You regular readers know how much I love numbers. They're black and white and they never lie to you. I needed a certain number today for insertion in something I was writing. I needed the total amount PATH has collected from millions of ratepayers in PJM's multi-state region (all or parts of Pennsylvania, New Jersey, Maryland, Virginia, West Virginia, North Carolina, Tennessee, Kentucky, Delaware, Ohio, Indiana, Illinois, Michigan and the District of Columbia) through its annual transmission revenue requirements from the inception of its formula rate in 2008 through the end of this year, 2012.
I'm not sure why I didn't have this number already at hand, it's just never had a use before, I suppose. Are you ready to know how much of your money has been wasted over the past 5 years on a transmission project that was never constructed, was never permitted, and will never provide the smallest benefit to the electric consumers who financed it?
Ninety-five million dollars. That's right $95M! PATH has poured $95M of your hard-earned money down a rathole attempting to promote, site and permit a project that was never needed in the first place. What an incredible waste! How many other uses for $95M can you think of that would have provided some benefit to society? Instead, the only benefits have been the financial ones that ended up on corporate profit statements.
Separate and apart from that $95M of your money that PATH has already collected and spent, they have also invested over $130M of their money in the project's rate base. You will continue to pay them 12.4% annual return on their $130M investment until the project is officially abandoned. When abandonment finally happens, the $130M will be fought over and eventually an amount will be set for recovery from ratepayers over a set number of years.
If we add the $130M investment PATH is going to want back to the $95M they have already collected and spent, we've got a total of $225M, nearly a quarter of a billion dollars of our money, that has been wasted by American Electric Power and FirstEnergy on a get-rich quick scheme to build unneeded transmission infrastructure.
Thanks for nothing, fellas!
Appalachian Power and the West Virginia Public Service Commission are attempting to pull a fast one on the utility's customers in the state.Last week's news headlines trumpeted, "PSC issues order to keep AEP electric rates from rising,"
and the PSC issued a press release titled, "PSC Maintains Current Level for Electric Rates."
Nothing could be further from the truth! However, APCo and the PSC think you ratepayers are dumb and easily fooled by their semantics games. A review of the PSC's order in the case
reveals that the claims of "no rate increases" are nothing but smoke and mirrors, and here's why:1.
The "current rates" that are being "maintained" are the product of a series of rate increases over the past four years that were supposed to pay down a huge unrecovered fuel cost balance from 2008 and 2009. These higher rates were supposed to be temporary increases granted to pay off a debt to the company. However, APCo has continued to overspend, and at the end of the temporary rate increase period no substantial amount of old debt has been retired, or paid, by these increased rates! Therefore, the 2008 and 2009 balance owed to APCo by ratepayers remains, and now has $25M in carrying costs (interest) tacked on to it! Here's how the PSC describes it in their order:
"Over the past several years, the APCo/WPCo customer rates have increased significantly primarily because of the increased costs to acquire fuel (coal) for power
generation and expenditures to meet more stringent environmental regulations. The 2012 ENEC filing was intended to be the last year of a four-year phase-in rate plan approved in Appalachian Power Co. & Wheeling Power Co., Case No. 09-0177-E-GI (Order dated September 30,2009) (2009 ENEC).
In the 2009 ENEC proceeding, the Companies filed for the largest rate increase ever requested by a utility in the State. That filing related to the energy cost increases
experienced in 2008 and 2009. In the 2009 ENEC, the Commission authorized a four-year phase-in plan of a $366.7 million rate increase, with the first ENEC increase of approximately $106.6 million, or a 10.5 percent increase in overall rates, and an $18.1 million Construction and Post-construction surcharge increase."2.
APCo didn't ask for, and the Commission didn't approve, an additional ENEC rate increase because the company, the PSC, and the legislature are trying to avoid your scrutiny and anger over another huge rate increase. These entities passed legislation this year that allows them to simply hide the huge rate increase necessary to pull their feet out of the fire. They are hiding the gigantic rate increase by mortgaging it in your name over a 10 year period and tossing words and ideas around that they are hoping will confuse you. "Securitization," or the "selling of bonds," is nothing more than the company taking out a mortgage and sticking you with the payments and interest. APCo is tired of carrying this huge unrecovered balance. If they "sell bonds" it means they take the cash from the mortgage loan, and the obligation to repay belongs to ratepayers. This is a rate increase you will be paying over the next ten years, with interest. APCo has tossed all its debt, both historical and current, into the amount of the rate mortgage that they will be applying for soon. There is no rate increase simply because the actual rate increase will be a separate "securitization" case that is expected to be filed in the next couple of weeks. The PSC took no action to "keep rates from rising," they simply deferred the huge rate increase to another case. Parent company AEP stated in a recent presentation to their investors that the amount of the West Virginia rate increase will be $400M.3.
