[00:00:01] Speaker 01:
Base number 18-1298, Baltimore task and election company petitioner versus Federal Energy Regulatory Commission.

[00:00:11] Speaker 01:
Mr. Price for the petitioner.

[00:00:13] Speaker 01:
Mr. Fish for the respondent.

[00:00:15] Speaker 01:
Mr. Pearson for the intervener.

[00:00:47] Speaker 02:
Good morning, Your Honor, and may it please the Court.

[00:01:02] Speaker 03:
My name is Matthew Price on behalf of Baltimore Gas and Electric Company.

[00:01:06] Speaker 03:
When BGE filed its formula rate in 2005, it expressly told the commission and the world that the rate filing did not deal with deferred tax amounts.

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You can see that on page 34, the addendum to our brief.

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The commission then set the formula rate for hearing, and the filing was resolved in a settlement.

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And the settlement also expressly indicated that the deferred tax amounts were still on BGE's books, but were not being dealt with in the settlement or recovered through the formula rate.

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And you can see that on pages 31

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line 40 of the Joint Appendix and also pages 36 through 38 of the Joint Appendix where you can see little 109s next to all the accumulated deferred income tax entries indicating that those amounts are being excluded from the deferred tax amounts being recovered through the formula rate.

[00:01:53] Speaker 03:
So everyone knew that these amounts were still out there like a trunk left up in the attic

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And everyone was happy to leave them unresolved for the moment.

[00:02:03] Speaker 05:
And critically, the question is, what is the consequence of leaving them unresolved for the moment?

[00:02:07] Speaker 05:
And as I understand it, your view of the matter is that leaving them unresolved for the moment enables BGE to collect them later at the end of the settlement, which does not seem to conform to the matching principle, which is really driving the whole thing.

[00:02:29] Speaker 03:
Well, two responses to that, Your Honor.

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The first is that I think it's critically important that everyone in the industry was doing the exact same thing, as FERC acknowledged in its recent notice of proposed rulemaking.

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It said that there was a near industry-wide gap in the transmission formula rates, and these amounts were simply not being recovered by utilities that had made the transition to formula rates.

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And when four different companies came to FERC,

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and said they wanted to recover deferred taxes that had been built up and they wanted to recover these catch-up amounts that were three years old, four years old, and seven years old, FERC said, okay, and approved their recovery.

[00:03:04] Speaker 03:
And we're here because when BGE came to FERC and asked for the exact same treatment, FERC said no, but provided no explanation.

[00:03:10] Speaker 05:
Maybe it gagged at 12 years.

[00:03:14] Speaker 05:
I mean, I agree with your view, your implicit view that it was

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foolish of Frick to accept that even for, what was it, five years?

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Seven years was the worst.

[00:03:26] Speaker 05:
Seven years is the worst of things, yeah.

[00:03:28] Speaker 03:
Well, I recognize there's maybe a difference between seven and twelve in the sense that twelve is greater than seven, but I think it's important to note that Frick's orders don't draw the line

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at 7 or between 7 and 12, they don't draw that line anywhere.

[00:03:42] Speaker 05:
They did note in your case that it was a longer period, which is inspeutable.

[00:03:51] Speaker 03:
That is absolutely right, Your Honor, but they didn't make that the basis for denying our recovery, but also they didn't even give us 7.

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So FERC has never explained the difference between 7 or 12 or explained where it would draw the line, and it hasn't disavowed the 7-year approval in the Duquesne case.

[00:04:07] Speaker 03:
It didn't allow us to recover up to 7, though.

[00:04:09] Speaker 03:
It gave us nothing at all.

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It's as though we came into FERC and FERC said, well, we'll give you $50 if you had asked for $50, but because you asked for $100, we give you $0.

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And that's arbitrary and capricious, Your Honor.

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There's no rational basis for doing that.

[00:04:23] Speaker 05:
Did you propose recovery for a period equivalent to the longest period for which they had

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allowed it?

[00:04:36] Speaker 03:
Yes, Your Honor.

