... and this one goes to Sprouse!
We're still living in America, where money apparently can't buy everything. And that's a cheery thought!
The Kansas City Star continues its excellent coverage of the Grain Belt Express debacle in the wake of yesterday's denial of the project by the Missouri Public Service Commission.
The Star focuses on impacted Missouri landowner Loren Sprouse, who, along with his brothers, operates a farm in Caldwell County. Read the article and watch the video here.
A week before the vote, Loren Sprouse — along with two brothers, he farms land in Caldwell County that’s been in the family since 1919 — said of Grain Belt: “This is a giant land grab by a huge company. They (Clean Line) are a private, for-profit company trying to masquerade as a public utility.”
After Wednesday’s vote, Sprouse said: “Now we can get back to the important business of feeding America.”
Clean Line Investor Corp. is a subsidiary of ZAM Ventures, L.P., which is one
of the principal investment vehicles for ZBI Ventures, LLC. ZAM Ventures, L.P. has a consolidated net worth of $500 million based on U.S. GAAP measurements. ZBI Ventures,
LLC is owned by Ziff Brothers, a multi-billion dollar family investment fund.
The Order stopped short of revealing how much of this particular $500M chunk their multi-billion dollar fortune the Ziffs have invested in Clean Line's struggling projects, but Clean Line's recent application to the Illinois Commerce Commission revealed
it's in the neighborhood of $70M. That's nearly 1/5 of ZAM's fortune tied up in Clean Line with no hope of recovery if the projects fail. Maybe this will give the Ziffs some empathy for the Sprouse brothers, who stand to lose a huge chunk of their
investment if the project is built.
And let's think about that for a second... how much potential profit is in these projects for the Ziffs if they're willing to invest such a huge chunk of their fortune? Will they recoup their entire investment if only one of Clean Line's five projects gets built?
So, who watched the Missouri PSC meeting yesterday? It was lovely of Mike Skelly and Mark Lawlor to choose seats that put them within range of the streaming video camera. Everyone got to watch them lose! Here's what it looked like:
Schadenfreude? You betcha!
Skelly originally took his classic "arms folded" defiant pose while Lawlor awkwardly stood in the doorway with a hang dog expression. I guess someone told them that their body language was unbecoming for the occasion, because Skelly switched to the "hands tightly clasped between his knees" pose and Lawlor sat down to take notes. Although, in this shot, it looks like Lawlor is about to bolt from his seat and run screaming from the room.
So, what did Clean Line have to say afterwards? It took forever for them to issue a press release (because the victory one they probably had prepared ended up in the shredder). Clean Line says:
...there appears to be some confusion at the Missouri Public Service Commission about how the project will benefit Missourians.
Confusion? Hardly. The MO PSC's Order was clear as a bell. It weighed the evidence and made a decision that actual benefits to the general public from the Project are outweighed by the burdens on affected landowners.
Who does that Clean Line? Who calls a state regulatory board "confused" when they don't get their way? This isn't boding well for another application down the road...
The profit-seeking needs of the Ziff Brothers were outweighed by the burden the project proposed to the Sprouse Brothers.
What a great thought as we celebrate America this weekend!
And let's end with a final photo of Mike and Mark, who finally managed to have a word with each other as the meeting was ending. What do you suppose they said?
The Beckley Register-Herald published a spot on editorial last week regarding the captive West Virginia PSC's continual rubber stamping of utility rate increases.
The editorial lambasted the PSC for not even bothering to act like they care to listen to public commentary.
At a hearing last week in Beckley, one citizen clearly believed the PSC acts more as a rubber stamp for the utilities than an advocate for the people. His notion was not hindered by a PSC staffer who was perceived to be texting or playing with her phone throughout the meeting.
The editorial points out that at some point, the continued advancement of utility bill increases are going to meet the immovable object of consumer ability to pay.
In the past, the PSC has shown little concern about consumers, except to scam them with "consumer rate relief bonds" designed to simply hide huge rate increases with slick PR campaigns and additional financing fees.
