<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 4
TO
APPLICATION OR DECLARATION
ON FORM U-1
UNDER
THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
Allegheny Energy, Inc.
10435 Downsville Pike
Hagerstown, MD 21740
(Name of company or companies filing this statement and addresses of
principal executive offices)
Allegheny Energy, Inc.
(Name of top registered holding company parent of each applicant or
declarant)
Thomas K. Henderson, Esq.
Vice President
Allegheny Energy, Inc.
10435 Downsville Pike
Hagerstown, MD 21740
(Name and address of agent for service)
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
______________________________
)
Allegheny Power System, Inc. ) File No. 70-9147
)
DQE, Inc. )
______________________________)
RESPONSE OF ALLEGHENY ENERGY INC. IN OPPOSITION
TO MOTION TO INTERVENE OUT OF TIME
Allegheny Energy, Inc. ("AYE") hereby submits in
response in opposition to MidAtlantic Energy Company's
("MidAtlantic") Motion for Leave to participate as a Party
("MidAtlantic SEC Motion") filed on July 17, 1998 with the
Securities and Exchange Commission ("SEC").
THE MIDATLANTIC SEC MOTION SHOULD BE DENIED
The MidAtlantic SEC Motion should be denied for
three reasons. First MidAtlantic cannot show "exceptional
circumstances" -- indeed, can show no circumstances at all -
- - justifying its failure to request a hearing within the
time period granted by the SEC in its notice of the filing
of AYE's application-declaration. Second, the SEC Rules of
Practice cited by MidAtlantic to justify its untimely
intervention do not apply, as the SEC has not ordered a
hearing on AYE's application-declaration and the time has
passed for MidAtlantic to request such a hearing. Third,
the MidAtlantic SEC Motion does not raise any jurisdictional
issue under the PUHCA.
<PAGE>
AN UNTIMELY REQUEST FOR A HEARING MUST BE DENIED
ABSENT EXCEPTIONAL CIRCUMSTANCES
AYE filed an application-declaration on November
26, 1997 requesting approval of its merger with DQE, Inc.
The SEC issued its notice of the filing of the application-
declaration on March 20, 1998 (HCAR 26846) and, pursuant to
Rule 23 under the Public Utility Holding Company Act of
1935k as amended ('PUHCA"), gave interested persons until
April 13, 1998 to comment or request a hearing. MidAtlantic
filed its motion on July 17, 1998, more than three months
after the stated deadline.
The SEC has long held that a request for a hearing
that is untimely filed will not be considered absent
exceptional circumstances. See, e.g., Energy Corporation,
et al. HCAR 25136, August 27, 1990 at note 57, aff'd in part
and rev'd in part sub nom. City of New Orleans v. SEC, 969
F.2d 1163 (D.C. Cir. 1992). As the SEC stated in WPL
Holdings, Inc. et al., "[t]he certainties of the
Commission's notice procedures benefit the regulated
companies, the Commission and the public. The Commission
believes that these procedures should be disregarded only in
extraordinary circumstances." WPL Holdings, Inc. HCAR 26856,
April 14, 1998 at note 93. Further, in PSI Resources, Inc.,
HCAR 35-25674, Nov. 13, 1992, where the Indiana Office of
Utility Consumer counselor explained its untimely submission
by claiming that it was unaware of the proposed transaction,
the Commission rightly rejected the untimely request,
stating "[t]hat alone is not a sufficient basis for the
Commission to disregard its procedure, particularly where
the application concerns a transaction in which timing is
critical."
In the instant matter, not only does the
MidAtlantic SEC Motion fail to provide "exceptional
circumstances" justifying its untimely request for a
hearing, it fails to provide any explanation at all.
Further, as the Merger Agreement between AYE and
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DQE, Inc. was entered into more than one year ago, the SEC should
not permit further undue delay of the merger approval decision caused
by the untimely motion of a person that has
grievances with AYE unrelated to the pending merger with
DQE, Inc. Consequently, MidAtlantic's request for a hearing
must be denied.
THERE IS NO PROCEEDING IN WHICH MIDATLANTIC MAY INTERVENE
The SEC's Rules of Practice cited by MidAtlantic
do not provide any basis on which MidAtlantic may intervene.
The MidAtlantic SEC Motion requests permission to intervene
pursuant to 17 C.F.R. 201.210(b)(1), which permits any
person to seek leave to intervene in certain "proceedings"
before the Commission. However, MidAtlantic's own motion
provides the explicit basis on which its request should be
denied.
The term "proceeding" is defined 17 C.F.R.
201.101(a) as "any agency process initiated by an order
instituting proceedings" and the term "order instituting
proceedings" is defined as "an order issued by the
Commission commencing a proceeding or an order issued by the
Commission to hold a hearing." MidAtlantic does not claim
that the Commission has issued an order commencing a
proceeding and MidAtlantic explicitly admits that "[a]
hearing has not been ordered by the Commission."
(MidAtlantic SEC Motion, at 3 (emphasis added)). As set
forth above, MidAtlantic's request for a hearing is over
three months late and it should not be granted such an
extraordinary request at such late a date. Therefore, no
proceeding exists in which the commission may permit MidAtlantic
to intervene.
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THE MIDATLANTIC SEC MOTION RAISES NO ISSUES UNDER PUHCA
The MidAtlantic SEC Motion fails to raise any
issues under the PUHCA. The MidAtlantic Motion is virtually
identical to the untimely intervention it filed with the
Federal Energy Regulatory Commission ("FERC") ("MidAtlantic
FERC Motion"). A copy of the MidAtlantic FERC Motion and
the Answer of AYE are attached as Exhibits A and B,
respectively. The Answer of AYE to the MidAtlantic FERC
Motion is incorporated by reference herein.
The MidAtlantic SEC Motion merely reiterates the
same issues it asserted before the FERC. Both MidAtlantic
motions claim that AYE should be required to divest
generation because of its alleged dominance over strategic
transmission interfaces, the alleged dominance of its
generation function over its transmission function, and
MidAtlantic's alleged inability to develop a third Public
Utility Regulatory Policies Act of 1978 ("PURPA") project in
West Virginia. Both motions seek to require AYE to divest
its generation and flow profits at wholesale back to
affiliated distributors to mitigate stranded costs. Simply
put, the MidAtlantic SEC Motion does not present any
jurisdictional issues for the SEC. The appropriate fora, if
any, for these claims are the FERC, where MidAtlantic has
brought an essentially identical motion, or the state
commissions.
BACKGROUND
As background for the SEC, MidAtlantic is the
plaintiff in a lawsuit against AYE and certain of its
subsidiaries in West Virginia. The lawsuit, the history of
which is set forth in Item 3 of AYE's Form 10-K, page 31,
involves, in part, claims
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concerning a PURPA project that
MidAtlantic and its principals were unable to develop and
sell to AYE's subsidiaries. MidAtlantic's SEC Motion, like
the MidAtlantic FERC Motion, is a ploy to pressure AYE in
the unrelated West Virginia case. In that respect, it is
similar to the facts of In the Matter of Middle South
Utilities, Inc. HCAR 17081, March 30, 1971, in which the SEC
granted Middle South's Motion to Dismiss the City of
Lafayette's and the City of Plaquemine's notice of
appearance which was filed after the time fixed in the
public notice of hearing for interested persons to request
participation. Further, as a factual matter, MidAtlantic's
unsupported assertions about AYE's hostility toward its
obligations under PURPA is belied by AYE's subsidiaries'
purchases under long term contracts with other PURPA projects,
including two projects developed by MidAtlantic or its
principals. (West Virginia University and Hannibal Lock and
Dam (see Item 1 of the 1997 Form 10-K, page 13)).
RELIEF
The MidAtlantic SEC Motion is untimely, is made in
the absence of any proceeding into which MidAtlantic may
intervene, and raises no jurisdictional issues under PUHCA.
Therefore, AYE respectfully requests that the MidAtlantic
SEC Motion be denied.
Respectfully submitted,
/s/ Thomas K. Henderson
Thomas K. Henderson
On behalf of Allegheny Energy, Inc.
DATED: July 29, 1998
5
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<PAGE>
EXHIBIT A
MIDATLANTIC ENERGY COMPANY'S
MOTION TO INTERVENE
AND PROTEST
FILE NO. 70-9147
DATE: July 30, 1998
Thomas K. Henderson
Vice President
<PAGE>
UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION
______________________________
)
Allegheny Power System, Inc. ) Docket Nos. EC97-46-000
) ER97-4057-000 and
DQE, Inc. ) ER97-4051-000
______________________________)
MOTION TO INTERVENE and PROTEST
By
MIDATLANTIC ENERGY CO.
Pursuant to Rules 214 and 211, MidAtlantic Energy
Co. ('MAE") hereby moves to intervene and protest the filing
by Allegheny Power System, Inc. ("APS") and DQE, Inc. ("DQE"
or "Duquesne") (collectively, the "Applicants") of their
application for merger under Section 203 of the Federal
Power Act ("FPA").
Communications regarding this Motion and Protest
should be addressed to
Michael H. Schwartz James F. Fairman, Esq.
Vice President Suite 850
MidAtlantic Energy Co. 1225 Eye Street, N.W.
436 Seventh Avenue, Suite 200 Washington, D.C. 20005
Pittsburgh, PA 15219 Phone: (202) 371-8200
Phone: (412) 227-3150 Fax: (202) 371-2520
Fax: (412) 227-3166
1
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I. Nature of MAE interest
MAE is an independent power producer ("IPP"), and
has been a competitor of Allegheny for over eleven (11)
years. MAE and its principals are responsible for the
development of two power generation projects which are
operating in the West Virginia service area of Monongahela
Power and are interconnected with this APS operating
affiliate. For a period of eight (8) years beginning in
1987, MAE has initiated and pursued the development of a
third independent power project which was frustrated and
ultimately thwarted by APS. MAE intends to continue as a
competitor of the larger merged entity in the new
environment of open access and retail competition.
MAE's interests will not be adequately represented by
other parties. As the developer of two projects operating
successfully before the introduction of competition into the
wholesale marketplace and restructuring of the electric
utility industry, but thwarted by deeply rooted monopolistic
interests in its third attempt to bring new power production
technology to the marketplace, MAE as experienced first hand
the manner in which entrenched interests facing competition
exploit the transition period. It is important that the
views and concers of an independent producer-competitor be
heard in the context of a mter, especially in light of
information available to MAE indicating that the merger
partners intend to transfer control of generation assets in
a transaction involving APS and an affiliated but
unregulated generation unit. That transaction has the clear
potential to frustrate Pennsylvania State regulation of West
Penn and
2
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Duquesne and will have anti-compettive impacts on
competing buyers and sellers of power
II. Untimely Intervention
MAE's participation at this time will not prejudice
other parties nor delay the proceeding. A hearing has not
yet been ordered by the Commission. The proceeding is in
abeyance. Allegheny and DQE because of their election to
join the Midwest ISO rather than participate in the Alliance
program, are preparing a revised market concentration
analysis for Commission assessment, as directed by the May
7, 1998, letter from Michael A. Coleman, Acting Director,
Division of Opinions and Applications to counsel (Winston &
Strawn) for the Applicants.
In light of the present status of the proceeding, MAE
requests that the Commission waive the time limitation for
intervention established as October 3, 1997, by the Notice
issued August 4, 1997, and grant MAE party status in this
docketed case.
III. Position of MAE -- Protest
A. History of APS' Exploitation of its Bottleneck
Transmission Monopoly
APS has a long history of anti-competitive conduct from
which it has profited greatly, owing to its dominance over
one of the most strategic transmission interfaces in the
United States. APS' transmission interface constitutes a
true bottleneck monopoly facility. It links (a) tens of
thousands of
3
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megawatts of low-priced, coal-based energy
generation of APS and others in the East Central Area
Reliability council ("ECAR") to (b) higher-cost, oil
dependent markets in Virginia and in the Pennsylvania-New
Jersey-Maryland Interconnection ("PJM"). By exploiting this
transmission bottleneck and by insisting on buy-sell
transactions, APS has historically realized profits greatly
exceeding the level one would ordinarily expect to derive
from a legitimate use of its ownership of transmission
assets alone.
APS' abuse of its bottleneck monopoly has continued
despite the filing of its Pro Forma Open Access Tariff
("OAT"),[1] and standards of conduct.[2] In an August 1997
telephone conversation, Mr. Whitfield Russell was seeking
transmission access from the administrators of APS' OAT and
the following exchange occurred:[3]
____________________________________________________________
Russell: "All the way through the end of '98 you
show transfer capability from AEP to PJM...the
firm capability is zero every month. Do you know
why this is?"
