[00:00:01] Speaker 00: Page number 20-1283 et al. [00:00:04] Speaker 00: New York Bauer Authority Hudson Transmission Partners LLC petitioners versus Federal Energy Regulatory Commission. [00:00:12] Speaker 00: Mr. Downsend for the petitioners, Ms. [00:00:14] Speaker 00: Chu for the respondents, Mr. Longstreet for the respondent intervener. [00:00:21] Speaker 01: Good morning, your honors. [00:00:23] Speaker 01: My name is Lucas Townsend, and I'm arguing for petitioners Hudson Transmission Partners and New York Power Authority. [00:00:30] Speaker 01: And with the court's permission, I'd like to reserve two minutes for rebuttal. [00:00:35] Speaker 01: The orders on review require Hudson and its customer, the New York Power Authority, to pay roughly $12 million per year for 40 years for rights they do not actually have and benefits they no longer receive. [00:00:49] Speaker 01: Plain language of the controlling tariff, the PJM tariff, forbids this result. [00:00:54] Speaker 01: And I'll begin with the lower voltage projects, which represent the lion's share of the contested costs. [00:01:00] Speaker 01: in this case. [00:01:01] Speaker 01: The lower voltage projects are governed by a provision of the PJM tariff section B10-B2 and is found at Joint Appendix page 499. [00:01:14] Speaker 01: And the relevant language says this. [00:01:16] Speaker 01: It says transmission provider shall base the collection of transmission enhancement charges associated with required transmission enhancements from a merchant transmission facility on the actual firm transmission withdrawal rights that have been awarded the merchant transmission facility. [00:01:33] Speaker 01: That's at JA 499. [00:01:35] Speaker 01: In other words, the collection of charges from a merchant facility shall be based on its actual firm rights, not prior, not deemed an actual. [00:01:46] Speaker 01: So if there are no actual firm rights, there cannot be a collection. [00:01:50] Speaker 01: The fundamental that [00:01:52] Speaker 01: the agency makes in this case and in the orders below, is that it conflates cost assignment with collection. [00:02:00] Speaker 01: Those terms do not mean the same thing. [00:02:03] Speaker 01: And this court held as much just last year in a strikingly similar case, Long Island Power Authority versus FERC. [00:02:12] Speaker 01: 27 F third F fourth 705 and in that in that case, this court addressed the meaning of the word collected in another provision of the PJM tariff relating to merchant facilities at provision was scheduled 12 C. [00:02:28] Speaker 01: In that case, if charges were collected, then the merchant facility would be responsible for adjustments under that provision of the tariff. [00:02:36] Speaker 01: And FERC had argued that the word collected in that case meant to accrue liability for the assignment of costs. [00:02:44] Speaker 01: This court rejected FERC's interpretation in that case, and the court relied on the plain meaning of the word collected. [00:02:51] Speaker 01: Collect as meaning to call for and obtain payment of. [00:02:55] Speaker 01: That's at page 716 of the LIPA decision. [00:02:58] Speaker 01: And the court said FERC has not identified a single example in a dictionary or otherwise where collect means to accrue liability, nor have we found any. [00:03:09] Speaker 01: And the court also found support in the surrounding provisions of that tariff provision. [00:03:13] Speaker 01: There are provisions in that case that called for deferred charges. [00:03:18] Speaker 01: There's a difference between what was collected and what the settlement called for, and they were essentially deferred charges. [00:03:24] Speaker 06: But that section seems different, right, from what we have here. [00:03:27] Speaker 06: I mean, subsection B is about when there are less firm rights. [00:03:33] Speaker 06: When a company has less firm rights than they will eventually have. [00:03:37] Speaker 06: It doesn't speak to the situation here where there are no firm rights at the time the costs were assigned. [00:03:48] Speaker 06: So that analogy doesn't seem to work here. [00:03:51] Speaker 01: Well, I think this provision actually, I mean, the facts are slightly different, and the wording is slightly different. [00:03:56] Speaker 01: But I think that the analogy does hold up, because this provision is a parallel to the one that was discussed in the Long Island Power Authority case. [00:04:03] Speaker 01: The tariff provision at issue in this case, section 12b10, defines the difference between what is assigned and what can be collected. [00:04:14] Speaker 01: And it's defined as a deferred charge. [00:04:17] Speaker 01: And that deferred charge shows up in the account books of PJM, the grid administrator, the grid operator, as something that is kept track of. [00:04:27] Speaker 01: Eventually, it may become due, but it cannot be collected except on the basis of actual firm rights. [00:04:34] Speaker 01: In this case, there are zero firm rights, no actual firm rights. [00:04:38] Speaker 01: Under the plain text of this provision and the meaning of the word collected, there can't be collection of those charges unless and until there are firm rights. [00:04:48] Speaker 01: And in the meantime, they are just deferred charges. [00:04:52] Speaker 06: but that's why this isn't really an analogous situation, right? [00:04:57] Speaker 06: I mean, you know, here the lower voltage facilities charge was calculated using the old method, right? [00:05:06] Speaker 06: The violation-based defects, right? [00:05:09] Speaker 06: And that was set at a certain time. [00:05:12] Speaker 06: You know, it was like the charges for those firm rights. [00:05:16] Speaker 06: And so how do you get out of those charges now? [00:05:20] Speaker 01: Well, so this goes to the distinction between what is assigned and what is electable. [00:05:27] Speaker 01: So the provision that sets those charges that the commission has relied on is provision A5. [00:05:34] Speaker 01: And it says, except as the relevant language says, and this is in page JA 489, except as specifically set forth herein, nothing in this schedule 12 shall change the assignment [00:05:48] Speaker 01: Of cost responsibility or classification of required transmission enhancements included in the tower of schedule 12 appendix and the argument is that those listed assignments are fixed and I'm changing and our position is [00:06:03] Speaker 01: that under 12B, it's entirely possible that those are fixed and unchanging and yet 12B10B2 still applies to make those charges uncollectible. [00:06:19] Speaker 01: They're uncollectible and they show up as deferred charges under the procedures that are surrounding 12B10B1 and 12B10B3 provide for deferred collection. [00:06:33] Speaker 05: But I think for didn't rely on that reasoning and its decision-making. [00:06:47] Speaker 05: What do I do with that. [00:06:48] Speaker 01: Well, FERC didn't have really any reasoned rationale that can be upheld in this