The WV PSC must balance the interests of consumers with those of utilities. Simply denying a rate increase needed to keep the utility solvent isn't an option.
What's a regulator to do?
Break those utility chains that bind you, Commissioners! Instead of being lead around by the utilities like a monkey on a leash, how about leading for a change? We're only going to get a handle on utility rate increases when regulators start acting like regulators and stop acting like utility sycophants.
Only when regulators use their authority to lead utilities can true balance happen. Perhaps our Governor should start appointing Commissioners with the proper skills, instead of appointing his cronies to the PSC as political favors.
Did you think I've been on vacation for the past couple of weeks? Hardly. But I've been having so much fun it sort of felt like a vacation.
Today was the filing deadline for initial briefs in the consolidated FERC proceeding dealing with the formal challenges to PATH's 2009, 2010 and 2011 rates and the recovery of PATH's capital investment in the cancelled PATH project.
The briefs summarize the evidence and positions of the parties.
You can download them here:
Newman-Haverty Initial Brief
(deals with formal challenge only)
FERC Trial Staff Initial Brief
(deals with formal challenge and abandonment)
Joint Consumer Advocates Brief
(deals with abandonment only)
(deals with formal challenge and abandonment)
Happy reading! They're much shorter than War and Peace. I think.
Why do they call them briefs? Is this some sort of sick joke?
Holding this proceeding in abeyance and allowing the Company to obtain such additional information and to work with Staff to develop additional production cost models would prejudice no one.
They also claim it would be "in the public interest" to allow the application to languish in limbo until Grain Belt Express can actually provide the information the Commission asked for back in February.
"The public" has been inconvenienced and financially harmed by Grain Belt Express every day of the past 2 years this thing has been an active threat to their lives and livelihood. Targeted landowners have been living in stasis, afraid to invest in their properties, unable to sell their properties without disclosing the possible intrusion of a gigantic power line that will lower its value. Thousands have been spent legally defending their rights. There has been many a sleepless night, an uneaten meal, and way too much family time foregone in favor of meetings, hearings, and other related events. These folks have been put through the wringer, but they have persevered.
Now, when denial of Clean Line's application is imminent, the company suddenly wants the Commission to slow down, after urging it to hurry up all these months it thought it was on the way to victory.
The Commission has given GBE way too many chances already. A full evidentiary hearing was held. The record was closed. But, the Commission gave GBE a second chance to supplement the record months after the record had closed. Clean Line couldn't be bothered to provide the necessary information or evidence. Now GBE wants a third chance to get it right, and for thousands of affected landowners to continue to live in suspended animation for however long it takes GBE to get its act together.
Obviously Lawlor's threats to march right to the U.S. DOE to revive his application for federal eminent domain authority under Sec. 1222 of the U.S. Energy Policy Act was a big, fat bluff. He's not going anywhere, except to drop to his knees right there in Missouri and beg for a third chance.
"Do overs" are best left on the playground. Release the landowners from this corporate game-playing purgatory. Deny the application.
Yesterday, The Coalition of Eastside Neighborhoods for Sensible Energy
and Citizens for a Sane Eastside Energy
, et al, filed a complaint
at FERC against Washington State utilities Puget Sound Energy, Seattle City Light, Bonneville Power Administration and ColumbiaGrid. The complaint alleges that the utilities violated the Federal Power Act, FERC Orders No. 1000, 890 and 2000, and contractual obligations that the respondents made with the Commission that incorporate the referenced Orders, as well as the terms of their respective Open Access Transmission Tariffs.
Whew! That's a mouthful, huh? In plain English, it looks like the complainants are accusing Puget Sound Energy of trying to permit and build a transmission project that was not developed in a plan by an independent grid operator (or a reasonable facsimile, since the Northwest doesn't have a traditional RTO/ISO).
ColumbiaGrid is supposed to be taking the place of a RTO for all the named respondent utilities, and according to the complaint, the utilities promised FERC that ColumbiaGrid would serve in a role to make the area Order 1000-compliant.