Gogol: "Yes...We do not have the capability of
offering firm transmission service of [on] that
path."
Russell: "What is the constraint? What is
preventing you from offering service there? Who's
tying it up? Has anybody reserved it?"
Gogol: "I can't answer that specific question,
but the system we have in place right now because
of native load does not permit us to offer firm
transmission on that path. That is a west to east
path, which is the primary path through our
system."
_______________
[1] 77 FERC Paragraph 61,266 (12/18/96)
[2] 81 FERC Paragraph 61,339 (12/18/97)
[3] Conversation between Michael J. Gogol and William J. Smith
(both APS) and Whitfield Russell, Washington, DC consultant,
on August 7, 1997. Conversation recorded by APS.
4
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Russell: "...We have signed up firm power and we
need to move it and the best market is going
east."
Gogol: "That's right."
Russell: "We wanted to be sure we could reserve a
path and get the best rpice when we shut down [our
production facility and seek to resell power
purchased for it]. That is what struck us here
because there did not seem to be any reservations
on that path, but it is zeroed out, and I am
puzzled who I might talk to about that case."
Gogol: "Okay. I tell you what. I am going to
put Bill Smith on the line with us and he has a
background that should be able to help us out....
Bill Smith is on the phone with us.
* * *
Russell: "...Is this call being recorded?"
Smith: "Yes. This call is being recorded; this
is Bill Smith."
Russell: "Can we talk on a line that is not being
recorded?"
Smith: "We prefer not to."
Russell: "Can you send me a copy of this
recording?"
Smith: "Yes. I believe we can do that if you
feel it is necessary after the conversation.
Quite honestly, we are a little uncomfortable
talking to someone who has not signed on to our
Open Access Tariff, because you would like you
might be coming under retail wheeling and so
forth...."
* * *
Russell: "....There is no question of us having
rights to wholesale service....
"...We see that AEP is posting 4000 MW [of total
transfer capability] going east out of ECAR
rather, but when we brought up your Home Page and
saw there is no firm transmission available at all
going through your system to PJM or VEPCO, that is
what prompted the call. I was wondering if it was
all tied up with firm reservations or there is
some other reason."
Smith: "Well, what is available is all tied up
with a firm reservation....
"...We do not want to put any of our firm
customers or native load in jeopardy of being cut
just to make money by selling firm transmission
because when you sell firm transmission when it
comes to curtailments it is on the same priority
with your native load and with any firm customer
whether it be network service or point-to-
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point."
Russell: "Well does ATC--you posted a total
transfer capability of raw 3,000 in some of those
months."
Smith: "That is correct."
Russell: "There is only 400 MW of transactions
used, the whole remainder is tied up with TRM
["Transmission Reserve Margin"] and CBM ["Capacity
Benefit Margin"]."
Smith: "No. Yes, yes. That is exactly right."
Russell: "Why is it that the TRM and CBM are so
high?"
Smith: "Well, the CBM is there so that you could
cover your native load if you happen to have a
generation loss. The calculation is a load of
loss [loss of load] based on the worst possible
contingency that could happen every 20 years or
something like that."
* * *
Russell: "Do you have any long range planning
purchases that have been reserved?"
Smith: "I can't answer that because it's not my
department and it's not part of my business. We
are separated into a transmission business unit
and a generation business unit."
Russell: "Has the generation business asked you
for a reservation from the west?"
Smith: "Well, the way generation makes purchases
is that they have network service that is reserved
to them. The native load customers have already
paid for network transmission service. It is in
the rate base and that is part of the CBM. That
is reserved for their use."
Russell: "Wait a second. I thought you had to
specify the network resources as part of the
network service. Have you specified any network
resources to your knowledge to the west of that
interface?"
Smith: "Like I said, I am not in that group so I
don't know what they have specified. What I think
we should do is because this is starting to become
adversarial..."
Russell: "Oh, no. I am trying to buy some
service and have your unit make a little money
here. What you are telling me here is that your
other side of the business doesn't tell you
anything, but they have your product tied up."
Smith: "What I am going to suggest is that you
make a request in writing and we can best handle
it this way."
* * *
Russell: "Who gave you this number, the firm ATC?
Is there
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someone else we can talk to?"
Smith: "No there isn't. We want all our
customers to come through the transmission-
marketing group. We are the contact person for
conversations like that. We like that all of our
people come through us. If necessary we get other
people involved."
MAE is, and the Commission should be, very concerned
about the anti-competitive attitudes and abusive practices
revealed in this telephone conversation. This conversation
demonstrates that APS' transmission function continues to be
dominated by its generation function long after the
ostensible onset of open access. Management of APS'
transmission function seemed perfectly willing to forego
substantial transmission revenues and profits in its
unquestioning efforts to protect the profits and markets of
its generation business unit. The purported basis for this
submissive approach was an unchallenged and undocumented
claim by the generation business unit that APS' generation
function needed all 4,000 MW of import capability in order
to protect its reliability. The transmission functionmeekly
accepted this claim despite the failure of its sister
generation function to reserve such capacity, to pay for
such capacity or to even designate or line up network
resources to use capacity.
The commission's rules and codes of conduct are
patently inadequate to cope with such tacit, secret deals.
In the case of PAS, the deal was made through a Chinese
curtain in blatant violation of any conceivable notion of
ethical conduct.
B. Opposition to Independent Power Projects
In its efforts to eliminate competing generators, APS
has reserved a special
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zeal for those proposing to develop PURPA Qualifying Facilities
("QF's"). Among the acts APS has routinely engaged in are:
1. Obstructing transmission access to QFs or offering them
access, if at all, at transmission rates that were
pancaked across each APS operating company. This
practice was carried out at the same time that APS
delivered power to all of its owned and purchased
resources at a flat, postage-stamp rate.
2. Constraining the PAS markets to which PURPA QFs could
sell by:
a. Insisting (or arguing) at various times and
in public statements that each QF could sell power
only to the APS operating companies in the same
State (despite the fact that each APS affiliate
obtained approval in only one State of its jointly
owned power plants and sold the output of its
respective shares in those plants to its sister
companies in other States under FERC rate
schedules);
b. Insisting that the maximum load for which QFs
could compete was the amount needed by each
operating company and not by the entire APS
system. When the 1992 APS Integrated Resource
Plan ("IRP") demonstrated that Potomac Edison
needed 338 MW of capacity in the 1996-1998 period,
West Virginia PSC Staff interpreted the APS policy
as allowing West Virginia QFs to compete for only
59 MW of that need, thus reserving 80% of the
needed capacity to APS;
c. Insisting that the incremental cost of QF
resources be recovered solely from the State in
which the QF was located, thereby exacerbating
local rate impacts and stimulating opposition to QF
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projects that served system needs;[4]
d. Insisting that a Wet Virginia QF seek
approval of the Maryland Commission if that QF
sought to serve the 80% portion of Potomac
Edison's load growth in Maryland and then
threatening to oppose regulatory approval in
Maryland.
3. Causing the failure of numerous proposed QF projects by
relitigating to extreme lengths previously decided
issues of avoided cost and the need for generating
capacity;[5]
4. Refusing to sign power purchase agreements with QFs
after being ordered to do so by State Commissions and
Courts;
5. Tortiously interfering in the partnerships of QF
developers (threatening to cease existing business
with, and to withhold future business from, APS vendors
that partnered with QF developers, bypassing the
negotiators designated by QFs and communicating with
directors of QF investors impugning the motives and
capabilities of their business partners with no evident
intent to resolve disagreements);
_______________
[4] "Any attempt to require West Virginia rate payers to pay for an entire
PURPA project which sells power to PE [Potomac Edison] would be
unreasonable since West Virginia rate payers constitute less than
one-fifth of the Companies' ratepayers: West Virginia Public
Service Commission Order, Case Nos. 89-703-E-C, 91-987-E-C, March 5,
1993.
[5] See, West Penn Power Co., et al. v. Pennsylvania Public Utility
Commission, 629 A.2d 221 (Pa. Commw. 1991). See Attachment A; a
1994 Order by the Pennsylvania Public Utility Commission.
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6. Delaying or declining to carry out transmission
upgrades and studies related thereto, imposing unduly
high charges for upgrades and interconnections and
directly assigning all such charges to QFs;
7. Setting aside substantial blocks of admittedly needed
capacity additions for development and ownership solely
by APS affiliates so as to preserve "planning
flexibility"[6] despite the fact that APS had not
commenced development of those capacity additions and
the further fact that they remained avoidable;[7]
8. Insisting that low-cost combustion turbine peaking
capacity was APS' avoidable unit - to the extent APS
admitted needing any capacity - despite never having
ordered or built such a unit in its entire corporate
history, and then refusing to buy or sell power based
on that avoided cost and subsequently going deficient
in generating capacity.
9. Mounting extensive public relations campaigns at
ratepayer expense to oppose and criticize the
purportedly high cost of QFs and then later agreeing to
merge with Duquesne whose generating costs exceed the
QF generating costs previously complained of.
_______________
[6] "The Companies have failed to make any convincing showing that the
flexibility needs of the system require company ownership of next
units of generation." West Virginia Public Service Commission
Order, Case Nos. 89-783-E-C, 91-987-E-C, March 5, 1993.
[7] See, In re: Petition of West Penn Power for Approval of Electric
Power Purchase Agreement Re Shannopin Mine Project; Order on Mon
Valley Energy corporation for Modification of Electric Purchase
Agreement, Penna. PUC Docket No. P-8820286, 1992. See, also,
Allegheny Ludlum Corp. v. Pennsylvania Public Service Commission,
No. 100 C.D. 1991 (Commw. Ct. June 25, 1992), where acceptance of
a West Penn allocation of QF capacity cost was rejected.
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10. Unlawfully contending in 1992 that additional
generating capacity to be added between 1996 and 1998
should not be avoidable by QFs.
11. Obstructing project development[8] and the purchase at
avoided cost of the capacity and energy available from
a QF, and denying an obligation of one affiliate to
transmit power to its sister company facing a planned
need for additional capacity.[9]
Title VII of the Energy Policy Act of 1992
provided enhanced opportunity for marketing independent
power production through a policy of open access
transmission. APS disregarded this policy mandate.
Indeed, in November 1992, Potomac Edison contended that
neither the Allegheny Power System, Inc. (a holding
company), was an electric utility; thus activities such
as off-system sales or purchases were alleged not to be
performed by either APS or APS, Inc. (W.Va. Public
Service Comm., Case No. 89-783-E-C, Brief of Potomac
Edison, 11/16/92, pp. 12-13). The FERC should
proscribe this
_______________
[8] "...A practice of reserving capacity needs to be met only by a
particular supplier would appear to be systematically discriminatory
against QFs. If a utility would plan to build capacity itself or
purchase from another source, "it must offer to by such capacity
from QFs...such a capacity reservation would appear to run afoul of
the section 210(b) proscription against rates that discriminate
against QFs." Notice of Proposed Rule Making, Regulations Governing
Bidding Programs, Docket RM88-5-000, 42 FERC Paragraph 61,323 (1988).
[9] FERC Statutes & Regulations, Section 292.303 and Section 292.304.
Subpart (d) of Section 304 provides than an electric utility that
would otherwise bve obligated to purchase the LP project output
may transmit the production to another electric utility which
"shall purchase such energy and capacity under this subpart...."
Monongahela denied that it had an obligation to transmit such
power to its affiliate Potomac Edison. Traditionally, electric
utilities were reluctant to purchase from QFs. FERC v. Mississippi,
456 U.S. 742, 750 (1982).
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kind of rational as it considers the competitive implications of the
APS, Inc. (now Allegheny Energy, Inc.) merger application.
12. Insisting that the APS obligation to purchase power
from a QF be limited by a "single state recovery
policy" which limited the capacity purchase to only a
portion of the affiliate's jurisdictional service
requirements under the APS operating agreement
formulation.[10] This limitation served to prevent the
competitor, MAE, from achieving the planned economies
of scale and thus operating at a lower cost. This
discriminatory treatment viz-a-viz APS affiliates, not
economic distinctions, erected an unwarranted barrier.[11]
In Environmental Action, Inc. v. FERC, 939 F.2d 1057
(D.C. Cir. 1991), the court reversed and remanded the
matter of the PacificCorp-Utah Power & Light merger.
FERC had declined to condition its approval with a
requirement that the new entity wheel power for QFs.[12]
More germane now is that this Commission
_______________
[10] Potomac Edison, serving in multiple jurisdictions, forecasted a
capacity need of 338 MW in the relevant time period. MAE's Ohio
River Project was to be located in Monongahela's West Virginia
territory. The APS policy dictated that a purchase would be
limited to a pro rata share Potomac Edison's West Virginia load.