[00:04:37] Speaker 03:
We raised that issue in our application for rehearing.

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We raised that issue when we found out that FERC was not going to respect this.

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I believe we raised it in our initial deficiency response before the application for hearing.

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We raised it in our brief in this court.

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FERC has never responded to the argument at all, and has never offered any explanation whatsoever of why it wouldn't at least allow us to recover going back seven years.

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And we would be happy for a remand for FERC to do that.

[00:05:05] Speaker 05:
to sort of look at what the FERC rules perhaps ought to have been.

[00:05:13] Speaker 05:
In order to satisfy the matching principle, the idea of the first available rate case has got to be the first case dealing with, as it were, new deferred tax amounts, deferred tax amounts that aren't covered by something else.

[00:05:31] Speaker 05:
Is that right?

[00:05:33] Speaker 03:
Well, again, I think there's a little bit more slip in the joints in terms of the way FERC has approached it.

[00:05:38] Speaker 05:
Because as I just noted, in four cases, FERC recognized the fact that- Let's assume those are mistakes.

[00:05:50] Speaker 05:
OK.

[00:05:52] Speaker 05:
In terms of a coherent policy.

[00:05:54] Speaker 05:
Wouldn't it have to insist that if you go for a long time after some new deferred tax amount has come into the picture, you lose it until you either resolve it by settlement or ask for it in a rape filing?

[00:06:10] Speaker 03:
Well, I think this gets to the second point I wanted to make in response to Your Honor's question, which is there's also a settlement exception.

[00:06:16] Speaker 03:
And in the Commonwealth Medicine decision that was issued the same day as our case, FERC said, and this is at page 28 of our brief, it said that a utility could recover previous deferred tax amounts

[00:06:26] Speaker 03:
without actually any time limit at all, the utility expressly, quote, reserved in a settlement such issue for future consideration.

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So in other words, deferred the issue later.

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And I think that's consistent with the matching concept, because if the parties to the settlement agreement recognize that these amounts are still out there, they're still happening.

[00:06:42] Speaker 03:
I'm sorry.

[00:06:43] Speaker 03:
What case are you relying on?

[00:06:44] Speaker 03:
It's the Commonwealth Edison decision.

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It's cited on page 28 of our brief.

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It was issued the same day as our case.

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164 FERC 61172, and I'm referring in particular to paragraph 132 at the very end of the decision and the footnote attached to that paragraph.

[00:07:08] Speaker 05:
I'm sorry, I see you have a summary of that case in brackets within one year.

[00:07:17] Speaker 03:
Well, that's where we put it.

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I mean, it said it elsewhere in our brief as well.

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But that's the particular passage I wanted to refer the court to.

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It said it also on pages 30 and 42 of our brief.

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But what Frick said is that if the public utility had reserved its right to recover these tax amounts through settlement terms, it could come in any time within the next two years and recover those amounts without any time limit whatsoever.

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And Frick said that that exception didn't apply because it interpreted our 2006 settlement as abandoning the issue or abandoning these costs, but that was erroneous.

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We satisfied this settlement exception because the settlement agreement, as I discussed at the beginning, made clear these amounts remain on VGE's books but weren't being addressed by the formula rate.

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They were left in the attic.

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And all the parties understood that, and they could be dealt with later on.

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And FERC seems to want some kind of magic words to provide for express reservation, other than the fact that tariff sheets made perfectly clear that these amounts were still being recorded, but not recovered.

[00:08:27] Speaker 05:
But at the time... Just to make sure, your view of a qualifying settlement is one where the parties simply agree to disagree.

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Is that right?

[00:08:37] Speaker 03:
Well, I think that's FERC's view of a qualifying solution.

[00:08:40] Speaker 05:
Well, it may be.

[00:08:40] Speaker 05:
It may be.

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We'll come to that.

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FERC will have a chance to speak for itself.

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And you can see that that does not satisfy the matching principle.