The complaint alleges that Puget Sound Energy developed its "Energize Eastside" project without proper load flow studies, no study of alternatives, no RFP to evaluate alternate proposals, and that ColumbiaGrid is an entity controlled by its member utilities, including Puget Sound Energy, and does not meet independence requirements for RTOs.
The complaint also alleges that the project is not the "local load flow" project it claims to be (to escape FERC jurisdiction) but also includes a new 1500MW transmission path to Canada that fulfills a decades-old agreement about shared hydro resources. The addition of the Canadian firm capacity also elevates the project to one that should be regionally allocated, and not charged 100% to local load in the Eastside neighborhoods, as Puget Sound Energy is attempting to do.
Sounds complicated, but the affidavit of J. Richard Lauckhart is a great read to get an easy handle on the problem here. These guys really did their homework on FERC process and policies, and provided evidence in the form of expert testimony. Well done!
Looking forward to seeing where this leads...
A friend sent me a copy of this recent FERC OE audit of Kinder Morgan, Inc.
He found it unusual because there was no dollar amount of refund in it anywhere. What was the point?
FERC has never met a utility merger it didn't like. In exchange for some divestiture and a promise not to charge ratepayers for merger costs, FERC approves every merger I've ever read about.
The divestiture is what it is. It happens, and then it's over. However, merger costs happen over a period of several years, and may not appear in rates until after the fact. How does FERC know that the utility has kept its promise and not passed on merger costs to ratepayers?
It audits them. It's happening a lot more frequently lately, as the Commission has realized that nobody minds their merger cost promise. "Mistakes" happen. If an audit doesn't happen, then the utility keeps the money. If an audit does happen, then the utility says, "Oooops! My bad!" and refunds the amount FERC recommends. No penalties happen.
So, it was really no surprise that FERC's OE commenced an audit of Kinder Morgan a couple years after the merger happened. FERC audits routinely turn up merger costs "accidentally" included in rates.
But what's interesting in Kinder Morgan's case is that although FERC found four different violations of its accounting rules, the corrective action was prospective.
FERC found that Kinder Morgan had incorrectly recorded some maintenance expenses and
incorrectly expensed some abandoned projects. That ended up pretty much being a wash. No big deal. Nobody but a bean counter cares.
But then FERC discovered that Kinder Morgan had not correctly recorded its merger labor costs in special merger accounts.
KMI stated that it made a corporate decision not to track merger-related labor costs not due to the lack of process or system, but rather due to the fact that management did not consider the labor-related costs to be incremental costs. Also, KMI asserted that no existing employee costs were shifted to merger activities, since all pipelines continued to receive the same level of service before the
merger and all merger activities were completed as well as employees' regular tasks. KMI stated that more than 300 employees made meaningful contributions to merger activities and received a bonus for their efforts.
Audit staff noted that KMI had the requisite processes, accounting practices, and systems to track the cost of labor for merger activities. However, audit staff found written communication specifically instructing employees not to record any labor costs as a cost related to the merger. By not tracking merger-related labor expenses for more than 300 employees, the KMI jurisdictional entities were unable to accurately record the allocation of labor costs to various USofA accounts based on the time engaged in various classes of work during the period of merger activity.
Audit staff also noted that activities for pursuing, considering, and consummating a corporate merger are nonoperating, so their costs should be recorded in Account 426.5, which includes miscellaneous items that are nonoperating in nature. For accounting purposes, the Commission has consistently stated that costs involving mergers of public utilities are nonoperating and are to be recorded in Account 426.5. By not tracking the cost of employees involved in merger activity, the KMI jurisdictional entities could not distinguish the cost of labor related to the merger from labor costs for pipeline operations. As a result, the KMI jurisdictional entities failed to record such costs consistent with their nature, and the entities were unable to properly allocate labor costs to utility and nonutility operations as required by General Instruction No. 10. This resulted in the KMI jurisdictional entities recording internal labor costs in operating expense accounts that should have been recorded in Account 426.5.
