Commissioner James Danly Statement
August 3, 2021
Docket No. ER17-1821-004
I dissent from our order today denying Panda Stonewall, LLC’s (Panda) proposed payment schedule for its refund obligation. That plan involves: (1) the immediate payment of $12,860,000 of refunds from the collateral account established by PJM Interconnection, L.L.C. (PJM) to ensure that Panda can pay the required refunds; (2) the return to Panda of any additional funds—the amount is unstated but apparently is less than the remaining $5 million of refunds owed by Panda; and (3) the payment of the remaining $5 million, plus interest, over a nine month period. Panda asserts that this plan is necessary to ensure that it will be able to comply with the requirements of its financing arrangements.
I agree that Panda could have done a better job of documenting its assertion that its plan is necessary to ensure its financial solvency. Having said that, I do not see any benefit to denying Panda’s request. Even though there is not good documentation, it seems likely that Panda is raising a genuine concern about its financing because it is difficult to see any other reason why it would request to have a relatively small amount of money returned from the collateral account for such a short period of time. Panda has committed not to request rejection of its refund obligation in the event it were to declare bankruptcy prior to its full payment of refunds, which means that so long as Panda does not shut down its facility upon a declaration of bankruptcy, it will generate the cash from its operations to make refunds.
The only reason the Commission provides for rejecting Panda’s proposal is that it involves the return to Panda of some amount of funds from the collateral account, and that the collateral was collected to protect customers. But the Commission provides no explanation as to why it is necessary to immediately return the entire amount in the collateral account to protect customers, or why we are willing to potentially force Panda into bankruptcy instead of returning any money to it from the collateral account. I agree that if the circumstances were such that there was a concern that money returned from the collateral account would never be refunded, then it would be appropriate to immediately apply the entire amount in the account to Panda’s refund obligation. But the Commission makes no such finding, and it appears to me that there is minimal risk that this would happen. Indeed, PJM supported Panda’s proposed repayment plan, stating “PJM accepts Panda’s representation that immediate payment of the total refund amount would create financial stress . . . PJM also supports Panda’s proposed conditions for Commission acceptance of its Compliance Proposal . . . [the] conditions provide essential safeguards for PJM and its stakeholders against potential default on Panda’s refund obligations and are consistent with the primary intent of the Federal Power Act, which is to protect customers.”[1] The Commission gives no explanation as to why, if PJM is not concerned that the repayment plan puts customers at risk, we should reach a different conclusion.
The Commission’s order thus reaches an unusually harsh and punitive result of possibly forcing Panda into bankruptcy with no indication of wrongdoing by Panda and no discernable benefit to the customers who will get full payment of refunds in less than a year. Based on the specific facts of this case, I would have approved Panda’s proposed repayment plan.
For these reasons, I respectfully dissent.
[1] PJM Comments at 3.