[00:08:50] Speaker 03:
Well, I think it satisfies the spirit of the matching principle in the sense that if the parties all agree that we can defer these issues to later on and we don't really know what's in the trunk, we don't know whether the costs are going to favor the utility or favor rate payers, then

[00:09:09] Speaker 03:
no one's ox is gored necessarily by the deferral of those issues for later on.

[00:09:13] Speaker 03:
And when FERC says in the Commonwealth Edison decision that as long as the issue is reserved in a settlement, such issues for future consideration, I think what FERC is saying, we can agree to disagree later on and we don't need to resolve these issues now.

[00:09:26] Speaker 03:
And that's exactly what the settlement agreement in 2006 provided when it indicated expressly that these amounts were being recorded but not recovered through the formula rate.

[00:09:36] Speaker 03:
And I think it's important to note that no one protested our 2016 filing when we came in to ask for these amounts.

[00:09:43] Speaker 03:
And I think that's quite important because one would think that if indeed we were trying to unravel something that the parties had agreed to or upset expectations that these costs had been abandoned, you would have seen the intervenors come in and actually file a protest, but they did not.

[00:09:57] Speaker 03:
All they did was file a blanket sort of plain vanilla intervention and said nothing until FERC essentially dropped a gift into their lap, and now they're here trying to protect that gift.

[00:10:07] Speaker 03:
And the other two very quick points I want to make, and then I do want to save a little time for rebuttal, is there's also general FERC precedent that you should never infer from a settlement that a party has waived the right to recover certain costs unless the settlement agreement expressly provides for the waiver.

[00:10:22] Speaker 03:
And the rule in this case seems to be the

[00:10:24] Speaker 03:
flip of that.

[00:10:26] Speaker 03:
But the general FERC precedent that the parties were bargaining against the backdrop of was what I just said, and that's the transcontinental case in our brief that FERC doesn't respond to.

[00:10:35] Speaker 03:
And finally, there is a specific regulation on point, 18 CFR 3524C, saying the utility must apply some rate-making method to these costs, and it can't just ignore them.

[00:10:45] Speaker 03:
And against the backdrop of that regulation, it seems very, very strange to think the parties

[00:10:50] Speaker 03:
expected BGE to do something that the regulations actually prohibited it from doing.

[00:10:54] Speaker 02:
I do just have one question, though.

[00:10:56] Speaker 02:
I mean, can you provide some explanation of why it did take 12 years?

[00:11:00] Speaker 02:
I know on your account that's not so relevant, but why 12 years?

[00:11:04] Speaker 02:
I mean, that's a long time.

[00:11:05] Speaker 03:
I don't think there's a great explanation of it, other than that I don't think BGE believed that it was under any time limitation and that the parties had just agreed to defer these amounts until later on and had seen other people in the industry doing the same thing.

[00:11:18] Speaker 03:
And that's what everyone was doing.

[00:11:20] Speaker 03:
That's the best I can offer for you.

[00:11:22] Speaker 05:
We'll give you some time in response.

[00:11:24] Speaker 03:
Thank you very much.

[00:11:25] Speaker 05:
Mr. Fish.

[00:11:35] Speaker 04:
Good morning, Your Honors.

[00:11:36] Speaker 04:
May it please the Court, Gerard Fish for the Commission.

[00:11:39] Speaker 04:
Judge Willings, you are correct.

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This case is all about the matching principle.

[00:11:43] Speaker 04:
And to align the tax effects of a facility expense with the ratepayers who pay the cost of that facility expense, Order 144 requires utilities to address excesses or deficiencies in their deferred tax accounts sooner rather than later in their next rate case to ensure full tax normalization within a reasonable period of time.

[00:12:02] Speaker 05:
That seems to me a coherent view.

[00:12:03] Speaker 05:
I'm just not sure that

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FERC has applied it.

[00:12:06] Speaker 05:
It has, Your Honor.

[00:12:07] Speaker 05:
Well, what do you say about Commonwealth Edison?