While audit staff believes that the KMI jurisdictional entities should have recorded merger-related labor costs in a nonoperating expense account, KMI stated that the accounting misclassification did not affect customers' rates. Audit staff also did not find that this misclassification affected rates for jurisdictional customers.
So, apparently now it's okay for a merging utility to fail to record its merger labor separately, causing a massive transparency fail that not even FERC can figure out? What was the point of this audit? Was FERC trying to make KMI admit to certain dollar amount of merger labor cost and failed? This is clear as mud, but it looks like KMI's deliberate failure to separate its merger labor costs made it impossible for FERC to determine how much labor cost there was, and where it ended up. I'm not buying that the merger duties didn't cause any additional labor on the part of the employees. FERC came away empty-handed. What a waste of time and money!
But wait.. FERC also discovered "several" accounting misclassifications in their dig for merger costs. Some of the misclassifications were a wash, rate-wise, but FERC still felt the reclass was necessary to bring KMI into compliance. Some of them, however, were not. FERC found donations, civil penalties, and environmental legal reserve in accounts that are recovered from ratepayers. These transactions should always be recorded in accounts that are not recovered from ratepayers. So, did FERC dig deeper to at least correct this violation and come away with something for ratepayers?
Nope. They recommended that KMI "[e]stablish and implement procedures to ensure proper coding and accounting of expenses under Commission regulations."
So, there was a big stare down about merger labor where FERC blinked first, but when FERC actually found some real money here, it didn't bother to correct it. It gave KMI a pass, as long as it pretended to do better next time.
I hope future audits do better for ratepayers than this one. FERC's OE isn't helping ratepayers, it's apparently too busy making headlines with banks and traders.
Has Clean Line finally reached its financial tipping point?
I'm sure the initial estimate of development costs for the company's first three transmission line projects (Plains & Eastern, Rock Island and Grain Belt Express) has long since fallen to the wayside. So far though, Clean Line has been able to sweet talk its investors into injecting more cash when the company runs into trouble and out of money. But, at some point, these investors are going to have to slap the checkbook shut, cut their losses and move on. It's not like they're stupid or something, is it?
Clean Line's projects just keep running into more and more trouble. Instead of moving forward, they're moving in reverse.
For example, take yesterday's indication from the Missouri Public Service Commission that it will deny GBE's application. How much money was spent on that application process in Missouri? Millions were wasted. GBE's angry response was to threaten to revive their parked application for federal eminent domain under Section 1222 of the Energy Policy Act.
How much is that going to cost? Many millions more! Another 1222 application is going to very costly, in both time and money. It's going to add several years to the permitting process and Clean Line is going to pay every penny of the federal government's cost to process the application, including a multi-million dollar NEPA environmental impact statement process. And still, there's no guarantee. In fact Clean Line could get several million into this process with Grain Belt Express, only to receive a denial of its other Section 1222 application currently in process on its Plains & Eastern project. Such a denial would make continuing with Grain Belt's 1222 application a moot point, but the money will have already been spent.
And then what's Clean Line going to do? Spend millions lobbying Congress to try to pass legislation giving the federal government the authority to usurp state authority to site and permit transmission? It's not that easy. It's been tried again and again over the years and has been nothing but an expensive failure. Another dead end.
Meanwhile, Clean Line has begun the application process for its Grain Belt project at the Illinois Commerce Commission. Silly Grain Belt has applied under the "expedited" review rule. This means that the multi-million dollar Illinois permitting process is all going to come due and payable in the next several months (unless GBE gets lucky and the ICC dismisses their application because they're not a public utility). And what good is an Illinois certificate without a Missouri certificate? Illinois certificates expire two years from the date of issue. There's just no way Grain Belt will have completed the Section 1222 process to overrule Missouri's denial before the Illinois certificate expires.
None of the other Clean Line projects are in any better shape. Rock Island does not have eminent domain authority in Illinois, and the Iowa portion is slogging along the slow track. New legislation in Iowa could completely derail the project before the IUB even acts.
