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Virginia State Corporation Commission
eFiling CASE Document Cover Sheet
Case Number (if already assigned)
PUE-2009-00043
Case Name (if known)
Application of PATH Allegheny Virginia Transmission
Corporation for Approval and Certification of Electric
Transmission Facilities Under Va. Code Section
56-46.1 and the Utility Facilities Act, Va. Code
Sections 56-265.1 et seq.
Document Type
RPNS
Document Description Summary
Cover Letter, Response to Commission Staff Motion to
Dismiss Application, Service List, Affidavit of Lawrence
A. Hozempa, and Order
Total Number of Pages
41
Submission ID
1518
eFiling Date Stamp
10/26/2009 2 :38:08PM
HUNTON & WILLIAMS LLP
RIVERFRONT PLAZA, EAST TOWER
951 EAST BYRD STREET
RICUMOND, VIRGINIA 232194074
HUNTON&
WMAMS
TEL
FAX
804 - 788 - 8200
804-788-8218
RICHARD D . GARY
DIRECT DIAL: 804-788-8330
EMAIL; rgary@hunton .com
October 26, 2009
FILE NO: 27364 .71
Via Electronic Filing
Hon. Joel H. Peck
Clerk
State Corporation Commission
Document Control Center
Tyler Building, ls'Floor
1300 East Main Street
Richmond, Virginia 23219
Application of PATH Allegheny Virginia Transn-dssion Corporation
For Approval and Certification of Electric Transmission Facilities Under
Va. Code § 56-46.1 and the Utility Facilities Act, Va. Code §§ 56-265 .1 et seq .
Case No. PUE-2009-00043
Dear Mr. Peck:
Enclosed is PATH Allegheny Virginia Transmission Corporation's Response to Commission
Staff Motion to Dismiss Application, Case No. PUE-2009-00043 .
Richard D . Gary
RDG/tms
Enclosure
Service List
cc:
Hon. Mark C. Christie
Hon. James C. Dimitri
Hon. Judith W. Jagdmann
Hon. Alexander Skirpan, Jr.
C. Meade Browder, Esq.
Wayne N . Smith, Esq.
Frederick Ochsenhirt, Esq.
Randall B. Palmer, Esq.
Charlotte P. McAfee, Esq .
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BEFORE THE
STATE CORPORATION COMMISSION
OF VIRGINIA
APPLICATION OF
PATH ALLEGHENY VIRGINIA
TRANSMISSION CORPORATION
Case No. PUE-2009-00043
For approval and certification of electric
transmission facilities under Va. Code
§ 56-46 .1 and the Utility Facilities Act,
Va. Code §§ 56-265 .1 et seq.
RESPONSE TO
COMMISSION STAFF MOTION TO DISMISS APPLICATION
PATH Allegheny Virginia Transmission Corporation ("PATH-VA") urges the Virginia
State Corporation Commission ("Commission") to deny the Commission Staff s Motion to
Dismiss Application ("Motion").' First and foremost, the construction and operation of the
1 Respondent, River's Edge Community Association, Inc. filed a Motion to Dismiss ("RECA Motion") on
October 19, 2009 joining the request of the Staff and adding several allegations that are not relevant to a motion to
dismiss. One allegation however, asserts that PATH-VA shows "contempt!'for local elected officials (RECA
Motion at 3). PATH-VA categorically denies that assertion . In fact, PATH-VA held numerous open houses in
Virginia and communicated directly with local officials in meetings, by telephone and over electronic mail .
Specifically, PATH-VA met with local officials (including Mayor Elaine Walker and Supervisor Sally Kurtz) on
four separate occasions, including August 14, 2008, December 9, 2008, January 5, 2009, and February 25, 2009, to
discuss various aspects of the PATH Project . Delegate Joe May attended two of these meetings and sent a
representative for the two meetings that he did not personally attend . The January 22, 2009 Public Open House
resulted from discussions held during these meetings . The Piedmont Environmental Council also joined the Staff
through its Filing in Support of Staff Motion to Dismiss (October 23, 2009) .
(continued . . . )
Potomac-Appalachian Transirtission Highline ("PATH Project") is essential to address reliability
violations of the North American Electric Reliability Corporation ("NERC") Reliability
Standards that are anticipated to arise as early as June 2014 and continue thereafter. This need
for the PATH Project existed when the Application was filed, and exists today. If not addressed,
these anticipated violations of the NERC Reliability Standards could result in transmission line
overloads and in voltage drops and voltage collapse, affecting electric service in Virginia. (See,
e.g., Application, Exhibit 3, Section 1. B ; prefiled testimony of Lawrence A. Hozempa at 17-20;
and McGlynn prefiled Exhibit PFM-6.) The public interest will not be served by summarily
dismissing this Application and delaying the approval of the Virginia portion of the PATH
Project . The public interest will instead be served by moving forward to approve the Virginia
portion of the PATH Project in order to address the anticipated reliability violations . In addition,
simply dismissing the Application at this point, when discovery is virtually complete and much
of the testimony has been prepared and exchanged, would result in an unnecessary waste of time
and resources .
The Motion is premised entirely on the Maryland Public Service Commission's ("MD
PSC") Order No. 82892, dated September 9, 2009 ("Order") (attached) that found that the MD
PSC applicant, The Potomac Edison Company ("Potomac Edison"), could not file an application
Respondents Alfred T. and Irene A. Ghiorzi filed a Motion to Dismiss and for Reimbursement of All Fees
and Expenses on October 20, 2009, joining the Staff s and RECA's Motions. The Ghiorzis' Motion includes the
allegation that PATH-VA "is not an appropriate new entrant" to provide transmission service in Virginia. The
Ghiorzis filed a Motion to Dismiss on June 6, 2009 in this proceeding and asserted this same point. The Hearing
Examiner's Ruling of July 31, 2009 denied that Motion and found that PATH-VA is a Virginia public utility that
may file an application to begin operations in Virginia (Ruling at 3).
Respondent Charles R. Rodriguez filed a Motion to Dismiss on October 21, 2009, joining Staffs, RECA's
and the Ghiorzis' motions . In his motion, Mr. Rodriguez asserts that he has been put to great expense and
inconvenience in this proceeding thus far, and reiterates RECA's allegation of contempt shown by PATH-VA in its
outreach efforts and interaction with locally elected officials .
for a Certificate of Public Convenience and Necessity ("CPCN") on behalf of its affiliate, PATH
Allegheny Transmission Company LLC, ("PATH-Allegheny"), to construct the PATH Project
because PATH-Allegheny technically is not an "electric company" under Maryland law and that
Maryland law authorizes the MD PSC to issue a CPCN for construction of a transintission line
only to an electric company (Order at 6). Importantly, the MD PSC did not in any way address
or adjudicate the need for the PATH Project, its proposed route in Maryland or its terminus at
Kemptown Substation in Frederick County, Maryland . In fact, the MD PSC specifically noted
"that our decision that PATH is not eligible to construct a transmission line in Maryland should
not be read to foreshadow any views on the merits of the proposed transmission line project"
(Order at 6-7) .2
The MD PSC requested a response from Potomac Edison within 30 days describing its
future intention as to approval of the PATH Project in Maryland (Order at 12-14). On October 9,
2009, counsel for Potomac Edison submitted a letter to the MD PSC stating as follows :
At this time, the Company continues to consider its filing options,
including whether to re-file an application with the Commission,
and intends to inform the Commission of its decision as soon as
possible.
The foregoing response of Potomac Edison to the MD PSC should not be interpreted to support
the Staff s assertion of the "absence of a known Maryland termination . . . for the PATH Project"
(Motion at 3). In fact, this assertion in the Staff's Motion is erroneous and baseless. As
demonstrated in the attached Affidavit of Lawrence A. Hozempa, the proposed terminus for the
PATH Project has not changed and the line will terminate at the proposed Kemptown Substation
in Frederick County, Maryland, consistent with the Application filed in Virginia.