case. [00:06:53] Speaker 01: FERC simply said that 12B10B2 doesn't apply full stop. [00:07:00] Speaker 01: They read 12A5, said that applies, and they simply didn't grapple with the text of 12B10B2. [00:07:07] Speaker 01: In that instance, it's the failure of reasoned decision [00:07:10] Speaker 01: and the orders have to be set aside under the APA as arbitrary and capricious. [00:07:15] Speaker 01: And we would submit that the plain text, the unambiguous text of 12B10B2 forbids the collection of these costs. [00:07:23] Speaker 01: So it's not something that the agency can reinstate on remand. [00:07:26] Speaker 01: This court has already done the work in the Leipnick case to determine what collect means in a strikingly similar context. [00:07:33] Speaker 05: If B10 does what you say, why did Con Ed need B11? [00:07:41] Speaker 01: So that B-11 was put into the tariff as a result of a settlement, a 2009 settlement with Conn, that involved a number of parties, not Hudson, not the New York Power Authority. [00:07:53] Speaker 01: But that was addressed in a separate proceeding. [00:07:57] Speaker 01: And part of that proceeding resulted in an amendment to the tariff. [00:08:02] Speaker 05: I get all that. [00:08:04] Speaker 05: I follow that, but all that can be true and it could still be the case that if B10 does the work you say it does, Con Ed could have just relied on B10 being added to the tariff and wouldn't have needed B11 to be added. [00:08:18] Speaker 01: B10 is a provision specific to merchant transmission facilities. [00:08:22] Speaker 01: And so Con Ed is a utility. [00:08:25] Speaker 01: It's also an entity outside of the PJM region. [00:08:28] Speaker 01: So it required its own special provision here as a result of the settlement. [00:08:32] Speaker 01: This B10 is only with regard to merchant transmission facilities, and there are just three of those. [00:08:39] Speaker 06: I mean, so I guess A5, right, under the effective date says very clearly, except to specifically set forth here in nothing in the schedule 12 shall change the assignment of cost responsibility in schedule 12 appendix, right? [00:08:54] Speaker 06: So how does B10 do that work of specifically allowing for a change to the schedule 12 appendix? [00:09:04] Speaker 06: And I think that it's a tough read. [00:09:06] Speaker 01: So I would say two things. [00:09:07] Speaker 01: First of all, that we don't even need this as an exception because it's possible to read both of those provisions. [00:09:14] Speaker 01: They address different topics. [00:09:15] Speaker 01: The A5 addresses assignments. [00:09:18] Speaker 01: B10, B2 addresses collection, different topics. [00:09:23] Speaker 01: If we are talking about a reallocation of the charges. [00:09:27] Speaker 06: Isn't this saying hairs a little bit though? [00:09:28] Speaker 06: I mean, if it says you can't change the cost responsibility, [00:09:32] Speaker 06: But then you're just going to read B10 to say, oh, well, we're not changing the responsibility. [00:09:37] Speaker 06: We're just changing the selection. [00:09:40] Speaker 06: Well, not a little bit. [00:09:41] Speaker 06: I mean, it's not maybe clever, but I don't know. [00:09:45] Speaker 01: Not at all, Your Honor, because that's what the tariff actually provides. [00:09:48] Speaker 01: It provides for different charges. [00:09:50] Speaker 01: It contemplates that charges can be assigned, but not collectible. [00:09:54] Speaker 01: And they go on to the accounts of PJM. [00:09:57] Speaker 01: I'll close the language in particular. [00:09:59] Speaker 01: This is Section 12B10B1. [00:10:04] Speaker 01: Transmission enhancement charges allocated to a merchant transmission facility. [00:10:08] Speaker 01: So allocated. [00:10:09] Speaker 01: for which collection is deferred. [00:10:12] Speaker 01: in accordance with this section shall be recorded in appropriate transmission provider accounts for deferred charges and collected in accordance with the procedure set forth in three. [00:10:23] Speaker 01: That's a JA 499. [00:10:25] Speaker 01: So the tariff itself defines the difference between what is assigned and what can be collected. [00:10:32] Speaker 01: And it was exactly, that same situation also existed in the LIPA case. [00:10:37] Speaker 05: This is a common- What matters here is collections and not assignments. [00:10:41] Speaker 05: Does that hurt your opinion 503 argument? [00:10:44] Speaker 05: Because I think opinion 503 talks about assignments. [00:10:47] Speaker 05: Yes. [00:10:48] Speaker 01: We have a separate argument that there should be a reassignment as well. [00:10:53] Speaker 01: And so if we can step back and just remember how this arose. [00:10:56] Speaker 01: This arose because PJM made a compliance filing. [00:11:00] Speaker 01: And it proposed to change the assignments and zero out the costs for merchant transmission facilities that no longer had firm rights. [00:11:10] Speaker 01: And that was, we submit that was correct as well under the commission's precedent. [00:11:16] Speaker 01: Exactly the same thing happened with respect to the Con Ed settlement. [00:11:21] Speaker 01: Con Ed allowed its firm service to expire. [00:11:24] Speaker 01: And at that point, and there is a provision in the tariff that allows for the costs allocations to go to zero for Con Ed. [00:11:34] Speaker 01: There is no provision in the tariff though for reassigning those costs onto other parties. [00:11:39] Speaker 01: And what happened was PJM just proposed a pro rata reallocation at that point. [00:11:45] Speaker 01: on all other parties and FERC approved it. [00:11:48] Speaker 01: That methodology is not in the tariff. [00:11:50] Speaker 01: PJM proposed exactly the same pro-radar reallocation for Hudson and for NYPA in this case and FERC said no. [00:11:59] Speaker 01: And we submit that that was error. [00:12:01] Speaker 01: That was inconsistent with FERC's longstanding policy, both under the Con Ed example, and also under opinion 503, which recognizes that costs can only be assessed on merchant transmission facilities to the extent of their firm rights. [00:12:18] Speaker 06: Are you making an argument that FERC failed to treat like cases alike? [00:12:22] Speaker 01: Yes, with respect to the reading. [00:12:24] Speaker ?: Is that in? [00:12:25] Speaker 01: Well, it's the departure from long-standing policy. [00:12:29] Speaker 01: The long-standing policy is that only merchant facilities with firm rights can be assessed costs. [00:12:38] Speaker 01: And that was true in opinion 503. [00:12:41] Speaker 01: It was also true with respect to the policy that the December 15, 2017 orders that allowed Hudson and Linden to [00:12:52] Speaker 01: Convert from firm rights to non firm rights, and it was also consistent with the with the practice in the immediately following the con ed settlement, the 2017 order. [00:13:06] Speaker 06: says that you can't impose the solution-based defects going forward. [00:13:11] Speaker 06: But