Plains & Eastern is getting its clock cleaned in the Section 1222 process. The U.S. DOE has completely mucked up the entire process by failing to perform its review in a legal and transparent manner.
It's becoming more and more obvious that these projects are NEVER going to happen. It's time to quit giving money to these clowns and collapse the big top they've been performing under.
Clean Line no longer makes financial sense.
I've been trying to keep my nose to the ol' grindstone and ignore the calliope music coming from PJM's "Annual Meeting"
in Atlantic City
. But it's really hard to ignore it when a clown scampers across your computer screen before you've even had your morning coffee.
I started my day today with the latest issue of RTO Insider. I figured it went well with coffee and would be a pleasant way to wake up before going back to work on something that matters. I love RTO Insider almost as much as chocolate donuts!
Bowring, Gates’ Consultant Spar over PJM Traders’ Obligations on Loopholes
ATLANTIC CITY, N.J. — To shake or not to shake the Money Tree?
That was the question Independent Market Monitor Joe Bowring posed during his Year in Review presentation at PJM’s Annual Meeting last week, setting off a lively debate with one of the consultants that Richard and Kevin Gates, enlisted in their high profile defense against market manipulation allegations.
“If the rules are imperfect, is it OK to do anything not explicitly prohibited?” Bowring asked.
He quickly provided his own answer. “It is not permissible,” he said, citing what he called the “duty” of market participants to inform RTO officials and federal regulators of such “money trees.”
Is this rule supposed to apply equally to every entity FERC regulates? Doesn't Bowring realize that utilities routinely exploit "unclear" rules in order to pocket a little extra scratch? If regulated utilities had a duty to report all their "misinterpretation" money trees to FERC, we're going to need a couple more hotlines. Of course, if the utilities are so busy self-reporting all their shakes (or kicks, flicks, and karate chops) of the "money tree," they might not have time to "accidentally" misinterpret any rules that result in a profit for their shareholders, would they? Or will they simply have to hire new monkeys to shake the tree, while the old monkeys watch and phone in a report to FERC's hotline?
Utilities large and small routinely interpret FERC rules in incorrect and bizarre ways in order to squeak some additional profit from them. Except FERC never fines its utility pets $30M when they get caught breaking the rules. It's all giggle, giggle, hush, hush, slap my wrist, I promise to be good if you overlook this little "misunderstanding." FERC needs to tighten that shit up and adopt Bowring's "Money Tree Methodology" for everyone!
I do so admire Bowring's enthusiasm. You go, sport! I hear there's going to be a vacant spot on the Commission soon! Maybe you should be Chairman?
What do you suppose caused Bowring's money tree epiphany? Do you suppose he participated in the "Spa Toccare"* leisure activity in order to relax and clear his mind before giving his report to the membership?
Whatever you do, don't click on the clown picture above.
No, don't do it!
Well, that would explain things then. Thanks a lot, Joe, for making me snort with laughter before the coffee was even ready to drink.
*Dedicated to undoing the effects of your day, Spa Toccare offers relaxing treatments guaranteed to exhilarate. Here, tensions melt, knots disappear, skin glistens and eyes sparkle. A new you emerges just in time to wave bye-bye to your worldly cares.
Journalists are trained to be independent reporters of the facts. The readers are supposed to take those facts and form their own opinion. But what happens when a "journalist" tries to spin her opinion as "news?"
"Clean Line receives pocket approval from legislature."
On the heels of lawmakers voting to reject a House bill designed to stop the Grain Belt Express Clean Line project, Michael Skelly, President of Clean Line Energy, visited a Ralls County site of a Grain Belt Express Clean Line’s delivery station, a $100 million facility that proponents say will allow Missourians to receive low-cost, clean power from the Grain Belt Express Clean Line.
The Grain Belt Express Clean Line is a proposed electric power line that will deliver competitively-priced renewable energy to Missouri. The House Energy and Environment Committee voted down House Bill 1027, which would modify provisions relating to eminent domain powers of utilities, on April 28. The bill was sponsored by Rep. Jim Hansen, R-Frankford, who represents Monroe, Lincoln, Pike, and Ralls Counties.
