Hannibal Board of Public Works General Manager Bob Stevenson seemed quite eager to believe the unbelievable sales pitch of Clean Line Energy's salesmen last week.  Bob said his mind was "blown" by offered electricity prices of $.02 kWh. 

"Stevenson termed that power price as 'mind-blowing cheap'."

Since Bob's brains have now splattered everywhere, Hannibal needs to find itself some functioning minds so it doesn't repeat its power purchasing mistakes of the past.  Because when you contract in haste, you are bound to repent at leisure.

In 2007, Hannibal BPW entered into an agreement with the
Missouri Joint Municipal Electric Utility Commission (MJMEUC) to purchase an ownership share in a coal-fired electric generating station in neighboring Illinois.  Hannibal's share was 20 megawatts.

At the time, then BPW General Manager Jack Herring seemed to also have blown his mind over the opportunities of Prairie State:
"We believe that a project like Prairie State is the best way for us to secure a substantial portion of our members' needs for an affordable, long-term source of electricity. The project offers us cleaner energy from a convenient source located just across the river," said Duncan Kincheloe, general manager and chief executive officer of MJMEUC, in a press release.
So, Hannibal issued bonds to pay for everything.  And signed a contract that ensured Hannibal "will not be contributing any funds to the project until it starts receiving power from Prairie State."  Hannibal's BPW Board said it had "bided its time" by considering the project over a period of 18 months, during which the project cleared what was described as "an assortment of legal hurdles."  Prairie State was supposed to generate power at 4.2 cents.

Except that's not what happened.  Prairie State was plagued with cost overruns and construction delays.  Even when it came online, it was often operating way below its full capacity.  In addition, power prices have fallen way below even those promised prices.  Meanwhile, Prairie State's costs have ballooned to as much as $.07573 in 2014.  And municipal utilities who signed up for Prairie State's mind blowing deal aren't so happy.

“We’re in almost a million and a half bucks, and we don’t have a dime of revenue,” said Bob Stevenson, director of Hannibal’s Board of Public Works. “All I can say is, I had other plans for that money.”

Hannibal is raising rates for residential customers by 3 percent next month to offset the effect of construction delays.

“The only reason we’re having to do this is this problem we’re having with Prairie State,” Stevenson said.
But has Hannibal learned anything from its Prairie State experience?  Do Bob's plans for that money include investing it in a speculative transmission line with no customers?

Beware unregulated companies pushing power purchase schemes, Hannibal!  As history demonstrated with Prairie State, you ratepayers need to look out for yourselves and can't trust your BPW to make smart power choices on your behalf.  And you can't afford another Prairie State!

Clean Line offered Hannibal electricity priced at $.02.  Except Clean Line isn't a generator, and owns no generation resources.  Clean Line can't offer Hannibal any electricity, at any price, because Hannibal could never contract with Clean Line to purchase electricity at a certain price.  The best Clean Line could offer is that Hannibal could sign a power purchase agreement with an un-built third-party generator in a far off place.  That hypothetical generator would set its own price and contract with places like Hannibal, independent of Clean Line's promises, in order to finance its own construction.  Except that's nowhere close to happening.  Fictional power purchase agreements at mind-blowing prices don't exist.

Clean Line offered Hannibal capacity on its proposed transmission line.  The transmission line isn't built yet either.  What good is capacity on a transmission line that doesn't exist to a generator that also doesn't exist?  Just like Prairie State, a purchase of transmission capacity is "take or pay."
The “take or pay” contracts, standard for large-scale power projects such as Prairie State, are favored by lenders and credit rating agencies because they provide assurance that the borrower pays its debts. They also require end users, in this case municipal utility customers, to make debt payments regardless of whether the plant is operational. And if any of the cities default, a “step-up provision” in the contract requires remaining cities to pick up that city’s share of the payments.
Clean Line, a company who told federal regulators that it would shoulder all financial risk for its own project, is looking to sell and pass on its risk to municipal power companies in Missouri.  If munis in Missouri sign "take or pay" capacity contracts to guarantee Clean Line's financing, the munis will bear all the risk if Clean Line fails.

Clean Line has also offered Hannibal a $12.5M "investment" in its transmission project.  In exchange for $12.5M, Hannibal BPW could own a tiny portion of Clean Line's project, if it is ever built.

And that's just the problem.  By the time the Prairie State investments were made by Missouri municipalities, the project was approved and under construction.  Clean Line's project still faces several permitting hurdles, including approval by the Missouri PSC, who turned the project down once already last year.  The project is under appeal in Illinois, where state regulators made a grave legal error approving it.  There's no guarantee that Clean Line's project will be approved in a timely fashion, if at all.  Even if approved, Clean Line must still find financing to build the project before beginning.  Clean Line has no customers to use as collateral.  None.  Potential wind farms cannot sign contracts with Clean Line until they have their own financing guaranteed by signing contracts with buyers of their own.  No utilities want to engage in that kind of double-layered risk to sign "take or pay" contracts for generation and transmission that has yet to be approved or built.  Instead, Clean Line is sniffing around Missouri municipalities to scrounge up some cash so it may present the mutilated bodies of Missouri municipalities to the PSC during future permitting proceedings with the hope that the PSC will feel an obligation to bail out in-state municipalities who may go belly-up if their investment in Clean Line disappears.