Let's talk about utility "deferrals." When the utility spends money that they are unable to recover through current rates, they "defer" it by creating a regulatory asset in their accounting system. This debt belongs to the ratepayers, and at some point, the utility will ask the PSC for permission to recover it from you through a future rate increase. APCo plans to clean up all outstanding deferrals on its books through "securitization" and transfer all that debt to ratepayers. APCo also plans to put you right back into debt by "deferring" $56M of recent storm restoration costs. You will pay for this "deferral" later. APCo "deferred" its gigantic fuel cost increase from 2008 & 2009, and the cost of certain deals for lower rates it made with certain industrial customers
in prior rate cases (such as Century Aluminum). When APCo negotiates a lower rate for certain big electric users, they are not absorbing the discount. They simply book the difference between their cost and the lower rate that these customers pay as a "deferral." Now APCo wants you to pay for the discount other customers received in their bills in prior years."Deferrals" and "securitization" and the "selling of bonds" are not actions that cost APCo money. They are debts that are incurred in your name by the utility, and they will all come due. It's time for APCo customers to pay the piper, while the PSC and your state legislators hide behind big words and accounting mumbo-jumbo and try to trick you into believing that there will be no rate increases.
Whoever said corporations are faceless? Investor owned utilities have two faces: one face for the consumers who fund them, and a different face for their investors, who reap the financial benefits provided by consumers.Here's the face AEP wants you consumers to see -- Pablo the AEP Answer Man. He's a regular guy, just like you, right? Were you all feeling as
"strained" as poor Pablo, bravely "starring" in another one of his ridiculous youtube videos, after a grueling 18-hour day attempting to cover AEP's derriere over their poor post-storm performance?Late one night, recording a video update on the restoration effort, he recalled feeling the accumulated strain of days without much sleep.“I couldn’t get complete sentences out that made any sense,” he said.AEP is getting a bit carried away with the plain folks propaganda. We thought it would be funny to see the corporate bigwigs hurling dodge balls at each other in TV commercials when we suggested it. The ugly tie collection and experiments with different outfits and backdrops were amusing for a few minutes, but folks are over it. AEP just doesn't know when to quit, however.The other face AEP presents to its investors can be seen in this transcript of AEP's 2Q 2012 earnings call held on July 20. There's so much bragging about how they're sticking it to consumers in order to make huge profits, I'm just going to paraphrase the highlights
. Be sure to read the entire transcript yourself for even more filthy rich one percent goodness.1.
Quarterly earnings were .75 per share. Year to date earnings were $1.55 per share. Earnings were $370M for the quarter, and $759M year-to-date. It was a "pretty good" quarter for AEP.2.
Ohio has been a problem for AEP due to customer switching, low demand and their issues with rate cases.3.
"Investment" in their regulated (monopoly) subsidiaries and transmission will provide 4 - 6% growth in earnings.4.
Poor, poor, AEP CEO Nick Akins has had two "storms" to deal with since he became CEO 8 months ago. One "storm" was created by Mother Nature on June 29. The other "storm" was a regulatory one created by consumers in Ohio.5. The June storm cost AEP $230 million. They will defer much of the cost for future recovery from consumers.
As soon as the consumer anger begins to die back and you all take your eye off the ball, AEP's planning to stick it to you. $70M will be recovered through future rate cases. $130M will be deferred for future recovery from consumers. AEP has $4M budgeted for storm costs this quarter, so that only leaves $26M of cost coming out of AEP's shareholders pockets for the quarter. However, AEP's shareholders have been collecting profits from unspent budgeted O&M in other quarters, so they're still way, way ahead.6.
AEP was glad the June storm came along in order to take focus off the hot water they were in at PUCO. This is a direct quote from Akins: "...in an odd and perhaps, morbid way, it gave the management team a brief reprieve from the challenges of the other storm that occurred -- the regulated storm we call Ohio."7.