“With the vote this morning, Missouri lawmakers have demonstrated that they stand behind market based solutions to bring low-cost, renewable energy to the state,” said Mark Lawlor, Director of Development for Clean Line Energy. “The Grain Belt Express Clean Line will deliver enough low-cost clean power to Missouri through a direct connection to the electric grid to power 200,000 Missouri homes. We look forward to continuing to work with landowners and community members to develop the project in Missouri in a collaborative way. This project is very important to Missouri’s energy future.”
At the hearing on the bill, supporters spoke of the benefits that the Grain Belt Express Clean Line project would bring to the state and asked legislators to block HB 1027.
According to the Legislative Drafter's Deskbook: A Practical Guide
, a "pocket approval" happens when the President does not sign a bill, but fails to return it to the legislature within 10 days. In that case, it becomes law through "pocket approval."
Is that what this reporter meant? That HB 1027 became law because the President failed to return it to the House? Or is this reporter just desperate to include the words "approval" and "Grain Belt Express" in a headline?
There was no "approval" for Grain Belt Express in Missouri. The legislature does not have authority to "approve" a transmission project. "Approval" can only come from the Missouri Public Service Commission, and the Staff of the MO PSC just last week reaffirmed their recommendation that the PSC DENY APPROVAL for Grain Belt Express.
This headline is simply the reporter's opinionated fantasy. The only thing that actually happened at the legislature is that Clean Line's expensive lobbyists managed to twist enough arms to prevent legislation supported by the people from passing. Big deal... there's always next year!
The reporter conveniently skips over the fact that GBE won't provide ANY energy to Missouri that is not purchased by an actual utility that serves electric load in the state. Evidence at the PSC indicates that there are no utilities stepping up to purchase electricity from GBE's Missouri converter station.
The article also claims: "Grain Belt Express project moves process forward, receiving public support."
Moves forward? Forward to where? GBE is still stuck in the Molasses Swamp waiting for a decision on its application from the MO PSC. It's not going anywhere.
And where's the proof that GBE has any "public support?" The evidence at hand indicates that GBE is receiving record public opposition. This is backed up by the fact that when "Mike" Skelly called a recent press conference at a field in Ralls County, the only "supporters" who showed up were brought in by GBE from many miles away. On the same day, the Ralls County Commission re-iterated its opposition to GBE, no matter how much of a company man their assessor wants to be in the media.
Here's Block GBE MO's press release that reflects what REALLY happened:
Two Counties Clarify Opposition to Grain Belt: Chariton and Ralls Legalize Letters of Rescission
Texas based Clean Line Energy, that hopes to build a 750 mile high voltage-transmission line across the state, just hit another snag. Five out of eight counties crossed have now officially rescinded permission for Grain Belt Express to access their county. In Missouri, each county and the Missouri Public Service Commission (PSC) must grant permission to erect any towers.
The staff of the Missouri PSC recommended denying Grain Belt last fall. They stated “Grain Belt Express has not shown it is needed, economically feasible, or promotes the public interest in Missouri”. They also stated, “Section 229.100 RS Mo precludes Grain Belt from building its proposed line without first obtaining the consent of the County Commission in each of the eight counties in northern Missouri where the line would be located.”
Grain Belt questioned the validity of the rescission letters from two counties that were written in the summer of 2014. They stated that Chariton County’s letter had not specifically withdrawn section 229.100 authority or permission to build.
They also stated that Ralls County had said they would consider granting franchise only after the commission approved Grain Belt. Because the county must give permission for the PSC to grant a certificate it created a chicken and egg situation. Grain Belt asked for the Certificate of Convenience and Necessity first and promises to get the consent of each of the counties afterwards.
In response, both Chariton and Ralls County submitted new letters to the PSC to reiterate that Grain Belt does not have permission to build transmission lines in their county.