'The West Virginia Public Service Commission has scheduled the PATH Project for hearing beginning
February 8, 201 0.
The fact that another application has not been filed in Maryland does not change the fact
that the terminus of the PATH Project remains at the Kemptown Substation . The ongoing
consideration by Potomac Edison with regard to whether it will file another application with the
MD PSC for authority to construct the PATH Project in Maryland requires significant analysis of
a myriad of issues, not the least of which is the financial ability of Potomac Edison to construct
the project as was discussed in Potomac Edison's briefs prior to the issuance of the Order by the
MD PSC. In addition, such decision-making involves consideration of whether PATHAllegheny should seek authorization to construct the PATH Project in Maryland through an
application to the Federal Energy Regulatory Commission ("FERC"), pursuant to Section 216 of
the Federal Power Act. The option was clearly demonstrated in Potomac Edison's briefs leading
up to the Order .
As supported by the attached Hozernpa Affidavit, there has been, and there will be, no
change to the terminus of the PATH Project at the proposed Kemptown Substation . In
connection with the PATH Project, 152.3 acres have been purchased for the Kemptown
Substation, which will be located at the point where existing 500 kV transmission lines of
Baltimore Gas and Electric Company and Potomac Electric Power Company are in close
proximity. This site has been selected for the Kemptown Substation because PJM
Interconnection, L.L.C. ("PJM") has directed that the PATH Project terminate at the point where
it is interconnected with these existing transmission lines. Thus, the underpinning of the
Motion - Staff's asserted lack of an "identified terminus of the line" (Motion at 3) - is flawed, as
the terminus of the line will be, as set out in PATH-VA's application, at the Kemptown
Substation in Maryland .
Staff argues in support of its Motion that the action by the Maryland Commission renders
incomplete the Application filed in Virginia. This simply is not true. The Application filed in
Virginia remains the same, and in fact has already been found to be complete by this
Commission in its June 12, 2009 Order for Notice and Hearing . That Order stated that the
Commission, "upon consideration of the Application and applicable statutes and rules, finds that
the PATH-VA Application in Case No. PUE-2009-00043 included the information necessary for
the notice required by §§ 56-46 .1 B and 56-265.2 of the Code and that the filing conforms to the
Commission's Rules of Practice and Procedure . . .... The Order and Notice specifically referenced
the following proposed route for the PATH Project: "The PATH Project is a proposed 765 kV
transmission line that would originate at the existing Amos Substation near St. Albans, West
Virginia; cross the Virginia counties of Frederick, Loudoun, and Clarke; and terminate at the
proposed Kemptown Substation near New Market, Maryland ." The plan to construct the PATH
Project in Virginia, as identified in the Application and referenced in the Order and Notice, was
sufficient to support the docketing of the Application and remains the same today as it was then.
Accordingly, the Commission has already found the Application to be complete - and it remains
SO.
In addition, and as discussed above, if the Commission were to grant the relief the
Motion seeks, which is based on the incorrect assumption that the terminus of PATH is not
known, the tremendous effort that has been expended by PATH-VA and all other parties in this
proceeding would be wasted . For example :
PATH-VA has filed an Application accompanied by the detailed testimony and
exhibits of 15 witnesses ;
"
PATH-VA has responded to 28 sets of interrogatories and requests for production
of documents propounded by the Staff and the Respondents ;
"
Specific notice by first class mail has been sent to 774 landowners ;
"
Advertisements have been published pursuant to the Commission's Order for
Notice and Hearing issued on June 12, 2009;
"
Public hearings have been held in the Winchester County and Loudoun County
areas where the PATH Project will traverse and another public hearing is
scheduled in Lovettsville in Loudoun County on November 19, 2009 ;
"
Testimony has now been filed on behalf of more than a dozen Respondents and
Staff testimony is due to be filed on December 1, 2009 ; and
"
The hearing on the merits is scheduled to begin on January 19, 2010 .
In short, this Application is well down the Virginia procedural schedule.
Potomac Edison's decision with regard to a possible re-filing of an application for
approval of the PATH Project in Maryland will be announced in the near future. Irrespective of
whether Potomac Edison re-files with the MD PSC or PATH-Allegheny pursues authorization
for the PATH Project in Maryland before FERC, the application to the MD PSC or FERC most
assuredly will re-confirin the terminus of the PATH Project at the Kemptown Substation.
Accordingly, the Virginia application for the PATH Project should not be dismissed based on the
erroneous assertion of the Staff that there is no known terminus in Maryland, and it is not
necessary or proper to certify the Staff's question to the Commission on the completeness of the
Virginia Application, a matter on which the Commission has already specifically ruled.
WHEREFORE, the Staff s Motion should be denied, and the issue should not be
certified to the Commission .
Respectfully submitted,
PATH ALLEGHENY VIRGINIA
TRANSMISSION CORPORATION
B
Dated: October 26, 2009
Richard D. Gary
Charlotte P. McAfee
Humon & Williams LLP
Riverfrom Plaza, East Tower
951 East Byrd Street
Richmond, VA 23219-4074
(804) 788-8328 ; fax (804) 788-8218
[email protected]
[email protected]
Randall B. Palmer
Jeffrey P. Trout
Allegheny Energy
800 Cabin Hill Drive
Greensburg, PA 15601-1689
724-838-6894
[email protected]
[email protected]
62L
Couns6f'
CERTIFICATE OF SERVICE
I hereby certify that on this 26th day of October, 2009, a true copy of the foregoing
Response was delivered by hand or mailed, first-class, postage prepaid, to the attached service
list, which was copied from the Commission's electronic service list in Case No. PUE-200900043 on October 26, 2009 and to the following :
C. Meade Browder, Jr., Esq.
Office of Attorney General
900 E. Main Street
2nd Floor
Richmond, VA 23219
Wayne N. Smith, Esq.
Frederick Ochsenhirt, Esq.
State Corporation Commission
1300 East Main Street
Tyler Building, 10t" Floor
Richmond, VA 23219
Counsel
SERVICE UsT
CAsE No. PUE-2009-00043
As OF OCTOBER 26~ 2009
Benson, W. T.
Esquire
Piedmont Environmental Council
PO Box 460
Warrenton VA 20188
Burger, John D.
39605 Wenner Rd
Lovettsville VA 20180
Cadden, Kevin F.
1602 Aerie Lane
McLean VA 221 01
Cardamon, Don C.
12226 Harpers Ferry Rd
Purcellville VA 20132
Crowley, James K.
PO Box 344
40267 Quarter Branch Rd
Lovettsville VA 20180
Dellano, Josephine B.
2567 E 21 st St
Brooklyn NY 11235-2918
Dunagin, James
13226 Crest Lane
Purcellville VA 20132
Dunlap, Daniel C .
39593 Sugar Maple Lane
Loveftsville VA 201 80
Fisher-Guarino, Taina G .
11771 Folly Lane
Lovettsville VA 20180
Fognano, Kenneth M .
12915 Shady Lane
Purcellville VA 20132
Ghiorzi Baus, Angela
313 Ross St
Morgantown WV 26501
Ghiorzi, Irene A.
39558 Wenner Rd
Lovettsville VA 20180
Ghiorzi, Theresa
39558 Wenner Rd
Lovettsville VA 201 80
Griffin, J. D.
29 N Braddock St
PO Box 444
Winchester VA 22604
Hall, Patricia A.
39540 Quarter Branch Rd
Lovettsville VA 20180
Hodgson, Gordon M.
11820 Berlin Turnpike
Lovettsville VA 201 80
Hoffman, James S.
39883 Catoctin View Lane
Lovettsville VA 20180
Hyatt, Franklin J.