[00:12:11] Speaker 05:
Well, it seems to say, as quoted in page 28 of the opening brief, or if the public utility properly preserved its right to recover

[00:12:25] Speaker 04:
passed taxes through settlement terms.

[00:12:29] Speaker 04:
Right, your honor.

[00:12:30] Speaker 04:
But to determine whether a utility has properly reserved a strike, we have to look at what is required to fulfill the settlement exception in Order 144.

[00:12:38] Speaker 04:
The parties must, quote, reach a settlement on the issue of deferred taxes.

[00:12:43] Speaker 04:
The 2006 Settlement Agreement doesn't even mention deferred taxes.

[00:12:48] Speaker 04:
It's only line items in worksheets that acknowledges that those amounts are not included in the rates.

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effectively different from an explicit provision.

[00:12:59] Speaker 05:
We can't agree on this, but we agree it can all be collected later on after the expiration of this settlement.

[00:13:06] Speaker 04:
It's different, Your Honor, because remember, these settlement agreements are filed with the Commission for its approval.

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If the settlement agreement includes language that addresses the issue and says, okay,

[00:13:15] Speaker 04:
We're not going to address deferred taxes now.

[00:13:18] Speaker 04:
We're going to address them in five years.

[00:13:19] Speaker 04:
The commission has an opportunity to pass on that compromise and determine whether it's just and reasonable.

[00:13:25] Speaker 04:
Here, the commission was given no opportunity to do that.

[00:13:27] Speaker 04:
Are you saying that these worksheets were not before the commission?

[00:13:31] Speaker 04:
The worksheets were before the commission, but because Baltimore Gas did not address the deferred taxes in its settlement, the commission reasonably determined here that it had not satisfied the settlement exception.

[00:13:48] Speaker 04:
Any reasonable interpretation of the words reach a settlement on something, a straight textual analysis requires the parties to actually wrestle with the issue.

[00:13:56] Speaker 04:
And the commission has said as much in the Stingray decision.

[00:13:59] Speaker 04:
49, paragraph 61, 240, at 61859, the commission found that the parties had not reached a settlement on the degree of tax normalization.

[00:14:13] Speaker 04:
So Stingray, the utility, came in and said, look, we had a 1985 rate settlement agreement.

[00:14:18] Speaker 04:
And we didn't really satisfy order 144.

[00:14:22] Speaker 04:
We only agreed to partial normalization.

[00:14:24] Speaker 04:
So now we're coming into 1988, and we want to be able to recover those deficient deferred taxes.

[00:14:31] Speaker 04:
And the commission said no.

[00:14:32] Speaker 04:
Because you did not, quote, mention the degree of normalization in your 1985 settlement, you do not fit under the settlement exception.

[00:14:40] Speaker 04:
That's a straight application here, a straight through line from our decision in 1988 to our decision here.

[00:14:48] Speaker 05:
Just to be clear, your thought then is, and the commission's thought expressed through you, is that the settlement exception works where it is only an agreement to disagree, so long as this is made clear at the time the settlement is filed.

[00:15:13] Speaker 05:
And you're saying that the settlement filed here did not

[00:15:18] Speaker 05:
the requisite level of clarity.

[00:15:20] Speaker 04:
Is that right?

[00:15:21] Speaker 04:
Correct, Your Honor, but it's a pretty low bar.

[00:15:23] Speaker 04:
You just have to mention the degree or how deferred taxes are going to be resolved.

[00:15:28] Speaker 04:
There was no mention in the settlement agreement here.

[00:15:31] Speaker 04:
And Baltimore Gas argues in its brief that we're announcing a new rule.

[00:15:34] Speaker 04:
There's no new rule here that the degree of wrestling with deferred taxes has to be made explicitly.

[00:15:41] Speaker 04:
Explicitly is a word that Baltimore Gas used in its own rehearing request, where they argued that because they had explicitly excluded deferred taxes in their 2005 agreement, that they had necessarily deferred the issue.

[00:15:59] Speaker 04:
All FERC was doing in saying that there was no explicit deferral was a response to Baltimore Gas.