Ralls County’s new letter reads, in part, “Accordingly, if our grant of authority of August 23rd, 2012 to Grain Belt Express was valid, the County Commission does hereby rescind and revoke any authority granted that date to Grain Belt Express."
Wiley Hibbard, Presiding Commissioner of Ralls County stated, “I, as well as the other two Commissioners in Ralls County, felt it was important that we should restate our opposition to GBE's application to the PSC.
"By pure coincidence, we chose to send our letter to the PSC on the same day GBE held a press conference in Ralls County. It is my understanding that no landowners from Ralls County attended. GBE had to bring a person in from a county many miles away to speak to the press. This will show Grain Belt and the PSC that landowner's rights are very important to the citizens of Ralls County.”
Jennifer Gatrel of Block Grain Belt Express Missouri stated, “We are delighted that five out of eight counties have withdrawn their permission. We are very hopeful that the Missouri PSC will quickly deny Grain Belt and allow landowners to resume our lives."
A reporter who purposely misstates the facts to promote a corporate agenda does so at the peril of her own reputation.
Brace yourselves, Americans, Congress is tinkering with energy policy again! No good can come of this. And some idiot has introduced a whole new Sec. 216 (16 U.S.C. 824p)
aka Section 1221
of the Energy Policy Act of 2005 that's even worse than its first iteration.
The original, Section 1221, designated the Secretary of Energy to conduct an electric transmission "congestion study" and designate "National Interest Electric Transmission Corridors" (NIETCs) every three years. Transmission proposed in these designated corridors
was subject to "backstop" permitting by the Federal Energy Regulatory Commission (FERC) in the event a state withheld approval of an application for a permit for more than one year, or lacked the authority to permit the project.
Section 1221 was promptly deconstructed in two federal courts. When FERC proposed that "withholding approval" included a denial, and that meant it could override a state's denial of an application, the 4th Circuit determined that "withheld approval"
excludes a state's denial of an application, preserving state authority. In addition, the 9th Circuit determined
that DOE did not properly "consult with states" before designating NIETCs, and therefore it vacated the corridors DOE had set in 2009.
Last year, DOE made a half-hearted attempt to produce the 2012 "congestion study," but was resoundingly smacked down by a whole bunch of comments, and hasn't done a thing since.
In practice, Section 1221 has been an abject failure
However, the new Section 216, carried to Congress by Sen. Martin Heinrich (D-NM), attempts to fix all that by giving FERC authority to overrule a state denial of a transmission permit and use federal eminent domain authority to take private property. It also tosses NIETCs out the window as a means to identify worthy transmission projects and replaces them with an RTO/ISO finding that the project is "needed."
Good news: The new Sec. 216 does not apply to Clean Line in its current form.
Bad news: The new Sec. 216 will encourage a whole bunch of new transmission projects of questionable necessity, and landowners along existing corridors and/or those owning "open farmland" are always the first targets identified on the ol' transmission routing Etch-A-Sketch.
So, let's look at what the new Sec. 216 says:
(B) FEDERAL AUTHORITY.—The Commission may authorize, in accordance with subsection (d), construction of a high-priority regional transmission project that the Commission finds to be required by the present or future public convenience and necessity and in accordance with this section if--
“(i) a State--
“(I) fails to approve construction and authorize routing of a high-priority regional transmission project not later than 1 year after the date the applicant submits a completed application for authorization to the State;
“(II) rejects or denies the application for a high-priority regional transmission project;
“(III) authorizes the high-priority regional transmission project subject to conditions that unreasonably interfere with the development of a high-priority regional transmission project contrary to the purposes of this section; or
“(IV) does not have authority to approve the siting of the high-priority regional transmission project; or
“(ii) the developer seeking a certificate for construction under subsection (d) does not qualify to apply for State authorization to construct a high-priority regional transmission project because the developer does not serve end-users in the State.
So, FERC can "authorize" a transmission project if a state denies an application or conditions approval in a way the transmission developer doesn't like. That's not "backstop" or secondary authority, it's usurping state authority in its entirety. A state must approve, or else. So, why even bother with the fan dance of state applications at all? That's just a big waste of time and money.