solution-based defects is sort of, I mean, by definition, it's sort of an ongoing charge. [00:13:17] Speaker 06: So it makes sense that you can't continue to allocate the solution-based defects without any firm rights. [00:13:24] Speaker 06: But that doesn't necessarily tell us what to do about the violation-based defects charges that were imposed at a set time. [00:13:32] Speaker 01: Well, that's where we again go to the Con Ed example. [00:13:35] Speaker 01: So the costs that were reallocated were the supposedly fixed costs. [00:13:40] Speaker 01: Our fixed costs went up after the Con Ed settlement. [00:13:43] Speaker 01: There was no methodology whatsoever. [00:13:46] Speaker 01: And PJM did a probe. [00:13:48] Speaker 06: Do you raise a like cases, a like claim in your brief? [00:13:52] Speaker 06: I didn't see that. [00:13:53] Speaker 06: Well, that's a distinct claim under case law, a distinct kind of [00:13:58] Speaker 06: arbitrary and capricious agency action. [00:14:01] Speaker 01: It's within our argument that FERC has disregarded its longstanding policy. [00:14:06] Speaker 01: And we do rely on the Con Ed example as an instance where the agency did approve this exact reallocation and then didn't allow for that reallocation in our case. [00:14:21] Speaker 01: But that again goes to the reallocation point. [00:14:23] Speaker 01: And there's a separate point about whether the allocated costs are collectible, because it's entirely possible that the Schedule 12 appendix allocations are fixed and unchanging, but they can't be collected. [00:14:36] Speaker 01: And that's what 12B10B2 says. [00:14:39] Speaker 02: You indicate you don't receive any more benefits. [00:14:41] Speaker 02: That's how you started out. [00:14:42] Speaker 02: Yes. [00:14:43] Speaker 02: Go a little bit more there. [00:14:45] Speaker 01: Certainly, Your Honor. [00:14:46] Speaker 01: So the measure of benefits is firm transmission withdrawal rights. [00:14:50] Speaker 01: And those rights are special because they can't be curtailed except in very extreme circumstances. [00:14:56] Speaker 01: And that is the traditional measure in opinion 503 of the benefit that a merchant transmission facility draws. [00:15:05] Speaker 01: That incidental benefits, whatever incidental benefits parties draw from changes made out in the grid somewhere. [00:15:13] Speaker 01: Some of these projects are in the Chicago area, hundreds of miles away. [00:15:17] Speaker 01: Incidental benefits aren't the basis for cost allocations under this tariff and under opinion 503. [00:15:24] Speaker 01: So the argument that I think has the other side has made is that there are still incidental benefits coming from these projects, but those aren't the measure of benefits under opinion 503. [00:15:36] Speaker 01: And they aren't a basis for cost allocations. [00:15:40] Speaker 01: And we have paid, Hudson has paid very extensively [00:15:43] Speaker 01: for interconnection. [00:15:44] Speaker 01: They paid $335 million to interconnect to the PJM grid. [00:15:50] Speaker 01: That investment is completely lost. [00:15:52] Speaker 01: We walked away from that in order to stop the bleeding in this case. [00:15:55] Speaker 01: But all of those improvements are still in the PJM grid. [00:15:59] Speaker 01: We also paid for firm rights when we had those firm [00:16:02] Speaker 01: rights in the period where we had those. [00:16:04] Speaker 01: We pay a separate rate called the border rate, which is an export rate. [00:16:09] Speaker 01: We also pay for the electricity. [00:16:10] Speaker 01: So whatever incidental benefits can be said to be drawn from the grid, we've paid for. [00:16:17] Speaker 01: We've paid for, and the firm rights are the only measure for cost assessments under this provision. [00:16:23] Speaker 01: Over my time, if I am happy to. [00:16:29] Speaker 05: That's fine. [00:16:29] Speaker 05: I'm happy to answer a question. [00:16:31] Speaker 05: Yes. [00:16:32] Speaker 05: I think that your brief says that you didn't acquire the firm rights until 2015. [00:16:37] Speaker 05: Is that right? [00:16:40] Speaker 05: The full allocation of firm rights was in 2015. [00:16:42] Speaker 05: Maybe that's the answer to my question. [00:16:44] Speaker 05: But the violation-based costs were assessed from 2007 to 2013, you think? [00:16:51] Speaker 01: I believe the costs were assessed from 2013 to [00:16:57] Speaker 01: To present the put the projects. [00:16:59] Speaker 01: The projects were planned from 2007 to 2013. [00:17:03] Speaker 01: So that was the planning period for the projects. [00:17:05] Speaker 01: And then the cost get assessed after you have acquired your firm rights. [00:17:09] Speaker 01: Correct. [00:17:10] Speaker 01: That's correct. [00:17:13] Speaker 01: I'm happy to address economic projects briefly for any questions. [00:17:16] Speaker 06: You can say a little bit about that. [00:17:19] Speaker 01: Yes. [00:17:20] Speaker 01: The relevant provision for the economic projects is 12, 5, C. So there are three types of economic projects, A, B, and C. And 12, 5, C governs the projects at issue here. [00:17:33] Speaker 01: That provision does not mention merchant transmission facilities, in contrast to A and B. A and B say costs can be allocated to zones and merchant facilities. [00:17:44] Speaker 01: C says merchant facilities, full stop. [00:17:47] Speaker 01: There's no provision for the allocation to merchant transmission facilities. [00:17:51] Speaker 01: Now, the way that FERC has justified the cost assignments is to say, well, [00:17:57] Speaker 01: Merchant facilities are like zones. [00:18:00] Speaker 01: But they're only like zones if they have firm rights. [00:18:04] Speaker 01: And that's the policy of opinion number 503. [00:18:07] Speaker 01: If they have firm rights, if merchant facilities have firm rights, then they have a demand on the system, a load on the system, and can be assessed costs on that basis. [00:18:19] Speaker 01: But when they have no firm rights, [00:18:21] Speaker 01: There's no basis. [00:18:22] Speaker 01: There's no policy for treating them like zones. [00:18:25] Speaker 01: And the absence of the word merchant transmission facility in this provision should be respected. [00:18:31] Speaker 01: There should not be an ongoing cost assessment for these projects, some of which are in Chicago. [00:18:36] Speaker 01: I mean, some of them are hundreds of miles away, and we're still paying for them. [00:18:39] Speaker 06: So I take opinion 503 to suggest that if a merchant transmission facility imposes a load, that's sufficient. [00:18:50] Speaker 06: for the merchant transmission facility to be treated as a zone. [00:18:55] Speaker 06: But it doesn't necessarily mean that the load is necessary. [00:18:59] Speaker 06: I mean, maybe a merchant transmission facility can be treated as a zone even if it doesn't impose a load. [00:19:04] Speaker 06: Maybe that question just hasn't been decided by FERC. [00:19:07] Speaker 01: Well, I