[00:16:07] Speaker 04:
its own argument, but the holding in paragraph 17 of the procuring order, and that's at JA 210, paragraph 17 in note 41,

[00:16:21] Speaker 04:
The commission did a straight textual analysis and found that because the settlement was, quote, silent on this point, that it had not fulfilled the settlement exception, which requires actually addressing it.

[00:16:38] Speaker 04:
And again, that gives the commission an opportunity to pass on the compromise agreed to in the settlement and determine if it results in just and reasonable rates.

[00:16:45] Speaker 02:
Can you explain, though, why the mention of these lines on the worksheets is not at least

[00:16:51] Speaker 02:
reserving those questions?

[00:16:53] Speaker 02:
I mean, so if the Commission may later have the ability to approve, you know, the amount or how it works, but I mean, but why is it not explicitly reserved here on these worksheets?

[00:17:04] Speaker 04:
Well, remember, Your Honor, we have to come back to the text intent of the governing regulation, Order 144.

[00:17:10] Speaker 04:
which, as Judge Williams pointed out, is all about the matching principle.

[00:17:14] Speaker 04:
And so if a utility could simply exclude an amount from its rates and say, we're going to revisit this at some point in the future, it could be seven years, it could be 12 years, it could be 25 years, we're not going to tell you

[00:17:25] Speaker 04:
then we're undermining the entire thrust of order 144.

[00:17:30] Speaker 04:
And again, that's not just me saying it.

[00:17:34] Speaker 04:
This court has said it in its public systems decision in 1983.

[00:17:38] Speaker 02:
So what does the commission believe it means when you have these line items that say less FAS 190 above, if not separately removed?

[00:17:49] Speaker 02:
I mean, what does that mean?

[00:17:52] Speaker 04:
The commission acknowledges that it means that those amounts were not included in the rates in the settlement.

[00:17:58] Speaker 04:
But just because a utility is non-compliant with the regulation doesn't somehow ratify its coming in 12 years later and seeking to retrospectively recover those deferred amounts in violation of the matching principle and violation of quarter 144.

[00:18:13] Speaker 04:
I see I'm over my time.

[00:18:17] Speaker 04:
Could you address the

[00:18:19] Speaker 04:
12 years, 7 years, 5 years, conundrum.

[00:18:23] Speaker 04:
Yes, Your Honor.

[00:18:24] Speaker 04:
First of all, the Court doesn't have to enter that fray.

[00:18:27] Speaker 04:
The Commission's discussion of 12 years, 7 years, 5 years was in response to Baltimore gas saying, look, there are these other cases where the Commission has blessed retrospective recovery, you know, 5 years, 7 years, 12 years.

[00:18:39] Speaker 04:
And the commission said, look, you should have addressed these deferred taxes in your, quote, next-rate case, which was in 2005.

[00:18:47] Speaker 04:
And at any rate, waiting 12 years certainly wasn't a reasonable period of time to do so.

[00:18:55] Speaker 04:
Was that difference between 7 and 12?

[00:18:58] Speaker 04:
Well, again, that's not the commission's, that's not the basis for it's holding here, the time difference.

[00:19:04] Speaker 04:
The next rate case requirement is what controls.

[00:19:06] Speaker 04:
But the commission was simply saying, moreover, you waited longer.

[00:19:11] Speaker 04:
So under no formulation was this a reasonable period of time.

[00:19:16] Speaker 05:
So are you saying that the case is short of 12 years to be distinguished from this on grounds other than time period?

[00:19:27] Speaker 04:
The ITC decision can, that's the one published decision cited, because there ITC sought recovery of deferred taxes in its next rate case after the triggering event, a tax rate change in 2011.

[00:19:40] Speaker 04:
The other delegated letter orders are not precedent on this issue and here's why.

[00:19:45] Speaker 04:
This case is just like San Diego Gas and Electric for two reasons.