Tell ya what... if FERC ends up with authority to overrule state transmission permitting decisions, there's going to be a lot more "turn-offs" for Commissioner Norman Bay, because the protestors will have moved "from pipelines to Order 1000." *Insert laughter here*
Second problem - how these "special" high-priority regional transmission projects are determined:
(1) HIGH-PRIORITY REGIONAL TRANSMISSION PROJECT.—The term ‘high-priority regional transmission project’ means an overhead, submarine, or underground transmission facility, including conductors or cables, towers, manhole duct systems, reactors, capacitors, circuit breakers, static VAR compensators, static synchronous compensators, power converters, transformers, synchronous condensers, braking resistors, and any ancillary facilities and equipment necessary for the proper operation of the facility, that is selected in a regional transmission plan for the purposes of cost allocation under Order Number 1000 of the Commission (or any successor order), including an interregional project selected under that plan.
That's it -- mere selection of and inclusion in a regional transmission plan makes a project "high-priority." Ummm... does Heinrich know that RTOs include hundreds of projects in their regional plans each year? "High-priority" over what? Transmission projects that aren't in a regional plan? Those are few and far between because they're nearly impossible to build (ain't that right, Clean Line?) So, every
project is going to be a "high-priority" project in this brave, new world?
It's quite obvious that S.1017 intends to "fix" everything that went wrong with the original Sec. 216, including the flawed NIETCs and the ability of a state to deny an application for a transmission project that did not serve its citizens. But, let's ask ourselves, does it really need fixing? State approvals aren't the problem with new transmission, it's federal approvals and studies that muck up and delay transmission plans. In addition, Congress has resolutely refused to make electric transmission siting and permitting a federal responsibility, and will most likely continue to do so.
There seemed to be little love for controversial legislation like S.1017 at Thursday's Senate Energy and Natural Resources Committee hearing. But, you know how Congress is... they get up to all sorts of hijinks if you don't keep your eye on them, so this bears a bit of babysitting.
One more thing before I wrap this up... where did this legislation come from?
The original Sec. 216 got its purpose from:
(4) In determining whether to designate a national interest electric transmission corridor under paragraph (2), the Secretary may consider whether--
(A) the economic vitality and development of the corridor, or the end markets served by the corridor, may be constrained by lack of adequate or reasonably priced electricity;
(i) economic growth in the corridor, or the end markets served by the corridor, may be jeopardized by reliance on limited sources of energy; and
(ii) a diversification of supply is warranted;
(C) the energy independence of the United States would be served by the designation;
(D) the designation would be in the interest of national energy policy; and
(E) the designation would enhance national defense and homeland security.
Nothing in there about renewable energy, right?
Now take a look at the purpose of the new Sec. 216:
(a) Policy.—It is the policy of the United States that the national interstate transmission system should be guided by the goal of maximizing the net benefits of the electricity system, taking into consideration--
“(1) support for the development of new, cleaner power generation capacity, including renewable energy generation located distant from load centers;
“(2) opportunities for reduced emissions from regional power production;
“(3) transmission needs driven by public policy requirements established by State or Federal laws (including regulations);
“(4) cost savings resulting from--
“(A) reduced transmission congestion;
“(B) enhanced opportunities for intraregional and interregional electricity trades;
“(C) reduced line losses;
“(D) generation resource-sharing; and
“(E) enhanced fuel diversity;
“(5) reliability benefits, including satisfying reliability standards and guidelines for resource adequacy and system security;
“(6) diversification of risk relating to events affecting fuel supply or generating resources in a particular region;
“(7) the enhancement of competition in electricity markets and mitigation of market power;
“(8) the ability to collocate facilities on existing rights-of-way;
“(9) competing land use priorities, including land protected under Federal or State law;
“(10) the requirements of section 217(b)(4); and
“(11) the contribution of demand side management (including energy efficiency and demand response), energy storage, distributed generation resources, and smart grid investments.