think the language I'm referring to is footnote 84 of opinion 503 and the surrounding text. [00:19:14] Speaker 01: And there it says that a merchant transmission facility [00:19:17] Speaker 01: can be treated, can be assessed cost to the extent of its firm transmission withdrawal rights. [00:19:22] Speaker 01: And then it says it can avoid these cost assessments if it takes non-firm rights, only non-firm rights. [00:19:29] Speaker 01: Non-firm rights are essentially the ability to participate in the daily spot market for electricity. [00:19:34] Speaker 01: It's not a guaranteed or stable source of electricity. [00:19:37] Speaker 01: And that's the language in opinion number 503 that draws the distinction between firm rights, which can support cost assessments and non-firm rights. [00:19:45] Speaker 06: So you read 503 to say that a merchant transmission facility can only be treated as a zone if it has firm rights. [00:19:53] Speaker 01: Yes. [00:19:54] Speaker 06: And it forecloses the possibility it could be treated as a zone. [00:19:58] Speaker 01: Well, I'm not suggesting that the agency can't come up with a rationale for imposing costs otherwise. [00:20:04] Speaker 01: But they haven't done that in this case. [00:20:06] Speaker 01: They have not justified their departure from longstanding policy. [00:20:09] Speaker 01: The orders under review certainly don't do that. [00:20:13] Speaker 01: I'm happy to answer any other questions or address questions. [00:20:18] Speaker 01: Thank you. [00:20:33] Speaker 03: Good morning. [00:20:34] Speaker 03: May it please the court, Susanna Chu for the Federal Energy Regulatory Commission. [00:20:40] Speaker 03: Your honors are correct that this is not analogous to either the Long Island power case or the cons consolidated Edison decision. [00:20:51] Speaker 03: We're talking about pre existing fixed cost allocations that were established and are not subject to cost reallocation. [00:21:03] Speaker 03: We were talking a little bit about the [00:21:06] Speaker 03: the New Jersey Board decision that was part of the consolidated Edison decision that came out in August 2022. [00:21:13] Speaker 03: I think it's important to remember that that case involved the solution-based defax allocations, and that refers to a particular provision in the tariff where the solution-based defax calculation is done, and it uses as a multiplier [00:21:33] Speaker 03: the firm withdrawal rights of a merchant transmission facility. [00:21:37] Speaker 03: So that's why the commission found and the court upheld that Hudson and other merchant transmission facilities that had given up their firm rights were not obligated to pay these reliability upgrade costs on a going forward basis. [00:21:53] Speaker 03: But none of the firm rights at issue there are relevant to the cost allocations that were at issue in the PJM compliance filing that triggered this litigation. [00:22:07] Speaker 03: Going back to the language of Section A5, it says that [00:22:14] Speaker 03: These projects that were selected and planned by PJM in the 2007 to 2013 period are fixed and they are and they shall not be changed except that specifically set forth here in. [00:22:28] Speaker 03: But that is except the specifically set forth here in language does refer to the con ed provision at the tariff schedule 12 B 11. [00:22:40] Speaker 06: I'm Mr Townsend's argument that that is about the assignment of not the collection of costs. [00:22:48] Speaker 06: What do you think about that distinction. [00:22:49] Speaker 03: I think that is a false distinction. [00:22:53] Speaker 03: The discussion of collection in the Long Island power case is not relevant here. [00:23:00] Speaker 03: I think the history of that provision. [00:23:04] Speaker 03: The Roman at 10 B 2 shows [00:23:09] Speaker 03: At judge row as as you were describing earlier that provision actually addresses situations where a merchant facility does not have its full complement of firm rights. [00:23:21] Speaker 03: Just as Mr Townsend was describing the situation where. [00:23:27] Speaker 03: Hudson had signed an interconnection agreement in 2010 for 320 megawatts of firm rights, but did not yet receive the full complement of those firm rights until 2015. [00:23:38] Speaker 03: That is the situation that B10B2 is designed to address. [00:23:43] Speaker 03: And I think that is shown at opinion 503, paragraph, I'm sorry, JA 145. [00:23:53] Speaker 03: I'm sorry, it's paragraph 145, JA 272. [00:23:57] Speaker 03: to 273. [00:23:59] Speaker 03: And there's even a PJM compliance filing in response at GAA 281 to 283, showing that that's where provision B10B2 comes in. [00:24:12] Speaker 03: It is to address that mechanical situation where a merchant is entitled to receive a certain number of firm rights, but it's not yet in service and doesn't yet have revenue coming in. [00:24:26] Speaker 03: PJM defers the collection of costs until the merchant facility has revenue coming in and is able to pay that amount. [00:24:35] Speaker 06: What about Mr. Townsend's argument that the decision here is different from what happened in Con Ed and is contrary to FERC's policies in other instances when someone converts from firm to non-firm rights? [00:24:52] Speaker 03: Right, Your Honor. [00:24:53] Speaker 03: So to the extent it was that argument was made, this is different from the Con Ed situation because the Con Ed settlement agreement, which was described at the consolidated Edison decision at 45 fed forth 287, that was a 2009 settlement agreement. [00:25:13] Speaker 03: And it was incorporated into the tariff at section B 11. [00:25:17] Speaker 06: Is that what they wanted to do here? [00:25:19] Speaker 06: I mean, here PJM [00:25:21] Speaker 06: And Hudson agreed, right, to release them from, you know, to prevent the collection or the assignment of those funds going forward. [00:25:31] Speaker 06: But FERC disagreed. [00:25:32] Speaker 06: Well, a couple of things there, Your Honor. [00:25:34] Speaker 06: FERC refused to ratify the agreement that the private parties had come to. [00:25:39] Speaker 03: No, there was no agreement between Hudson and PJM. [00:25:43] Speaker 03: In fact, the compliance filing by PJM actually says that [00:25:48] Speaker 03: They were, PJM was unsure about what to do with these pre-existing cost allocations in the wake of the commission's order, 2017 order that was affirmed in New Jersey board. [00:26:00] Speaker 03: At JA six through seven, PJM actually says that there are no provisions in schedule 12 that permit PJM to reallocate cost responsibility for economic projects below 500 kilovolts or cost assignments allocated using violation based defects. [00:26:17] Speaker 03: So PJM said that there are no provisions, but they were still making a good faith effort to try to implement the commission's orders. [00:26:23] Speaker 06: But they agreed, didn't they, with Hudson? [00:26:26] Speaker 03: No, they did not, Your Honor. [00:26:28] Speaker 03: No, they proposed