39687 Wenner Rd
Lovettsville VA 20180
Johnson, Lauren
190 Hannah Court
Winchester VA 22603
Kershner, Robert J.
11688 Purcell Rd
Loveftsville VA 20180
Lawson,Keith
11760 Berlin Tpk
Lovettsville VA 20180
MacHorton, J . G.
12910 Crest Lane
Purcellville VA 20132
Marmet, Robert G.
Esquire
Piedmont Environmental Council
45 Horner St
PC Box 460 Warrenton VA 20188
Matarazzo, William
39625 Sugar Maple Lane
Lovettsville VA 20180
Meiser, Hala A.
8700 Lothbury Court
Fairfax VA 22031
Mohler, Nicholas L.
11 479 Potomac Heights Lane
Lovettsville VA 201 80
Murphy, Timothy
12031 Morningstar Place
Lovettsville VA 20180
Palmer, Randall B.
Esquire
Allegheny Energy
800 Cabin Hill Drive
Greensburg PA 15601-1689
Randles, Kenneth
39998 Catoctin View Lane
Loveltsville VA 201 80
Rittner, Dawn
12001 Morningstar PI
Lovettsville VA 20180
Roberts, John R.
County Attorney
County of Loudoun
1 Harrison St., SE/5th Fl.
Leesburg VA 20175-3102
Rosenthal, Dawn L.
39763 Rivers Edge Lane
Lovettsville VA 20180
Silverman, Deanna
12011 Morningstar Place
Lovettsville VA 20180
Trout, Jeffrey P.
Esquire
Allegheny Power
800 Cabin Hill Dr
Greensburg PA 15601
Ulmer, Tylee M .
37964 Long Lane
Lovettsville VA 20180
Vanderhye, Robert A.
801 Ridge Dr
McLean VA 22101-1625
Wallington, Mary L.
11583 Scott Morgan Lane
Lovettsville VA 20180-1868
Zwicker, David
12220 Harpers Fe" Rd
Purceliville VA 20132
STATE CORPORATION COMMISSION
COMMONWEALTH OF VIRGINIA
APPLICATION OF
PATH ALLEGHENY VIRGINIA
TRANSMISSION CORPORATION
Case No. PUE-2009-00043
For certificates of public convenience
and necessity to construct facilities :
765 kV Transmission Line through
Loudoun, Frederick, and Clarke Counties
AFFEDAVrF
1, Lawrence A. Hozempa, the undersigned afflant, do hereby make the following
statements based on personal knowledge, and under oath on behalf of The Potomac Edison
Company, PATH Allegheny Virginia Transmission Corporation CPATH-VA"), PATH
Allegheny Transmission Company, LLC and PATH West Virginia Transmission Company,
LLC:
I.
I am over 18 years of age and am I am employed by Allegheny Energy Service
Corporation as a Consulting Engineer in the Transmission Planning Department assigned to
perform certain tasks for, among other affiliates, PATH-VA and Allegheny Power.
2.
On May 19, 2009, PATH-VA filed an application with the State Corporation
Commission of Virginia for certification of proposed 765 kV electric transmission facilities (the
"PATH Projeef), which was docketed as Case No. PUE-2009-00043 . The Application included
my prefiled direct testimony in support of the need for the PATH Project.
3.
On October 19, 2009, the Staff of the State Corporation Commission filed a
Motion to dismiss PATH Allegheny Virginia Transmission Corporation's C'PATH-VA~')
application for certification of electric transmission facilities, docketed as Case No. PUF,200900043. The Motion asserted that the Application should be dismissed as incomplete because of
the status of the Maryland PATH Project proceeding. Staff specifically stated that "there now
exists such a level of uncertainty as to the termination point of the PATH Project that the Staff
cannot discharge its duty to analyze the application and advise the Commission on whether the
project should be approved and, if approved, where it should be routed."
4.
The current status of the application before the Maryland Commission does not
change the contents of the PATH Application before the Virginia State Corporation Commission
or the pre-filed testimony in support of that Application. The plan is to continue to move
forward with the route detailed in that Application and in the supporting testimony. The
terminus of the PATH Project is still the proposed Kemptown Substation near New Market,
Maryland, as set forth in the Application PATH-VA filed with this Commission. There has been
no change to the terminus and therefore there is no uncertainty as to the termination point.
[Continued on the next page.]
Further, the afflant sayeth not
STATE OF WEST VIRGENTIA
COUNTY OF,-,~&,~o
I do hereby certify that on this db' day of &4he 2009, Lawrence A. Hozempa
personally appeared before the unders~g~n notary public and made oath to the foregoing .
Notary
My commission expires :
2, Alq
ORDER NO. 82892
IN THE MATTER OF THE APPLICATION OF THE
POTOMAC EDISON COMPANY ON BEHALF OF
PATH
ALLEGHENY
TRANSMISSION
COMPANY, LLC FOR A CERTIFICATE OF
PUBLIC CONVENIENCE AND NECESSITY TO
CONSTRUCT THE MARYLAND SEGMENTS OF
* 765 kV ELECTRIC TRANSMISSION LINE AND
* SUBSTATION IN FREDERICK COUNTY,
MARYLAND
BEFORE THE
PUBLIC SERVICE COMMISSION
OF MARYLAND
CASE NO. 9198
In this Order, the Public Service Commission ("Commission")' finds that the
Potomac Edison Company d1b/a Allegheny Power ("Potomac Edison" or the "Company")
may not seek authorization to construct a transmission line on behalf of its non-electriccompany affiliate, PATH Allegheny Transmission Company, LLC ("PATH") .2
As set
forth below, we find first that § 7-207(b)(3) of the Public Utility Companies ("PUC")
Article authorizes us to issue a Certificate of Public Convenience and Necessity ("CPCN")
only to an "electric company,"3 a status PATH undeniably lacks, and that the law does not
allow us to ignore or circumvent this requirement by granting a CPCN to Potomac Edison
"on behalf of' PATH when Potomac Edison will neither construct nor operate the
proposed line. Second, as a result of this holding, we find that no application to construct
the proposed transmission line has properly been filed with the Commission, and thus that
any time periods pertaining to possible federal siting authority have not yet begun to run
and will not begin to run until a proper electric company has filed a complete application
' Commissioner Brenner dissents from Section II of this Order and writes separately on the issues covered
there. He joins the remainder of this Order.
2 There are a number of different entities that use one variant or another of the "PATH" name. Unless
otherwise noted, the abbreviation 'TATH" refers to all or any one of them, as appropriate.
' See PUC § 1-101(h) .
with the Comniission.
Third, because the issue would have been presented had this
application been properly filed, we hold that our authority under § 7-207(b)(3) of the PUC
Article encompasses all components of a project integral to the proposed transmission line,
including, where appropriate, substations . We make no decisions here about whether the
substation proposed in this application would or would not qualify as integral to the
proposed transmission line for these purposes,
Based on these holdings, we need not and do not structure or schedule any further
proceedings to consider this application. We ask the Company to inform the Commission
within 30 days of its intention to submit a new, conforming application and, if possible, the
anticipated timeframe of any such filing .
1.
Background
On May 19, 2009, Potomac Edison filed a Motion for Expedited Decision that the
Company may file for a Certificate of Public Convenience and Necessity (" CPCN ") on
behalf of PATHAIIegheny Transmission Company, LLC and an Applicationfor a CPCN to
construct the Maryland segments of a 765-kV transmission line and a substation in
Frederick County, Maryland ("Motion") at the same time it submitted an Application of
The Potomac Edison Company on Behalf of Path Allegheny Transmission Company, LLC
for a Certificate of Public Convenience and Necessity to Construct the Maryland Segments
of a 765 KV Electric Transmission Line and a Substation In Frederick County, Maryland
("Application") . The Commission considered the Motion, and specifically whether the
Application could be filed in the form PATH lodged it, at the Commission's
Administrative Meeting on June 3, 2009.