[11] It was contended that off-system purchases could not be integrated
as is capacity assigned by APS to the three affiliated utilities,
because such transactions are performed by the individual
affiliate, not APS. The APS Power Supply Agreement stated:
"Except for Own Account Transactions, all power and energy
transactions...shall be construed as having been made for APS,
and the Participants shall share the costs, revenues and savings
as hereinafter set forth." PSA Section 5.1. Monongahela Power
had a wheeling tariff for QFs on file with this Commission at
the time. See, Standard Transmission Service by the APS
Companies, ER91-189-000 (December 28, 1990).
[12] On November 30, 1992, FERC filed a motion with the court stating
that Section 721 of the Energy Policy Act amended FERC's authority
under Section 211 of PURPA and enabled FERC to order transmission
for "any person generating electric energy for sale at resale....
Accordingly, the Commission seeks a voluntary remand to issue a
new order including
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has rejected
efforts by integrated systems like APS to treat
operating affiliates as stand alone companies for the
purpose of avoiding obligations., 32 FERC Paragraph 61,305
(1985), rehearing denied, 32 FERC Paragraph 61,425 (1985),
Middle South Energy, Inc. affirmed sub nom.,
Mississippi Industries v. FERC, 808F.2d 1525 (D.C.
Cir), reversed and remanded on other grounds, 822 F.2d
1104 (D.C. Cir. 1987), order on remand affirming prior
decision sub nom., System Energy Resources, Inc. 41
FERC Paragraph 61,238 (1987), rehearing denied, 42 FERC
Paragraph 61,091 (1988), rehearing denied sub nom., City of
New Orleans v. FERC, 875 F.2d 903 (D.C. Cir. 1989), cert.
Denied sub nom., Mississippi v. FERC, 494 U.S. 1078 (1990).
IV. Conditions Needed to Protect Competition in Production
Market
The only appropriate remedy is divestiture of
generation. Clearly, this is a merger case that cries out
for mandatory divestiture of generation. MAE therefore
urges the Commission to require the applicants to divest
their generation to non-affiliated interests as a condition
for approval of the merger.
Divestiture would put a stop to APS filings at this
Commission that tend to frustrate lawful orders of the
Pennsylvania Commission. In one case in particular, APS
seeks to transfer control of its generation to a wholly
owned affiliate, Allegheny Power Company ("APC"). The APS
operating companies that presently control generation are
obligated to use off-system sales to mitigate
______________________________________________________________
QF's in the Utah merger access conditions." As the Commission
said in its order denying PacifiCorp a rehearing: "PacifiCorp's
arguments miss the crucial point of the January 14, 1993 order -
that the statutory basis for treating QFs that generate electric
energy for sale for resale differently from 'utilities,' as
defined in the Commission's earlier opinions and orders in this
proceeding, no longer exist." (83 FERC Paragraph 61,236 at
62,582) (3/12/93).
13
<PAGE>
stranded costs in Pennsylvania. But if APS wins this Commission's
approval to transfer control of generation to APC, off-system
revenues from wholesale sale by ALLEGHENY Energy would no
longer be clearly earmarked to mitigate stranded costs.
Accordingly, the Commission must carefully examine in this
proceeding the likely effect of the Applicants' plan to
lease their generating facilities to APC, which in turn will
sell full service requirements back to its distribution
affiliates until 2004. The proposal at this Commission to
transfer control over generation will clearly enable APS to
evade State regulation of stranded cost recovery.
APC can, and predictably will, sell power at wholesale
from the integrated system of the newly merged entity. The
lease agreement is silent on whether revenues from off-
system sales would be credited to the APS distribution
affiliates. Without full divestiture, this Commission and
the Pennsylvania PUC will be forced to police the
disposition of this affiliate's income. APS profits at
wholesale should be flowed back to the affiliated
distributors in order to mitigate retail stranded costs.
Recommended Conditions
Divestiture should be ordered, but that alone is not
enough to remedy the harm APS has long inflicted on
competing generators. The order to divest should be further
conditioned upon the Applicants setting aside 20% of their
generating assets for divestiture to PURPA QFs whose
projects failed under the onslaught of APS's anti-
competitive conduct. Those QFs should be granted an option
to buy 20% slice-of-the-Allegheny Energy System at a price
no less than that APS and
14
<PAGE>
Duquesne obtain on the remaining
80% of their divested generation, and that option should be
held open for six months after the sales of that other 80%
are closed.
Divestiture will allow the States and this Commission
to make an immediate determination of stranded cost without
any necessity for modeling life cycle costs (with all the
defects of such forecasts and modeling) and making later
true-ups to stranded costs.
The commission should require that no more than 20% of
the divested generation assets be acquired by a single buyer
in order to satisfy the Department of Justice Antitrust
Division HHI index for measuring competitiveness of markets.
There must also be assured competitor access to APS
interfaces with ECAR, PJM and Virginia Power, as well as an
unambiguous open access transmission tariff free of features
which discriminate against LPPs.
V. Conclusion
MAE requests that the Commission grant it late
intervention in the above-captioned proceeding and order a
hearing be held in this matter. MAE also requests that the
Commission consider the Protest herein submitted in
determining further appropriate action with regard to the
Application by APS and DQE now before it.
15
<PAGE>
Respectfully submitted,
/s/ James F. Fairman
James F. Fairman
On Behalf of
MIDATLANTIC ENERGY CO.,
Dated: June 19, 1998
16
<PAGE>
CERTIFICATE OF SERVICE
I hereby certify that I have this day served the foregoing document
upon each person designated on the official service list compiled by the
Secretary in this proceeding.
Dated at Washington, D.C. this 19th day of June 1998.
/s/ James F. Fairman
James F. Fairman
Suite 850
1225 Eye Street, N.W.
Washington, D.C. 20005
(202) 371-8200
<PAGE>
PENNSYLVANIA
PUBLIC UTILITY COMMISSION
Harrisburg, PA 17105
Public Meeting held December 15, 1994
Commissioners Present:
David W. Rolka, chairman
Joseph Rhodes, Jr., Vice-chairman
John M. Quain, Dissenting
Lisa Crutchfield
John Hanger
Complaint of West Penn Power Company :
against $ 70+ Million Annual Rate :
Increase for (a) Proposed Burgettstown :
Power Station ($ 30+ Million Annually); : Docket No. C-00946317
(b) Proposed Shannopin Power Station :
($ 30 to $ 48 Million Annually); and :
(c) Proposed Milesburg Power Station :
($ 10+ Million Annually) :
OPINION AND ORDER
BY THE COMMISSION:
Before the Commission is a complaint filed on November 3, 1994,
by West Penn Power Company (West Penn) in opposition to the rates associated
with three qualifying facilities (QF's). In 1987, West Penn and the
developers [1] of the QF's entered contracts for the purchase of power from the
facilities by West Penn. The reasonableness of those contracts and propriety of
Commission modifications thereto has
_______________
[1] Washington Power Company, L.P. (Washington Power) is the
developer of the burgettstown Project. Mon Valley Energy
corporation (Mon Valley) is the developer of the Shannopin
Project. Milesburg Energy, Inc. (Milesburg) is the developer
of the Milesburg Project.
<PAGE>
been litigated before this Commission
and appellate courts since 1987, with the United States Supreme Court recently
denying certiorari in appeals involving all three projects. Nonetheless,
West Penn's complaint seeks to revisit those proceedings and West Penn seeks
to have the capacity declared unnecessary and the prior Commission orders
concerning the qualifying facilities rescinded.
BACKGROUND
Commission involvement with the Milesburg Power Project, the
Burgettstown Power Project and the Shannopin Power Project dates back to 1987.
After entering into power purchase agreements with the developers of
these PURPA[2] projects, West Penn petitioned this Commission to recover costs
paid to these developers from West Penn ratepayers.
The Commission approved cost recovery for payments made to
Milesburg. That order was appealed to the Commonwealth Court where it was
remanded for customer notice and hearings. [3] The Commission then ordered
notice to be sent to West Penn ratepayers and hearings to be held. Because
the Commission had only
_______________
[2] Public Utility Regulatory Policies Act of 1978, Pub. L. 95-
617, November 9, 1978, 92 Stat. 3117, as amended (PURPA). 16
U.S.C. Sections 796 and 824a-3. PURPA requires electric utilities
to purchase needed energy from certain facilities known as
qualifying facilities.
[3] Barasch v. Pa. P.U.C., 119 Pa. Commonwealth Ct. 81, 546 A.2d
1296, modified on denial of reargument, 119 Pa. Commonwealth Ct.
115, 550 A.2d 257 (1988), appeal denied, 567 A.2d 655 (Pa. 1989)
(Milesburg I).
2
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tentatively approved recovery related to the
Burgettstown and Shannopin projects, those projects were added to the hearings.
At the time of the hearings, Milesburg and Washington Power
(then known as North Branch Energy Partners) requested that the Commission
extend milestone deadlines due to the unexpected requirement of a trial-type
hearing. The Commission granted those requests and approved recovery of costs
associated with all three PURPA projects. Those orders were appealed to the
Commonwealth Court where the court affirmed the Commission's authority to modify
power purchase contracts consistent with PURPA and the FERC regulations but
reversed the Commission's determination of when avoided cost rates are locked
in and remanded the matter for a recalculation of avoided costs as of the
contract signing date.[4]
As litigation wore on, Shannopin's milestones approached and Mon
Valley requested this Commission to extend the Milestone deadlines as it
had for Burgettstown. The Commission modified the Mon Valley power
purchase agreement and extended the milestone
_______________
[4] Armco Advanced Materials Corp. v. Pa. P.U.C., 135 Pa.
Commonwealth Ct. 15, 579 A.2d 1337 (1990) affirmed per
curiam, 535 Pa. 108, 634 A.2d 207 (1993), cert. denied
U.S._____, U.S. Supreme Ct. No. 93-1341 (October 11, 1994)
(Milesburg II); Armco Advanced Materials Corp. v. Pa. P.U.C.,
Nos. 2090 and 2097 C.D. 1989 (September 7, 1990) allocatur
denied, No. 531 W.D. Allocatur Docket 1990 (November 19, 1991)
(Burgettstown I); Armco Advanced Materials Corp. v. Pa.
P.U.C., 2091 C.D. 1989 (July 17, 1990), allocatur denied,
545 W.D. Allocatur Docket 1990 (November 19, 1991) (Shannopin I).
3
<PAGE>
dates. That order was appealed to Commonwealth Court where it was affirmed.[5]
Pursuant to the court's remand, the Commission accepted from
interested parties proposed recalculations for the Burgettstown Project using
inputs from the date of contract signing. On November 24, 1992, the
Commission entered an order approving recalculations for the Burgettstown
Project. That order was appealed to Commonwealth Court where it was
affirmed. [6] Also pursuant to the court's remand, the Commission accepted
proposed recalculations for the Shannopin Project using only updated tax
inputs. That order was appealed to the Commonwealth Court [*5] where it was
remanded for recalculations changing all input data to the contract signing
date. [7] The Commission then accepted recalculations changing all input to
the date of contract signing and approved recalculations for the Shannopin
Project on December 1, 1994.
_______________
[5] West Penn Power Company v. Pa. P.U.C., 150 Pa. Commonwealth Ct. 349,
615 A.2d 951 (1992) allocatur denied sub nom., Armco Advanced
Materials Corp. v. Pa. P.U.C., 536 Pa. 631, 637 A.2d 291 (1993)
cert. denied, ____U.S.____, U.S. Supreme Ct. No. 93-1535 (October 11,
1994) (Shannopin II).
[6] Armco Advanced Materials Corp. v. Pa. P.U.C., 157 Pa. Commonwealth
Ct. 150, 629 A.2d 221 (1993) allocatur denied ____Pa. ____, 644
A.2d 165 (1994) cert. denied ____U.S.____, U.S. Supreme Ct. No. 94-7
(October 11, 1994) (Burgettstown II).
[7] West Penn Power Company v. Pa. P.U.C., 154 Pa. Commonwealth Ct. 136,
623 A.2d 383 (1993) (Shannopin III).
4
<PAGE>
In this most recent flurry of litigation, West Penn filed a
complaint on November 3, 1994. Four days later, West Penn filed an application
for stay or supersedeas. Washington Power, developer of the Burgettstown
Project, filed an answer to the complaint on November 18, 1994. Mon Valley,
developer of the Shannopin Project, filed its answer to the complaint and new
matter on November 28, 1994.