When Clean Line runs out of money, it's done.  There is no chance it may recover the money it has already spent.  An investment in Clean Line is one that can be lost in its entirety.

Any municipality thinking about making a deal with Clean Line should only gamble with what they are comfortable losing.

Clean Line may end up being a bigger loser than Prairie State.
Well, bless their little hearts.  Some WV legislators still believe elections aren't controlled by corporate money.
As if WV's current governor-appointed PSC Commissioners aren't bad enough (completely clueless political favors or biased industry plants), a handful of legislators have set their sights on guaranteeing that future Commissioners are on the utility payroll.

A couple of bills intended to "fix" our awful public service Commission could end up making matters worse.

First up, HB2238 attempts to fix the PSC by geographically spreading out the commissioners to have one from each congressional district.  Whatever.  This one is harmless.

But HB2483 wants to elect commissioners.  And where do these legislators think PSC candidates will get their campaign money?

They will get it from the investor owned utilities they would "regulate" if elected.  And how do you suppose these "elected" commissioners would vote on proposals by their campaign funders?

In other states that elect PSC commissioners
, the vast majority of PSC campaign money comes from the utilities the PSC regulates.

Alabama PSC funded by coal.

Georgia PSC funded by utilities.
Louisiana PSC funded by utilities.
Accusations of utility influence fly in Montana PSC race.
76% of Nebraska PSC campaign donations from utilities.
South Dakota PSC candidates accept unlimited donations from utilities they regulate.

Other problems:

PSC Commissioners moonlighting as industry lobbyists.

PSC Candidates funded by utility contractors when law prohibits direct utility contributions.
Candidates for New Mexico's Public Regulation Commission receive public funding for campaigns since 2003.
Oklahoma regulator accepts congressional campaign contributions from utilities she regulates.

And because PSC Commissioners would be elected from three different districts, that would remove the current requirement that at least one of them be an attorney.  It would also toss out the window the current requirement that only two of them can be from the same political party.

Considering a huge majority of the voters electing utility-financed PSC candidates have never heard of the PSC and have no idea what they do, is it a good idea to let these clowns elect commissioners based on TV ads or party affiliation?

As long as the governor appoints commissioners, we stand a chance of getting decent commissioners from a decent governor.  Once utilities can influence PSC elections, there is absolutely no chance of getting a decent commissioner.  None.

Kick this legislation to the curb.  Uninspired and thoughtless "fixes" may just cause further damage.

Samuel Clemens, better known as Mark Twain, grew up in Hannibal, Missouri.  He once said, "We have the best government that money can buy."

And it must have been in that spirit that "top brass" (subtract consonants at your own pleasure) from Texas-based Clean Line Energy Partners descended on Hannibal this week.
Skelly said that Clean Line is prepared to make a power proposal that would represent a “fantastic deal for the city of Hannibal.”
Insert carnival sideshow music here.
For a visual depiction of the action, go here to get your poster of Michael Skelly scowling in his Dad jeans, arms crossed in defiance.

Of course, nothing is written in stone, or legally binding.

What's the pitch?
Lawlor suggested that the Grain Belt Express could potentially offer power to Hannibal for as little as 2 cents per kilowatt hour (kwh).

...the possibility that Hannibal could buy “capacity rights,” which the BPW could utilize or sell on the open market.

Lawlor said a $12.5 million investment in Grain Belt could equate to a 25 megawatt stake in the Ralls County converter station and a portion of the project's capacity, noting the utility could buy as much or as little as it wanted.
So, Mark, Clean Line is selling power now?  And at two cents per kWh?  Where's your generator?  And how is that power going to get to Hannibal?  How much would that possibly cost?  FOB Kansas, right?

And how about that mind blowing opportunity to invest $12.5 million dollars in the Grain Belt Express project?  What's the guaranteed return on that?  And what happens if Grain Belt is never built?  The entire $12.5 million dollars of Hannibal's ratepayers hard earned cash disappears forever.  You'd think Hannibal has learned their lesson about investing in energy market revenue schemes, after their recent investment in Prairie State, right?
Critics of the investment need only look at the audit’s bottom line regarding Prairie State to find areas where revenues from the sale of power generated at the plant continued to not equal the BPW’s expenses associated with the facility.
I can't imagine what the good citizens of Hannibal must be paying for power, what with all this energy market investment going on.  How much will rates go up to fund a $12.5M "investment" in Grain Belt Express for which the ratepayers may never see any benefit? 

And it wouldn't even supply half of Hannibal's energy needs, "The 25 megawatt chuck of power the city is interested in would represent approximately 40 percent of the city’s current needs."

What's a "chuck" of power?  Maybe it's this.