[00:19:49] Speaker 04:
There, as in here, the cases that are cited as precedent

[00:19:53] Speaker 04:
did not actually decide the issue in dispute here and that issue was not squarely presented to the court.

[00:20:00] Speaker 04:
And that was enough for San Diego Gas to say prior commission orders, which by the way there they were fully published orders, did not set precedent on the issue in dispute there.

[00:20:10] Speaker 04:
That was about financial incentives.

[00:20:12] Speaker 05:
I have to say your invoking non-precedential orders bothers the judicial mind.

[00:20:20] Speaker 05:
makes it sound as if by declaring something non-presidential you can flip back and forth as you like.

[00:20:25] Speaker 05:
But you're arguing, I take it, that in those cases the issue presented by BGE's position here

[00:20:35] Speaker 04:
was not presented.

[00:20:37] Speaker 04:
It wasn't, Your Honor.

[00:20:37] Speaker 04:
The only issue that was presented in those cases was whether allowing recovery of these deficient deferred tax accounts would zero out the balance sheet in those deferred tax accounts.

[00:20:48] Speaker 04:
Was what?

[00:20:49] Speaker 04:
Was whether it would zero out the balance sheet in those deferred tax accounts.

[00:20:53] Speaker 04:
And sure, it definitely would.

[00:20:54] Speaker 04:
But what the Commission didn't consider and what was not squarely presented was the timing issue.

[00:20:59] Speaker 04:
Again, it all comes back to the matching principle, whether the utility did it in time.

[00:21:04] Speaker 04:
By analogy, if

[00:21:05] Speaker 04:
If a taxpayer fails to file taxes in year one and then 12 years later goes to the IRS and says, oh, I'm filing my tax return now.

[00:21:15] Speaker 04:
I'm entitled to the refund I should have received had I timely filed.

[00:21:18] Speaker 04:
Well, sure, as Baltimore Gas argues, they were required to file that tax return.

[00:21:23] Speaker 04:
But timeliness matters.

[00:21:25] Speaker 04:
Chances are you're not going to get the refund.

[00:21:27] Speaker 04:
You might actually get a penalty or even worse.

[00:21:30] Speaker 04:
Timeliness matters, and that's baked into the text and intent of Order 144 here.

[00:21:36] Speaker 04:
Baltimore Guests seeking retrospective recovery shifts the burden of paying for facility expenses to future rate payers and subsidizes rate payers from 2005 to 2015.

[00:21:51] Speaker 04:
17 in violation of the order.

[00:21:54] Speaker 04:
Thank you, Your Honors.

[00:22:12] Speaker 00:
Good morning, Your Honors.

[00:22:13] Speaker 00:
May it please the Court.

[00:22:15] Speaker 00:
My name is Steve Pearson, and I'm appearing today on behalf of the Maryland Office of People's Council.

[00:22:20] Speaker 00:
By statute, Maryland has designated the office to represent the interests of residential ratepayers in Maryland.

[00:22:29] Speaker 00:
The office supports first decision in this case, because as counsel just said,

[00:22:38] Speaker 00:
This decision protects future ratepayers from paying costs that, if they are in fact recoverable, should have been recovered from ratepayers historically from 2005 through 2017.

[00:22:50] Speaker 00:
We urge the court to affirm the Commission's decision for that reason.

[00:22:57] Speaker 00:
This precludes, and to do anything otherwise, would open the door to allow an intergenerational subsidy by future rate pairs for in favor of past rate pairs.

[00:23:10] Speaker 00:
And that intergenerational subsidy would be created strictly from the inaction of Baltimore Gas and Electric.

[00:23:18] Speaker 00:
The door is opened.

[00:23:19] Speaker 05:
on the assumption that it wasn't opened earlier by those one or more of those four FERC decisions?

[00:23:28] Speaker 00:
That's correct, Your Honor.

[00:23:29] Speaker 00:
And I think you have to address each case on its facts and each case individually.

[00:23:37] Speaker 00:
And in this case, we have a 12-year gap.

[00:23:42] Speaker 00:
We don't need to decide whether 10 years is good or bad, five years is good or bad.