AEP is looking forward to the PUCO allowing the company to recover deferred capacity costs from consumers when their rate case is decided in August. PUCO declared both AEP and FirstEnergy winners in the dodgeball game by allowing FirstEnergy to pay a lower cost while also allowing AEP to charge a higher cost. How can this be so? Because the consumers are going to pick up the difference between what AEP is allowed to charge and what FirstEnergy has to pay. Consumers are the big losers in Ohio, once again.8.
AEP also wants PUCO to approve their rate stability rider "to ensure AEP's financial integrity," their distribution investment rider and allow recovery of deferred fuel costs and other regulatory assets totaling $800M. Of course, these are all additional costs that consumers will end up paying, and paying, and paying.9.
AEP needs a fistful of your cash to complete their corporate separation and start their competitive generation company. In order to do this, AEP is going to "sell" a bunch of their Ohio generation assets into West Virginia and Kentucky's regulated environments, where consumers in those states will end up paying for them so that AEP doesn't have that financial liability mucking up their competitive company profit margins.10.
AEP's new transmission projects will "really provide the earnings growth for the future." Transmission will provide the "critical mass" for future earnings growth and AEP has "plenty of projects" that can take the place of those that don't work out. So, AEP will just keep proposing and building new transmission projects as a way to make money, not because the transmission is truly needed. Consumers will pay for all this unneeded new transmission.11.
AEP is looking forward to getting their new pulverized coal plant on line in Indiana so they can start collecting the cost of it from ratepayers.12.
AEP is concentrating on cutting operations & maintenance spending in order to make up for customer switching in Ohio and other areas where their earnings are lagging. AEP added .13 per share this quarter by reducing O&M. How did their skimping on maintenance work out for you on June 29?13.
AEP is looking forward to $400M in "securitization opportunities" in West Virginia. That means that they are anxiously awaiting all that beautiful cash they will get by mortgaging all their old coal debt in the name of West Virginia consumers, who will end up paying for AEP's past coal-buying mistakes for the next ten years.14.
The profit AEP is making at their regulated companies in other states is propping up their big losses in Ohio. Consumers in other states are making up for any savings Ohio consumers receive. O&M cuts and transmission are really the only things propping up AEP right now.15.
Akins had an epiphany moment where he toyed with the idea that the sustained decline in residential sales could possibly be due to increased energy efficiency. Ya think, Nick, old boy? Nick gets the Captain Obvious Award!So, while AEP cries "poor me" to the consumers with one face, their other face is laughing all the way to the bank. AEP thinks you're never going to know what they do behind your back. Oops.
Check out the West Virginia PSC's reliability "fan dance" on The Powerline.
Bill does an excellent analysis of the PSC's post-storm posturing and how none of it is likely to result in any real increase in reliability. If you want real reliability, you have to make it yourself
.Because Mother Nature aptly demonstrated how unreliable our current centralized generation and transmission system of providing electricity is on June 29, public officials are running for cover.Governor Tomblin ordered a "storm review" investigation.Senators Manchin and Rockefeller and Rep. Rahall begged for and were awarded federal disaster relief.So, what is West Virginia going to do with the money? Are our politicians going to do what they usually do and funnel the money to favored contractors for "make work" projects intended to enrich their friends
?The federal money shower is also intended to prevent a recurrence of the "disaster." Instead of wasting money on empty promises, Tomblin, Manchin, Rockefeller and Rahall should spend more time looking for real solutions.
"To combat future widespread and extended power outages, Carnegie Mellon University researchers have devised a strategy to use local distributed electricity generation, distribution automation, and smart meters to form small electricity "islands" that would support critical social services in the event of a substantial disruption resulting from extreme weather, terrorism, or other causes."
As part of a series of decisions over transmission owner squabbles last week, FERC denied the complaint of Primary Power that we have been following.
You can read the Commission's Order here.Read the statements of Commissioners Wellinghoff and Norris regarding these decisions.FERC says that they had to follow the RTO agreements currently in effect. In the Primary Power case, they relied on PJM's findings that the SVC projects would be cheaper if constructed by the incumbents. Sounds great right? After all, who doesn't want to save money?However, PJM's evaluation of the projects was based on completely bogus cost estimates from the incumbents
. PJM's selection of incumbents to build the projects provides no guarantee that the incumbent projects will actually end up being cheaper. In fact, the way things are set up now, there is no cost control or performance standard for the incumbents to meet.