Is this deal really about cheaper power for Hannibal, or is it about:
What Clean Line will be seeking initially from the city is a letter of participation that the company would include in its next application for a Certificate of Public Convenience and Necessity from the Missouri Public Service Commission. The PSC denied Clean Line such a certificate in July 2015.

In a renewed effort to illustrate Grain Belt's merits to the PSC, Clean Line has approached municipal utilities about participating in the project.
Don't be a cheap date, Hannibal.  That "letter of participation" is worth a lot to Grain Belt Express.  Think of it as Clean Line's precious...
You could probably get Clean Line to pay YOU $12.5M for the letter, if you hold out for a better deal.  Now that's an energy market play with a real return!

But, will the Missouri Public Service Commission really be swayed by Clean Line investors and their non-binding "letters of participation?"  Probably not.  The MO PSC has already rejected this project once, and nothing has changed (except Clean Line's traveling carnival side show barker act at municipal power authorities across the state).  It would be foolish to underestimate the state-wide opposition to this project. 

Samuel Clemens had a lot of wise things to say.  He also said...
"It's not the size of the dog in the fight, it's the size of the fight in the dog."
My money's on the Grain Belt Express opposition.
FERC continues its focus on transmission formula rates, recently opening an investigation into ISO-NE's processes.  This follows FERC's investigation into MISO formula rates several years ago.

In its December 28 Order, FERC set the justness and reasonableness of ISO-NE's RNS and LNS formula rates and the development of protocols for hearing.  FERC said the current formula rates lack transparency and sufficient detail to determine how certain costs are derived and recovered.  The rates also lack sufficient protocols to ensure the data is correct, calculations are performed correctly and that the charges are reasonable and prudent.  The protocols also lack sufficient notice, review, and challenge procedures for interested parties.

There seems to be some concern over the timing and synchronization between RNS (regional) and LNS (local) rates.  Currently, transmission owners submit their own revenue requirements for a combined RNS formula rate, in addition to individual LNS rate filings.

This article in the NH Union Leader presents a handy-dandy graph of transmission costs in different regions.  ISO-NE's transmission charges are nearly double those of second place transmission rate champion, PJM.  Does ISO-NE really have that much more transmission, or are things simply out of control on the formula rate front that allows "errors" to boost annual revenue requirements with bogus charges?

Who's currently monitoring whether transmission owners are doubling their return by including the same costs in both RNS and LNS formula rates?  FERC's Order says its impossible to determine right now.

And what if companies like Eversource are accidentally including costs for things, like advertising for their Northern Pass project, in RNS/LNS rates collected from ratepayers, instead of including them in the transmission service agreement costs formula rate to be paid by HQ Hydro?  All sorts of "mistakes" could happen in the current rate scheme.

Who's minding the store up there?  FERC says ISO-NE currently has an option to audit the RNS/LNS rates, but I wonder how much real auditing actually happens?

Good thing that FERC is taking on the challenge of shedding a little light into ISO-NE formula rates.  But the work doesn't stop there... even the best formula rates and protocols are useless unless someone takes advantage them to actually take a look at the rates on a yearly basis, long after FERC's work here is done.

Good luck on getting a handle on your transmission costs problem, New England!
Do you often make a typo that turns "Clean Line" into "Clean Lie?"  Me, too.

Clean Line has a new shtick that claims Iowa ratepayers will benefit if the IUB allows it to change the process to make it less costly for its investors.  Clean Line's claim can be paraphrased like this:

If you don't make it easy for us to build the Rock Island Clean Line (RICL) using the merchant model that charges customers in other regions for the cost of the project, then the Midcontinent Independent Systems Operator (MISO) will order new transmission just like RICL and make Iowa ratepayers pay for it.

Clean Line must really think Iowans and their Utility Board are a bunch of rubes.  This argument fails on so many levels, and the reality is that building RICL could actually increase electricity costs for Iowans.

First of all, this is an apples to oranges comparison.  RICL is not at all like the transmission projects MISO may order to be built.  RICL's stated purpose is to export electricity from the MISO region to the PJM Interconnection region.  MISO generally serves midwestern states, while PJM generally serves eastern states.  RICL proposes to move large quantities of electricity generated in MISO into PJM, where it may be used by "states farther east."  RICL is not proposing to serve any customers in MISO, particularly in Iowa.  Contrast that to the transmission projects MISO orders.  MISO is concerned only with serving customers within its own region.  Therefore, any transmission projects MISO orders will be for the purpose of moving electricity around the MISO region for use by MISO consumers.  MISO would never propose a transmission project for the express purpose of exporting electricity to another region, and then turn around and expect MISO consumers to pay for it.

Independent System Operators and Regional Transmission Organizations (which are generally identical constructs) are quite parochial.  They are utility member organizations that exist to serve their own regional interests.  Interregional planning is extremely fragile, to the point of being non-existent.  This is because an ISO/RTO will generally utilize its own resources first, from a cost and reliability standpoint, before importing resources from another region.  RTO/ISO members would never agree to pay the cost of export to another region, and moreover, this rubs against the Federal Energy Regulatory Commission's Order No. 1000, that ensures that only beneficiaries pay the cost of transmission built to serve them.

