, LLC PJM Interconnection, L.L.C. Docket Nos. ER09-1256-005 and ER12-2708-007 REFUND REPORT
PATH COMPANIES - REFUND REPORT ER09-1256-005 - ER12-2708-007 MARCH 18, 2019 PATH REVENUE REQUIREMENTS ADJUSTED post FERC Order on Compliance, issued January 17, 2019 PATH-AYE PATH-WV Opinion 554 Compliance Variance Opinion 554 Compliance ATRR 2008 2,120,109 1,747,049 373,060 2008 6,371,531 5,957,569 413,962 ATRR 2009 6,398,371 6,398,068 303 2009 8,336,507 7,984,927 351,579 ATRR 2010 9,527,928 9,527,928-2010 11,416,671 11,416,671 - ATRR 2011 (a) 12,860,861 12,860,861-2011 (a) 11,640,302 11,640,302 - ATRR 2012 9,987,545 9,987,545-2012 11,926,948 11,926,948 - ATRR 2013 17,523,209 17,523,209-2013 (a) 17,587,040 17,587,040 - ATRR 2014 16,754,492 16,754,492-2014 (a) 17,663,730 17,663,730 - ATRR 2015 15,524,975 15,524,975-2015 (a) 16,277,558 16,277,558 - Variance (a) The FERC Order on Compliance issued January 17, 2019 in Docket Nos. ER09-1256-004 and ER12-2708-006, Appendix B, displays that PATH AYE and PATH WV passed through in rates $22,934 and $79,626 of general advertising expenses in Account 930.1 in 2011, respectively. Similarly, Appendix B displays that PATH WV passed through in rates $2,022, $2,129, and $40,935 of general advertising expenses in Account 930.1 in 2013, 2014, and 2015, respectively. However, PATH AYE and PATH WV did not pass through rates any account 930.1 expenses in 2011, 2013, 2014, or 2015; thus, no revenue requirement adjustment is needed for those years.