BEFORE THE PUBLIC SERVICE COMMISSION OF MARYLAND IN THE MATTER OF THE APPLICATION ) OF THE POTOMAC EDISON COMPANY ) D/B/A ALLEGHENY POWER FOR A ) CERTIFICATE OF PUBLIC CONVENIENCE ) CASE NO. 9223 AND NECESSITY TO CONSTRUCT THE ) MARYLAND SEGMETS OF A 765 KV ) ELECTRIC TRANSMISSION LINE AND A ) SUBSTATION IN FREDERICK COUNTY ) MARYLAND ) REPLY COMMENTS ON PRELIMINARY MATTERS OF THE OFFICE OF PEOPLE S COUNSEL The Maryland Office of People s Counsel, by the undersigned, hereby replies to certain arguments made by Staff in its Brief filed on April 9, 2010 in this matter ( Proceeding ). I. Conditions Imposed By The Commission On The Requested CPCN May Not Be Binding On PATH-MD For The Purpose Of Regulating Its Ownership Interest In The PATH Project. It is unclear whether the imposition by the Public Service Commission ( Commission ) of conditions on the requested CPCN would be sufficient to regulate the transfer of PATH-MD s ownership interest in the Maryland segment of the PATH transmission line ( PATH Project ), since PATH-MD is not before, or subject to the jurisdiction of, the Commission in the instant Proceeding. In its Brief, Staff argues that ownership of the PATH Project by PATH-MD, a non-electric company, should not preclude issuance of a CPCN to Potomac Edison because [w]hen issuing a CPCN for the construction of generating stations or transmission lines, the Commission grants the
CPCN subject to conditions the Commission determines to be appropriate. 1 Staff states that it is possible to regulate the transfer of ownership of the PATH Project by PATH-MD through conditions placed on the requested CPCN, as the Commission has previously done in the case of Re CPV Md., LLC, 99 Md. P.S.C. 183 (2008). 2 In that case, however, CPV Maryland, LLC ( CPV ) applied for a CPCN to construct and operate a generating facility as its owner. Thus, CPV, as a person seeking a CPCN for a generating plant, PUC 7-207(b)(1)(i), was properly before the Commission not only as the applicant but also as the owner of the proposed facility, and would clearly be bound by conditions imposed by the Commission. In contrast, the instant Proceeding involves an applicant which, albeit an electric company, has only a very small and restricted ownership interest in the proposed transmission line. 3 II. A Consequence Of The Commission s Acceptance Of The Application Is That Transmission Lines Constructed And Operated In Maryland Need Not Be Owned By Electric Companies. A foreseeable and likely consequence of a decision by the Commission to accept the corporate structure described in the Application is that it will set a precedent that transmission lines to be constructed and operated in Maryland need not be owned by electric companies. In other words, the barn door for permitting merchant transmission projects in Maryland will have been opened. Staff argues that, in determining whether PUC 7-207 permits the proposed corporate structure, the Commission may consider the consequences of its decision. 4 Staff urges that public policy favors a finding of 1 Brief, at pg. 8. 2 Brief, at pg. 9. 3 Additionally, Staff s narrow reading of the statute, and upon which Staff builds its arguments, calls into question the Commission s authority to impose conditions after the proposed line s construction has begun. 4 Brief, at pg. 13. 2
jurisdiction over the Application on the ground that the failure to do so may result in the potential exercise of federal jurisdiction in siting the PATH transmission line pursuant to the Energy Policy Act of 2005, 16 U.S. C. 824p. Jurisdiction under this statute is, however, generally untested and few, if any, applications have been filed thereunder for the construction of transmission projects. It is not at all clear, therefore, that the Commission s finding that the Application is not properly filed will result in the exercise of federal jurisdiction over siting of the PATH transmission line. A decision to accept the Application, however, may have other, more significant public policy ramifications with respect to the interpretation of PUC 7-207 and the future ownership of Maryland transmission lines, including the potential proliferation of merchant transmission projects or projects owned by entities that do not serve retail customers and are beyond the scope of the Commission s jurisdiction. These public policy consequences are even more troubling when the Maryland legislature has provided no apparent statutory guidance for the treatment or oversight of merchant transmission owners. III. The Issue Of Need Is Not Currently Before The Commission. Finally, Staff implies that OPC s position, pursuant to its comments filed on January 4, 2010 ( Comments ), 5 is that the need for upgrades to the transmission system in Maryland encompasses only issues of reliability and stability. First, it is unclear why Staff has raised this issue at all. In its Order, the Commission expressly stated that the issue of need is not currently before it, and will not be unless the Application is accepted and the evidence that the Company intends to rely on to establish 5 OPC s Comments (ML #120785) were filed in connection with the January 6, 2010 Administrative Meeting at which the Commission considered the Application. 3
need has been properly filed. 6 Further, OPC has taken no such position with regard to the definition of need under PUC 7-207. The OPC statement quoted by Staff was taken out of context; rather, the point of OPC s Comments was that (i) in the Virginia CPCN proceeding, PATH had moved to withdraw its application based upon its own witness s statement that there was now apparently no need for the PATH transmission line in 2014, and (ii) without the Virginia portion of the PATH transmission line, the PATH Project would be useless, whether or not the Company successfully established for the Commission a need for some sort of significant new transmission located in western Maryland. OPC acknowledges that the consideration of the need for any transmission line may encompass an analysis of multiple issues, such as economics and reliability, and further that need is appropriately considered when a complete Application has been properly filed with the Commission. Respectfully submitted, Paula M. Carmody People s Counsel Theresa V. Czarski Deputy People s Counsel Anne L. Johnson Assistant People s Counsel 6 Notice Initiating Proceeding and Setting a Procedural Schedule, dated March 10, 2010, at pg. 4. 4
Continued for signatures: Gary L. Alexander Assistant People s Counsel Maryland Office of People s Counsel 6 St. Paul Street, Suite 2102 Baltimore, Maryland 21202 Tel: 410-767-8150 Dated: April 29, 2010 5
CERTIFICATE OF SERVICE I HEREBY CERTIFY that on this 29 th day of April, 2010, the foregoing Reply Comments on Preliminary Matters of the Office of People s Counsel was handdelivered, e-mailed or mailed first-class, postage prepaid to all parties of record to this proceeding. Respectfully submitted, Anne L. Johnson Assistant People s Counsel Maryland Office of People s Counsel 6 St. Paul Street, Suite 2102 Baltimore, Maryland 21202 410-767-8150 6