Therefore, the building of RICL would have NO EFFECT on the transmission projects MISO orders to serve its consumers.  MISO will still order the transmission it needs to serve consumers in its region, including Iowa.  RICL is no substitute for MISO-ordered transmission because it would not serve any consumers in Iowa, or anywhere in the MISO region.  At best, RICL is agnostic about costs to Iowa ratepayers.  It certainly won't save them any money.

RICL may actually cost Iowans higher electricity prices.  Think of electricity produced in Iowa as a reservoir.  As long as supply is plentiful, prices remain cheap, and cheap energy is dispatched first to Iowans.  However, RICL would turn on a gigantic tap that drains that reservoir and sends the water (or electricity) to other regions with higher prices.  This creates an imbalance between supply and demand, where Iowa electricity buyers must now compete with other regions to buy the cheapest Iowa-produced electricity remaining in the reservoir.  Transmission lines levelize prices between electricity's source and sink (consumers), lowering prices in other areas by making cheaper energy available to new users, while raising prices at its source by increasing competition for the newly-limited supply.  Exporting a plentiful supply of anything raises local prices by lowering supply.  It's the simple principle of supply and demand.

Clean Line has come dangerously close to violating its negotiated rate authority granted by the Federal Energy Regulatory Commission.  FERC based its grant of authority, in part, on the following:

To approve negotiated rates for a transmission project, the Commission must find that the rates are just and reasonable. To do so, the Commission must determine that the merchant transmission owner has assumed the full market risk for the cost of constructing its proposed transmission project.

Rock Island meets the definition of a merchant transmission owner because it assumes all market risk associated with the Project and has no captive customers. Rock Island has agreed to bear all the risk that the Project will succeed or fail based on whether a market exists for its services.
What RICL proposed in Iowa is a shifting of risk to Iowans.  RICL believes it should not be subject to the financial risk presented by Iowa's long-standing permitting process that requires it to negotiate voluntary easements or prepare time-consuming Exhibit E material before being granted a permit.  Instead, RICL believes Iowans should be subject to a confusing, inconvenient, and more costly bifurcated permitting process in order to absolve RICL of any financial risk during the permitting process.  This is a shifting of financial risk to Iowans.

In its application to FERC, RICL talked big about sharing the risk with its customers, the load-serving entities (LSEs) that would buy its capacity.
Rock Island also argues that wind generators, whose energy the Project will likely transmit, present numerous risks that transmission project developers and investors must overcome. For example, Rock Island states that wind energy projects are typically constructed with shorter lead times than other generators and are less willing to commit to large transmission projects well in advance of generator construction. Rock Island argues that pre-subscription of capacity with creditworthy anchor customers can reduce financing obstacles because lenders demand to see a secure source of revenue as a predicate to project financing.
Here, it appears that RICL is suggesting that it can sell its capacity to LSEs before the project is built.  These entities with a guaranteed spot on RICL's wind highway would later buy electricity from wind farms connected to RICL.  Not only would it lower RICL's financial risk by providing the company with capital before its project is online, it would also provide a future revenue stream that wind farms could use to secure their own financing.  Perhaps RICL should be looking to share its financial risk in Iowa with its potential customers by pre-subscribing its capacity to LSE customers at this time?  Let the LSEs pony up the funds necessary to negotiate voluntary easements or create Exhibit E materials.  That would shift the financial risk from RICL to its customers, where it belongs, instead of to Iowans.

Except RICL doesn't have any customers.  Potential customers have been unwilling to shoulder any of RICL's financial risk during the permitting process.  Chicken/egg.  This demonstrates why Clean Line's business model will never work unless states agree to shift Clean Line's risk onto their own citizens by permitting a project that has no customers.  Iowa said no on Monday.  Arkansas said no in 2011.  Missouri said no last summer.

In order to hide its failure to share risk with its own customers, RICL whined that the Iowa process is flawed and must be changed to shift risk from RICL to Iowans.

I'm not buying it.  How about you?
Looks like Dominion has finally reached the bottom of the barrel in its desperate attempts to get approval for construction of a 500kV transmission line across the James River at Jamestown.

An article in the Virginia Gazette says that Dominion is now offering $85M in "mitigation" to groups opposing its project.  The $85M includes:
The mitigation proposal includes more than $52 million in funding for Jamestown Island, Hog Island and the Captain John Smith Historic Trail District. The money would fund projects such as seawall rehabilitation and replacement at Historic Jamestowne to help combat the impacts of sea-level rise and erosion, according to the draft mitigation plan obtained by the Virginia Gazette.