On November 18, 1994, Washington Power also filed a motion to
dismiss, a motion to sever the proceeding and an answer protesting the
application for stay. On November 21, 1994, both Milesburg, developer of the
Milesburg Project, and Mon Valley filed answers protesting the application
for stay or supersedeas. Mon Valley also filed a motion to dismiss on
November 28, 1994 and a response in opposition to Washington Power's motion to
sever the proceeding on November 29, 1994. On December 1, 1994 West Penn filed
a reply to Washington Power's motion to dismiss, motion to sever and answer
protesting West Penn's application for stay.
A notice of Intervention was filed by the Office of the Small
Business Advocate (OSBA) on November 21, 1994. Petitions to intervene were
filed by West Penn Power Industrial Intervenors (WPPII) and by Allegheny Ludlum
Corporation (Allegheny) on November 23, 1994; and by Armco Advanced Materials
Corporation (Armco) on November 28, 1994.
5
<PAGE>
DISCUSSION
Petitions to Intervene
Each petition to intervene effectively details the interest
each petitioner has in this proceeding. In fact, Armco and Allegheny have for
many years been involved in the proceedings involving these PURPA projects.
Additionally, no party has objected to the intervention of any petitioner.
Accordingly, all petitions to intervene are granted.
Motion to Sever
Washington Power seeks to sever its case from the complaint
proceeding concerning the Milesburg Project and the Shannopin Project.
Washington Power asserts that because it is the only developer with a final and
non-appealable Commission order approving the recalculated rates and therefore
the only developer now subject to milestone deadlines for financial
closing, it is uniquely situated among the developers and any delay would cause
greater harm to Washington Power than it could to the other developers.
Washington Power further stresses that it has commenced construction and further
delay could likely increase construction costs.
Mon Valley opposes Washington Power's motion to sever, arguing
that West Penn's complaint is deficient on its face and must be dismissed
and therefore there is no need to sever this proceeding.
6
<PAGE>
West Penn also opposes the motion to sever. West Penn argues
that Commission regulations do not provide for such a motion, but rather
allow for only four types of preliminary motions -- none of which is a
motion to sever proceedings. See 52 Pa. Code @ 5.101(a). West Penn continues
that, even in civil cases, severance is allowed only for good cause and
prejudice to the moving party should greatly outweigh the procedural
convenience of a consolidated case. Brillhart v. Edison Light & Power Co.,
68 D.&C. 48 (1949). West Penn further argues that milestone deadlines should
not be a factor in determining prejudice to Washington Power because this
Commission has extended these milestones in the past and Washington Power
could seek additional extensions.
Section 5.101 of the Commission's regulations, 52 Pa Code @
5.101, does not prevent the granting of a motion to sever if this Commission
determined a proceeding should be severed. Additionally, section 1.2(c) of the
Commission's regulations reserves the right of the Commission to waive any
requirement of the General Provisions when necessary or appropriate. 52 Pa.
Code Section 1.2(c). The Commission agrees with West Penn, however, that
severance must be for good cause.
Mon Valley's argument that severance is not necessary, because
West Penn's complaint must be dismissed, will be addressed below in the
discussion of the motions to dismiss.
While Washington Power has set forth factual distinctions
between its project and the other two projects, it has not explained how
the severance of this proceeding will mitigate the
7
<PAGE>
delay that will so harm its project. If the motions to dismiss are denied
and the complaint goes forward, whether as one proceeding or as two, delay
is inevitable. The issues to be examined would be the same. It is unclear
whether any time would be saved if the proceeding were severed. It is quite
clear, however, that the administrative burden and inefficiency of moving
forward in two directions on what amounts to the same case would be great.
Consequently, Washington Power's motion to sever is denied.
Application for Stay or Supersedeas
West Penn has filed an application for stay or supersedeas in
this matter. West Penn states that it believes the QF developers are proceeding
with their respective projects and maintains that such action is neither
prudent nor reasonable.
All three developers oppose the application for stay claiming
that West Penn has failed to meet the four elements required for a stay as set
forth in Pa. P.U.C. v. Process Gas Consumers (Process Gas). [8] All three
developers also argue that the Commission lacks the authority to stay the
progress of their PURPA projects.
By way of rebuttal, West Penn attempts to distinguish Process
Gas by noting that Process Gas concerned the stay of a final order which was
then on appeal. West Penn then characterizes its requested stay as "requested
while different and substantial
_______________
[8] Pa. P.U.C. v. Process Gas Consumers, 502 Pa. 545, 467 A.2d 805 (1983).
8
<PAGE>
issues are considered in a related complaint proceeding prior to there being
a final decision by the Commission on the merits of those substantial issues."
West Penn's Reply at 33.
West Penn's characterization of its application for stay does
not alter what West Penn seeks. This matter is different than Process Gas, in
a manner that makes a stay virtually impossible. West Penn does not seek a
stay of final and non-appealable orders which have been before the United States
Supreme Court. While the Commission agrees with West Penn that the Process Gas
standard would be more applicable during an appeal from a Commission order, we
would go farther to say that, assuming a stay could ever be granted under these
circumstances, the Process Gas standard is not a strong enough standard to apply
in a situation where the order to be stayed is final and non-appealable.
Assuming arguendo that the Process Gas standard applies here,
West Penn does not meet that standard. Under Process Gas, a stay may
be granted if: (1) the petitioner is likely to prevail on the merits; (2) the
petitioner has shown that he will suffer irreparable injury without the stay;
(3) the issuance of a stay will not substantially harm other parties; and,
(4) the issuance of a stay will not adversely affect the public interest.
467 A.2d at 808-809.
West Penn is not likely to prevail on the merits, especially
given that it has failed to persuade this Commission, the Commonwealth Court,
the Pennsylvania Supreme Court and the
9
<PAGE>
United States Supreme Court that it should be relieved of its PURPA obligation.
While monetary loss can be considered irreparable injury in some circumstances,
[9] West Penn cannot show such irreparable injury here. That its ratepayers
will have to pay for power at a rate which the United States Congress deemed
just and reasonable is not irreparable injury. The three developers, especially
Washington Power, would be harmed by a stay. To halt construction after it has
begun will certainly add to the ultimate cost. Additionally, pursuit of
financing and permits may have to begin anew if a stay were issued, resulting
in wasted time, effort and money. In PURPA cases, the United States Congress
has determined that the encouragement of cogeneration is in the public interest.
However, because the other elements have not been met, we need not examine
whether a stay would adversely affect the public interest in this instance.
For all the foregoing reasons, West Penn's application for stay
is denied.
Jurisdiction
West Penn has captioned its filing as a "complaint," which
raises the questions of whether the Commission has subject matter
jurisdiction and whether a complaint proceeding is an allowable proceeding,
pursuant to 66 Pa. C.S. Section 701, under these
_______________
[9] In Shannopin II, this Commission held that in some instances,
monetary losses can be viewed as irreparable harm. Petition of
West Penn re Shannopin, Docket No. P-880286 (January 14, 1992).
10
<PAGE>
circumstances. That statutory section provides that a complaint may be filed
alleging that a public utility has violated a Commission order, regulation or
statute that the Commission has jurisdiction to administer. This provision
clearly allows the Commission itself or another affected party (including
another [*13] utility) to initiate a proceeding in which the claimed
unlawful utility action would be examined, by filing a formal complaint.
There is also a provision allowing the filing of a complaint against a
Commission regulation or order which the complaining party has been required
to "observe or carry into effect." 66 Pa. C.S. Section 701.
Such a complaint may not be against a Commission order in lieu
of a petition for rehearing, rescission or amendment of that order (66 Pa. C.S.
@ 703(f) and (g)), or as an alternative to an appeal from that order (42 Pa.
C.S. @ 763(a); Pa. R.A.P. 101, et seq.). Section 701 of the Public Utility
Code, 66 Pa. Code Section 701, is intended to provide a forum in which a party
can be heard when the Commission direction or approval of a utility action
affects that party. SME Bessemer Cement, Inc. v. Pa. P.U.C., 540 A.2d 1006,
16 Pa. Commonwealth Ct. 13 (1988) (customer filed complaint concerning tariff
and threatened service termination); Allied Development and Building Corp. v.
Pa. P.U.C., 430 A.2d 1239, 60 Pa. Commonwealth Ct. 207 (1981) (customer filed
complaint after utility applied a curtailment penalty, under tariff provision
previously approved by the Commission). Section 701 does not provide for a
collateral attack on a Commission order rendered in disposition of
11
<PAGE>
formal proceedings. In such cases, an appeal or a petition for reconsideration
is the correct method of seeking further review; here, there has been ultimate
review of the Commission orders at issue.
Also, Section 701 cannot provide for jurisdiction the Commission does not
already have. The Commission has power and authority to regulate all
Pennsylvania public utilities. 66 Pa. C.S. @ 501 (b). A "public utility" is
defined under 66 Pa. C.S. @ 102. That definition includes generating and
transmitting electricity "to or for the public for compensation." Although West
Penn is an electric public utility, the three qualifying facilities are not, as
a matter of Pennsylvania law. While they will generate and sell electric power,
it will not be "to or for the public," since the sale will be made to only one
customer, West Penn. Providing service to only one customer does not constitute
public utility service. Borough of Ambridge v. Public Service Commission, 165
A. 47, 108 Pa. Superior Ct. 298 (1933). The distinction is that public
utilities must serve all customers, while private entities do not and
may not do so. Id. Even use of facilities by more than one customer may not
render the service provider a public utility. Vacation Charters, Ltd. v. Pa.
P.U.C., 605 A.2d 314, 529 Pa. 464 (1992).
Thus the qualifying facilities here are not public utilities as
defined under Pennsylvania law. The Federal Power Act, 16 U. S. C. @ 796 (22),
does define an "electric utility" simply as any person which sells electric
energy, so these
12
<PAGE>
facilities would be electric utilities under federal law, if they
were not specifically exempted from the provisions of the Federal Power Act
by PURPA and Federal Energy Regulatory Commission (FERC) regulations. 16
U.S.C. Section 824a-3(e); 18 C.F.R. Section 292.602. In fact, those authorities
not only exempt the qualifying facilities from federal law, they exempt them
from state law and regulation as to rates, financial and organizational
regulation. Id. Therefore, even if these facilities could be defined as
electric utilities under Pennsylvania law (they cannot), they would be exempt
from our regulation in all material respects.
While we do not agree that the case cited by West Penn, Advanced
Power Systems, Inc. v. Potomac Electric Power Co., 83 MD PSC 191, Case No. 8413,
Order No. 70017 (July 21, 1992), should be read as supporting a different
result, it is clear that states may not regulate qualifying facilities as
utilities contrary to the Federal Power Act. As far as state regulatory
authority over sales of electricity for resale is concerned, it was long ago
decided that the federal government, not the state, has that authority, as
Washington Power notes. Public Utilities Comm. v. Attleboro Steam & Electric
Co., 273 U.S. 83 (1927). The FERC has exclusive authority over sales of
"wholesale" electric energy. 16 U.S.C. Sections 824-824K; United States
v. Public Utilities Commission of California, 345 U.S. 295 (1953).
In regard to West Penn's arguments concerning federal "preemption" (reply,
pp. 7-22), - it is not that this Commission would have regulatory authority over
qualifying facilities but for
13
<PAGE>
federal preemption. Rather, this Commission would have no authority over any
action by qualifying facilities but for PURPA. QF's are not electric utilities
as a matter of Pennsylvania law, and FERC would have exclusive authority over
sale-for-resale transactions but for the delegation of authority to state
commissions under PURPA Section 210, 16 U.S.C. Section 824 a-3 (f), as
Washington Power notes (motion to dismiss, p.7). Concomitant with that
delegation of authority, however, was the prohibition against any state
attempt to regulate the rates, finances or organization of qualifying facilities
as though they were utilities. 16 U.S.C. Section 824 a-3 (e); 18 C.F.R.
Section 292.602.
While, as West Penn notes, our decision in Re Pennsylvania Electric Co., 89
P.U.R. 4th 402, Docket No. P-870248 (January 21, 1988) (Scrubgrass),
specifically indicated that federal law would prohibit reconsidering rate
recovery, rather than contract approval, the rationale is the same. In fact,
West Penn does object to the rates it will pay the projects. Therefore, as Mon
Valley and Washington Power note, the Scrubgrass rationale, that the Commission
is prohibited by federal law from revisiting prior rate approval, is applicable
here.
A requirement of 66 Pa. C.S. @ 701 is that the complainant indicate what the
subject of the complaint is, i.e., what is the claimed violation of a Commission
order, regulations or law the Commission has jurisdiction to administer. Our
previous orders approving the power purchase agreements are the subject of
West Penn's complaint, however, since we already found these agreements
14
<PAGE>
consistent with our regulations, PURPA and the FERC regulations, West
Penn's complaint cannot withstand the motions to dismiss from Mon Valley and
Washington Power. As previously stated, the qualifying facilities are not
jurisdictional electric utilities, are exempt from being utilities under the
Federal Power Act and are exempt from state regulation as public utilities.