to eliminate the cost responsibility. [00:26:33] Speaker 03: Is that agreeing with Hudson? [00:26:36] Speaker 03: Well, but they said that, you know, we're just making a good faith effort to implement the commission orders. [00:26:41] Speaker 03: And after that, they did not disagree with the commission orders. [00:26:44] Speaker 03: They actually appeared as an intervener in support of FERC in this case, although they did not file a brief. [00:26:51] Speaker 03: And I want to say that there was not an agreement there, but also... I don't understand. [00:26:59] Speaker 05: They said, we're not going to charge Hudson. [00:27:04] Speaker 05: And presumably Hudson didn't want to be charged. [00:27:08] Speaker 05: So it seems like they agreed. [00:27:09] Speaker 03: Right. [00:27:10] Speaker 03: OK. [00:27:10] Speaker 03: Well, Your Honor, I don't mean to be splitting hairs here. [00:27:13] Speaker 03: It's PJM said that we're not sure how to implement, but this is our good faith effort to implement. [00:27:20] Speaker 06: But what they brought forth to FERC was Hudson's proposal to get out from the fixed costs. [00:27:28] Speaker 06: That's what they put forth in their filing, isn't it? [00:27:31] Speaker 03: That is true, Your Honor. [00:27:32] Speaker 03: I'm just trying to clarify that they, it wasn't, PGM did not say, we think- Fully on board, but they were actually filing that, but they were filing it with FERC. [00:27:42] Speaker 03: That's right, Your Honor. [00:27:43] Speaker 03: They did file with FERC. [00:27:44] Speaker 03: They just weren't fully on board. [00:27:45] Speaker 03: They expressed uncertainty. [00:27:47] Speaker 06: What the legal consequence of that is? [00:27:51] Speaker 03: I think it just- [00:27:57] Speaker 03: I think that's probably right. [00:27:59] Speaker 03: You're right. [00:28:01] Speaker 03: So just going back to the Con Ed settlement, that provision, the last sentence of B11, it specifically talks about adjusting cost responsibility assignments at the commencement and transmission [00:28:19] Speaker 03: of excuse me, at the commencement and termination of service under the Con Ed service agreements. [00:28:28] Speaker 03: And in fact, that settlement agreement was before the court in the New Jersey board and consolidated Edison cases. [00:28:36] Speaker 03: The actual settlement agreement is very specific at upon commencement of Con Ed service agreements. [00:28:43] Speaker 03: The cost responsibility, the cost allocations under schedule [00:28:48] Speaker 03: schedule 12 appendix are actually going to be changed to incorporate responsibility for Con Ed. [00:28:56] Speaker 03: And upon termination, those same allocations will be eliminated to account for Con Ed's termination. [00:29:03] Speaker 03: I know that that is the prior case, but it is in the New Jersey Board Joint Appendix at volume 4, JA 615. [00:29:13] Speaker 03: And that does provide the additional background. [00:29:15] Speaker 06: Isn't the only difference though between those situations whether FERC agreed? [00:29:22] Speaker 03: No, I don't think so, Your Honor. [00:29:23] Speaker 03: I mean, I think there's a difference in that there's the specific settlement agreement that FERC agreed with, yes, but that is incorporated into the tariff. [00:29:33] Speaker 03: And that is the, except the specifically specified hearing, that falls under the A5 language. [00:29:39] Speaker 06: So are you saying that the agreement that PJM and Hudson came to was not the type of settlement that could have been incorporated into the tariff? [00:29:49] Speaker 03: I don't think there was a settlement agreement. [00:29:53] Speaker 06: Maybe there wasn't a formal settlement. [00:29:55] Speaker 06: Are you saying it wasn't formal enough? [00:29:57] Speaker 03: It wasn't a settlement agreement. [00:29:59] Speaker 03: The Con Ed settlement agreement involved numerous parties. [00:30:02] Speaker 03: It was Con Ed, PJM, the New Jersey board. [00:30:07] Speaker 03: I don't recall all of the parties, but there were numerous parties to that settlement agreement. [00:30:11] Speaker 03: It was a huge agreement. [00:30:13] Speaker 03: There was no such settlement agreement here. [00:30:15] Speaker 06: But there was some agreement between PJM and Hudson. [00:30:18] Speaker 03: Again, I think it was PJM happened to agree with Hudson's view. [00:30:25] Speaker 03: You know, they proposed to eliminate the responsibility because they were just trying to implement the commission orders. [00:30:33] Speaker 02: And can you respond to the question I asked earlier about the benefits? [00:30:39] Speaker 02: Oh, yes, your honor. [00:30:41] Speaker 03: So that kind of goes back to the fact that the Section A5 provision [00:30:48] Speaker 03: that those allocations are assigned under a different methodology. [00:30:54] Speaker 03: It doesn't measure present benefits the way the solution based defects does. [00:30:59] Speaker 03: It actually measures the measures who caused the reliability violation that necessitates the new upgrade. [00:31:10] Speaker 03: It is described in the commission order, but there's also testimony in the joint appendix and that is [00:31:18] Speaker 03: at Joint Appendix 361. [00:31:20] Speaker 03: And it's a good overview of what makes the violation-based method different from solution-based method. [00:31:26] Speaker 03: It is also in the order at footnotes 8 and 10 at JA 92. [00:31:30] Speaker 02: And you also indicated that Hudson should be assigned load regardless of their... Yes, I'm sorry. [00:31:36] Speaker 03: Yes. [00:31:38] Speaker 03: I meant to bring out that Hudson is still a customer within PJM. [00:31:42] Speaker 03: It is still drawing power from the PJM grid. [00:31:47] Speaker 03: Um, and as to certainly as to those economic constraint projects, they are still obtaining relief in the form of lower congestion payments, load energy payments. [00:31:59] Speaker 03: So they are still receiving benefits. [00:32:01] Speaker 03: They're still part of the PJM system and they're still bound by these tariff provisions, especially a five that that are, um, fixed, they're fixed and they were not affected by [00:32:16] Speaker 03: any of the subsequent developments that were at issue in the prior case. [00:32:22] Speaker 02: And I was also asking about whether or not Hudson, you were indicating that they should still be treated as load regardless of their firm withdrawal rights? [00:32:32] Speaker 03: That's right, Your Honor. [00:32:33] Speaker 03: The Commission held that Hudson is still treated as a zone for purposes of these cost allocations, yes. [00:32:44] Speaker 02: And how do you determine at what time that occurs? [00:32:51] Speaker 03: Well, Your Honor, the timing is not really at issue here because we're talking about a specific set of projects that were previously cost allocated. [00:33:03] Speaker 03: It's the specific projects that are in the PGM compliance filing. [00:33:09] Speaker 03: You know, these projects