" Primary Power challenges the Dominion and FirstEnergy claims of lower cost and avoiding duplication of facilities as lacking technical analysis and development work. Primary Power claims that neither Dominion nor FirstEnergy proposed any SVC projects in the Meadow Brook or Mt. Storm areas prior to the November 2011 Advisory Committee meeting and notes that FirstEnergy initially objected to installing an SVC at Meadow Brook, favoring a static capacitor-based alternative. Primary Power notes that it committed to the PJM Board that it had “plenty of time” to obtain a certificate of public convenience and necessity and complete construction before the June 1, 2014 in-service deadline. Primary Power challenges FirstEnergy’s cost estimate, noting that FirstEnergy exceeded its estimate when it built the Black Oak SVC. Static capacitors, unlike SVCs, do not absorb VARs and do not provide a range in output, but may only be switched on or off."The PJM cartel supposedly made its decision favoring the incumbents based on cost. PJM is always thinking about you ratepayers, you know, and putting your needs first. However, Primary Power claims that FirstEnergy and Dominion simply made up cost estimates based on rough calculations, with the goal being to arrive at a lower cost estimate than Primary Power's, which was already on the table. How easy was it to simply make crap up when the incumbents know they won't be held to their estimates?FirstEnergy will most likely request incentives and add this project to their TrAILCo shell company's formula rate. Perhaps FERC can make these projects the first to be held to cost control and performance standards under a revamped system of awarding incentives
. After all, PJM's reasoning for awarding the projects to incumbents completely fails if the projects end up costing more than Primary Power's estimates when fantasy meets reality. It would be just desserts for the incumbents to have to actually build these projects for the amounts they have estimated.
I'm quite sure they'll have an audience.
Shh! Be vewy, vewy quiet, the Coalition
is hunting wabbits!The trade press seems to be vewy, vewy disturbed by the Coalition for Reliable Power's filing at the WV PSC regarding FirstEnergy's "
plan for reconductoring existing transmission lines" that was ordered by the Commission in the TrAILCo order.Read the re-hash that appeared in "EnergyBiz" (for leaders in the global power industry)
of Pam Kasey's State Journal article.When "leaders in the global power industry" decide to pursue an unneeded transmission project that costs you time and money, they're not "blasting" consumers and landowners. But when a citizens' coalition dares to speak up about "a leader in the global power industry's" failure to comply with a legal order, all of a sudden the coalition is "blasting" them, and inexplicably, "WV line [is] under attack." What line is that, EnergyBiz?Notice how the industry's scribe goes out of his way to get comments from the PSC and First Energy, but ignores the Coalition, other than to report, in a dismissive fashion: "The CRP describes itself on its web page as a “grassroots citizens’ association” whose mission is "to create a vital public conversation about reliable electrical power and real alternatives to our dangerously centralized electrical grid.” The group lists six organizations and 43 individuals as its members."Is your name on this list? If not, email me, and your very own cartoon shotgun will soon be on it's way to you!The PSC spokesperson had this vewy vapid comment to make:“Had these come in while the case was active, then there would have been a set, 10-day response period,” the spokesperson said. “But, it being a closed case, there is no set response period.”I'm not sure how the Coalition could have predicted that the Commission would order the report, and that FirstEnergy would fail to file a proper report, while the case was "active" in 2008
, but maybe they need to borrow my Magic 8 Ball?FirstEnergy said what they always say when they get clobbered by an unexpected kick in the gut:"
The TrAIL companies are in the process of reviewing CRP’s comments and will not have a response until their review is complete, a FirstEnergy spokesperson told TransmissionHub on July 18." Translation: "We will respond appropriately."So, who else has gotten bombarded with "free" subscription offers from Transmission Hub lately? Seems the industry-centric publication is getting pretty hard up for readers lately and has been harvesting email addresses from somewhere... like state PSC e-service lists. Tsk, tsk, tsk!
What makes them think we want to read their drivel?
FERC noticed the complaint
and set a deadline of August 7 for answers, interventions, protests or comments.If you'd like to contribute you own two cents, follow the instructions on the notice.
