In the NOI, Promoting Transmission Investment Through Pricing Reform, FERC is seeking comments about the effect of its incentives in promoting transmission.  If you're going to comment, you need to understand what the incentives are, and what they are intended to do.

Let's start with incentive ROE adders.  When a company makes an investment in something like a new transmission project, they will be tying up their capital (and/or borrowing) to finance the capital assets of the project.  They are not reimbursed dollar for dollar as the money is spent for the entire cost of the project.  We wouldn't be able to afford it if we were charged for something like the PATH project's $2.1B cost over the 5 year construction period. 

There are two different sets of costs going on -- expense and capital assets.  Expense includes the operation & maintenance costs of the project and are reimbursed dollar for dollar as they occur.  The capital asset costs (in the case of a transmission project, mainly the fixtures and land) are reimbursed over time during the useful life of the project as they depreciate.  So, in exchange for tying up their capital and/or borrowing money to finance these assets, the company is entitled to a return on their investment.  It wouldn't be fair to equate this with an investment return you'd earn on your own money.  If returns on these projects aren't lucrative, the company could find a better place to invest their money and nothing would ever get built.

Utility returns are usually somewhere in the neighborhood of 9 - 11%.  However, in order to incentivize transmission, FERC felt it necessary to sweeten the pot with incentive ROE adders.  The return is calculated through something called the DCF analysis and then incentive adders boost the return to what FERC calls "the zone of reasonableness" arrived at through an anaysis of a selected proxy group of similar utility returns.  An "adder" is a certain number of points added to the DCF base rate of return.  100 points equals an additional 1%.

In the case of our poster child, PATH, the company's DCF analysis produced a 12.3% base rate and they requested an additional 50 points for being a member of an RTO, and an additional 150 points for their project's above average risks.  These abnormal risks, according to PATH, were the large amount of investment needed ($2.1 billion price tag); the coordination needed between two different companies; regulatory risk (the uncertainty of approvals); the need to attract needed investment (so PATH could borrow money to finance the project); siting and approvals needed in 2 different states (which ended up being 3 after re-routing); and PJM's aggressive construction timetable (originally "needed" in 2012).  The requested incentive ROE adders, which were conditionally approved and set for re-hearing (currently in process), added 200 points, or 2%, to PATH's return on equity, for a total of 14.3%, which was in the high end of the "zone of reasonableness," although not at the top of the zone.

Sounds pretty sweet, doesn't it?  But the incentives didn't stop there!  There were more!  But, that's discussion for another time.

In the NOI, beginning on page 23, FERC discusses the incentive ROE adder and asks several specific questions.  Now that you know what a ROE adder is... go look at the questions and formulate your comments/suggestions for FERC.  I'm sure you creative consumer "stakeholders" can make suggestions that the industry won't even ponder.  The industry will be letting FERC know how they can and should sweeten the pot even further for them.  It's up to you to provide balance with a little real world sanity.

Keep checking back... there's lots more incentives to come!

If you found this helpful in crafting your comments, you are encouraged to browse the entire FERC Transmission NOI category at for other useful material.  You don't have to comment on all aspects of the NOI if that's too burdensome.  In fact, if you want to concentrate in detail on just one aspect that interests you and about which you have strong feelings, that's a perfectly acceptable approach to producing effective comments.
The NOI was published in the Federal Register on Friday, so now we have a deadline date.  Comments must be filed by July 26.  For more information about how to file your comments, see this guide.  For more information about the incentives, see this topic and keep checking back.  Don't miss your opportunity to let FERC know how their transmission incentives have worked so well that they are now a new profit center for energy companies. These companies have been proposing transmission projects as a way to make money, instead of as a way to satisfy a need for additional transmission.

If you found this helpful in crafting your comments, you are encouraged to browse the entire FERC Transmission NOI category at for other useful material.  You don't have to comment on all aspects of the NOI if that's too burdensome.  In fact, if you want to concentrate in detail on just one aspect that interests you and about which you have strong feelings, that's a perfectly acceptable approach to producing effective comments.
In the final episode of the PATH funeral saga, here is the last batch of party photos.  These are shots of the single biggest flaw in PATH's sinister plan -- the PEOPLE (or as AEP thinks of them -- the Soylent Green of transmission line siting)!  PATH died because of the grassroots activity of the people of West Virginia, Virginia and Maryland.  Instead of letting them divide and conquer and play us against each other, we rose and stood together in solidarity.  We refused to take the NIMBY part PATH had written for us, and we refused to follow PATH's strategy playbook.  We wrote our own!  The creativity of the people was PATH's ultimate downfall.
As the party, ummm... I mean funeral, was winding down, we grabbed some protest signs and took a short walk to PATH's prepared funeral pyre.  Burn, baby, burn!  Unfortunately, none of the PATH guys showed up and volunteered to jump into the fire, so we tossed in boxes of old literature, including the letter signs we used at the Manchin demonstration in Shepherdstown in 2008, the day the original route was abandoned.