While West Penn apparently claims violation of 66 Pa. C.S. Sections 520,
1301 and 1307, those statutory sections refer to actions taken or rates
collected by jurisdictional public utilities. The Commission has no subject
matter jurisdiction when a complaint under @ 701 fails to establish
entitlement to relief which can be granted. Pennsylvania Petroleum Assoc. v.
Pennsylvania Power & Light, 412 A.2d 522, 488 Pa. 308 (1980). As Mon Valley
notes, the Commission has no jurisdiction over persons not providing service
as utilities. Nelson v. Duquesne Light Co., 1990 Pa. PUC Lexis 24; Borough of
Darby v. Philadelphia Transportation Co., 43 Pa. PUC 98 (1966); Robbins v.
Bell Telephone Co. of Pennsylvania, 53 Pa. PUC 1 (1979).
Mon Valley states the Commission can exercise only that
authority conferred clearly and unmistakably by legislative language, citing
Process Gas Consumers Group v. Pa. P.U.C., 511 A. 2d 1315, 511 Pa. 88 (1986),
and points out that since Sections 520, 1301 and 1307 only apply to utilities,
the Commission does not have jurisdiction to sustain West Penn's complaint.
We agree.
When a complainant has an opportunity to present argument on purely legal
issues in its complaint, the Commission may dismiss the complaint pursuant
to 66 Pa. C.S. Section 703 (b), if resolution of
15
<PAGE>
the legal issues disposes of the matter. Lehigh Valley Power Committee v. Pa.
P.U.C., 563 A.2d 548, 128 Pa. Commonwealth Ct. 259 (1989). Therefore, we will
grant the motions to dismiss the complaint, filed by Mon Valley and Washington
Power, since we must conclude West Penn has presented no claim over which the
Commission has jurisdiction.
Rescission of prior orders
West Penn, as part of its complaint, asks that the Commission rescind the
prior orders in these proceedings, ostensibly under authority of 66 Pa. C.S.
Section 703 (g). Mon Valley and Washington Power contend that rescission
of the Commission orders is impermissible since federal law prohibits
rescission and res judicata precludes it. Both Mon Valley and Washington
Power cite Smith Cogeneration Management, Inc. v. Corporation Commission, 863
P.2d 1227 (Okla. 1993) (Smith) as correctly determining that PURPA and the FERC
regulations prevent "reconsideration" of utility - QF contracts, since such
reconsideration would be akin to utility - type regulation of the QF's.
Although West Penn disagrees with this reading of Smith (reply, p.15), we concur
that reconsideration would be inconsistent with PURPA and 18 C.F.R. Section
292. 304 (b) (5) and (d), which allow "lock-in" of rates and prohibit requiring
reconciliation with later rate determinations. Mon Valley and Washington Power
also cite Independent Energy Producers v. California Public Utilities
Commission, 36 F. 3d 848 (9th Cir. 1994) as requiring that QF's remain entitled
to their contract
16
<PAGE>
rates, as a matter of federal law, and that the state was prohibited from
contravening that authority by allowing utilities to unilaterally reduce
contract rates to current avoided costs. Since we believe this is a correct
application of law, our prior orders (which have been litigated exhaustively)
should not be reconsidered.
In its complaint, West Penn asserts that its capacity needs have changed
since the time the legally enforceable obligations to sell power from the three
facilities at issue were incurred and seeks to revisit the power purchase
agreements to reflect that alleged change in capacity need. Specifically, West
Penn seeks rescission of prior adjudicated Commission orders which have been
affirmed by all appellate courts.
Review of the issues raised by West Penn is barred by the doctrine of res
judicata. In determining whether res judicata is applicable, four elements must
be examined: (1) identity of the thing or matter sued for; (2) identity of the
cause of action; (3) identity of parties to the actions; and (4) identity of the
quality or capacity of the parties suing or being sued. In re Estate of Tower,
463 Pa. 93, 343 A.2d 671 (1975) (citing Strauss v. W.H. Strauss & Co., Inc., 328
Pa. 72, 76-77, 194 A.2d 905 (1937)).
In this instance, there is an identity of the thing or matter sued for. West
Penn seeks to terminate three existing PURPA contracts due to a professed
current change in capacity and to claimed excessive rates. That West Penn now
seeks rescission of Commission orders instead of reversal is of little
consequence.
17
<PAGE>
There is an identity of the cause of action. West Penn
continues to assert a change in circumstances as justification to be relieved
of its obligations under PURPA. West Penn also continues to challenge
Commission orders approving and/or modifying the PURPA contracts at issue.
That West Penn now additionally asserts some new arguments as to why it should
be relieved of its PURPA obligationsdoes not rescue its complaint from the bar
of res judicata. As the Pennsylvania Supreme Court noted, "the final
determination of a court of competent jurisdiction settles not only the
defenses actually raised, but also those which might have been raised."
Duquesne Light Co. v. Pittsburgh Rys. Co., 413 Pa. 1, 194 A.2d 319 (1963)
cert. denied, Pittsburgh Rys. Co. v. Duquesne Light Co., 377 U.S. 924 (1964).
There is an identity of the parties to the actions and of their capacity.
West Penn remains the utility obligated to purchase power under three PURPA
contracts and Washington Power, Mon VAlley and Milesburg remain the
developers obligated to sell power under the same three PURPA contracts.
Consequently, West Penn's complaint is barred by the doctrine of res
judicata. "The rationale of res judicata is to bring an end to vexations and
repetitious litigation." Tower, 463 Pa. at 100. After seven years of initial
litigation, the doctrine of res judicata is appropriately applied to this
proceeding.
Even if the doctrine of res judicata did not apply in this instance, West
Penn would be unable to proceed with its complaint because the sections of the
Public Utility Code under
18
<PAGE>
which West Penn attempts to proceed are inapplicable in this matter.
In support of its complaint, West Penn cites the Public Utility Code sections
520, 527, 701, 703(g), 1301 and 1307. 66 Pa. C.S. @@ 520, 527, 701, 703(g),
1301 and 1307.
West Penn argues that the Commission can exercise its authority under section
520 of the Public Utility Code to order the cancellation of the three qualifying
facilities. Section 520 provides in pertinent part:
(a) General rule. -- The commission shall order any public
utility engaged in producing, generating, transmitting, distributing or
furnishing electricity to cancel or modify the construction of, or its
participation in the construction of, any generating unit where the commission,
after notice and an opportunity for hearing, determines that the construction
is not in the public interest.
66 Pa. C.S. Section 520(a) (emphasis added).
In an attempt to force the square peg of qualifying facilities into the round
hole of public utility regulation, West Penn takes a hammer to the definitions
of public utility, qualifying facility and to its own role under the purchase
agreements. West Penn argues that because it is an unwilling player in
purchasing the power output from these QF's, it can be said that West Penn is
participating in their construction. As such, West Penn asserts the Commission
would be within its bounds
19
<PAGE>
of authority to order West Penn to cancel its participation (i.e. order the
cancellation of the QF's). West Penn goes even farther, stating that
Washington Power is a public utility.
In fact, neither Washington Power nor any other developer is a public
utility. Selling power to an electric utility for resale to its customers is
not service for the public, as discussed above. Moreover, while sale for resale
is normally a federal matter for the FERC, where it involves qualifying
facilities, the state utility commissions were given certain authority even
though the qualifying facilities are expressly not jurisdictional public
utilities. See 16 U.S.C. Section 824a-3; 18 C.F.R. Section 292.602; 66 Pa.
C.S. Section 102.
As for West Penn's "participation" in the construction of the Milesburg,
Burgettstown and Shannopin Projects, a mere obligation to purchase the output of
certain plants is vastly different than actual participation in their
construction. While West Penn certainly is under an obligation to purchase the
output of the three projects at issue, it is by no stretch of the imagination
participating in their construction.
Thus, section 520 of the Code does not apply in this instance. The
developers are not public utilities and West Penn is not participating in the
construction of the plants.
Section 527 of the Public Utility Code directs the Commission to promulgate
regulations concerning cogeneration and requires that utility rates to the
public reflect any savings to the utility from cogeneration. 66 Pa. C.S.
Section 527. Section 527 does
20
<PAGE>
not mandate that cogenerators must provide savings to utilities in
contravention of PURPA. PURPA clearly prohibits states from requiring
cogenerators to accept less than full avoided cost. 18 C.F.R. Section
292.304. Section 527 does, however, require that any savings a cogenerator does
provide to a utility must be passed on to the utility's ratepayers.
Section 1301 of the Public Utility Code requires every rate made, demanded or
received by any public utility to be just and reasonable and in conformity with
Commission regulations and orders. 66 Pa. C.S. Section 1301. The recovery of
costs associated with the Burgettstown and Shannopin Projects has been
determined to be at or below West Penn's avoided costs as of the date of
contract signing and therefore the costs are reasonable per se. [10] Thus,
the orders are consistent with section 1301. [10] The avoided costs for
the Milesburg Project have not yet been recalculated as of the date of contract
signing.
West Penn also cites section 1307 of the Public Utility Code for the
proposition that rates received by public utilities must be just and reasonable.
66 Pa. C.S. Section 1307. As stated above, because the rates to be received
by West Penn are no more than West Penn's own avoided costs at the time the
legally enforceable obligation was incurred, the rates are just and reasonable
per se.
CONCLUSION
West Penn's complaint must be dismissed. The complaint is
barred by the doctrine of res judicata. Moreover, West Penn has
_______________
[10] The avoided costs for the Milesburg Project have not yet been
recalculated as of the date of contract signing.
21
<PAGE>
stated no ground upon which we can act. The orders West Penn seeks to rescind
are final adjudicated orders which have been affirmed by courts at every
appellate level. The matter has been decided and the courts, all courts,
have upheld the Commission's decisions.
THEREFORE;
IT IS ORDERED:
1. That the petitions to intervene of West Penn Power Industrial
Intervenors, Armco Advanced Materials Corporation and Allegheny
Ludlum Corporation are granted.
2. That the motion to sever of Washington Power Company is denied.
3. That the application for stay or supersedes of West Penn Power is denied.
4. That the motions to dismiss of Washington Power Company and Mon Valley
Energy Corporation are granted.
5. That the complaint of West Penn Power Company is dismissed.
6. That a copy of this order shall be served on all parties to this
proceeding.
7. That this docket shall be closed.
_______________________________
BY THE COMMISSION
/s/ John G. Alford
John G. Alford
Secretary
(SEAL)
ORDER ADOPTED: December 15, 1994
ORDER ENTERED: December 16, 1994
<PAGE>
Exhibit A
MIDATLANTIC ENERGY COMPANY'S
MOTION TO INTERVENE
AND PROTEST
FILE NO. 70-9147
DATE: July 30, 1998
Thomas K. Henderson
Vice President
<PAGE>
UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
Allegheny Power System, Inc. ) Dockets Nos. EC97-46-000
) ER97-4057-000
DQE, Inc. ) ER97-4051-000
ALLEGHENY POWER'S ANSWER IN OPPOSITION
TO MOTION TO INTERVENE OUT OF TIME
Pursuant to Rules 213 and 214 of the Commission's Rules
of Practice and Procedure, 18 C.F.R. 385.213 and 214 (1997),
Allegheny Power System, Inc. hereby answers in opposition to
MidAtlantic Energy Company's motion to intervene nearly a year out
of time. The Commission need not be long distracted by
MidAtlantic's submission.
MidAtlantic alleges that it has an interest in this case
because it has been a competitor of Allegheny power for over
eleven years,[1] but it offers no valid reason why it failed to
submit a timely motion to intervene in this proceeding, which was
publicly noticed by the Commission over ten months ago. The
Commission would be fully justified to deny MidAtlantic's motion
on that basis alone. See Pacific Gas and Electric Company, 59
FERC Paragraph 61,098 (1992)(motion to intervene out of time denied
when the party failed to provide an explanation for its untimely
filing).
Here, the fact that the commission's staff recently
submitted a data request to the Applicants hardly constitutes
"good cause for failing to file the motion within the time
prescribed." 18 C.F.R. 385.214(d)(1997). MidAtlantic's pleading
does not even address the questions raised
_______________
[1] In fact, PURPA projects are considered to be suppliers to public
utilities, not competitors with them. Schuykill Energy Resources
v. PP&L, 113 F.3d 405, 407 (D.C. Cir. 1997). Thus, MidAtlantic's
arguments rest upon an inaccurate premise.