After hearing from the Commission's Technical Staff ("Staff"), the Company, the
Office of People's Counsel ("OPC"), the Board of County Commissioners of Frederick
County, Maryland ("County"), the Sierra Club, the Sugarloaf Conservancy, Inc., as well as
from a number of citizens from Frederick County who opposed the proposed substation,
the Commission found that several preliminary matters must be briefed, argued and
resolved before the Commission could set the Application for hearing :
1) Does § 7-207(b)(3) of the Public Utility Companies
Article, Annotated Code of Maryland ("PUC") authorize
the Commission to issue a CPCN for a transmission line
designed to carry a voltage in excess of 69,000 volts to
any entity other than an electric company? Does the
Company, a Maryland electric company, have standing
to seek a CPCN for a line that would be constructed and
owned by its affiliate, PATH Allegheny Transmission
Company, LLC, which is not a Maryland electric
company? If the Commission were to issue the requested
CPCN to the Company, under what authority could the
Company assign or otherwise delegate the construction
or ownership of any approved transmission line to an
affiliate?
2) Must the Company obtain the County's approval
regarding the siting of the substation, or has the PUC preempted the County's zoning authority? If the County is
not pre-empted, may the Application be considered by
the Commission concurrently with the County zoning
process?
3) What, if any, sources of federal siting authority might
apply to any aspect of the proposed project? For each
source of federal siting authority identified : (a) is there a
time period that must elapse before that authority could
be invoked; (b) if so, has that time period begun to run;
and (c) if so, when did the time period begin to run?4
4) Should the Commission set an intervention deadline
immediately and allow discovery to start prior to
' Although the Commission directed the parties to address this issue, ultimately, individual parties will decide
what federal avenues they will attempt to pursue and it would be up to federal authorities to determine what,
if any, jurisdiction they have in this matter .
deciding the preliminary matters? What core discovery
could be started prior to a ruling on these preliminary
matters?
The Commission set a briefing schedule and scheduled oral arguments for July 3 1,
2009. Pursuant to that schedule, Staff, OPC, the Company, several organizations and
numerous citizens submitted both Initial Briefs and Reply Briefs . The County submitted
Initial Comments on Issues 2 and 3 and declined to comment on Issues I and 4. In
submitting its comments, the County asserted that it was not submitting to the jurisdiction
of the Commission to determine the issues. After reviewing and considering the briefs of
all parties and the testimony and comments received at the July 31st hearing, the
Commission finds that the Application cannot be accepted as filed.
11.
§ 7-207(b)(3) of the PUC Article Does Not Authorize The Commission
To Grant A CPCN To Potomac Edison "On Behalf Of" PATH
The first, and threshold, question before us is whether the PUC Article authorizes
us to issue a CPCN for the proposed transmission line to Potomac Edison "on behalf of'
PATH. Potomac Edison concedes, to its credit, that the proposed line would be built,
owned and operated not by Potomac Edison itself, but by a family of entities created for
those purposes. 5 Potomac Edison acknowledges as well that the PATH companies do not
qualify as an "electric company" under the PUC Article6 and that the Maryland entity,
PATH Allegheny, "couldn't come here on its own to seek a CPCN to build a transmission
line ,,7 In light of these undisputed facts, Potomac Edison submitted the Application "on
See Initial Brief of Potomac Edison at 4-5 .
See Transcript of Hearing, July 31, 2009 ("Transcript"), at 12 ("CHAIRMAN NAZARIAN : But [PATH
Allegheny] is not an electric company, right? MS. HERMAN : PATH Allegheny is not an electric
company ."). An electric company is defined as "a person who physically transmits or distributes electricity
in the State to a retail electric customer ." PUC § 1-101(h).
' See Transcript at 12 ("CHAIRMAN NAZARIAN: PATH Allegheny couldn't come here on its own to seek
a CPCN to build a transmission line, correct? MS. HERMAN : Correct.").
behalf of' the PATH entities and asks us to issue (after the appropriate review) a CPCN in
that fashion . Potomac Edison argues that we can grant this Application because neither
§ 7-207(b)(3) of the PUC Article nor the Commission's regulations expressly forbids it.
When pressed, Potomac Edison also falls back on § 2-113 of the PUC Article, the section
defining the Commission's general supervisory and regulatory authority over public
service companies, and argues that the operational and financial benefits from the PATH
entity structure justify a "liberal" construction of our statutory authority.
In this context, however, the law does not permit us the sort of flexibility Potomac
Edison seeks . Indeed, § 7-207(b)(3) of the PUC Article leaves no interstitial void for § 2113 of the PUC Article to fill: it limits the Commission's authority to issue CPCNs for
transmission lines designed to carry a voltage in excess of 69,000 volts to "electric
company[ies]":
Unless a certificate of public convenience and necessity for
the construction is first obtained from the Commission, an
electric company may not begin construction of an
overhead transmission line that is designed to carry a voltage
in excess of 69,000 volts or exercise a right of condemnation
with the construction. 8
The term "electric company" is defined in the PUC Article and, unlike the Panda case on
which Potomac Edison relies,9 there is no factual dispute here about whether PATH could
satisfy that definition . To the contrary, we know here that the family of entities created to
construct, own and operate the proposed line cannot qualify as an electric company. The
only way to read this sentence to allow a non-electric company such as PATH to construct
a 69kV or greater transmission line is to ignore the term or to give it a meaning different
than the meaning the General Assembly gave it. Moreover, the General Assembly knew
' PUC 7-207(b)(3) (emphasis added) .
9 See Re Potomac Elec. Power Co., 83 Md. P.S.C. 191 (1992) .
precisely bow to modify our authority to allow non-electric companies to build things - in
1999, as part of legislation restructuring Maryland's electricity markets, the General
Assembly amended the companion provision defining our authority to issue CPCNs for
generating stations to allow a "person," rather than just an electric company, to construct
one .10 So although we agree with Commissioner Brenner that we should interpret and
apply the PUC Article flexibly and with the best interests of the ratepayers in mind, that
principle does not permit us to expand the scope of our authority if we disagree with the
lines the legislature has drawn . It may be that the structure of PATH entities would allow
them to construct and operate the line more efficiently and cost-effectively, but that
possibility does not permit us to ignore or waive the statutory limitations on our authority .
For these reasons, we find that § 7-207(b)(3) of the PUC Article does not authorize
the Commission to issue a CPCN to "Potomac Edison on behalf of PATIL" and that the
Application Potomac Edison submitted on May 19, 2009 is neither complete nor properly
filed. And as such, any time periods that must expire before PATH might seek authority to
construct the proposed project under federal law have not yet begun to run." Potomac
Edison could, of course, file an application for a CPCN on its own behalf, and that filing
would trigger the Commission's CPCN review process, and we ask the Company to advise
the Commission within thirty days of its intention to do so and, if so, an estimate of when
it plans to file a proper application. We note as well that our decision that PATH is not
eligible to construct a transmission line in Maryland should not be read to foreshadow any
* See Chapters 3 and 4, Acts 1999, amending PUC § 7-207(b)(1)(i) .
* See, e.g., Section 216 of the Energy Policy Act of 2005, codified at 16 U.S.C. §824p which grants the
Federal Energy Regulatory Agency ("FERC") the authority to issue a construction permit for an applicant's
transmission line if the Commission "withheld approval for more than I year after the filing of an application
seeking approval pursuant to applicable law . . . ... 16 U.S.C.§824p(b)(1)(C) (i)
views on the merits of the proposed transmission line project.
111.