were assigned to Hudson at a time when they held firm withdrawal rights. [00:33:16] Speaker 03: So the fact that they later relinquished them doesn't change the fact that they incurred this cost responsibility and they continue to have this cost responsibility as a customer in PJM. [00:33:30] Speaker 05: What if Hudson were not a customer anymore? [00:33:34] Speaker 05: Would they still be on the hook for all these charges? [00:33:41] Speaker 03: That's a good question, Your Honor. [00:33:43] Speaker 03: To be honest, I'm not sure. [00:33:45] Speaker 03: Do you mean if Hudson disconnected its line and left PJM altogether? [00:33:52] Speaker 03: I'm not sure. [00:33:57] Speaker 03: I mean, in that scenario, I would suspect the parties would discuss that. [00:34:04] Speaker 03: And there may be a provision in their interconnection agreements that addresses that. [00:34:11] Speaker 05: It seems like the logic of your argument about the violation-based costs would suggest that they would still be on the hook. [00:34:24] Speaker 03: I agree, Your Honor, that the logic would say that they probably would still be on the hook. [00:34:29] Speaker 03: But I don't know if there's a specific provision in their interconnection service agreements or any other agreements they may have that may actually address what happens if they disconnect their line. [00:34:39] Speaker 05: There's a line in your brief at page 30, and it's back-to-back sentences. [00:34:47] Speaker 05: And I just wasn't sure how they fit together. [00:34:50] Speaker 05: I can get you there. [00:34:55] Speaker 05: The first brief, Your Honor, yes. [00:34:57] Speaker 05: Yes, your brief. [00:34:58] Speaker 05: You say that Hudson's firm rights were a proxy for load. [00:35:04] Speaker 05: But in the next sentence, you say that firm rights have no relationship to allocations for economic projects, which are based on changes in energy load payments. [00:35:17] Speaker 05: So it sounds like you're saying firm rights are relevant in the first sentence and then you're saying they're not relevant in the next. [00:35:24] Speaker 05: But I suspect that's not really what you're trying to say. [00:35:27] Speaker 05: So tell me what you're really trying to say. [00:35:29] Speaker 03: I apologize for the lack of clarity, Your Honor. [00:35:32] Speaker 03: I mean, I think our reasoning is really in the second sentence, that the economic constraint projects, those are cost allocated. [00:35:42] Speaker 03: They're actually, they're allocated, and I may not be able to very accurately describe the specific calculation, but they're calculated once and then they're done. [00:35:55] Speaker 03: So they calculate forward 15 years, [00:35:59] Speaker 03: the change in the load energy payments that a facility receives as a result of a new upgrade. [00:36:06] Speaker 03: And then they bring it down to the net present value and allocate those costs among the benefiting parties. [00:36:14] Speaker 03: So what the commission was saying is that this particular provision just, it just relates to the congestion relief benefits and these financial benefits. [00:36:25] Speaker 03: It just doesn't have to do with the firm rights. [00:36:30] Speaker 05: then how do you square that with the sentence that precedes it where you say that the firm rights are a proxy for load? [00:36:38] Speaker 03: I think that's really relevant to, it's a more general point that going back to opinion 503, where the commission had talked about, and that was 2009 at a time when merchant facilities that had firm rights were [00:37:00] Speaker 03: considered unlikely to give them up. [00:37:03] Speaker 03: So these were considered, their firm rights were used when the calculation called for the amount of load, they would use the amount of the firm rights. [00:37:18] Speaker 03: So I'm sorry if those two sentences don't really fit together all that well, but that's- [00:37:27] Speaker 05: Clarification. [00:37:29] Speaker 05: Can I ask about opinion 503? [00:37:30] Speaker 05: I think if I were a owner of Hudson or something like that, and I read opinion 503, which was issued at a time when there were no solution-based costs, I think. [00:37:45] Speaker 05: Right. [00:37:45] Speaker 05: That's right, Your Honor. [00:37:46] Speaker 05: So it had to be talking about violation-based costs. [00:37:50] Speaker 05: And I read opinion 503, and it sounds like [00:37:55] Speaker 05: I can avoid these costs if I opt out of my firm rights. [00:38:00] Speaker 05: And in particular, it says the cost allocation provisions in schedule 12 provide that emergent transmission owner does not own firm rights, does not receive cost responsibility assignments for our TEP projects. [00:38:15] Speaker 05: Why would I have been wrong to read that and think, okay, if I went out of these cost responsibility assignments, I just need to opt out of my firm rights? [00:38:28] Speaker 03: Well, going back to the initial choice as to whether to opt in for firm rights or not opt in, I mean, if you do not opt in at all, then there would be no cost assignments. [00:38:42] Speaker 03: What happened here is that [00:38:46] Speaker 03: that once PJM shifted over to the new solution-based defax method, the PJM implemented a firm cutoff, and that was Section A5, that as of February 1st, 2013, all of the violation-based costs are fixed, and they shall not be changed. [00:39:10] Speaker 03: And it's important to remember the violation-based costs, they are allocated based on [00:39:16] Speaker 03: They're like a snapshot in time. [00:39:17] Speaker 03: It's who has caused the need for a specific reliability upgrade. [00:39:24] Speaker 03: And it's explained, I believe, in the testimony I cited earlier, at JA 361, that the violation-based method cannot be rerun. [00:39:33] Speaker 03: It's not like solution-based defects, which is done every year. [00:39:38] Speaker 05: Well, content violation-based costs were reallocated. [00:39:43] Speaker 03: Right. [00:39:45] Speaker 03: Right. [00:39:46] Speaker 03: They were not re-calculated, shall I say? [00:39:50] Speaker 03: Yes, they were. [00:39:51] Speaker 03: When Con Ed terminated, yes, their allocations were just eliminated and the remaining costs were reassigned. [00:39:57] Speaker 03: As a practical matter, the same thing could happen here. [00:40:00] Speaker 03: Yes, as a practical matter, that is possible. [00:40:02] Speaker 03: But the commission held that that wasn't appropriate in this situation because there was no settlement like the 2009 Con Ed settlement and no provision like the Con Ed provision. [00:40:12] Speaker 05: What if I think your explanation of the conflict between what happened here and Opinion 503 is persuasive, but I don't see that explanation in FERC's order? [00:40:30] Speaker 03: I think it is, Your Honor. [00:40:31] Speaker 03: I mean, I think the order does refer to the Con Ed situation and the Con Ed provision. [00:40:41] Speaker 03: Uh, it's that paragraph 24. [00:40:43] Speaker 05: Pretty, uh, cursory. [00:40:50] Speaker 03: Uh, right. [00:40:51] Speaker 03: Well, 503 is really the backdrop to all of, all of this. [00:40:56] Speaker 03: I mean, the commission, of course, is, is not addressing these issues in a vacuum. [00:41:01] Speaker 03: I mean, the commission has been navigating these issues for [00:41:05] Speaker 03: over a decade, or it's been a very long time. [00:41:08] Speaker 03: So opinion 503, that is, I believe, front and center in the commission's mind. [00:41:16] Speaker 03: I believe it is cited. [00:41:18] Speaker 03: And at the rehearing order at paragraph 24, I think that's where the reasoning is. [00:41:26] Speaker 03: I think it is there, Your Honor. [00:41:27] Speaker 03: I think it's discernible from the order. [00:41:30] Speaker 05: Well, and then I think this will be my last question. [00:41:35] Speaker 05: If it's as cursory as I think 503 discussion wise, it's at least longer than the cost causation analysis, which I think is not there at all. [00:41:49] Speaker 05: And I think maybe your argument is, well, it didn't need to be there because we've done all of this before. [00:41:56] Speaker 05: This is not a different situation, right? [00:41:58] Speaker 03: That's right, Your Honor. [00:42:00] Speaker 05: But if it's not a different situation, [00:42:03] Speaker 05: from, for example, opinion 503, then it seems like, fine, let's apply the general rule from opinion 503, which says, if you don't have firm rights, you don't pay violation-based costs. [00:42:18] Speaker 03: I'm sorry, Your Honor, I lost you there. [00:42:20] Speaker 03: I think that the [00:42:24] Speaker 03: You're talking about the A5 projects here, right? [00:42:29] Speaker 03: The violation-based costs. [00:42:32] Speaker 05: And I'm saying there's no cost causation analysis in FERC's order. [00:42:37] Speaker 05: And that would probably be OK if FERC was just rerunning stuff it had done before. [00:42:44] Speaker 05: But I think your point is that, no, FERC's not rerunning stuff it did before. [00:42:49] Speaker 05: FERC is doing something different here. [00:42:52] Speaker 05: This is a different scenario than opinion 503, in which case it seems like you probably needed some causation discussion. [00:43:01] Speaker 07: Okay, I'm sorry. [00:43:02] Speaker 05: It's not a different scenario than 503. [00:43:04] Speaker 05: It seems like you should have applied 503's general rule that if you don't have firm rights, you don't pay violation-based costs. [00:43:12] Speaker 03: Okay, I think I understand, Your Honor. [00:43:14] Speaker 03: The Commission is relying on those violation-based cost assessments that were done in 2007 to 2013. [00:43:22] Speaker 03: I mean, those were run, they were just and reasonable, you know, allocation and use of, you know, the prevailing method at the time. [00:43:33] Speaker 03: So the Commission did not feel it had to rerun the cost [00:43:40] Speaker 05: I get that. [00:43:41] Speaker 05: So that's fine. [00:43:42] Speaker 05: But then why not, in that case, apply what FERC said at the time, which is if you don't have firm rights, you don't pay violation-based costs. [00:43:54] Speaker 03: Right. [00:43:54] Speaker 03: But I think, Your Honor, it's because the Hudson had the firm rights at the time they were allocated. [00:44:01] Speaker 03: And we're just applying the tariff now. [00:44:03] Speaker 03: We're applying Section A5, which says that [00:44:08] Speaker 03: those costs are fixed and they shall not be changed unless there is a specific exclusion from these particular allocations. [00:44:19] Speaker 03: The commission here is relying on the fact that it's not required to consider the cost allocation rules on a project by project basis. [00:44:31] Speaker 03: I think that was in the court's Long Island power decision [00:44:35] Speaker 03: that would unravel the whole framework of these ex ante tariffs. [00:44:43] Speaker 03: So the commission, you know, this is just like the New Jersey board case where the result is. [00:44:49] Speaker 03: It's just. [00:44:51] Speaker 03: It's the result of a combined set of permissible circumstances that does not render any of these rates unjust and [00:45:12] Speaker 04: John Langstroth for PPL, we're one of the transmission owners at PJM. [00:45:18] Speaker 04: Let me start at the end because it's Judge Walker's question, because I think it's absolutely consistent what's going on. [00:45:23] Speaker 04: What it says in order 503 is, yeah, if you have firm rights, you get assigned these costs. [00:45:28] Speaker 04: That's exactly what happened. [00:45:29] Speaker 04: Because they had firm rights, those rights were causing a violation and under violation-based defects, they had to pay those. [00:45:37] Speaker 04: Now, if you're reading it and saying, OK, I don't have firm rights, they could have done that in 2010. [00:45:42] Speaker 04: They could have done that in 2011. [00:45:44] Speaker 04: They could have done that in 2012. [00:45:45] Speaker 04: Suppose in 2012 they decide to give up their firm rights. [00:45:49] Speaker 04: They're not responsible for any violation based defects after that. [00:45:52] Speaker 04: But for the rights they had at the time those reliability projects were planned, violation based defects said you've got to pay those costs and you can't get out of them later the way you can with solution based defects. [00:46:05] Speaker 04: I think it's absolutely consistent with 503. [00:46:07] Speaker 04: about that. [00:46:08] Speaker 05: It seems like that argument relies on a distinction between allocating the costs and collecting the costs. [00:46:15] Speaker 05: And it's fine if you think that that's an important line to draw, but that's going to cut against you when we get to B10 because [00:46:23] Speaker 04: I don't think so. [00:46:25] Speaker 04: No, I don't think so because B10 is just a different situation. [00:46:27] Speaker 04: I think when Judge Rao suggested, and I understand, you know, FERC shorthanded a little bit and we did a little bit our brief. [00:46:34] Speaker 04: You know, we just don't think B10 really has anything to do with the situation, for example, you had in Lipa. [00:46:40] Speaker 04: In Lipa, it was very clear that you had to be collecting at the time you had the firm rights. [00:46:45] Speaker 04: Here, the firm rights [00:46:47] Speaker 04: And again, remember, for violation-based defects, when you have the firm rights, PJM is planning ahead. [00:46:53] Speaker 04: So in 2010, 2011, they're planning for what's going to happen in 2015. [00:46:58] Speaker 04: And they're saying, if you caused that, you caused that. [00:47:01] Speaker 04: We're building it for you. [00:47:02] Speaker 04: If you decide five, six, seven years later, you want to get out of it, we built it for you back then. [00:47:08] Speaker 04: And that was the rule. [00:47:09] Speaker 04: That's the rule that applies. [00:47:14] Speaker 04: That was the rule. [00:47:15] Speaker 04: That was the