<PAGE>
by staff's data request, nor does it address the Applicants' response
to it. Thus, MidAtlantic's reference to staff's data request as
justification for its motion is without merit.
Overlooking the procedural defects in MidAtlantic's
filing, for the sake of argument, the substance of its argument is
off base, and fails to establish a basis for intervention in this
case. The gist of it is that Allegheny Power denied MidAtlantic
firm transmission access in August 1997, and has pursued legal
means to protect its ratepayers from costly and unnecessary PURPA
projects--such as the above market Burgettstown, Milesburg and
Shannopin project contracts that Allegheny Power recently bought
out. See Attachment A to MidAtlantic's motion. MidAtlantic
contends these actions by Allegheny Power took place during the
period 1992 through 1997 and, based on these alleged actions,
MidAtlantic urges the Commission to order Allegheny Power to
divest its generation.
There are three fundamental problems with MidAtlantic's
argument. First, MidAtlantic does not discuss, let alone
demonstrate, how any of its allegations are relevant to the
Commission's inquiry under the Merger Guidelines. It is
application of the Merger Guidelines to the Applicants' proposed
merger, after all, which served as the foundation for staff's data
request, and is MidAtlantic's purported justification for its
untimely motion to intervene. There is however, no connection
between Allegheny Power's alleged treatment of MidAtlantic and the
Divestiture of generation remedy that MidAtlantic seeks. Even if
Allegheny Power sells its generation, it will continue to require
firm transmission capability to serve retail customers as long as
the Allegheny Power operating companies have a regulatory
obligation to serve them (an obligation that MidAtlantic does not
have). And, as long as the Allegheny Power companies have that
obligation to serve, Allegheny Power will continue to have an
obligation to oppose uneconomic and
2
<PAGE>
unnecessary PURPA projects through lawful means.
Second, nothing in MidAtlantic's protest raises issues
or concerns that could not have been raised in a timely fashion
and therefore, nothing in its protest rises to the level of "good
cause" for its untimely filing. On the face of MidAtlantic's
submission, all the events it complains of occurred a year or more
ago. Its motion is a classic case of an intervenor "sitting on
its rights", only to raise new issues as the proceeding moves
toward closure. See Central Illinois Public Service Company, 59
FERC 61,219 (1992) (denying untimely motion to intervene filed by
a party that "sat on its rights" while the case went forward). If
Mid-Atlantic believes its allegations have any merit, MidAtlantic
can raise them in another appropriate forum.
Finally, MidAtlantic's motion is factually misleading
and internally inconsistent. MidAtlantic admits (at page 2) that
"its principals are responsible for the development of two power
generation projects which are operating in the West Virginia
service area of Monongahela Power and are interconnected with this
APS operating affiliate." But MidAtlantic complains that
Allegheny Power has opposed MidAtlantic's proposal to development
a third project. MidAtlantic has not alleged, much less shown,
how the development of this third project would impact the market
power of the merger company in the event the Applicants' merger is
consummated.
Nor has MidAtlantic made any showing that its problems
with the development of this third PURPA project stem in any way
from anti-competitive conduct by APS. Instead, MidAtlantic has
resorted to sweeping allegations of supposedly anti-competitive
opposition to PURPA projects generally -- allegations that are
unsupported by specifics or any affidavit swearing to the veracity
of the charges made.
3
<PAGE>
The one arguable relevant citation to MidAtlantic's
undeveloped third PURPA project is buried in footnote 4 of its
pleading. MidAtlantic complains Allegheny Power projected a need
for combustion turbines ("CTS") as a way to keep their project
from being built. Notably absent from MidAtlantic's discussion is
the West Virginia Public Service Commission's finding that
MidAtlantic's proposal was fatally flawed. Notably, the WVPSC
found:
The Commission rejects the complainants' argument that
the next capacity should be base load coal. The
complainants failed to put on convincing evidence to
support the proposition. Much of the complainants'
evidence concerning off-system sales and pollution
allowances seemed at best speculative and perhaps merely
wishful thinking. Whatever credibility the
complainants' argument had quickly evaporated when
tested by cross-examination and point-by-point rebuttal
by the intervenors and companies. Furthermore, the
Commission found Mr. Russell's adjusted estimate of the
cost of a CT unconvincing.
MidAtlantic Energy Company v. Monongahela Power Company, Case No.
91-987-E-C, mimeo at 4(WVPSC Mar. 5, 1993)(attached).
MidAtlantic's attempt to relitigate past battles that it lost in
the context of the Applicants' merger proceeding are misplaced.
WHEREFORE, for the foregoing reasons, MidAtlantic's
untimely motion to intervene and protest should be rejected.
Respectfully submitted,
/s/ Leonard W. Belter
Theresa J. Colecchia, Esquire Leonard W. Belter, Esquire
Thomas K. Henderson, Esquire Raymond B. Wuslich, Esquire
Allegheny Power Service Corp. Winston & Strawn
800 Cabin Hill Drive 1400 L Street, N.W.
Greensburg, PA 15601 Washington, DC 20005-3502
Attorneys for Allegheny Energy, Inc. and DQE, Inc.
Dated: June 30, 1998
4
<PAGE>
PUBLIC SERVICE COMMISSION
OF WEST VIRGINIA
CHARLESTON
At a session of the PUBLIC SERVICE COMMISSION OF WEST VIRGINIA in the
City of Charleston on the 5th day of March, 1993.
CASE NO. 89-783-E-C
MIDATLANTIC ENERGY,
Complainant
v.
MONONGAHELA POWER COMPANY,
a corporation, and
THE POTOMAC EDISON COMPANY,
a corporation,
Respondents,
CASE NO. 91-987-E-C
ARBOUR COUNTY POWER PROJECT,
P.,
Complainant
v.
THE POTOMAC EDISON COMPANY,
a corporation and
MONONGAHELA POWER COMPANY,
a corporation,
Respondents
COMMISSION ORDER
By order of June 26, 1992, the Commission established four
threshold issues to be determined in the first phase of the proceeding. The four
issues to be resolved were "(1) the need of Monongahela Power Company and/or
The Potomac Edison Company for additional generating capacity, including the
timing of future generating capacity needs, (2) how the need should be met,
(3) the costs involved, absent the proposed PURPA project(s) and (4) the
determination of power purchase rates to be established for these Companies
based on avoided costs. The Commission heard an extensive amount of evidence
from all the parties as well as public comment in Charleston, Martinsburg,
Philippi, Romney, Moundsville and Glen Dale. The four threshold issues have been
fully briefed and the Commission allowed the parties to engage in oral argument.
The Commission would emphasize that its findings are limited to the
appropriate disposition of this proceeding. For example, the Commission's
findings concerning reserve margin, and the appropriate next generating capacity
to be added by the utility is for the sole purpose of determining an appropriate
avoided capacity cost in this proceeding.
The first issue to be resolved is the power Companies' need for power. The
<PAGE>
Companies' position is that Monongahela Power Co. (MP) will have
no need for power in the next ten years. Using a 22% reserve margin, they
calculate that Potomac Edison Co. (PE) will need 90 MW's in 1996, 90 MW's in
1997, 158 MW's in 1998, 118.5 MW's in 1999 and 213.3 MW's in 2000. Staff
supports the Companies' position regarding need. CAD argues for a 20%
reserve margin which delays PE's need to late 1998. The Energy Users and
Weirton Steel argue for a 15% reserve requirement but claim that even using
a 20% margin that PE does not need power until late 1999. The complainants
argue that the Companies have understated the need in a variety of ways. They
first urge the Commission to adopt a 25% reserve margin as a reasonable
planning target. They argue that this high reserve is justified by the system's
high load factor. They also argue that the Companies' diversity exchange
agreements with Duquesne and Virginia Power should not be relied upon, and
that the Companies are relying too heavily on demand side management programs.
Determining the reserve margin is critical in the development of a
reasonable capacity plan (which in turn will drive the determination of avoided
cost). The economy of the State and the health and welfare of all its citizens
depends on reliable electrical energy sources. Reliability is enhanced by
establishing and meeting high reserve targets. However, the economy also
flourishes with low cost energy. Achieving low cost energy is enhanced by
relying on older existing low cost generating units for as long as possible,
even if that means having lower reserve margins. Thus, the Commission is faced
with balancing two critical components necessary for a strong state economy and
public welfare: reliable power and low cost power.
In light of the evidence presented, the current appropriate reserve margin
is 22% (See Ex. AFK-6; Kave Ex. 3 at 3-4; Kave Tr. VI at 102-108; Melton Tr. VII
at 58-59). Indeed, much evidence was presented which would indicate that a
reserve margin even lower than 22% may soon be appropriate. (See Falkenburg Ex.
2 at 19; Falkenburg Rebuttal Ex. 2; Harris Supp. Dir. Ex. 2; CAD Ex. 1; WVEUG
Ex. 1 at 6; CAD Cross Ex. 3 and 4; Kave Tr. VI at 183-185). The decision
concerning the 22% reserve margin is part of the overall capacity plan and could
change as circumstances change.
Given the 22% reserve margin, the evidence shows that MP has no need for
additional generating capacity in the foreseeable future. (See CAD Cross Ex. 7;
Ex. AFK-7 and AFK-8; Melton Ex. 1 at 4; Kave Tr. VII at 24-28). Regarding PE,
the evidence shows a need for 90 MW's in 1996, 90 MW's in 1997, 158 MW's in
1998, 118.5 MW's in 1999 and 213.3 MW's in 2000. (See Kave Ex. 2; Seelke Ex. 3;
Ex. AFK-7; Ex. AFK-8). The complainants presented no convincing evidence to
support their argument that the Companies understated their need for new power.
The Companies' witnesses offered sufficient support for the Companies'
integrated resource plan including its reliance on older plants, diversity
exchange agreements and demand side management programs.
The second issue to be decided is how the need for power should be met. To
resolve the second issue, the Commission must decide the appropriate nature of
the next generating capacity. The resolution of the issue of the next
appropriate capacity is for the limited purpose of resolving the current
complaint. The passage of time may erode the value of the findings. The
Companies propose the construction of a series of combustion turbines (CT's) to
be used for peaking purposes. They claim that the CT's are the lowest cost
alternative. The Energy Users and Weirton Steel support the Companies' argument
regarding CT's. Staff recommends flexible CT's which it defines as CT's which
could later be converted to combined cycle units (CC's) or even CC's with coal
gasification units as a fuel source. CAD argues that the intermediate CC's are
<PAGE>
the appropriate choice because a CC unit would add flexibility to the system and
be more efficiently available for extended usage. CAD argues that a CT is only
the cheapest unit if it is run less than 5% of the time whereas CC's are the
cheapest option up to a capacity factor of 53%.
The complainants, on the other hand, argue that the best option is a coal
fired base load plant. They offer a variety of theories to support their
proposition that a coal fired base load plant is the superior option. First,
MidAtlantic's expert offered construction estimates for CT's much higher than
offered by the Companies or any of the intervenors. The complainants also argued
that base load coal plants can be used at high load factors for meeting
off-system sales markets. They argued that certain sums of money would be saved
because their "clean" technology would either produce pollution allowances
which could be sold or allow the Companies not to scrub Hatfield's Ferry. They
also argued that certain extra costs would be required to maintain the CT's and
the Companies' older plants which are to be run at greater capacity levels.
Historically, West Virginia ratepayers have benefited from
coal fired steam turbine generation units, sized to take advantage of economies
of scale. This is true in spite of the fact that most of our more recently added
base load units resulted in reserve margins far in excess of those that were
expected when the units were first planned. This excess reserve margin came
about largely due to lower than expected growth in native load. For years,
throughout most of the 1980's, the excess capacity available from our economical
base load units was not a burden on native load customers because of the
strength in the off-system sales market. However, it is highly speculative to
count on such markets reappearing in the future.
After reviewing the extensive record, the Commission is convinced that for
the purpose of determining avoided capacity costs in this proceeding, the next
generating capacity should be CT's. (See Kave Ex. 1 at 27-31; Kave Ex. 3 at 4;
Falkenburg Tr. IV at 107-108, 162; Falkenburg Ex. 2; Melton Tr. VII at 58;
Melton Ex. 2 at 3). We recognize the need to satisfy peaking load requirements.
Although we are sensitive to any move towards CT's, the evidence cannot support
planning a coal fired base load plant at this time. There is simply too great a
difference between the investment in CT's and base load units. Even if the CT's
cost somewhat more than projected, economies of scale come into play. The
economics of base load steam plants have historically tended to favor larger
units, and larger plant capacity. There is no basis in the record before the
Commission to find that it would be prudent to plan smaller (one or two hundred
megawatt) base load steam turbine units. There is clear evidence, however, that
CT's can be added in small increments, greatly reducing the relative present
value of CT capital costs as compared to base load units.