We've done just about everything we could think of short of driving a wooden stake through PATH's heart (since PATH is heartless that would be an exercise in futility) to kill this stupid project.  Give up, PATH, and stay dead!

Tomorrow... the last of the funeral pictures... the miscellaneous candid shots of the "mourners."
Well, here's what you've been waiting for... Funeral party guests spanking the snot out of PATH with a baseball bat (it was technically a stickball bat, but that made the PATHata last a little longer).  Take a good look at the faces (on the people, not the PATHata) and you'll know how good it felt to pay them back for all the misery, worry and money they have cost thousands of landowners over the past 3 years over a project that was NEVER NEEDED IN THE FIRST PLACE!

The PATHata lasted a lot longer than I thought it would (kind of like PATH itself, who keeps trying to hang on by its fingernails).  But, it didn't last quite long enough for everyone to have a turn, unfortunately.

I guess this kind of makes up for that WV-PSC status hearing in August of 2009 where the PSC expected us to show up with torches and pitchforks and storm the castle.  For some reason, they had police present... and when everyone behaved like ladies and gentlemen, the PSC looked paranoid and foolish.  And then there was the Frederick County, MD, Charlie Foxtrot in September of 2010 where PATH hired two undercover sheriffs to threaten people and bodily eject them from a "public meeting" for raising their voices, dropping the "f-bomb" on self-important, pompous asses, or taking pictures of them.  Apparently the only time PATH really needed to worry would have been if we had shown up carrying a stickball bat pasted with StopPATH stickers. 

Go away, PATH.  We've now officially finished you off.
So what exactly was in the PATHata that gave us the giggles so badly?  Here's what was left over after the celebrants collected their own personal "trophies" for their display cases...

It's amazing what you can find at the dollar store... maybe PATH should have been shopping there for the past 3 years so that there's not a mountain of debt left over after they abandon their project.
It's late and I'm tired... so tonight's installment of party fun is going to be the entertainment and speakers.

"Electra" performed the PATH fight song for a cheering crowd.  It was too hot and not dark enough for the costume... so she was just the amazingly talented Clissy this time!  Thank you once again, Clissy, for lending your talents to our cause!  Click below for sound to go with the photos...

When we opened the floor for speakers, we had plenty of volunteers who shared their thoughts with us.  Whether it was inspiring, funny, a victory cheer, an expression of gratitude, or plans for the future, all speakers were warmly welcomed by the crowd.  I can't remember what every speaker talked about.  I can hardly remember what I said, except that it started out, "I've been waiting 2 years, 9 months and 10 days to say this..."  For once I wasn't sitting there with a notebook documenting everything for later use.  Forgive me... the Raging Bitches made me derelict :-)

Stay tuned... PATHata coming up...

It's getting a bit more interesting now.  Chairman Wellinghoff responds to Representative Bartlett again in this letter.

Wellinghoff confirms that there are two outstanding matters currently pending.  One is the rehearing that's been going on regarding PATH's 14.3% ROE.  Don't bother looking at the settlement judge's report referenced, it merely says that settlement is ongoing, it doesn't give any details.  You're going to have to wait for the order to come out to read any of that.  The amount PATH is going to cost you isn't public information right now.

The other is the Formal Challenge, submitted back in January, which "alleges imprudence, fraud, and improper accounting by booking costs to more than one FERC Account."

These are things we already know (although I don't recall using the word "fraud" anywhere in the complaint -- that must be FERC's characterization).

If PATH is canceled or withdrawn, they can request recovery of 100% of the cost of their abandoned project, one of the incentives granted to them back in 2008 to "promote transmission investment through pricing reform."

We know that too.

Wellinghoff tells Bartlett that cancellation or withdrawal is up to PJM.  PJM is a cartel of energy companies whose impartiality has been questioned. 

However, this paragraph is interesting:

"Regarding your question concerning changing the end point of the PATH transmission line and its affect on the rate, please note that with respect to rates, Order No. 679 provides guidelines for review of transmission rate incentives if the design of a transmission project changes materially. Specifically, when an applicant files to recover the incentive in its rates from a changed project, other interested persons may challenge that filing at that time, and those other interested persons may also file a complaint."

You know, the PATH project that received the incentives back in 2008, based on its former inclusion in PJM's RTEP and its fix for reliability issues that have since disappeared, has been reconfigured.  The original PATH project consisted of a 765kV line from Amos to Bedington and two 500kV lines from Bedington to the "Doubs" substation in Kemptown, MD.

