By Tom Kleckner
A retired elementary school teacher goes to Washington to take on a powerful utility — and wins a $4.2 million refund.
A David and Goliath story?
“It certainly felt that way,” says Martha Peine (pronounced “piney”), a former lawyer who hadn’t practiced since 2002. “I was dealing with rules and regulations and procedures I had never been familiar with. It was just me … funding my own way against what I consider a behemoth organization, with outside and inside counsel with many years of experience.”
The “behemoth” in question is American Electric Power, owner of the nation’s largest transmission system, with a market capitalization of more than $32 billion and more than 5 million customers in 11 states.
Peine received her law degree from the University of Texas and spent seven years as a sole practitioner specializing in “consumer-type” issues, before taking down her shingle in 2002. She spent the next nine years as an elementary school teacher and lecturer for the Houston Independent School District.
Ozark Mountain Tx Fight
Several years ago, Peine found herself involved in a community effort to fight AEP subsidiary Southwestern Electric Power Co.’s plans to build a transmission line through the scenic Ozark Mountains in Northwest Arkansas. A grassroots organization, Save the Ozarks, spun up enough community support around the eccentric town of Eureka Springs, a haven for artists and retired hippies, that SWEPCO withdrew its plans in December 2014.
By then, Peine was submerged in AEP’s filings at FERC, trying to make sense of transmission formula rates, protocols and operating tariffs. Poring over the company’s annual updated filings to its formula rate under SPP’s Tariff, she uncovered and contested almost $2.5 million in improperly recovered transmission costs for charitable contributions, general advertising, economic development, lobbying, and generation and distribution regulatory cases.
So what kept Peine going in what must have appeared early on to be a quixotic quest?
“Just determination. Pure determination,” she said. “I wasn’t going to give up until someone said, ‘Go home and don’t you ever come back here again.’ I just kept putting one foot in front of the other.”
Using her forensic skills and invoices provided by AEP, Peine was able to determine whether the company’s expenses were properly accounted for under FERC regulations. She contested air travel for SWEPCO President Venita McCellon-Allen to attend legislative meetings and a luncheon honoring former Arkansas Public Service Commissioner Colette Honorable before her appointment to FERC. She also contested a tree-planting program around SWEPCO’s Turk power plant in southwest Arkansas.
‘Drilling Down’
“Drilling down to the actual invoice is something that rarely happens,” Peine said, making sure she put quotes around “reviewed” when describing her understanding of how regulators and wholesale purchasers may check the annual updates. “They look at the delta from one year to the next and ask generally about it.”
A FERC staff review after her complaint found additional improper charges in SWEPCO sister company Public Service Company of Oklahoma’s AEP’s rate structure.
On June 13, Peine and AEP reached a $4.2 million settlement agreement.
The money will be distributed as a one-time credit to utilities using AEP’s SWEPCO and PSO transmission systems (ER07-1069). “I think it was a good result, a substantial refund, and I’m happy with that,” Peine said. “I followed through, I stayed committed … I think this was a right result for ratepayers.”
Pat Costner, director of Save the Ozarks, said in a press release, “Every SWEPCO electric customer owes a debt of gratitude to this remarkable woman, who has shown us that one person can make a big difference.”
It didn’t come easy, but pro se interventions — in which intervenors represent themselves — never are. Peine said she used a template provided by Keryn Newman and Alison Haverty, who successfully challenged AEP and Allegheny Energy (now FirstEnergy) in their bid to recover $121.5 million from an abandoned PJM project. (See FERC ALJ Rejects $10 Million in PATH Transmission Project Recovery.)
“That made my job much easier,” said Peine, who followed the case closely and attended several days of FERC hearings on the matter.
Peine’s interest was piqued during her work with Save the Ozarks. She asked herself, “What’s in it monetarily for these people? How do they recover costs? What’s the motivation there?”
She spent hundreds of hours on her challenges. She familiarized herself with the protocols and SPP’s Tariff. She learned how to file preliminary and formal challenges. And she researched FERC’s eLibrary database from the comfort of her home. “Everything is filed,” Peine marveled.
Proving Standing
Before filing her challenges, Peine had to first gain standing. She said AEP “quibbled” at first: Peine and her husband have a summer home in Eureka Springs, where they will eventually move to from Houston. It took a copy of Peine’s electric bill to prove she had standing.
Peine had to prove her standing again once the commission set her challenges for hearing. Administrative Law Judge Carmen Cintron recommended the commission find that ratepayers don’t have standing under the Federal Power Act. But FERC staff, the Electricity Consumers Resource Council and others strongly objected to Cintron’s interpretation, and the commission reconfirmed Peine’s standing.
She said she became aware in August 2013 of AEP’s formula rate updates to the SPP Tariff, which it files on behalf of SWEPCO and PSO each May. Peine said she asked AEP for electronic submission of the underlying documents in the filing but was told to come up to the company’s headquarters in Columbus, Ohio, to look at them.
“If you’re having a dispute like that, you can request a FERC administrative law judge to act as a discovery master,” Peine said. “Things were resolved that way. Certain documentation I never got, but we moved forward anyway.”
When Peine’s preliminary challenge was not resolved, she filed a formal challenge in January 2014. She followed the same process in challenging AEP’s May 2014 update to the formula rate.
Peine disputed the recovery of $92,511 in costs for 2013 and $2,467,024 for 2014 in her formal challenges, which were set for settlement proceedings in August 2015. The two sides exchanged and rejected offers and went through two ALJs before reaching a final agreement.
“The settlement will completely resolve all issues in the current proceeding,” said SWEPCO spokesperson Carey Sullivan, noting the agreement has yet to be approved by FERC. “The parties agree that the settlement is fair, reasonable and in the public interest.”
The settlement makes it clear that “directly assignable” AEP’s charges recovered under its formula rate after July 1 “shall mean expenses directly related to the provision of transmission services, and does not include those general, company-wide expenses that may be allocated partially to transmission.”
The parties said the settlement addresses issues “both retrospectively and prospectively,” through the ratepayer refund and by “explicitly excluding certain expenditures from recovery under the AEP formula rate.”
But while the settlement is signed, Peine says the proper recovery of rate expenses going forward is “not a resolved issue.”
“I will always wonder what mistakes there may be in the years to come,” she said. “Some [SWEPCO employees] wear so many hats and have multiple functions — public relations, lobbying and outreach to officials — it’s difficult to separate out what’s recoverable and what isn’t in a situation like that.”
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