The Commission is also persuaded by Staff's recommendation
that the CT's be sited and designed so that they could later be converted to
CC's or even CC's with coal gasification units. Leaving open the possibility of
conversion creates additional flexibility which would allow the system to
respond to future changes in needs. CAD proposed the construction of CC's. It
did not however present any evidence that the Companies' projection that the
CT's would operate less than 5% of the time was erroneous. It seems more
reasonable to construct the less expensive CT's and be prepared to convert
them to CC's if the need arises.
The Commission rejects the complainants' argument that the
next capacity should be base load coal. The complainants failed to put on
convincing evidence to support the proposition. Much of the complainants'
evidence concerning off-system sales and pollution allowances seemed at best
speculative and perhaps
<PAGE>
merely wishful thinking. Whatever credibility the complainants' argument had
quickly evaporated when tested by cross-examination and point by point
rebuttal by the intervenors and companies. Furthermore, the Commission found
Mr. Russell's adjusted estimate of the cost of a CT unconvincing. (See Russell
Ex. 3 at 17).
The complainants also argue alternatively that they should be
compensated based on the avoidance of CT's now but with an increment built
into their purchase power rate based on the avoidance of a coal plant which
is predicted to come on line in 2007. The complainants, in essence, are asking
the Commission to find that a base load coal plant will be needed and built in
2007 based on evidence we have now regarding predictions of fuel costs,
construction costs, energy demand, pollution requirements and a whole host of
other facts some fourteen years from now. The proposed coal plant is simply too
far away to justify a guarantee to the complainants (through a long term
purchase agreement) that they will be paid for avoiding a coal plant in 2007.
Any number of technical breakthroughs, changes in economic conditions, or
regulatory changes (a federal carbon tax for instance) might radically change
when and whether a coal base load plant is built. Indeed, if we look back at
projections concerning capacity need for 1992 made back in the early seventies,
the projections were off by staggering amounts (See Tr. VI at 167). Projections
are fallible. The greater the distance in time, the larger the error is likely
to be. The Commission rejects any proposal to bind ratepayers of West
Virginia into paying for a hypothetical plant some fourteen years away. Other
states have rejected attempts to avoid plants so far on the planning horizon.
See In Re Pacific Gas and Electric, 76 PUR4th 1, 44-45 (Cal. P.U.C. 1986); Re
Unitil Service Co. 73 N.H. P.U.C. 117 (1988); Re Small Power Producers and
Cogenerators, 60 PUR4th 574, 578 (Ky. P.S.C. 1984).
The Companies argue that the next 238 MW's of capacity, scheduled to be
built from 1996-1998, should be built by PE and considered unavoidable. The
Companies have a relatively small percentage of QF energy production and failed
to present convincing evidence that their system flexibility needs require that
PE own the next 238 MW's. Since the Companies failed to convince us that their
flexibility needs require PE ownership of the next capacity, we need not
consider whether such a reservation would be permissible under PURPA.
Staff still argues that the Commission should require that these
complainants participate in some sort of competitive bidding process. These
complaints have been pending for a long time before the Commission. The parties
have put forth a large amount of time, money and energy in fully litigating
Phase I issues. Indeed, there are not currently rules in place which require
competitive bidding. Given the history of the case, we will not deprive the
complainants an opinion on the merits by subjecting them to a competitive
bidding scheme.
The third area which Phase I was to deal with was the costs involved absent
the projects. The costs are broken down into capacity costs and energy costs.
Regarding capacity costs, the Companies' position is that it equals roughly 1
cents /Kwh for a CT plant in the third quarter of 1999. The Energy Users give an
estimate of 1.4 cents /Kwh for a CC plant in 1998. CAD estimates 1.28 cents /Kwh
for a CC plant in 1998. Barbour County seeks a capacity rate of 4.73 cents /Kwh
and MidAtlantic seeks 5.72 cents /Kwh. The cost selected must correspond to both
the type of capacity added and the timing. As discussed above, we are convinced
that the best current evidence indicates that a flexible CT should be added to
the system in 1996.
<PAGE>
Given that the various parties were advocating different types of capacity
for different time frames, no party clearly gave cost estimates for flexible
CT's starting to come on line in 1996. We accept the Companies' cost estimate
for CT's coming on line in 1999. If the proceeding continues into Phase II, the
parties should present evidence as to how the figure should be adjusted to
reflect the 1996 start up time and how the figure should be adjusted to reflect
any additional expenses resulting from siting and designing the CT's so that
they could be later converted to CC's.
Regarding energy cost, Barbour County is seeking an energy floor
of 1.9 cents /Kwh and MidAtlantic seeks an energy floor of 2.0 cents /Kwh
with escalators. The escalators result in a significant increase in the
proposed floor by the end of the contract. The Companies claim that 1.5
cents /Kwh represents their current avoided energy cost. It is an average of
energy costs at APS's five super-critical coal stations. CAD points out that
PURPA envisions that a ratepayer be in a no worse off position with QF
production than without it. For that reason, it does not seem that an energy
floor is appropriate. Energy costs should be based on actual avoided incremental
energy costs regardless of how high or low they will go. The Commission rejects
any floor on energy rates at this time.
We do not, however, preclude the adoption of some reasonable minimum price,
based on realistic current estimates, so long as such an energy pricing proposal
included a deferral mechanism and guarantees of true-up to actual cost. See
American Bituminous Power Partners v. Monongahela Power, 87-669-E-C (W.Va.
P.S.C. 1987). Such actual cost, however, as indicated above, would not be based
on "proxy" coal units. If the company is avoiding CT capacity, it is also
avoiding CT generating costs, at least during those periods that the avoided
CT's would have been running. Any QF contract which includes CT based avoided
capacity rates must reflect this real-time incremental approach to avoided
energy rates.
Another contested issue related to the appropriate power purchase rates is
whether the costs of a proposed project would be properly assumed by the
ratepayers of the jurisdiction in which the project is located or whether
ratepayers of all of the jurisdictions of an operating company would assume the
costs. The power Companies argue that only the West Virginia ratepayers should
pay for the projects if they are located in West Virginia. They point out that
previous contracts approved by the Commission for PURPA projects in West
Virginia have allowed for rate recovery from West Virginia ratepayers alone.
They also argue that the jurisdiction which receives the economic benefit from
construction and operation of a facility should pay for it. All the other
parties in the proceeding argue that fairness dictate that QF purchased power be
allocated to all customers regardless of jurisdictions. Our capacity-need
analysis for PE was based on PE as a whole and not merely on PE's West Virginia
jurisdiction. In fact, West Virginia's jurisdictional share of PE amounts to
less then one-fifth of PE. It is not reasonable for ratepayers representing less
than one-fifth of the company to pay for the entire company's capacity additions
merely because the facility is located in that jurisdiction. The Companies do
not recover for company owned power plants in that manner. It would create an
artificial barrier to PURPA projects to require rate recovery in that manner.
The Commission will only allow recovery from West Virginia ratepayers in an
amount that corresponds to a reasonable allocation to the West Virginia
jurisdictional customer. The Commission is aware that some prior contracts were
approved allowing the entire project's cost to be recovered from West Virginia
ratepayers. Upon reflection and given the persuasive arguments that such an
allocation is not appropriate or fair, the Commission now believes that costs
<PAGE>
for projects considered for the future must be borne by all of company's
ratepayers regardless of jurisdiction.
Finally, Potomac Edison made certain arguments concerning whether it has
any obligation under PURPA to purchase power from the complainants. PE alleges
it has no such obligation because the project would be connected directly to
MP's and not PE's transmission facilities. We believe that the argument
is a Phase II issue and decline to address the argument in Phase I.
FINDINGS OF FACT
1. The current appropriate reserve margin for the company is
22%. (See Ex. AFK-6; Kave Ex. 3 at 3-4; Kave Tr. VI at 102-108; Melton
Tr. VII at 58-59).
2. An even lower reserve margin may soon be appropriate. (See
Falkenburg Ex. 2 at 19; Falkenburg Rebuttal Ex. 2; Harris Supp. Dir.
Ex. 2; CAD Ex. 1; WVEUG Ex. 1 at 6; CAD Cross Ex. 3 and 4; Kave Tr.
VI at 183-185).
3. MP has no need for additional generating capacity in the foreseeable
future. (See CAD Cross Ex. 7; EX. AFK-7 and 8; Melton Ex. 1 at 4 Kave;
Tr. VII at 24-28).
4. PE needs 90 MW's of new generating capacity in 1996, 90 in 1997, 158 in
1998, 118.5 in 1999 and 213.3 in 2000 (See Kave Ex. 2; Seelke Ex. 3;
Ex. AFK-7 and 8).
5. Any attempt to justify the addition of base load power by relying on the
off-system sales market is highly speculative and must be rejected.
6. The next generating capacity for PE should be CT's which are designed and
sited so that they could later be converted to CC's or even CC's with
coal gasification units. (See Kave Ex. 1 at 27-31; Kave Ex. 3 at 4;
Falkenbury Tr. IV at 107-108, 162; Falkenburg Ex. 2; Melton Tr. VII at
58; Melton Ex. 2 at 3).
7. The Companies' cost estimate for a CT coming on line in 1999 is
reasonable and adopted by the Commission. The estimate will have
to be adjusted in Phase II to reflect a 1996 need and a CT which is
sited and designed so as to be convertible into a CC or even CC's with
coal gasification units. (Kave Ex. 1 at 27-31; Kave Ex. 30.)
8. Power need projections by their nature are fallible and become less
reliable the greater the distance in time. (Tr. VI at 167.)
CONCLUSIONS OF LAW
1. The avoided capacity costs in this proceeding should not be determined by
some future competitive bidding process.
2. The complainants' suggestion that the ratepayers be currently locked into
paying for a hypothetical coal plant to be built in 2007 is not
reasonable and must be rejected.
3. The capacity factor of the avoided costs should be based on CT's which
begin to come on line in 1996.
4. The Companies have failed to make any convincing showing that the
flexibility needs of the system require company ownership of the
next units of
<PAGE>
generation.
5. The complainants failed to show that an energy floor of 1.9 cents /Kwh or
2.0 cents /Kwh with escalators was reasonable or conformed with actual
expectation concerning energy costs.
6. Any attempt to require West Virginia ratepayers to pay for an entire
PURPA project which sells power to PE would be unreasonable since
West Virginia ratepayers constitute less than one-fifth of the Companies'
ratepayers.
7. The avoided energy factor in any purchase power agreement should be based
on the Companies' actual avoided incremental energy costs.
8. The Commission will only allow for rate recovery for the PURPA projects
from West Virginia ratepayers in an amount that corresponds to West
Virginia's jurisdictional percentage of PE.
ORDER
IT IS, THEREFORE, ORDERED, that the Phase I issues are resolved as reflected
herein.
IT IS, FURTHER, ORDERED that the Executive Secretary serve a copy of this
order containing the Commission's findings of fact and conclusions of law
regarding Phase I issues to all parties in this matter by United States mail and
upon Commission Staff by hand delivery.
IT IS FURTHER ORDERED that each complainant inform the Commission in writing
within thirty days whether it desires to proceed with Phase II of this
proceeding. Upon receipt of such notification, the Commission would intend to
issue an order establishing the procedures to be followed in Phase II.
<PAGE>
PUBLIC SERVICE COMMISSION
OF WEST VIRGINIA
CHARLESTON
At a session of the PUBLIC SERVICE COMMISSION OF WEST
VIRGINIA in the City of Charleston on the 25th day of June, 1993.
CASE No. 89-783-E-C
MIDATLANTIC ENERGY,
Complainant,
v.
MONONGAHELA POWER COMPANY, a
corporation, and THE POTOMAC
EDISON COMPANY, a corporation
Defendants.
CASE NO. 91-987-E-C
BARBOUR COUNTY POWER PROJECT,
Complainant,
v.
THE POTOMAC EDISION COMPANY,
a corporation, and
MONONGAHELA POWER COMPANY
a corporation,
Defendants.
COMMISSION ORDER
By order of April 14, 1993, the Commission indicated that it
would address the threshold issue of whether the Potomac Edison
Company (PE) was obligated under PURPA to purchase energy from a
qualifying facility interconnected to the Allegheny Power System
in Monongahela Power
<PAGE>
Company's service territory.[2] We invited the parties to brief the issue.
The issue has now been fully briefed by the parties.
Each advancing a slightly different theory, MidAtlantic, the
Barbour County Power Project, Staff, and the Consumer Advocate
Division all support finding that PE has an obligation to purchase
power. PE and Monongahela Power argue against finding an
obligation to purchase.