The mitigation plan proposal includes $15.5 million in funding for water quality improvement including erosion and sediment control in the James River. Battlefield and landscape conservation projects would get $12 million, including government and private lands associated with the Battle of Yorktown, according to the proposal. More than $4 million would go to protecting emergent marsh at the Hog Island Wildlife Management Area.
But here's the thing... the $85M in blood money would be paid for by electric ratepayers in PJM Interconnection's 13-state region, not by Dominion.  That's right, Dominion's "generous" offer would become part of the capital costs of its Skiffes Creek project, which will be reimbursed to the company through federal transmission rates over the 40-year life of the transmission line, plus interest.  Paying off the capital cost of a new transmission line works much like a mortgage, where a small amount of principal is paid each year, in addition to interest on the remaining balance.  Dominion's "interest rate," called return on equity, is currently set at 11.4%, annually. 

What Dominion is offering is that YOU will pay to "mitigate" the destruction of YOUR historic resource.  And Dominion will make a profit on the deal.

And, really, would $85M of unrelated improvements to the Jamestown historic area make the new transmission towers in the James River disappear?  No.  No matter how much of your money Dominion throws at it, the transmission line will still forever spoil historic Jamestown.  At the end of the day there will still be a transmission line in the river.  The $85M isn't "free" money coming out of Dominion's coffers, it's money that will be added to your electric bill for the next 40 years.  Aren't there better ways to pay for improvements to Jamestown than through a backdoor fee on your electric bill that also includes a hefty profit for Dominion?

Dominion's price for the transmission line is $155M, before "mitigation."  With mitigation of $85M, the new total for the project's capital costs is $240M, a substantial cost increase.  Don't you think Dominion could put that $85M to work finding a better solution to its plan, such as undergrounding the transmission line? 

And here's the best part... if Dominion is denied a permit to build its current project, then PJM must go back to the drawing board to find another solution to the supposed reliability issue.  Any new solution must now be competitively bid, not just handed to Dominion to build, as the original project was many years ago.  Competition is always a good thing, and will most likely result in a better, cheaper, "constructable" solution. 

Just say no to Dominion's ratepayer-funded blood money and send this project back to PJM's drawing board.
A Virginia blogger visited PJM Interconnection to find out who they are and what they do, and then wrote about it.  That's great investigative journalism because only a handful of the 61 million electric consumers served by PJM even know it exists.  However, I do wish the blogger had a bit more curiosity to scratch underneath the surface of some of PJM's propaganda.

Amid a factual account of how PJM operates, I found this thoughtless propaganda blurb:
Electricity on the PJM grid normally flows from west to east. The major centers for electricity demand are the big metropolises along the Eastern Seaboard, at the eastern edge of the PJM system. There aren’t any power plants located in the Atlantic Ocean, therefore power that isn’t generated locally has to come from the west. As it happens, PJM’s western states have abundant, low-cost wind power — at night-time, wind power is so plentiful compared to demand that the price essentially falls to zero. The main factor limiting East Coast access to that cheap wind is the limited capacity of the transmission grid to carry it.
There aren't any power plants located in the Atlantic Ocean, but it's not due to lack of a "low-cost" source of energy.  Offshore wind is a better source of energy than land-based wind.
In the United States, 53% of the nation’s population lives in coastal areas, where energy costs and demands are high and land-based renewable energy resources are often limited. Abundant offshore wind resources have the potential to supply immense quantities of renewable energy to major U.S. coastal cities, such as New York City and Boston.  

Offshore winds tend to blow harder and more uniformly than on land.
Why would PJM, a member organization of power producers and distributors, downplay the viability of offshore wind, if it is truly "agnostic about the desirability of renewable energy?"  Is it because PJM has an interest in building more transmission to expand its empire, or simply an interest in protecting the interests of its members?  Or did this propaganda form in the mind of the blogger?

In Virginia, Dominion Power controls offshore wind energy development.  And some believe Dominion is dragging its feet.  Why would they do that?  Dominion says its because the cost of offshore wind development is too high, but I think it's a simple matter of milking old technology for the most profits before embracing new ideas.

While Dominion whines that building two test turbines off the coast of Virginia Beach will be too costly at a price of up to $400M, another company is proposing to build new transmission to bring Midwest wind energy to coastal cities at a cost of $8.5B.  Yup, that's billion. 

Something doesn't make sense here.  Let's crack this nut. 

Energy flows from west to east in PJM based on history.  Over the past 100 years, Ohio Valley coal producers have been only too eager to plunder Appalachian states for their natural resources for benefit of those eastern metropolises.  The coal was mined and burned in the Ohio Valley, while the electricity produced was shipped east via gigantic transmission lines.  It worked because powerful interests in the Ohio Valley were happy to destroy local environments in exchange for the economic benefits of serving as an "energy exporter."  The eastern cities got the benefit of "cheap" Appalachian energy, without having any of the pollution or environmental destruction in their own backyard.  And they liked it.  And they got used to it.  And they expect it.  But, the times... they are a'changing.

Coal is no longer king.  Eastern cities are clamoring for "renewable" energy.  And while entrenched interests like Dominion cling to dirty energy sources in order to milk every last dime from them, other powerful interests have set their sights on the Midwest as a new source of energy exports.  There's money to be made hyping America's breadbasket as "the Saudi Arabia of wind" and building billions of dollars worth of new infrastructure to continue the status quo of west to east power flows.

