Becky Gillette – You may have thought that the case where local residents served as citizen watchdogs regarding American Electric Power/Southwestern Electric Power Company (SWEPCO) was over since the company announced in late 2014 it was dropping plans for a $116 million, high-voltage transmission line through the Ozarks. But one member of Save the Ozarks (STO) kept digging into filings with the Federal Energy Regulatory Commission (FERC) regarding how the utility charges customers for transmitting power.
Martha Peine, who lives part-time in rural Carroll County, kept on with a complaint she had filed with FERC in January 2014 claiming the utility improperly charged transmission customers for lobbying, advertising, charitable and other non-transmission-related expenditures.
In a classic David-and-Goliath battle pitting one citizen against lawyers for one of the bigger utility companies in the country, Peine recently hit gold for ratepayers. She reached a settlement that requires AEP to refund $4.2 million to customers to resolve issues related to 2008 through 2015 transmission rates. FERC must still approve the settlement, but that should be a routine matter. Refunds will go out within 90 days of that approval.
Peine was dogged in her search for accountability from SWEPCO.
“I spent hundreds and hundreds of hours on it and have been to Washington, D.C., twice,” Peine said. “The proposed power line got me interested in their business operations in general. I didn’t have an expectation one way or another about what I would find until I looked at it.”
The transmission of electricity in interstate commerce is nationally regulated by FERC, which allows regulated transmission companies to utilize what are known as “Formula Rates” to recover their cost of service from electric consumers.
Her complaints with FERC claimed the utility improperly charged customers $92,511 in 2013 and $2,467,024 in 2014. But after FERC staff assigned to her case investigated, the amount of questionable charges grew. Earlier this year AEP reached an initial settlement agreement with the commission’s staff. But Peine, who has a degree in law but hasn’t practiced since 2002, refused to accept it.
Then on June 6, Peine, FERC staff and AEP reached an agreement that will credit $4.2 million to ratepayers of any utility that uses transmission services in AEP’s western zone. The agreement also limits the amount of litigation expenses related to Peine’s challenges, and clarifies that certain expenses, including charitable and lobbying related expenses, cannot be charged to ratepayers by SWEPCO in the future.
“On behalf of STO, we congratulate Martha for her accomplishment,” STO Director Pat Costner said. “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.”
Peine explains she got involved after seeing a Formula Rate Update AEP had filed. She learned there was a document called the Protocols which outlines how to request work papers that underlie the calculations that are in the updates.
“I eventually got a list of vendors that were paid,” she said. “I set out Googling each one to see the type of product or service they provided. What I found included charitable and lobbying expenses. For example, there were purchases of software related to tracking charitable contributions and a payment for a Louisiana state lobbying license.”
According to FERC regulations and legal precedent, there are above-the-line expenses that can be passed on to ratepayers and below-the-line expenses that cannot. Peine argued the types of expenses challenged should have been below the line expenses.
Why didn’t FERC find the problems? Peine said updates to formula rates are informational filings that generally not audited by FERC. Whoever pays the rates has the responsibility to review the charges and raise a red flag, if necessary. Those paying the rates include big industrial users, wholesale buyers, and then “you and me.”
Peine, who taught elementary education for nine years in Texas, has spent her summers here since 2011 and soon will be living here full time. She is being welcomed with open arms by her many admirers.
“I have had wonderful well wishes from the community,” said Peine, who was not paid for her work, and will only receive the same settlement as other AEP customers. “People have expressed gratitude and that is very rewarding. Of course, I am pleased my challenges settled to the benefit of all ratepayers in the area.”
Peine said while the end result in her case is a win for ratepayers, she will always wonder what mistakes there may be in the years to come.
“The review process is complicated and time consuming,” she said. “There is no person, entity, or agency that meaningfully reviews the rate updates on a regular basis, so there is always the potential for significant overcharges.”
But don’t expect her to be burning the midnight oil continuing investigations of AEP.
“I fully intend to relax into the Eureka Springs tempo for the time being,” she said.
The tally is now 2,358 people reading this story. Amazing, when I write, if I get over 50 readers, I take Crystal for dinner. Way to go Martha!
Alan, here is what I know.
FERC was not the bad guy in this story, there may be some bull as you say, but not here. FERC increased the refund to be paid to Arkansas ratepayers. I have not decided what to do with my share, most people want to install home solar panels!
The timeline is important: the dubious expenses were charged by SWEPCO to Arkansas ratepayers, at the time SWEPCO threatened the Ozarks with another 345 kV transmission line 2013 – 2015.
The $4.2 million includes some astonishing expenses, not for the amounts, but the secret agreements and side deals uncovered:
1. Travel expenses in the amount of $3,230 including a private Jet to Little Rock for SWEPCO President Venita McCellon-Allen, to attend a luncheon honoring Collette Honorable, Chairman of the Arkansas Public Service Commission (APSC), the decider, and a meeting with Arkansas Senator Harrelson known as “Turk.”
2. Lunch with Larry Smith, the respected Mayor of Cave Springs and others in November 2012 while presenting a big-fat-check to the Illinois River Watershed Partnership for the development of a 30-acre watershed sanctuary at Cave Springs. Mayor Smith later gave testimony before the APSC that SWEPCO’s preferred route 33 is perfectly reasonable, even though it would damage the Trail of Tears and National Military Park at Pea Ridge, and that the alternate route proposed to pass through his own city was not reasonable.
Alan, not knowing about his close relationship with SWEPCO or the “fat check” I called Larry in 2014, offering to help Cave Springs. He told me “you are wasting your time; no one stops SWEPCO in Arkansas.” I remember the call, Larry tried to discourage me with silly arguments. My bad, I will call Larry to give him an apology. I did not know about his secret SWEPCO deal.
Great work! I would suspect that many utilities engage in similar ripoffs. We are paying them to bullshit us. FERC can’t be trusted.
Over 1,175 people have looked at this story, how cool is that?
Martha, you are a shining star; poems and songs and will be written about you.
I have an idea for “The legend of AEP and the accidental bookeping errors in the Ozarks, 2008 – 2015.”
AEP says on their website for investors: “Dear Fellow Employees: I began my career with this company and now have the honor of serving as its leader. One thing that has always been a point of pride for me is that AEP is built on a solid foundation of Doing the Right Thing. Whether it’s in our dealings with our customers, our stakeholders, or each other as employees, our culture supports – and demands – that we do the right thing every time. AEP’s Principles of Business Conduct is the embodiment of that simple, but critical philosophy. The Principles define both the ethical and legal standards by which we are expected to operate every day.” Nick Atkins
There are no exceptions for Arkansas.
Why would AEP need to claim to Do the Right Thing Every Time? Do they need to say, We will not beat up private property owners with a stick any time we need to build transmission lines? What about washing their hands after using the toilet, every time?
Like kids that say “I am not going to lie. I do drugs and drink when you leave the house and invite my friends to spend the night,” the part about lying is redundant.
Martha, we want to take you to a great local restaurant Fresh: Farm to to Table. Here is what they say ” We are focused on using seasonal ingredients to create menus that use both local and organic food whenever possible. We gratefully acknowledge our local vendors.” They don’t claim to use organic food every time, but they try.
Eureka Springs AR, loves people and visitors. “People have Power”