[00:23:49] Speaker 05:
It's an enormous hole in the matching principle to say it can go seven years if that is what the FERC's decisions add up to.

[00:23:58] Speaker 05:
It shows a lack of attention to the matching principle.

[00:24:03] Speaker 00:
It does in those prior cases, and we can't do anything about those prior cases in this case.

[00:24:08] Speaker 00:
What we have here is a 12-year delay by Baltimore Gas.

[00:24:14] Speaker 00:
And as a legal matter, the matching principle prevents the company from seeking recovery of those costs now because it's the basic principle of rate-making that the cost-causer should be the cost-payer.

[00:24:34] Speaker 00:
Future rate-payers did not cause those costs from 2005 through 2017.

[00:24:41] Speaker 00:
Future repairs are the causers of certain costs.

[00:24:44] Speaker 00:
They will bear those costs, but they should not also bear those historic costs.

[00:24:50] Speaker 00:
And with that, I see my time is up.

[00:24:52] Speaker 00:
And if the court has no further questions for me, we ask the court to affirm the commission's decision.

[00:24:57] Speaker 00:
Thank you.

[00:25:03] Speaker 03:
Thank you, Your Honor.

[00:25:05] Speaker 03:
I would like to make just a few quick points in rebuttal.

[00:25:07] Speaker 03:
The first has to do with the settlement exception.

[00:25:10] Speaker 03:
And I think what FERC is really asking for is a kind of magic words requirement.

[00:25:14] Speaker 03:
It claims the settlement was silent on this issue, but the settlement was not silent in the sense that

[00:25:20] Speaker 03:
Again, the worksheets that were attached to the settlement and submitted to the Commission for approval expressly excluded these amounts, and the testimony that was submitted to the Commission in accompanying the initial filing explained that these amounts were still on the books but were not being recovered through the formula rate.

[00:25:37] Speaker 03:
So I think that the settlement was expressed.

[00:25:41] Speaker 03:
we intended to defer this issue for later.

[00:25:43] Speaker 03:
And that matched what everyone in the industry was doing.

[00:25:46] Speaker 03:
And I haven't heard an answer from FERC about how could understand BGE's intent as one of abandonment when everyone in the industry, I mean, utilities don't just willy-nilly abandon costs that they might want to recover.

[00:25:58] Speaker 03:
Everyone in the industry was doing the same thing, and it resulted from confusion about what the rules were when he transitioned from state of the rates to formula X. You talk about everyone in the industry, but that turns on the four cases.

[00:26:11] Speaker 05:
which Frick argues essentially did not turn on the sort of claim that you're invoking.

[00:26:20] Speaker 03:
Well, let me address that, Your Honor.

[00:26:21] Speaker 03:
That's not true.

[00:26:22] Speaker 03:
The only issue in those four cases was whether companies could recover these catch-up amounts that had built up in between the formula rate and the filing to recover these catch-up amounts.

[00:26:34] Speaker 03:
That was the sole issue in the case.

[00:26:35] Speaker 03:
So the idea that it didn't come up, that was what the case was about, and Frick allowed it.

[00:26:40] Speaker 03:
And FERC here has offered no rationale whatsoever for distinguishing or explaining these prior cases.

[00:26:46] Speaker 03:
It disavowed the length of time as the relevant distinction in its argument.

[00:26:50] Speaker 03:
And we think that's very significant because all it's doing is essentially saying, well, they were delegated, so we can ignore them.

[00:26:58] Speaker 03:
The APA requires more.

[00:27:00] Speaker 03:
And when the entire industry is engaged in a set of practices that FERC, over time, approves repeatedly, it is arbitrary and capricious for FERC now, all of a sudden, to essentially single us out and deny us the same recovery that it's given to everyone else.

[00:27:14] Speaker 03:
And I see my time has expired, but we ask the court to reverse.

[00:27:18] Speaker 03:
Thank you.

[00:27:18] Speaker 03:
Thank you.