But, unlike the Appalachia of 100 years ago, Midwestern landowners are having none of the sacrifice that goes along with being energy exporters.  While a handful may be content to voluntarily lease land for wind turbines and collect royalties
, the vast majority will not gladly sacrifice their homes and businesses to host gigantic new "energy highways" to ship electricity thousands of miles to eastern states like Virginia.  These businessmen and women realize there's nothing in it for them, as "market value" payments for easements through their food factories do not adequately compensate for loss of production.  Adding insult to injury, while land leases for wind farms are voluntary (and subject to free market negotiation), easement purchases for transmission lines are proposed to be involuntarily accomplished through eminent domain.  Landowners are faced with voluntarily jumping off a cliff before they are pushed over the edge.  This isn't a choice, and "market value" has little meaning when there is no choice.  There is no "market" for involuntary land sales.

You simply cannot continue the west to east energy flow status quo, Virginia!  It won't end up being "cheap" plowing through thousands of miles of productive farm land with new infrastructure in order to bring you "cheap" wind energy.  The days of rural America to your west gladly sacrificing for your needs are over.  If you want clean energy, make it yourself.   Stop telling yourself that Midwest wind energy is your next Appalachia.  It's just as expensive and it requires sacrifice from people who receive no benefit.

Instead, why not encourage Dominion (and their transmission minion, PJM) to develop the wind energy resources in your own neighborhood?  The extensive transmission system
required to transmit offshore wind energy to eastern cities is already in place, saving billions of dollars worth of new infrastructure.  As well, a plan for an offshore transmission backbone to collect offshore wind energy and transmit it to shore at several crucial points has been in the works for years.

Stop drinking the industry koolaid that convinces you that you're helpless, Virginia.  Create your own vibrant energy future
in your own backyard!
I've said it before, and I'll say it again.  I think Sierra Club is a bunch of hypocrites who continue to shoot themselves in the foot.  It's not really about the cost of electricity, it's about environmental terrorism.

Sierra Club has been waging a huge campaign in Ohio against AEP's and FirstEnergy's plans to re-regulate their coal and nuclear generation plants so that the companies' competitive generators are guaranteed a profit.  Sierra Club has been stirring up dissent by trumpeting how much these "bailouts" are going to cost ratepayers.  Sierra Club has lied to the public.

Because Sierra Club has reached a settlement with AEP that allows the company to be "bailed out" by ratepayers in exchange for some environmental gewgaws.  That the ratepayers will also pay for.  AEP wins.  Sierra Club wins.  Ratepayers lose.

Sierra Club is a dishonest sell-out and nobody should be fooled by its claims to be sticking up for ratepayers in the future. 

The settlement not only saddles ratepayers with overpriced energy and a profit guarantee of 10.38% on these supposedly "free market" competitive generators, but also the cost of Sierra Club's environmental gewgaws, such as new "clean" energy projects that nobody wants in their own backyard.  High on the hypocrite hierarchy is the stipulation that AEP convert many of its coal-fired generators to natural gas at the end of the bailout.  Wait... isn't Sierra Club anti-gas as well as anti-coal?  Do the Sierra Club employees in Room A know what the employees in Room B are doing?  Or do they even care, as long as they keep getting away with this hypocrisy?

But not all parties sold out the way Sierra Club did.

Many opponents remain, including the Office of the Ohio Consumers’ Counsel, which says the plan would lead to a huge shift in risk from AEP to its customers; competing energy companies such as Dynegy Inc., which say the proposal is an illegal subsidy that would disrupt Ohio’s competitive electricity market; and environmental groups such as the Ohio Environmental Council, which say the deal is tilted to favor AEP’s interests over all others.
Who is Sierra Club to decide that it's okay to raise rates and stifle competition in Ohio as long as AEP gives them some environmental tokens?  Ratemaking is not a tool in Sierra Club's bag of stale tricks.

But yet, Sierra Club still opposes FirstEnergy's nearly identical proposal.  Why?  Because it will saddle consumers with additional cost.  How can anyone take Sierra Club seriously at this point?  They've just killed any credibility they had with the public and the PUCO on the FirstEnergy case.  I'm not sure Sierra Club even realizes how stupid they look at this point.  Nice going, knuckleheads.

So let's get FirstEnergy into the game here with a few environmental tokens for the Sierra Club.  I've got an idea!  How about if FirstEnergy offers to capture all the farts of their 15,500 employees and then refuel the plants in question to run on real "natural gas" that doesn't require fracking on someone else's property (assuming here that FirstEnergy owns the rights to its employees' gas wells).  This way Sierra Club can save the environment and give FirstEnergy a great big hug.  Awwwwww!

Bailout, meet sell out.

You know what?  If the environmental gewgaws weren't being paid for by ratepayers (in addition to the coal plant bailout), and there wasn't an opportunity for AEP to make additional profits off building them, they would never have agreed to make a deal with the Sierra Club hypocrites.