The Commission's CPCN Authority Encorwasses Electric Substations
That Are Integral To Transmission Lines Designed To
Carry a Voltage In Excess of 69,000 Volts
Notwithstanding our holding above, we will address the relative scope of our
CPCN authority vis-A-vis Frederick County's zoning authority for two reasons, First, the
question of whether our CPCN authority encompasses the siting, specifications and
conditions of the proposed Kemptown 12 substation is fully briefed and argued. Had we
decided that Potomac Edison could seek a CPCN on behalf of PATH, as Commissioner
Brenner would, we would need to decide the question and would do so on the very same
record . Second, because Potomac Edison and the PATH entities are seeking approval to
construct portions of the proposed transmission line in other states simultaneously, we
expect that Potomac Edison will seek authorization to build the proposed transmission line
project in the near future, at which point the identical issue would surface again. As a
general rule, the Commission does not and will not issue advisory opinions, and this Order
should not be read as setting a precedent that the Commission will decide on an advisory
basis issues not presented in a live case or controversy . But because these precise issues
are likely to come before us in the context of this same project, 13 we offer the following
guidance for the parties for the near-future life of this proposed project.
Although it is dramatically more complicated in engineering terms, the Maryland
portion of the proposed project consists of two primary components : a 765-kV
" We recognize that the proposed substation, which has been labeled "Kemptown" in the regional
transmission planning process, is physically located in Mount Airy, Maryland, not the town of Kemptown
itself For the sake of consistency between the application and this decision, we will refer to the substation
by its planning name. As the Company proceeds, however, it should be mindful of the potential for public
confusion that this nomenclature apparently has created and should tailor its public outreach accordingly .
13 Cf. City of Los Angeles v. Lyons, 461 U.S. 95 (1983) (exception to mootness doctrine applies where claims
are capable of repetition yet evading review).
transmission line and, at the terminus of the line, a new substation . Nobody disputes the
Cormi-tission's authority (assuming a proper application) to consider and issue a CPCN for
the transmission line portion of the project . With regard to the substation portion of the
project, however, Frederick County argues that the Maryland General Assembly has
directly delegated authority to site or locate electricity substations to local governments,
and thus that the proposed Keniptown substation cannot be sited or constructed as
proposed without the County's approval. The Company and Staff argued, to the contrary,
that the proposed substation is integral to the transmission lines and, therefore, the
transmission line CPCN process supersedes the County's independent siting authority .
We hold that the Commission's overarching authority to site transmission lines
includes the location, specifications and conditions of substations that are integral to a
proposed transmission line project that requires a CPCN. A substation is integral if, and to
the extent, we find that the construction of a proposed transmission line designed to a
voltage in excess of 69,000 volts cannot be constructed without it. We offer no opinion on
whether the proposed Kemptown substation is integral to the proposed transmission line that determination must be made from a factual record that had not yet been developed in
the life of this case, and will be for the Hearing Examiner or the Commission to make if
Potomac Edison submits a new and proper application . In the course of considering
whether to issue a CPCN that encompasses this proposed line and substation, or any other
project, we would have the authority - as we do with respect to the lines themselves - to
determine the appropriate location, specifications and conditions of the project.
And
although our CPCN authority would, in this regard, supersede what normally would be a
local land use decision, we will weigh heavily the expertise and recommendations of local
authorities such as Frederick County in our review and analysis.
This is not entirely an issue of first impression. In Howard County Co. v. Potomac
Electric Power Co., 319 Md. 511 (1990), the Maryland Court of Appeals held that the
Commission's authority to site transmission lines preempted county zoning ordinances .
Although the Court did not address the specific issue of local zoning authority over a
substation, the principles underlying that decision counsel in favor of construing the
Commission's substantive authority over transmission line projects to encompass all
integral elements of those projects, including substations that are, as a factual matter,
functionally necessary for the construction and operation of the line at issue.
In Howard County, two counties attempted to apply their zoning ordinances to one
of the last links in the 500 kV transmission loop around Washington, DC and Baltimore.
One county issued a special exemption that would expire in three years for its 3 .7 mile
section of the line, but the second county denied a request for a special exemption to allow
construction of its 6.8 mile section.
The Court began its analysis from the fact that the Commission, as the state-wide
regulator of electricity, has "final authority" over the siting of transmission lines:
In this case it is clear that, in the field of public utility
service, the General Assembly intended to grant broad
powers to the PSC to execute its principal duty of assuring
adequate electrical service statewide . While §§ [1-101] and
[2-113] of [the Public Utility Companies Article] outline the
general scope of authority vested in the PSC, § [7-207] states
with particularity that the PSC shall have final authority over
the granting of construction permits for overhead
transmission lines in excess of 69,000 volts. 14
14 Id. at 524.
Against that broader regulatory backdrop, the Court analyzed the tension, and possible
conflict, between the Commission's broader regulatory mission and local zoning decisions,
and concluded that the Commission's CPCN authority preempts county zoning authority
for transmission lines :
As in County Council v. Montgomery Ass'n, [274 Md. 52,
333 A.2d 596 (1975)], the imposition of conflicting
conditions associated with the construction of high-voltage
overhead transmission lines could generate like
complications if counties were permitted to require utilities
to obtain special exception status under local ordinances.
Not only could counties impose special conditions upon
utilities seeking to construct transiiiission lines, but an
individual county could effectively thwart the line's
construction even after the utility had been granted a
certificate by the PSC. And as this case demonstrates, the
county regulations require consideration of some of the same
factors which are implicated during the PSC proceedings for
a certificate . For example, both counties in the present cases
require a showing of a "public necessity" or "need" for the
construction, as does § [7-207] ; both counties require that the
local authorities consider potential impacts on esthetic
qualities, either architectural or historic, as does § [7-207) ;
both require minimization of impacts on the environment or
character of the surrounding areas, as do §§ [7-207] and [2113]; and Montgomery County requires a consideration of
aviation hazards, as does § [7-207] . Both counties require
assessment of other more specific considerations toward
granting a special exception . County regulations may
legitimately serve to protect strictly local interests .
However, a local governing body that has the power to
altogether exclude from its jurisdiction a transmission line
which provides electrical service statewide is essentially
regulating the public utility in a manner that may be
antithetical to the interests of the rest of the state. The
legislature could not possibly have intended this result. The
purpose of (the Public Utility Companies Article], and § [72071 in particular, is to control the transmission of electric
power . That the legislature delegated this authority to a state
agency with statewide powers, perspective, and expertise is
indicative of the intent that electric utility companies respond
to a centralized authority in the transmission of high-voltage
electricity . The legislature, however, did not intend that
10
local interests be ignored by the PSC, as evidenced by the
right of counties to actively participate in the certification
proceedings. Under §§ [7-207] and [7-2081 the counties may
present recommendations during the PSC public hearings,
thus eliminating the potential for dual application procedures
which may result in irreconcilably conflicting results, such as
those presented in this case.
Even so, the PSC is entitled to recognize the broader public
interest of providing safe and reliable electrical service to
larger areas . The counties' argument that the zoning
regulations govern disparate aspects of the utility is not well
founded because the regulations specify some of the same
considerations included in § [7-207] ; more significantly, the
local laws grant to county government the power to negate
prior PSC decisions as shown in this case. When such an
exercise of local authority obstructs the fundamental purpose
of [the Public Utility Companies Article], we must conclude
that these local powers were not intended to exist
concurrently with those of the pSC.15
Unlike our decision in Section 11, the precise contours of our authority over a
particular project are not defined in the statute. Put another way, there is a fair question
about where, in the context of a proposed transmission line project, the "transmission line"
begins and ends . The answer to that question is a factual one and could vary from project
to project, depending on the size and scope of the proposed line, the way in which it
interconnects with the broader electricity grid, and other issues of construction and
engineering that will differ with each proposal .
As a matter of principle, however, we are persuaded that the General Assembly has
directed us to decide whether and bow to site a transmission line . To the extent a local
authority could, in effect, veto the Commission's CPCN decision by denying approval of a
necessary substation (or other component), we hold that our broader regulatory authority
" Id. at 527-28 .
