It could be written clearer, I suppose, but the "Spell Level" used for the Penetration calculation is the reduced "Spell Level" provided by the Wizard's Communion. The Penetration is meant to be how much the Casting Total exceeds the target Spell Level (+ bonuses). Wizard's Communion reduces the target Spell Level for casting so increases the Penetration. So, the Penetration Total is:
70 + 2 - 10 = 62.
The rules are different in ArM4 for lots of things. Especially Penetration.