Keryn and others at StopPATH WV have been tracking AEP/FE and their real estate goat rodeo in the Eastern Panhandle. PATH was supposed to go through a lot of housing developments over there, and the power companies went on a buying spree with what they thought was rate payers’ money. They would have gotten away with it if PATH had ever been built. Now, with the abandonment case at FERC, the inflated prices AEP/FirstEnergy paid for these properties will come under scrutiny.
Under FERC rules, AEP/FirstEnergy can recover costs that were prudently incurred. “Prudently incurred,” that is the standard at FERC for the power companies recovering their lost capital costs on the dead PATH project.
Take a look at Keryn’s post on the situation. Despite the fact that FERC’s Commissioners warned AEP/FirstEnergy not to dump these properties for bargain basement prices, leaving rate payers to pay for the losses, the power companies have started dumping these properties. Here is Keryn’s list:
So, how “reasonable” are PATH’s “fair market value” sale prices compared to “fair market value” amounts PATH spent purchasing each property?
PATH purchased this property for $50,000 in April of 2010. It’s on sale today for only $9,000!
PATH purchased this property for $64,000 in April of 2009. It’s on sale today for only $12,000!
PATH purchased this property for $307,185 in March of 2009. It’s on sale today for only $229,900!
Let’s add up the difference between PATH’s purchase price and PATH’s sale price, because that is the amount PATH wants YOU to pay for its little unnecessary and overly generous property buying spree: $170,285! Even if PATH sells these properties at list, that’s how much of a loss PATH expects ratepayers to absorb for just these three properties. And it’s going to get worse, much worse.
Click on the links above to see the realtor’s descriptions of the properties. On the first property, consisting of .62 acres, AEP/FirstEnergy paid $50,000 for a “cabin, now uninhabitable.” The third property, for which AEP/FE paid over $300,000 is 17 acres of bare land in a development.
This is a clear picture of how PATH’s costs were not “prudently incurred.” Keep in mind that AEP/FirstEnergy will want to collect that more than $170,000 loss from all rate payers in PJM. That’s you and me. And there are dozens and dozens of properties just like these that AEP/FirstEnergy rushed to buy before any of the three states had even approved PATH.
As Keryn says, this will get much, much worse.