Is Wellinghoff insinuating that someone should file a complaint and make all the recent comments on the docket official?

Wellinghoff says that a public meeting is only necessary when the Commission needs to supplement the record.  He doesn't get it.  Bartlett's requested meeting is for an increasingly irate public to have their questions answered, not for the Commission's benefit.  Instead, FERC wants to remain ensconced in their ivory tower and leave public servants like Bartlett in the line of fire from disgruntled consumers.  How many times and in how many ways can you blow off a Congressman before he gets offended?  I guess we'll find out.

Wellinghoff advises that FERC has no authority over siting and therefore cannot answer the questions about property values.  That is true.

Let's end with this:  "the Commission's role in this type of proceeding is mostly limited to regulating the transmission rates associated with proposed facilities..."

Indeed.  I think that was Representative Bartlett's point.
See this article in NJ Spotlight about the Atlantic backbone with the headline, "Federal Agency Says Offshore Developer Can Charge Consumers Before It Delivers Power."  While this reporter comes about as close to "getting it" as any I have seen, the article implies that charging consumers for various white elephant transmission projects created by FERC's AYCE incentives buffet is the exception, rather than the rule.

Fact is, all PJM ratepayers have been financing multiple incentive-driven projects ever since FERC issued Order No. 679 in 2006.  We've even picked up the costs of "pre-commercial" expenses like setting up the PATH shell companies.

We've paid for the Susquehanna-Roseland project, the TrAIL project (including abandoned segments, with interest), the MAPP project and the PATH project.  This represents billions of dollars of extra expense in your electric bill, and millions of dollars of profit for the power company developers.  It might not be so bad if consumers were getting some benefit from these projects, but the only one even close to completion is TrAIL.  Susquehanna-Roseland and MAPP are stalled for different reasons, and PATH has been "suspended."  However, the developers continue to spend money and earn a return for these white elephants.

This is what FERC's NOI on "Promoting Transmission Investment Through Pricing Reform" of May 19 is all about.  Let FERC know what you think by submitting your comments.

But, back to the article (you need to slap me off my soapbox every once in a while).  The NJ Sierra Club also tips the reporter off to the fact that the Atlantic backbone is also capable of carrying coal-fired power from Virginia to New Jersey.  Bill had this one figured out last year, so it's nothing new.  Why else do you think Dominion all of a sudden wanted to get off the bench and enter the game with its MSD rebuild?  This leads to an overarching thought on FERC's NOI -- how many of these "badly needed" transmission projects could easily be solved by modernizing, upgrading and rebuilding existing transmission lines at a much cheaper cost, with less regulatory uncertainty, and much quicker than new projects like PATH, TrAIL, MAPP and S-R?  When Dominion wanted to make PATH go away, it was quickly and easily accomplished.  This question is sort of alluded to in a backhanded way in the NOI, so keep it in mind when you submit your comments.

And about the NOI -- FERC makes this statement:  "The Commission believes that there remains a need for additional transmission investment to ensure the reliable operation of the grid and reduce the cost of delivered power by reducing transmission congestion."  And then there's nothing to back it up.  On what do they base this "belief" that more and bigger transmission is the best way to proceed?  In reality, more and more people are investing in self-reliance and getting off the grid by installing their own solar or wind systems.  This is our future, not continued reliance on the old transmission dinosaur that's sadly out-of-date.  In his statement accompanying the NOI, Commissioner Moeller states, "By building needed transmission, our electrical service can maintain reliability at levels that are the envy of the world...".  Envy of the world?  The rest of the world laughs at us and our continued dependence on fossil fuels and failure to embrace renewables and new technology by relying on the long distance transmission dinosaur.  The rest of the world is quickly leaving us in the dust!

Anyhow (there I go again) read the linked article, and also check out some of Tom Johnson's other articles to get a good perspective on New Jersey's energy dilemmas.
You're all waiting for the pictures of the PATHata getting whaled on, aren't you?  Well, I'm going to keep you in suspense just a little longer.
Tonight, let's look instead at the other party games:  PATH darts and Pin the Head on PATH.  Both proved quite popular, with PATH darts gathering a crowd of eager players.  There was just something satisfying about the thunking noise the darts made when they hit the bullseye(s).  After the first few heads in the donkey game were carefully "routed" in PATH's "backyard," folks started complaining that all the prime real estate had been taken.  That's where the opposition's creative thinking took over...  And now the game is hanging on the wall in my garage, with a handful of heads leftover.  Who knows what may happen to it now...  :-)  You all are welcome to drop in anytime and route a head when you're feeling frustrated.  The PATH darts game has gone home with Steve, where I plan on paying it many, many visits in the future.