Because, after all...

Still, the No. 1 commitment for AEP is its shareholders.
Of course it is.  It's about those quarterly share dividends, not about supplying a necessary public service at a just and reasonable rate.  And it's not about greenwashing either.
The Public Utilities Commission of Ohio is expected to decide on the proposed settlement early next year. Having the respected Sierra Club on its side should help ease the decision.
You're kidding, right?  What Sierra Club just did was toss any respect they had gained in Ohio out the window.

I hope Sierra Club and AEP are very happy together.  Maybe the BeyondCoal folks can get invited to one of Nick's special luncheons?  I hear they serve a delicious magic mushroom quiche!
On Monday, the Illinois Commerce Commission was hit with an onslaught of Requests for Rehearing of its Order issuing a Certificate of Public Convenience and Necessity to Grain Belt Express.  Even Clean Line filed one!

The majority of the requests focus on the Commission's error in allowing GBE to utilize the expedited permitting process reserved for public utilities.  Grain Belt Express is not a public utility.

Rehearing requests came from:

Concerned Citizens & Property Owners.  CCPO concentrates on the expedited process error.

Illinois Farm Bureau.  Farm Bureau concentrates on the expedited process error and additionally contends that the project is not the least cost option.
GBX is asking for a back-up plan for its field of dreams approach to recovering costs, by coming back to the Commission to comply with the financing condition proposed in the Final Order.
GBE does not have the capacity to manage and supervise construction of the project, nor the ability to finance it.  Farm Bureau contends that issuance of the CPCN is premature.  It also believes that the actions of the Missouri PSC make GBE moot.
As the Farm Bureau previously argued before this Commission, the denial of GBX’s Application by the MPSC, along with the recent Circuit Court of Caldwell County Order which held that GBX has no authority to construct the proposed line through Caldwell County, Missouri, there will be no construction in Illinois by GBX due to the denials in Missouri. This Commission should consider additional evidence on this issue which occurred after the close of the evidentiary hearings, as described in Exhibit A, the Affidavit of Paul A. Agathen, a Missouri attorney who represents the Missouri Landowners Alliance (“MLA”). The Final Order erred on this issue. Thus, the Commission should rehear this issue.
The Illinois Landowners Alliance request parallels the Farm Bureau's, and adds that the Commission erred in its finding that GBE would promote the public convenience and necessity and promote the development of a competitive electricity market.  It also contends that the permit will "create an immediate cloud and deprivation of property rights which the landowners along the 200-mile route would experience for an unknown period of time."

Grain Belt whines that the Commission made an error when it said, "The Commission finds that GBX has not demonstrated that the Project is needed to provide adequate, reliable, and efficient service to customers within the meaning of Section 8-406.1."  Sounds good to me!  What's not to like?  GBE also gets its panties in a wad over the fact that the Order did not specifically mention the 345-kV facilities running from the converter station to the substation in Indiana.

But... I've saved the best for last.  Read this one slowly and savor it like a tasty after dinner mint.  The request for rehearing of Mary Ellen Zotos is a knowledgeable, entertaining look at the bald truth of GBE and points out all that is plainly ridiculous about GBE and the ICC's Order.  This attorney is awesome!  What separates a good attorney from a great attorney his command of written language, and this request contains enough zingers and snark to fuel a thousand anti-Clean Line Facebook posts.  Here's just a few snippets:
The record in this docket is devoid of any evidence that the Project would promote the convenience or necessity of anyone other than GBX and certain West Kansas wind developers who said they would use the Project if it ever gets built.

Boiled down, GBX merely asserts that a beneficial project like the Project is needed. Why is it needed? Because it is so beneficial. GBX’s argument that a need for the project exists based on a set of alleged benefits amounts to question-begging on a grand scale. GBX assumes what the Commission should require it to prove. Rather than focus on whether there is any need for the project, GBX jumps right into a show-and-tell on how beneficial the Project will be. The Commission concludes from this that a project with this many benefits must be needed.

Stated another way, the Commission fails to distinguish a benefit from a need. It merely accepts GBX’s catalog of purported benefits as proof of need. Under the Commission’s look-only-at-the-benefits logic, it could just as easily conclude that residents of Point Barrow, Alaska need Frigidaires.

...the Illinois RPS may be satisfied by buying RECs generated in GBX’s targeted west Kansas resource area, and those west Kansas-generated RECs can be purchased without having to build a $2,750,000,000 transmission line across four states.

...the GBX Project is “[l]ike that old 1970s song about Oz and the Tin Man, [because GBX] will give nothing to PJM that it doesn’t already have.”