II
over the transmission line supersedes the local land use authority . Our CPCN authority
wins out only with regard to the components of a proposed project that are integral to the
transmission line itself. We need not and do not answer the specific factual question about
whether this proposed substation (or any other component of the proposed PATH line) is
integral to the proposed PATH transmission line - if and when an electric company
submits a new application, we will address that question on an appropriate record . We
expressly do not hold that our CPCN authority supersedes local siting authority for a
electric substations, but only as to substations or other elements integral to proposed
transmission line projects that are subject to our CPCN authority.
As we reconcile these conflicting sources of regulatory authority, we recognize as
well the critical role of local authorities and citizens in the review and analysis of
transmission line projects. Should Potomac Edison file a new application, we encourage
Frederick County to participate in our evening public hearings16 and as a party in the
evidentiary proceedings themselves. 17
And beyond the statutory requirement that we
consider the County's recommendation in deciding the CPCN,18 we recognize that land use
decisions fall within the core expertise and competency of local authorities such as
Frederick County, not this Commission . As such, we will give appropriate - which is to
say, significant - weight to the views and recommendations of local authorities in the
course of deciding whether, where, and on what terms to site the various components of a
PUC § 7-207(d)(2).
PUC § 7-207(e).
'PUC § 7-207(e)(1) .
12
transmission line falling within our authority.
IV. Discover-yAntervention Deadline
The Company, Staff and OPC all have indicated that they support setting an
intervention deadline immediately . The parties further agreed that the Commission should
allow discovery to start prior to deciding the preliminary issue set forth above. Given the
very early stage of the proceedings, they suggested that none of the intervening parties
would have been harmed if the Commission allowed discovery to begin. Having found
that no application is properly on file, however, the Commission will defer any decisions
on discovery and/or intervention deadlines until the Company has an opportunity to
determine and exercise its next course of action . The Cormnission asks the Company to
file a letter within 30 days from the date of this Order, informing the Commission whether
it plans to file on its own behalf, and if so, when .
IT IS THEREFORE, this day of 9h September, in the year Two Thousand and
Nine, by the Public Service Commission of Maryland,
ORDERED : (1) That the Motion for Expedited Decision that the Company may
file a Certificate of Public Convenience and Necessity on behalf of PATH Allegheny
Transmission, LLC is denied ;
(2) That, for the reasons set forth above, the Application for a CPCN
to construct the Maryland segments of a 765-kV transmission line and a substation in
Frederick County, Maryland has not properly been filed, and thus cannot be considered ;
and; and
(3) That the Potomac Edison Company shall notify the Commission
within 30 days whether it intends to re-file an appropriate application and, if so, when it
intends to submit the application.
/s/ Douglas R. A Nazarian
/s/ Harold D. Williams
/s/ Susanne Brogran
/s/ Lawrence Brenner
Commissioners
IN THE MATTER OF THE APPLICATION
OF THE POTOMAC EDISON COMPANY
ON BEHALF OF PATH ALLEGHENY
TRANSMISSION COMPANY, LLC FOR
A CERTIFICATE OF PUBLIC
CONVENIENCE AND NECESSITY TO
CONSTRUCT THE MARYLAND
SEGMENTS OF A 765 KV ELECTRIC
TRANSMISSION LINE AND A
SUBSTATION IN FREDERICK
COUNTY,MARYLAND
BEFORE THE PUBLIC
SERVICE COMMISSION
OF MARYLAND
CASE NO . 9199
Commissioner Brenner, Dissenting in Part:
In this case, we are called upon to interpret Public Utility Companies Article
("PUC Article") § 7-207(b)(3) to determine whether The Potomac Edison Company
("Potomac Edison"), an "electric company" as defined by PUC Article I - 10 1 (h), may
apply for a Certificate of Public Convenience and Necessity ("CPCN") for transmission
facilities on behalf of its affiliate, PATH Allegheny Transmission Company, LLC
("PATH-Allegheny") . Because I believe our statutory responsibilities allow us to accept
CPCN applications in the form most beneficial to the public and because the application
currently before us is consistent with the language and intent of our statute, I would
permit Potomac Edison to request a CPCN on behalf of PATH-Allegheny, and therefore I
respectfully dissent solely from Section 11 of the majority opinion.'
' The merits, or lack thereof, of the proposed transmission facilities are not relevant to this initial
procedural phase, and I have not considered the substance of Potomac Edison's application in its present or
any future form.
1.
We Have a Broad Mandate to Interpret Statutory Language in the Manner
Most Consistent with the Interests of Maryland Ratepayers.
Maryland law has granted this Commission broad discretion to interpret our
governing statutes . We are obliged to interpret PUC Article § 7-207(b)(3) in a manner
that is not counter to the interests of Maryland utility customers unless that interpretation
contradicts an explicitly stated legislative intent. 2 The Court of Special Appeals
articulated the significant discretion allotted to regulatory agencies as follows:
fajlthough an administrative interpretation or construction of a state
unemployment compensation statute is clearly not binding on the courts,
where a state agency charged with administration of the state's
unemployment compensation statute has construed or interpreted the
statute in a particular way, the courts of the state, in recognition of the
agency's expertise in the field, will give such interpretation great
deference unless it is in conflict with legislative intent or relevant
decisional law, or is clearly erroneous, arbitrary, or unreasonable . 3
Additionally, our enabling legislation requires us to exercise this broad discretion to
"promote adequate, economical, and efficient delivery of utility services in the State
without unjust discrimination ."4 To this end, the General Assembly provided us with
numerous explicit powers as well as all "implied and incidental powers needed or proper
to carry out [our] functions ."5
Therefore, in the absence of an explicit legislative statement to the contrary, I
believe we must interpret statutory language in the manner most consistent with the best
interests of Maryland ratepayers. Even more urgently, we must avoid an interpretation
' Aviation Admin. v. Noland, 386 Md. 556,572 (2005) ("An administrative agency's interpretation and
application of the statute which the agency administers should ordinarily be given considerable weight by
reviewing courts .")
3 Westinghouse Elec. Corp. v. Callahan, 105 Md. App . 25, 35 (1995) (quoting 76 Am.Jur.2d
Unemployment Compensation § 17 at 761 (1992) . See also, Eddie Adamson v. Correctional Med. Sens.,
Inc., 359 Md. 238, 265 (2000) ("While it is true that an agency's view of the law does not bind this Court's
interpretation of the statutory scheme, we have noted before that an agency's expertise in its field is
Farticularly persuasive.")
PUC § 2-113(a) .
PUC § 2-112(b) .
that harms Maryland ratepayers with no countervailing benefit to any constituency. As
discussed below, I believe Potomac Edison has established that accepting its application
to review for a possible CPCN on behalf of its affiliate will have no negative effect upon
the rates paid by the public and may result in direct savings to ratepayers if the proposed
transmission facilities are ultimately approved .
2.
Allowing Potomac Edison to Apply for a CPCN on Behalf of PATHAllegheny Furthers the Public Interest Consistent with Our Broad Mandate.
Potomac Edison's application was filed on May 19, 2009, and included the
following pre-filed written testimony of Mr. Mark Joensen, the Director of Finance for
the holder of Allegheny Energy, Inc.'s ("Allegheny Energy") interests in PATHAllegheny :
. . . the [PATH LLC] structure allows for separate equity interests
through the subsidiaries (AET PATH and AEPTHQ created by
Allegheny and AEP and also allows PATH-WV and PATHAllegheny to seek more advantageous debt financing on a project
finance basis for their respective interests in the PATH project .
We expect to achieve more favorable terms by issuing debt at the
level of PATH-WV and PATH-Allegheny, since the exposure of
each will be limited to the specific transmission assets and
operations of that entity. Finally, the creation of PATH LLC and
its subsidiaries permits Allegheny and AEP to efficiently allocate
the financial costs and economic benefits of the PATH 6Project in
accordance with their underlying business agreements .
