Allegheny Power 2011 Annual Report Download - page 58

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In March 2009, the MDPSC issued an order temporarily suspending the right of all electric and gas utilities in the state to terminate
service to residential customers for non-payment of bills. The MDPSC subsequently issued an order making various rule changes
relating to terminations, payment plans, and customer deposits that make it more difficult for Maryland utilities to collect deposits
or to terminate service for non-payment. The MDPSC is continuing to collect data on payment plan and related issues and has
adopted regulations that expand the summer and winter “severe weather” termination moratoria when temperatures are very high
or very low, from one day, as provided by statute, to three days on each occurrence.
The Maryland legislature passed a bill on April 11, 2011, which requires the MDPSC to promulgate rules by July 1, 2012 that address
service interruptions, downed wire response, customer communication, vegetation management, equipment inspection, and annual
reporting. In crafting the regulations, the legislation directs the MDPSC to consider cost-effectiveness, and provides that the MDPSC
may adopt different standards for different utilities based on such factors as system design and existing infrastructure, geography,
and customer density. Beginning in July 2013, the MDPSC is required to assess each utility's compliance with the new rules, and
may assess penalties of up to $25,000 per day per violation. The MDPSC convened a working group of utilities, regulators, and
other interested stakeholders to address the topics of the proposed rules. A draft of the rules was filed, along with the report of the
working group, on October 27, 2011. Hearings to consider the rules and comments occurred over four days between December 8
and 15, 2011, after which revised rules were sent for legislative review. The proposed rules were published in the Maryland Register
on February 24, 2012, and a deadline of March 26, 2012, was set for the filing of further comments. A further hearing is required
before the rules could become final. Separately, on July 7, 2011, the MDPSC adopted draft rules requiring monitoring and inspections
for contact voltage. The draft rules were published in September, 2011. After a further hearing in October, 2011, the final rules were
re-published and became effective on November 28, 2011.
NEW JERSEY
On September 8, 2011, the Division of Rate Counsel filed a Petition with the NJBPU asserting that it has reason to believe that
JCP&L is earning an unreasonable return on its New Jersey jurisdictional rate base. The Division of Rate Counsel requests that
the NJBPU order JCP&L to file a base rate case petition so that the NJBPU may determine whether JCP&L's current rates for
electric service are just and reasonable. JCP&L filed an answer to the Petition on September 28, 2011, stating, inter alia, that the
Division of Rate Counsel analysis upon which it premises its Petition contains errors and inaccuracies, that JCP&L's achieved return
on equity is currently within a reasonable range, and that there is no reason for the NJBPU to require JCP&L to file a base rate
case at this time. On November 30, 2011, the NJBPU ordered that the matter be assigned to the NJBPU President to act as presiding
officer to set and modify the schedule for this matter as appropriate, decide upon motions, and otherwise control the conduct of
this case, without the need for full Board approval. The matter is pending and a schedule for further proceedings has not yet been
established.
On September 22, 2011, the NJBPU ordered that JCP&L hire a Special Reliability Master, subject to NJBPU approval, to evaluate
JCP&L's design, operating, maintenance and performance standards as they pertain to the Morristown, New Jersey underground
electric distribution system, and make recommendations to JCP&L and the NJBPU on the appropriate courses of action necessary
to ensure adequate reliability and safety in the Morristown underground network. On October 12, 2011, the Special Reliability Master
was selected and on January 31, 2012, the project report was submitted to the Company and NJBPU Staff. On February 10, 2012,
the NJBPU accepted the report and directed the Staff to present recommendations on March 12, 2012, on actions required by
JCP&L to ensure the safe, reliable operation of the Morristown network.
Pursuant to a formal Notice issued by the NJBPU on September 14, 2011, public hearings were held on September 26 and 27,
2011, to solicit public comments regarding the state of preparedness and responsiveness of the local electric distribution companies
prior to, during and after Hurricane Irene. By subsequent Notice issued September 28, 2011, additional hearings were held in
October 2011. Additionally, the NJBPU accepted written comments through October 31, 2011 related to this inquiry. On December
4, 2011, the NJBPU Division of Reliability and Security issued a Request for Qualifications soliciting bid proposals from qualified
consulting firms to provide expertise in the review and evaluation of New Jersey's electric distribution companies' preparation and
restoration to Hurricane Irene and the October 2011 snowstorm. Responsive bids were submitted on January 20, 2012, and the
report of selected bidder is to be submitted to the NJPBU 120 days from the date the contract is awarded. On December 14, 2011,
the NJBPU Staff filed a report of its preliminary findings and recommendations with respect to the electric utility companies' planning
and response to Hurricane Irene and the October 2011 snowstorm. The NJBPU has not indicated what additional action, if any,
may be taken as a result of information obtained through this process.
OHIO
The Ohio Companies operate under an ESP, which expires on May 31, 2014. The material terms of the ESP include: generation
supplied through a CBP commencing June 1, 2011; a load cap of no less than 80%, which also applies to tranches assigned post-
auction; a 6% generation discount to certain low income customers provided by the Ohio Companies through a bilateral wholesale
contract with FES (FES is one of the wholesale suppliers to the Ohio Companies); no increase in base distribution rates through
May 31, 2014; and a new distribution rider, Rider DCR, to recover a return of, and on, capital investments in the delivery system.
The Ohio Companies also agreed not to recover from retail customers certain costs related to transmission cost allocations by PJM
as a result of ATSI's integration into PJM for the longer of the five-year period from June 1, 2011 through May 31, 2015 or when
the amount of costs avoided by customers for certain types of products totals $360 million dependent on the outcome of certain
PJM proceedings, agreed to establish a $12 million fund to assist low income customers over the term of the ESP and agreed to