Summary of the Public Service Commission Hearing
July 31, 2009

Members of the Sugarloaf Conservancy, Inc., as well as interested citizens and property owners from Urbana and Mt. Airy, principally, attended the hearing before the Public Service Commission (“PSC”) today on the application of Potomac Edison on behalf of PATH (a conglomerate of various transmission companies and groups, including Allegheny Power and AEP) which seeks to build transmission lines and a substation near Mt. Airy.

The hearing commenced at 10:00 AM with four of the five commissioners present. The hearing was focused on four questions which the PSC had requested the parties to brief, dealing with procedural and jurisdictional issues to determine if they would accept the application for filing. Presentations were made by the attorneys for the several parties, including the Applicant, Frederick County, the Sierra Club, Office of Peoples Counsel, Staff of the Public Service Commission and Jim Thompson, attorney for the Sugarloaf Conservancy, Inc. In addition, individual presentations were made by eight to ten citizen / intervenors addressing a variety of issues including the lack of notice the Applicant had given to citizens.

As a result of the hearing, it appears that the PSC will issue a decision within the next two weeks with several of these findings:

A. That the PSC does not have jurisdiction to consider the application of Potomac Edison on behalf of PATH since PATH is not an electric company, and PSC is restricted by statute in this regard. It appears likely that they will permit the applicant to amend their application and make Potomac Edison the applicant since it is an electric company under the statute; however, PATH has the financing and the rate approval from the Federal Energy Regulatory Commission (“FERC”) and does not wish to do that.

B. That Potomac Edison cannot assign a CPCN (“Certificate of Public Convenience and Necessity”) to a non-electric company to satisfy the statute. There are no rules or principles to cover this.

C. That the Frederick County Planning Board and County Commissioners have jurisdiction to hear the special exception necessary for the siting of the substation. Frederick County maintains that it has jurisdiction to hear the land use issues and decide on the siting of the substation. However, the Public Service Commission has authority to determine the location of the transmission lines and possibly, as the applicant maintains, the substation can be considered an integral part of the transmission lines. Hence, there can be several different outcomes with either Frederick or the PSC with exclusive jurisdiction or some type of a shared decision making process.

D. That FERC has “back stop” authority if the PSC does not make a decision on the merits of the application within twelve months after a proper application has been filed with the PSC. Concerns were expressed about when the one-year time clock begins to run and how much time the PSC has left to address the issues on the merits, since the application in this case was filed on May 19, 2009. Since the applicant did not file as an electric company, a powerful argument can be made that the time clock for the FERC back stop authority has not yet begun to run. Discussion was had about whether PSC would permit the applicant to amend its application with the understanding that the one-year time clock would begin to run from that date, but the PSC’s view on this is unclear.