The PATH Project is a j oint venture between American Electric Power Company,
Inc. and Allegheny Energy to construct approximately 276 miles of transmission
line through Maryland, Virginia and West Virginia . To this purpose, PATH
consists in part of two operating companies - PATH-Allegheny and PATH West
Virginia Transmission Company LLC. These two companies were created to
finance, construct, own, operate and maintain the Project.
' Direct Testimony of Mark Joensen at 10.
Additionally, Mr. Joensen stated that Allegheny Energy created the PATH-LLC
corporate structure to, inter alia, "allow for business services to be provided efficiently to
PATH by Allegheny, AEP, and third-party vendors",7 and "provide for the efficient
ownership, oversight and management of the PATH Project by the joint owners, with a
division of the investment in the project consistent with Allegheny and AEP's business
agreement."8
Currently, no party disputes these proffered benefits to the Maryland public. If
the evidentiary hearing on the merits reveals these claims to be specious, this
Commission is free to issue the CPCN exclusively to Potomac Edison, Conversely, if
discovery reveals that the administration of the CPCN through PATH-Allegheny will
result in tangible benefits to Maryland consumers, I believe our statutory mandate
militates that we issue the CPCN in the manner currently requested .
The narrow interpretation urged by the majority, while consistent with the
language of PUC Article § 7-207(b)(3), is not mandatory in light of the wide discretion
we have to condition the issuance of any CPCN. If Potomac Edison had applied for a
CPCN on its own behalf, and the evidentiary hearing on the merits revealed that the
creation of a single-purpose affiliate like PATH-Allegheny would significantly benefit
Maryland ratepayers, our authority pursuant to PUC Article §§ 2-112, 2-113 and 7-207
would permit us to grant the application conditioned upon the establishment of the
corporate structure presented to us currently .
In summary, I believe 1) our broad discretion, 2) our mandate to interpret our
statutory language in a manner that would inure to the greatest benefit of Maryland
Id. at 6.
Id. at 7.
ratepayers, and 3) the likely savings that would result from constructing, operating and
owning the transmission lines through an affiliate of Potomac Edison, require us to
interpret PUC Article § 7-207(b)(3) broadly in the absence of an explicit prohibition. As
discussed below, I find no prohibition of the broad interpretation urged by Potomac
Edison and our Staff.
3.
PUC Section 7-207 Does Not Prohibit an Electric Company from Applying
for a CPCN on Behalf of an Affiliate.
PUC Article § 7-207(b)(3) states that
(u]nless a certificate of public convenience and necessity for the
construction is first obtained from the Commission, an electric
company may not begin construction of an overhead transmission
line that is designed to carry a voltage in excess of 69,000 volts9 or
exercise a right of condemnation with the construction.
PUC Article § 1-101(h)(1) defines an electric company as "a person who physically
transmits or distributes electricity in the State to a retail electric customer." Potomac
Edison clearly falls within this statutory definition. I find nothing in § 7-207(b)(3) or
elsewhere in Maryland law that expressly prohibits Potomac Edison from requesting a
CPCN on behalf of an affiliate . Although this provision prohibits an electric company
from constructing an overhead transmission line without first obtaining a CPCN, it does
not dictate how the lines will be constructed, operated or owned, thereby leaving to our
discretion the most beneficial means of accomplishing this .
This broad interpretation will have little practical effect on the administration of
the CPCN because Potomac Edison and PATH-Allegheny are both wholly-owned
subsidiaries of Allegheny Energy . Allegheny Energy will therefore have complete
control over the operation of the CPCN-covered activities regardless of which entity is
9 It is undisputed that the transmission line at issue would exceed this statutory threshold.
the official recipient of the certificate. Imposing potentially increased debt financing
costs without changing the actual administration of the CPCN would be window dressing
that furthers no legislative purpose . Although we could construe § 7-207(b)(3) narrowly,
we are not required to do so, and I can discem no benefit from doing so. To the contrary,
as noted above, narrowly defining "electric company" may underntine our statutory
mandate to ensure that this transmission line, if it is approved and built, is in the best
interest of Maryland ratepayers.
Additionally, as Potomac Edison has alluded to on a number of occasions in its
briefs, section 215 of the Federal Power Act of 2005 authorizes FERC to "issue one or
more permits for the construction or modification of electric transmission facilities in a
national interest electric transmission corridor designated by the Secretary" whenever it
finds that a transmitting utility doesn't qualify for a State permit because it does not serve
end-use customers in the state. 10 Therefore, if we reject Potomac Edison's application,
PATH-Allegheny might re-apply directly at the federal level. Unlike another basis for
preemptive federal "backstop" siting authority, there is no minimum time period that
must ran before PATH-Allegheny may do so. This is at least a possible outcome, and
neither the majority nor any party to this proceeding contends that the public interest
would be better served if this Commission loses its siting and construction authority over
this line. "
'0 16 U.S .C . § 824p (b) .
" I agree with Section III of the majority's opinion that, if the Kemptown substation is found after hearing
to be integral to the transmission lines, our CPCN authority pre-empts the authority of the local government
(Frederick County in this case), but we and the County may lose jurisdiction over the substation if FERC
takes over the permit process .
The unnecessarily cramped reading of this statute urged by only one Intervenor
(and supported somewhat reluctantly by Office of the People's Counsel ("OPC")), 2 does
not benefit any party to these proceedings, including the Sierra Club, who will almost
certainly oppose this CPCN just as strongly if Potomac Edison re-files its application on
its own behalf. Rather than potentially inflict higher electric bills on Maryland
consumers and potentiaUy abdicate our responsibility to consider whether to permit the
PATH project solely to maintain the purity of the definition of "electric company", I
would adopt the position set forth in Commission Staff s brief and interpret "electric
company" to also include an electric company filing on behalf of an affiliate wholly
owned by the same parent. 13
This would not be the first time we've defined an "electric company" broadly to
further an underlying public interest . In Re Potomac Elec. Power Co., 83 Md. PSC 19 1,
195 (1992) ("Pepco" case), we exercised our broad authority to conclude that a nonutility was a "jurisdictional electric company" and therefore subject to the CPCN
provisions of PUC law. We did so because of the public interest involved and the
plausibility of the interpretation necessary to achieve that public interest . I see no reason
to unnecessarily limit our interpretation in the present case.
PATH-Allegheny has voluntarily submitted to the jurisdiction of this Commission
for the purpose of administering the requested CPCN 14 , and no party disputes that we
already possess subject matter jurisdiction over the overhead lines anyway. Contrary to
" The strongest language OPC offers against the current application is that "OPC recognizes and
understands the arguments of the Company, PATH-Allegheny and Allegheny (Energy] regarding the
potential benefits of the corporate structure of PATH LLC as well as the benefits to residential ratepayers
of the Commission's oversight and jurisdiction regarding the Application and, if the CPCN is granted, the
PATH Project . OPC continues, therefore, to be willing to consider other alternatives or mechanisms that
will satisfactorily resolve the legal issues raised hereinabove ." OPC Initial Brief at 3.
13 Staff Initial Brief at 4.
" Affidavit of James R. Haney, Appendix B to Potomac Electric's Application, at 3.
the arguments offered by the Sierra Club, I do not see this as an impermissible extension
of our subject matter jurisdiction . As discussed above, I believe we should adopt a broad
interpretation of "electric company" to ensure that we can evaluate the most publicly
beneficial manner of constructing this transmission line . By requiring the affiliates of the
electric company or the transferee of the CPCN (see infra) to submit to our jurisdiction
on matters related to the subject of the CPCN, as PATH-Allegheny has here, we can allay
any concern that a broad definition of "electric company" or a broad interpretation of
Potomac Edison's right to transfer its CPCN would remove the administration of a CPCN
from our regulatory oversight. Requiring such a submission is no different than any other
condition we might attach to the granting of a CPCN to protect the public interest, 15
especially when we already possess subject-matter jurisdiction over the proposed line.