rule. [00:47:17] Speaker 04: And we talked about cost causation. [00:47:18] Speaker 04: Everybody understood that was the rule. [00:47:20] Speaker 04: I don't understand anybody's ever brought a cost causation case against violation based defects. [00:47:27] Speaker 04: Cause is right in the violation. [00:47:29] Speaker 04: You are causing the problem. [00:47:31] Speaker 04: We are building this for you based on the rights you tell us that you're going to have. [00:47:36] Speaker 04: And that's another issue, too, when they talked about we didn't have firm rights, and I think even firm counsel talked about did the full complement of rights. [00:47:45] Speaker 04: They had full rights at 2010, 2011, 2012. [00:47:51] Speaker 04: They came and said, we're going to have these 320 kilowatts, and you're going to have to build for them. [00:47:59] Speaker 04: for PJM doesn't know at the time they're building that and are ordering that to be built and planning it, that five, six, seven years from now, they're going to give up their rights, they have to assume they have those for those rights going forward. [00:48:11] Speaker 04: So they're planning the project for those rights at the time that they have [00:48:15] Speaker 04: So they absolutely did have the rights. [00:48:18] Speaker 04: It's just that they didn't exercise the rights until the facilities were actually built in 2015, 2016. [00:48:25] Speaker 04: And that's what happened here. [00:48:26] Speaker 04: It's a deferred payment. [00:48:28] Speaker 04: So again, that's completely different from the LIPA case. [00:48:31] Speaker 04: In the LIPA case, the problem was that even though the costs were accruing and it didn't necessarily make a lot of sense that, you know, they're going to be accruing costs that we can't collect them until Burt gets around to ruling on it. [00:48:43] Speaker 04: The problem was that's what the tariff said. [00:48:45] Speaker 04: Here, it's absolutely not what the tariff says. [00:48:47] Speaker 04: The tariff says not that you have to be collected at the time that they have firm rights, but that when we come to calculate your payments, we basically look to see the rights, and it's, what's the exact language? [00:49:03] Speaker 04: Because he skipped over it, that have been awarded. [00:49:06] Speaker 04: We look at the rights that have been awarded. [00:49:08] Speaker 04: It's looking back language in that B-10, B-Roman 10-2 language. [00:49:14] Speaker 04: completely different from the lipo case. [00:49:20] Speaker 04: Okay, thank you very much. [00:49:30] Speaker 01: Thank you. [00:49:31] Speaker 01: So much of this case can be resolved with three words, collection, actual, and assignment. [00:49:38] Speaker 01: There cannot be collection without actual firm rights. [00:49:42] Speaker 01: The provision that FERC relies on and that PPL rely on is about assignment, assignment of cost responsibility, different from collection. [00:49:51] Speaker 01: And the argument has been made, well, LIPA is a different case. [00:49:54] Speaker 01: I mean, we don't need, LIPA addressed the word collect and said it was unambiguous. [00:49:59] Speaker 01: But even if the LIPA decision had never issued, the plain text of this statute, the plain meaning, the plain English meaning of the word collection supports our interpretation. [00:50:11] Speaker 01: As for the costs that were, we were not in service until 2013. [00:50:18] Speaker 01: And so at that time, we paid $335 million for all violations that we could conceivably cause in order to connect to the PJM grid. [00:50:31] Speaker 01: Those caused violations have been paid for. [00:50:34] Speaker 01: We walked away from that investment. [00:50:36] Speaker 01: And I want to stress that that was not an easy choice. [00:50:38] Speaker 01: That was an enormous investment that we had to leave on the table to stop the bleeding from these additional assessments, these additional collections. [00:50:47] Speaker 06: And we so as a practical matter, if we work with Hudson want to to go back to having firm rights in the grid, that's going to be paying for them. [00:50:59] Speaker 01: Not under certainly not under the conditions that prevailed when we had during that period, it was it was an untenable position where we were just socked with massive costs 600 million and some costs for the Bergen-Linden corridor project alone. [00:51:17] Speaker 01: It was most of the solution. [00:51:19] Speaker 01: I beg your pardon? [00:51:20] Speaker 05: Most of those were solution-based costs, not these violations. [00:51:24] Speaker 01: Most of them, to be sure, but we have $136 million in violation-based costs here as well. [00:51:29] Speaker 01: And to go back to your points about opinion 503, the understanding was when that issue, the only methodology was violation-based defects at that time, the so-called fixed, once-and-done allocation. [00:51:43] Speaker 01: The opinion says, it says in so many terms, that the merchant facility can take non-firm rights and avoid those charges. [00:51:51] Speaker 01: That's exactly what we did. [00:51:53] Speaker 01: Can I ask you? [00:51:54] Speaker 01: No, please. [00:51:55] Speaker 02: How does that $136 million that you mentioned compare to the actual benefit you received? [00:52:02] Speaker 01: So first of all, the benefits that we receive from firm rights, we paid for in the time that we had firm rights. [00:52:08] Speaker 01: We're not asking for any sort of a refund. [00:52:10] Speaker 01: At this point, we only have non-firm rights. [00:52:13] Speaker 01: And that means an incidental benefit. [00:52:15] Speaker 01: To participate in the daily spot market for electricity, that's not a basis for allocating costs. [00:52:23] Speaker 01: Never has been. [00:52:24] Speaker 01: The Seventh Circuit said in the Illinois Commerce case, we mustn't allow the incidental benefits tail to wag the primary benefits dog. [00:52:31] Speaker 01: Everyone who is connected to the grid can be said to be deriving some incidental benefit from any improvement anywhere in the grid, and yet they're not charged. [00:52:41] Speaker 01: They're not charged. [00:52:41] Speaker 01: Only the metric for charging a merchant transmission facility is firm transmission withdrawal rights, and FERC established that in opinion number 503. [00:52:51] Speaker 01: I'm over my time. [00:52:51] Speaker 01: I'm happy to answer any other questions. [00:52:53] Speaker 05: Do you think that any of the arguments that Burke or the intervener made today are kind of precluded because Burke did not make them in its order? [00:53:05] Speaker 01: Yes, we heard. [00:53:06] Speaker 01: Which ones? [00:53:06] Speaker 01: We heard today for the first time a theory for what B10B2 means. [00:53:12] Speaker 01: And I think it was a reference to Joint Appendix, page 275. [00:53:15] Speaker 01: That's not a theory that's reflected in the orders under issue, barred by Chenner. [00:53:24] Speaker 06: Thank you. [00:53:24] Speaker 06: Case submitted.