This morning, the Jefferson County Commission decided to send a letter to Dominion Power requesting that the company hold a public information meeting in the county regarding their Mt. Storm - Doubs 500kV transmission rebuild project. The letter will also request that Dominion answer specific questions raised by citizens at today's
Commission meeting (that Dominion couldn't be bothered to show up for). Dominion may think that they can continue to ignore the citizens and local government in Jefferson County, but I wouldn't advise that plan of (in)action.Citizen Robin Huyett Thomas spoke to the Commission during public comment and advised them that certain lenders will not approve financing for homes within the fall zone of transmission towers. There are many homes in Jefferson County that are already affected. However, Dominion's plan to increase the height of its towers by another 30 feet will necessarily affect additional homes.Keryn Newman spoke to the Commission during a scheduled agenda item on the rebuild and presented the detailed public safety questions posed by citizen Sharon Wilson, who could not be present for the meeting. Sharon is concerned about the public safety aspects of access roads, proximity of the work zone to homes, coordination with local public safety/emergency services, and possible future road closures during construction (remember, Dominion's line crosses both Rt. 340 and Rt. 9, in addition to many other secondary roads).Keryn also presented her own personal concerns that a design defect in steel lattice transmission towers has been known to the industry for many years, but it appears industry has made no improvements to their design. Commissioner Pellish commented that one of the references in the abstract of a recent engineering study of the design defect that was presented to the Commissioners went all the way back to 1996. Utility engineers have been aware for at least 16 years that transmission towers are subject to failure from downburst wind, but have done nothing to change the design or reinforce their existing towers. The Commission wants to know whether Dominion's new towers are designed to withstand downburst wind. A simple "yes" won't do. Show us.Lastly, Keryn spoke on behalf of the StopPATH WV, Inc. organization, who supports Dominion's rebuild project. However, public relations is an integral part of any major infrastructure project and Dominion has failed to provide information to the public. Public trust in utilities is at an all-time low in Jefferson County, the legacy of the PATH project that just keeps on giving. Our goal is for the community to be informed about what to expect, where to get relevant updates and information, and for Dominion to develop an ongoing relationship and dialogue with the citizens of Jefferson County, who want to see this project completed quickly, safely and as cost-effectively as possible.Now the question is -- will Dominion step up here, or will the company continue to pretend that their project only affects those with towers on their property, and that the rest of us haven't noticed or don't care. We have and we do.
The ball is in Dominion's court.
This morning, PATH held their "Open Meeting" for interested parties and others PATH doesn't consider to be interested parties but who were nevertheless "invited" to "participate" in the meeting.A picture is worth 1,000 words.
But sometimes pictures aren't enough.
As if transmission towers falling over in downbursts
isn't bad enough, badly designed and maintained transmission lines have been fingered in a Utah wildfire that gobbled up 52 homes and killed one
."A Utah wildfire that destroyed 52 homes and left one man dead was caused by arcing between power transmission lines that were built too closely together and sent a surge to the ground that ignited dry grass, a fire investigator said Wednesday.The central Utah Wood Hollow Fire began June 23 and wasn't fully contained for 10 days, costing nearly $4 million to fight, according to state officials. Officials said 160 structures total were destroyed.The 75-square-mile blaze began when winds caused two sets of high-voltage power lines to either touch or swing close enough to each other to create a surge than swept down the poles into dry brush, said Deputy Utah Fire Marshal Troy Mills.Rocky Mountain Power, which owns the lines, said a thief stripped protective cooper wire from its poles that may have prevented the surge."The investigation into the Wood Hollow fire is a top priority for Rocky Mountain Power. We want to understand exactly what happened," the company said in a statement Wednesday. "We are in the process of doing our own detailed technical analysis in addition to cooperating with fire investigators. There are aspects of this investigation that have yet to be fully analyzed."Mills, however, insisted that even with the copper wire in place, the surge would have easily overwhelmed the protections."That is the cause of the fire. There's some things where you've got to take a stand. It is what it is," Mills said.Some residents of destroyed homes in the area say they're considering a lawsuit against the utility."Well, there goes the utilities "best practice" of creating transmission corridors with multiple parallel lines, such as PATH's little fantasy of a 138kv line parallel to a 500kv line parallel to a 765kv
line, along with their love of steel lattice transmission towers.Rocky Mountain Power's only defense seems to be to blame it on some phantom vandals who made off with protective wire. Why wasn't the power company inspecting and maintaining their equipment on a regular basis?Why aren't power companies performing required maintenance? Maybe because it cuts into their bottom line and their first responsibility seems to be to their stockholders, not to the consumers they are supposed to serve.