4.
The Public Utility Companies Article Does Not Prohibit Potomac Edison
from Transferring Its CPCN to Its Affiliate.
In their Briefs, both Sierra Club and OPC opine that this Commission should not
permit Potomac Edison to transfer its CPCN to PATH-Allegheny because doing so would
allow Potomac Edison to accomplish indirectly what this Commission could not order
directly. However, I find the reverse reasoning to be more persuasive : the PUC Article
does not prohibit Potomac Edison from transferring its CPCN to PATH-Allegheny (with
Commission approval) . Therefore, we should interpret PUC Article § 7-207(b)(3)
broadly because a narrow reading would only force applicants to reach the same result
indirectly . If this Commission feels bound by the precise language contained in PUC
" Md. Code Ann ., Cis . & Jud . Proc. § 6-102(a) states that a judicial body "may exercise personal
jurisdiction as to any cause of action over a person domiciled in, served with process in, organized under
the laws of, or who maintains his principal place of business in the State." However, section 6-102(b)
provides that the former provision "does not limit any other basis of personal jurisdiction of a court of the
State", and Maryland case law holds that an individual or entity may voluntarily submit to the jurisdiction
of Maryland courts . See e.g., Beyond Sys., Inc. v. Secure Medical, Inc., 168 Md. App . 186, 189 (2006)
(noting that lack of personal jurisdiction may be cured by waiver or consent).
Article § 7-207(b)(3), it should feel similarly unbound by the absence of any language
prohibiting or limiting the transfer of CPCNs, subject to Commission approval.
This Commission has previously approved the transfer of CPCNs after
determining the transfer to be in the public interest . For example, Request of Clipper
Windpower, Inc. for Consent to Transfer of the Criterion Wind Energy Project, case No.
8938 (2007), described how an applicant could transfer its interests :
[T]he Applicant shall not transfer ownership or control of the
project so as to divest the Applicant of its ability to control the
construction or operation of the project without the written consent
of the PSC which shall not be unreasonably withheld, conditioned
or delayed . A proposed successor shall be approved if it has
sufficient financial ability (or has such financial ability guaranteed
by a parent company) and experience (or will engage an operator
with experience) to operate the project in compliance with this
CPCN and has satisfied .the PSC that it is otherwise reasonably
capable of complying with the terms and conditions of the
CPCN."
In the absence of any statutory limit upon CPCN transfers, we should not unnecessarily
create one, especially when the transfer furthers the public good. Therefore, I would
permit the transfer of Potomac Edison's CPCN to an affiliate, wholly-owned by the same
corporate parent. We can evaluate whether future proposed transfers of other CPCNs to
affiliates are in the public interest on a case-by-case basis.
A CPCN is no different than any other license. It is simply a "right or permission
granted by some competent authority to carry on a business or to do an act which,
16 Proposed Order of Hearing Examiner, Case No. 8938, App . B at 72 (2003) (adopted by the Commission
in Order 78354). Issues of transfer and/or delegation also have arisen within CPCN proceedings
themselves. See e.g., Notice of Entry into a Letter Agreement Regarding Development and Ownership of
the Electric Power Generation Facility near Rock Springs, Maryland, Case No. 8821 (2001) (assigning and
delegating to initial applicant via letter agreement any and all of second applicant's assets, rights, claims,
duties, obligations, and other interests in the project) ; See also, Supplemental Information Amending
Application for a Certificate of Public Convenience and Necessity, Case No. 8821 (1999) (amending initial
CPCN application to include a second applicant); Letter Requesting that the Commission Take Certain
Ministerial Actions in Connection with [Panda's] Plans to Transfer the Transmission Facilities, case No.
8488 (1996) .
without such license, would be illegal . ,,17 Under Maryland law, the approving
government agency may authorize the transfer of a license unless the text of the licensing
statute explicitly prohibits the transfer . The Maryland General Assembly clearly knows
how to prohibit transfers, but such a prohibition is noticeably absent from PUC Article §
7-207(b)(3) ."
Not only do Commission precedent and Maryland license law support the
transferability of CPCNs, but other states also approve such transfers when in the public
interest .19 Additionally, although Maryland's PUC Article does not directly address the
transferability of CPCN licenses, it does strongly suggest that they may be transferred
subject to Commission approval. PUC Article § 5-202(l) provides that, without prior
authorization of the Commission, a public service company may not assign, lease, or
transfer a franchise or right under a franchise, Section 5-202(2) applies the same
requirement before a public service company may "enter into any agreement or contract
that materially affects a franchise or right under a franchise". The transfer of a CPCN or
a transmission line may come within the scope of these provisions and, when they do, §
17 14 Md. L. Encyc. Licenses § 1 ; See also, Robert T. Foley Co. v. Wash. Suburban Sanitary Comm'n, 283
Md. 140, 153 (1978)(finding that the State agency's approval of developers' applications to connect new
housing units to existing district water and sewer service gave rise to a license); Md. Code Ann ., Bus. Reg.
§ 17-201 (listing 26 types of licenses) .
" See, 51 Am. Jur. 2d Licenses and Permits § 97; Md. Code Ann ., Bus . Reg. § 17-1009 ("A State junk
license is not transferable."); Md. Code Ann ., Envir . § 7-241 ("A low-level nuclear waste facility permit is
not transferable."); Id. § 9-1014(a) ("A water quality laboratory certification is not transferable.")
19 See e.g., California Public Service Commission Website : "When a certificated nondominant carrier
transfers its CPCN to its existing parent, subsidiary, or affiliate, the carrier should send the
Communications Division a letter stating so. The tariff should be updated as if this was only a company
name change."; The Application of Phyllis J. Johnsondlbla Lady Bug Tours, for temporary approval to
allow the Mountain Guides, Inc., db/a Scenic Mountain Tours, to assume operational control of certificate
ofpablic convenience and necessity, PUC No. 46968 (Public Service Commission of Colorado, Decision No.
CO 1 -0057) ; In the Matter of the Transfer of Operating Authority of Touch America Services, Inc., to Touch
America, Inc. (Utah Public Service Commission, Docket No. 0 1 -2310-01 (200 1) (approving transfer of
CPCN from subsidiary to parent)
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5-104 allows us to approve the transfer if it "is consistent with the public convenience
and necessity ." Therefore, if Potomac Edison had applied for a CPCN in its own name
and thereafter sought to transfer that CPCN to PATH-Allegheny pursuant to § 5-202(l)
or (2), we would evaluate whether that transfer was consistent with the public
convenience and necessity pursuant to § 5-104(a). This is precisely what Potomac
Edison is asking us to do initially, and, for the reasons stated above, I believe the public
interest is best served by accepting and conducting a thorough review of the application
in its current form.
In summary, Potomac Edison's right to transfer its CPCN to PATH-Allegheny,
subject to our approval, is supported by 1) this Commission's own precedent, 2)
established Maryland license law, 3) the practice of other states, 4) public policy, and 5)
our own authority pursuant to PUC Article §§ 2-112, 2-113, 5-202 and 5-104. Therefore,
if this Commission prohibits Potomac Edison from applying for a CPCN on behalf of its
affiliate, I believe we should evaluate the public interest in the inevitable transfer to
PATH-Allegheny during the course of the CPCN review process,
5.
Conclusion
Based upon the above, I would review Potomac Edison's application as filed,
reserving our right to either 1) permit or order the transfer of the CPCN to PATHAllegheny, or 2) issue the CPCN exclusively to Potomac Edison based upon which
outcome the evidence demonstrates to be most consistent with the public convenience
and necessity.
/s/ Lawrence Brenner
Commissioner
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