While the Commission makes soothing noises that it takes seriously the landowners’ concerns about GBX’s ability to use the power of eminent domain against them, it immediately and blatantly contradicts itself by dismissing their concerns as unwarranted because GBX has not specifically requested eminent domain authority in this docket.  Less than a moment’s thought suffices to show the absurdity of the Commission’s position on this issue. If GBX is granted a CPCN it could ultimately use the power of eminent domain against landowners under Section 8-509.
Instead of coming to grips with the power of eminent domain as an integral component of public utility easement acquisitions, the Commission adopts the Pollyanna Principle and accepts at face value GBX’s well-oiled talking points about its voluntary “code of conduct” when dealing with landowners, its promises of respectful treatment, its commitment to negotiate reasonably, and so forth. For the Commission to completely discount the potential impact of eminent domain on landowners simply because GBX did not ask for it in this docket is arbitrary and capricious, and an utter abdication of the Commission’s duty to Illinois citizens.

The Commission’s attitude toward GBX is one of serene and nearly limitless benevolence: whatever GBX can’t do now, it can certainly do later. The Commission will grant GBX its CPCN here and now even though it can’t satisfy most of the requirements of Section 8-406.1 until some unknown point in the future.

But when the landowners raise the issue of GBX’s potential future use of the power of eminent domain against them, which the Commission knows full well inheres in every easement negotiation between GBX and a landowner, the Commission summarily dismisses their concerns as premature because GBX hasn’t asked for eminent domain power here and now, in this docket. In this the Commission subjects the landowners to an egregious double standard, and indulges itself in arbitrariness and caprice of the grossest sort.

GBX’s least cost argument thus rests entirely on its claim that it has no alternative but to be least cost because its entire corporate existence will be some kind of Darwinian
market struggle where only the fittest survive.

The unmistakable irony here is that GBX destroys its own claim to be least cost by asserting that it can exempt itself from those same inexorable free market forces if the going gets tough: GBX reserves to itself the right to seek cost allocation to ratepayers, and in so doing proves itself just another corporate dissembler trying to evade committing itself irrevocably to the ups and downs of the market. And if there are too many downs, the ratepayers can bail GBX out.

But in this docket GBX tells the Commission that it is a “merchant transmission owner” not because it has assumed the full market risk of the Project, but because it plans to earn revenues through discrete transmission services contracts with shippers. This definition of “merchant” transmission owner” appears nowhere in FERC’s orders. That’s because it is a definition concocted entirely by GBX itself, and it differs fundamentally from FERC’s.

Understanding the term “assumption of all market risk” does not require a degree in economics: an assumption of all market risk means exactly that, all market risk, come Hell or high water.

This Commission has no jurisdiction to determine whether or how much of an interstate transmission operator’s costs may be recovered from anyone. The rates, terms and conditions of service for interstate transmission are exclusively matters of federal jurisdiction.

...GBX has no power to confer on this Commission subject matter jurisdiction over the rates, terms and conditions of service on interstate transmission facilities.

If GBX were really a “merchant” transmission owner as defined by FERC, then there would be no questions concerning cost allocation,
and this entire discussion would be unnecessary. GBX simply wants to have it both ways, eating its free market cake while having its cost allocation too.
I hope you enjoyed that as much as I did!   The attorney who wrote it, Paul Neilan, also writes a blog.  If you enjoyed that filing, you'll probably enjoy the blog as well.

The ICC now has 20 days to consider the requests and make a decision to either rehear the case or deny the requests.  If the Commission denies the requests, the litigants can proceed to court appeals.

Things are definitely heating up in Illinois!  More fun to come!
The Federal Energy Regulatory Commission has added reconsideration of PATH's request for rehearing of the Commission's denial of its RTO membership incentive adder to the agenda of its monthly meeting scheduled for Thursday.

It's been so long since the Commission granted rehearing on this limited matter, it's been nearly forgotten in the ensuing shuffle.

At issue is PATH's request to continue to collect a half a percent of extra incentive return on equity for its membership in PJM Interconnection.  When the Commission granted PATH a whole bunch of incentives back in 2008, it also granted it an additional 50 basis points for joining PJM.  PATH proposed that it be allowed to continue to collect this incentive after it abandoned the PATH project, by continuing its membership in PJM until it had finished collecting its abandoned plant.

The Joint Consumer Advocates answered PATH's request for rehearing, and pointed out that the stated purpose of section 219 is to provide incentive-based rate treatments that benefit consumers by ensuring reliability and reducing the cost of delivered power.
  The PATH project has not benefited consumers by ensuring reliability because it was never built.  And it certainly never reduced the cost of delivered power.  Quite to the contrary, PATH increased the cost of delivered power by leaving ratepayers on the hook for its $121M of development costs even though it never even put a shovel in the ground.

In other words, even though PATH will never be built, and the PATH companies will cease to exist as soon as their abandoned plant is collected from ratepayers, PATH wants to be financially rewarded for continuing its pointless membership in PJM.  A membership in PJM allows the member to participate in the PJM transmission planning process.  Since PATH won't be built, and since the PATH companies were single purpose entities that will never plan or build another transmission project, what's the point of their continued membership in PJM?

I think the point is to continue to collect an additional half a percentage point of return (or interest) on the slowly dwindling $121M abandoned plant balance that PJM ratepayers must pay for.

It will be interesting to see what the Commission does to dispose of this matter.