We find no controlling or persuasive precedent on point.
There are several factors which point towards finding an
obligation to purchase. The Allegheny Power System (APS) operates
as a single integrated electric system. A vast majority of PE's
own generating capacity lies outside of its service territory.
Bulk power purchases from other utilities are purchased for the
benefit of all of APS regardless of where the interconnection
occurs. According to a Security and Exchange Commission filing,
the plan of APS was to treat any qualifying facility (QF) in which
APS had an ownership interest as supplying power to whichever
operating company needed power regardless of where the facility
was located. See Attachment B of MidAtlantic's Notice to proceed.
The proposed contract which the APS had with the Clairton QF also
shows that APS treated a QF interconnecting anywhere in the system
as connecting with the operating company which needed the power.
Clairton, although located in West Penn's service territory, was
to sell power to PE. See Case No. 92-0158-E-PC. The reality is
that we are dealing with a single integrated electric system. The
operating companies are bound by their operating agreement to
operate as a single integrated electric system. Each company, as
required by documents filed with the Federal Energy Regulatory
Commission, transmits power in the system as dictated by the
system's needs without regard to the individual operating
company's service territory. The system's power supply agreement
shows that the integration of the system extends to its
transmission facilities. We are not dealing with separate stand-
alone electric utilities.
PE's attempt to shield itself from an obligation to purchase
QF energy by arguing that the QF's proposed interconnection is
with Monongahela Power must fail. PE and APS has too long
operated the system in a manner which does not require that the
actual location of a generating facility be in the operating
company's service territory. PE located plants anywhere within
APS which offers the least cost location for generating capacity
with is consistent with the engineering requirements of the
transmission grid. A QF offering to sell to PE
_______________
[2] The parties in their argument drift into various related issues
such as how and where possible interconnection would occur,
whether there may be technical problems created by the proposed
interconnection, and whether or not there may be a charge payable
to Monongahela Power for transmitting power to PE. We decline
to address more than the single issue we discussed in our April 14,
1993 order. The remaining issues will be properly addressed in
Phase II.
<PAGE>
should be allowed the same opportunity to locate its generation outside
of PE's service territory as long as it is properly interconnected with
the APS' transmission grid. Under these circumstances, to require direct
interconnection with PE would be to create an artificial barrier to
shield PE of its obligation to purchase from the QF. We therefore find
that PE has an obligation to buy energy from a QF properly interconnected
to the APS system in Monongahela Power Company's service territory.
FINDINGS OF FACT
1. By order of April 14, 1993, the Commission indicated
that it would address the threshold issue of whether PE was
obligated to purchase energy from a QF interconnected to the APS
in Monongahela Power's service territory.
2. The parties have fully briefed the issue.
3. The Allegheny Power System operates as a single
integrated electric system.
4. The vast majority of PE's own generating capacity lies
outside of its service territory.
5. Bulk power purchases from other utilities are purchased
for the benefit of all of APS regardless of where the
interconnection occurs.
6. APS had planned to treat any QF in which it had an
ownership interest as supplying power to whichever operating
company needed power regardless of where the facility was located.
7. APS's proposed contract with the Clairton QF treated it
as supplying power to PE despite the fact it was located in West
Penn's service territory.
8. Each operating company, as required by documents filed
with the Federal Energy Regulatory Commission, transmits power in
the system as dictated by the system's needs without regard to the
individual operating company's service territory.
9. PE and APS has long operated the system in a manner
which does not require that the actual location of generation be
in an operating company's service territory.
10. PE located plants anywhere within APS which offers the
least cost location for generating capacity which is consistent
with the engineering requirements of the transmission grid.
<PAGE>
CONCLUSION OF LAW
PE has an obligation to purchase power from a QF properly
interconnected to the APS system in the Monongahela Power
Company's service territory.
IT IS THEREFORE ORDERED that consistent with our April 14,
1993 Order that MidAtlantic, Barbour County, Monongahela Power and
Potomac Edison engage in negotiation to attempt to resolve as many
Phase II issues as is possible.
IT IS FURTHER ORDERED that if the parties reach an impasse
that they are to promptly notify the Commission in writing and
indicate the issues which cannot be resolved.
IT IS FURTHER ORDERED that the Commission's Executive
Secretary serve a copy of this order upon all parties of record by
United States First Class Mail and upon Commission Staff by hand
delivery.
ARC
DAC/dt
A True Copy, Teste:
/s/ Howard M. Cunningham
Howard M. Cunningham
Executive Secretary
<PAGE>
PUBLIC SERVICE COMMISSION
OF WEST VIRGINIA
CHARLESTON
At a session of the PUBLIC SERVICE COMMISSION OF WEST
VIRGINIA in the City of Charleston on the 20th day of March, 1995.
CASE NO. 89-783-E-C
MIDATLANTIC ENERGY,
COMPLAINANT,
v.
MONONGAHELA POWER COMPANY,
a corporation and
THE POTOMAC EDISON COMPANY,
a corporation,
DEFENDANT.
COMMISSION ORDER
On January 10, 1995, MidAtlantic Energy filed a motion with
the commission to compel Potomac Edison (PE) to enter into an
electric energy purchase agreement. PE filed a response in which
it argues, among other things, that MidAtlantic's complaint should
be dismissed because it involves a new project. Both Staff and
the Consumer Advocate Division (CAD) also filed responses to
MidAtlantic's motion. Finally, MidAtlantic filed a reply to the
filings of the other parties.
The Commission has reviewed the motion and related filings.
We have decided to address only two issues and reserve ruling on
the remaining issues presented by the parties until a later date.
The first issue to be addressed is MidAtlantic's proposal "to
dedicate the entire 115 MW output of the capacity installed in the
first phase to West Virginia and obtain regulatory approval solely
from . . . [West Virginia] for such a sale." MidAtlantic's motion
at 8. PE, Staff and CAD all argue that MidAtlantic's proposal
that only West Virginia ratepayers pick up all the costs of the
115 MW facility is improper and contrary to the Commission's March
5, 1993 order. PE argues that MidAtlantic's division of the
project into phases with the first phase being borne solely by
West Virginia is a mere artifice to get around the Commission's
March 5, 1993 order. PE argues that MidAtlantic knows there will
never be a Phase II of the project and that it is merely trying to
escape review by the Maryland and Virginia Commissions. The
parties also point out that MidAtlantic, itself, had earlier
represented to the Commission and the public at various hearings
that it supported ratepayers of all three jurisdictions paying for
any project and that it was prepared to seek review by all three
state commissions.
<PAGE>
The issue of the appropriate method of recovery of the costs
of a proposed project has already been litigated. We ruled in our
March 5, 1993 order that "[t]he Commission will only allow
recovery from West Virginia ratepayers in an amount that
corresponds to a reasonable allocation to the West Virginia
jurisdictional customer." We found that "[a]ny attempt to require
West Virginia ratepayers to pay for an entire PURPA project which
sells power to PE would be unreasonable since West Virginia
ratepayers constitute less than one-fifth of the Companies'
ratepayers." Conclusion of Law No. 6. We reject MidAtlantic's
attempt to now sponsor a smaller project and argue that because
the smaller project does not meet all of PE's projected power
needs, West Virginia ratepayers should pick up all of the smaller
project. Whether a project is 50 MW, 115 MW or 230 MW, we believe
that the proper result is that West Virginia ratepayers bear only
the costs of their jurisdictional portion of the project. If
MidAtlantic is to recover more than a fraction of the project's
costs, it must seek approval from the Maryland and/or Virginia
Commissions or find another purchaser for the power. We will not
approve a contract which involves West Virginia ratepayers bearing
more than their jurisdictional share of costs of the project.
The second issue which we will address in this order is
MidAtlantic's status as a QF. MidAtlantic indicated that it self
certified its project with the FERC on December 16, 1994. PE
raises concerns in its filing that the project may not qualify as
a QF. FERC is the appropriate forum for the ultimate
determination as to whether a project qualifies as a QF. Under
the FERC system, it appears that a project which engenders
controversy as to its QF status should use the procedure as set
forth in 18 C.F.R. 292.207(b) to determine status. See Small
Power Production: Order Granting in Part and Denying in Part
Rehearing of Orders 60 & 70 and Amending Regulations, 45 Fed. Reg.
30,958 33,963 (1980); Independent Energy Producers Assn., Inc. v.
California Public Utilities Commission, 36 F.3d 848, 855 (9th Cir.
1994). MidAtlantic used the self certification procedure found in
18 C.F.R. Section 292.207(a). PE, under federal regulations, may
file a petition for the FERC to decertify the project's QF status.
18 C.F.R. Section 292.207(d)(1). Whether or not the project will
ultimately achieve and retain QF status from FERC is of critical
importance to this proceeding. Indeed, PE has no obligation to
purchase energy from the project if it is not a QF. We believe that
before the Commission spends any additional resources on this proceeding
that MidAtlantic obtain some sort of resolution as to its QF
status from FERC. We also believe that MidAtlantic should
cooperate with PE on discovery matters relating to QF status so
that PE can determine what actions, if any, it should take at FERC
to protect its interest in determining MidAtlantic's QF status.
We decline to rule on any additional matters at this time.
We reserve the right to rule on the additional issues raised by
the parties in the future. We believe that MidAtlantic should
have thirty days from the date of this order to determine whether,
in light of our ruling on what costs are properly allocated to
West Virginia ratepayers, it desires to proceed with the
litigation. We also believe that MidAtlantic should be prepared
to explain to the Commission its plan to obtain a resolution of
the project's QF status if it decides to pursue this complaint.
FINDINGS OF FACT
1. On January 10, 1995, MidAtlantic filed a motion to
compel PE to enter into a purchased power contract.
<PAGE>
2. PE filed a response which argued, among other things,
that MidAtlantic's complaint should be dismissed because its
latest proposal was a "new project".
3. CAS and Staff also filed responses to MidAtlantic's motion.
CONCLUSIONS OF LAW
1. MidAtlantic's proposal to have West Virginia ratepayers
cover the cost of all 115 MWs of the first phase of its project is
contrary to our March 15, 1993 order, is unreasonable and merits
rejection.
2. MidAtlantic should be prepared to ultimately resolve its
project's QF status prior to the Commission expending additional
resources to resolve this dispute.
ORDER
IT IS, THEREFORE, ORDERED that MidAtlantic's proposal to have
West Virginia ratepayers cover the cost of all 115 MWs of the
first phase of its proposed project is denied.
IT IS FURTHER ORDERED that MidAtlantic inform the Commission
within thirty (30) days whether it intends to proceed with this
complaint given our ruling on recovery of costs from
jurisdictional ratepayers.
IT IS FURTHER ORDERED that MidAtlantic be prepared to offer
an explanation of its plan to ultimately resolve the issue of its
project's QF status if it intends to proceed with the complaint.
IT IS FURTHER ORDERED that the Commission's Executive
Secretary serve a copy of this order upon all parties of record by
United States First Class Mail and upon Commission Staff by hand
delivery.
A True Copy, Teste:
/s/ Howard M. Cunningham
ARC Howard M. Cunningham
DT/8978 Executive Secretary
<PAGE>
PUBLIC SERVICE COMMISSION
OF WEST VIRGINIA
CHARLESTON
At a session of the PUBLIC SERVICE COMMISSION OF WEST
VIRGINIA in the City of Charleston on the 29th day of June, 1995.
CASE NO. 89-783-E-C
MIDATLANTIC ENERGY,
Complainant,
v.
MONONGAHELA POWER COMPANY and
POTOMAC EDISON COMPANY,
Defendants,
COMMISSION ORDER
On June 26, 1995, MidAtlantic Energy filed a status report
pursuant to our May 10, 1995 order. MidAtlantic reported to the
Commission that its development partner, Babcock & Wilcox Company
has withdrawn from the project. Accordingly, MidAtlantic
indicated that it was unable to move forward with the project.
Given the status report as filed by MidAtlantic, we believe that
this complaint should be dismissed.
FINDING OF FACT
On June 26, 1995, MidAtlantic indicated that it was no longer
able to proceed with its project.
CONCLUSION OF LAW
This complaint should be dismissed.
ORDER
IT IS, THEREFORE, ORDERED that this complaint is hereby
dismissed and the proceeding removed from the Commission's active
docket.
IT IS FURTHER ORDERED that the Commission's Executive
Secretary service a copy of this order upon all parties of record
by United States First Class Mail and upon Commission Staff by
hand delivery.
ARC
A True Copy, Teste:
/s/ Howard M. Cunningham
Howard M. Cunningham
Executive Secretary
