Category: $$$$$$

Checking NextEra's Math

5/22/2025

NextEra Energy Transmission MidAtlantic, designated entity for the MidAtlantic Resiliency Link, or MARL, project recently announced its Actual Net Revenue Requirement and Annual True-up Meeting. The meeting will be held on June 12 at 3:30 p.m. and probably won't last more than an hour (depending on how many questions you ask). Interested parties can attend via Webex or telephone. NextEra requests that you répondez s'il vous plaît, but it's not required. See meeting notice linked above.

An interested party is defined in NextEra's Formula Rate Protocols (PJM OATT Attachment H-33-A). "For purposes of these protocols, the term Interested Party includes, but is not limited to, customers under the PJM Tariff, state utility regulatory commissions, consumer advocacy agencies, and state attorneys general." If you pay an electric bill in the PJM region, NextEra's transmission costs are flowing through into your bill and therefore you are an interested party by definition. This issue has been litigated before FERC many times and FERC has emphatically found every time that consumers are interested parties.

At the meeting, NextEra will be presenting its Formula Rate Update to true up its estimated 2024 revenue requirement with its actual expenditures. It will also be presenting its estimate of its revenue requirement for 2025.

What's a revenue requirement? It's the total amount NextEra gets to collect from ratepayers in the PJM region for each year. Once NextEra calculates its revenue requirement, PJM collects that amount from responsible load serving entities (LSE -- the company that actually sends you your bill). The LSE in turn collects the transmission rate from you in your bill. This is how the costs of new transmission get included in your monthly electric bill.

NextEra will NOT be discussing or entertaining any questions about its transmission projects. This meeting is ONLY about NextEra's transmission formula rates.

What's a formula rate? It's a series of mathematical calculations into which the utility plugs certain numbers. It calculates the utility's annual revenue requirement. Formula rates take the place of a stated rate, which is a set dollar amount that the utility would collect from its customers. Instead of a set number, the regulator sets a formula for calculating yearly rates so that there doesn't need to be a full blown rate case every year. The formula is the rate, not a fixed number. The revenue requirement can therefore fluctuate from year to year.

Now take a deep breath.

This is NextEra's formula rate, populated with numbers from 2024.

It's not as hard as it looks. Each calculation names where the numbers it plugs in come from. The numbers used come from NextEra's FERC Form No. 1.

The Form No. 1 is an accounting of NextEra Energy Transmission MidAtlantic's finances for 2024 that is organized into various accounts. If you've ever worked in accounting, or taken an accounting course, you know that an entity's finances are organized into certain accounts that describe each general class of expense. The list of descriptive accounts for an entity is called its Chart of Accounts. All utilities regulated by the Federal Energy Regulatory Commission use FERC's Chart of Accounts, called the Uniform System of Accounts (USofA). Each account listed on the Form No. 1 (and transferred to the formula rate) has a description and rules for its use. Not every account in the USofA gets transferred to the formula rate template. Only certain accounts are included in the formula rate. Other accounts are not included in the rate. For instance, FERC Account Number 426.4, Expenditures for certain civic, political and related activities, is not included in a formula rate. That's because those kinds of expenses are not recoverable from ratepayers under FERC's accounting rules. A utility that chooses to make those kind of expenditures pays for them out of its own funds. When a utility does not follow the descriptions and rules, this can happen.

Sometimes, utility accountants accidentally record expenses in an incorrect account. Not a problem if both accounts are either recoverable or non-recoverable. However if a non-recoverable expense is accidentally recorded in a recoverable account, it would get transferred to the formula rate and recovered from ratepayers in error. In that case, the utility must refund that expense to ratepayers.

NextEra will also be discussing its projections for 2025. These numbers are based on historic averages or company budgets. The estimated revenue requirement is what will be recovered from ratepayers in 2025. However, it is just an estimate. This estimate will be compared with actual 2025 expenses in 2026 (called a true-up) and any overage will be refunded, or any under collection will be wrapped into the next year's rate. This way, the utility only collects its actual expenditures from ratepayers.

As an interested party, you will be able to ask about specific numbers that are plugged into the formula rate, the accounts included in that line item, and how the actual expenses were classified for accounting purposes. If the utility cannot provide detailed answers during the meeting, there is a process for interested parties to submit information requests to seek more details about the expenses and/or calculations to make sure that the rate was calculated correctly. If you are not satisfied with the answer you receive to your question, feel free to ask them how to submit additional written information requests.

Yes, this is heady stuff, but it can be mastered by regular people. Having an accounting background helps.

You might wonder why this process exists. Doesn't FERC check NextEra's math when they file their annual revenue requirement? The answer is NO. No, they do not. FERC relies on the entities that pay these rates to examine and question them. Occasionally FERC may audit some of these utilities, but that's a random process that never looks at every one filed. Because the formula rate has been determined to be just and reasonable, FERC assumes that the utility that uses it follows all the rules when it fills out the rate template every year. Therefore, FERC doesn't need to even look at the filings. They leave that job to you. You might think that your LSE or your state regulator or other state office reviews these filings for accuracy. NO. No, they do not. Your electric company just pays the bill to PJM and passes these costs on to you. It doesn't care how much they are. Your state offices usually don't have the skills or resources to review formula rate filings. In a lot of cases, they don't understand them at all. That leaves it up to you...

So, if you want to plunge into NextEra Energy Transmission MidAtlantic's annual transmission revenue requirement to check their math, don't miss the meeting. It's your first step.

0 Comments

FERC Checks the Box

5/18/2025

0 Comments

Last week, the Federal Energy Regulatory Commission approved financial incentives for the Valley Link "portfolio" and set its formula rate, return on equity, and hypothetical capital structure for settlement and hearing. That's exactly what I expected they would do, so no surprise there.

It was also no surprise that FERC Chairman Mark Christie wrote a scathing dissent to the approval of incentives. Financial incentives for transmission projects are so far out of whack that they border on usurious. No, scratch that, they're way past the border. FERC's generous award of financial incentives for the Valley Link projects will cost consumers hundreds of millions of dollars in increased transmission rates over Valley Link's expected 40 year life. Well, if it actually gets built that is. Even if it never puts a shovel in the ground, ratepayers are still on the hook for hundreds of millions of dollars, thanks to the abandoned plant incentive. I just hope I'm around long enough to say... I told you so!

Chairman Christie's dissent is worth a read. He's grown increasingly critical of FERC's incentives policy and desperately wants to change it. But, he was outvoted 2-1 by two other Commissioners who are fairly recent additions to the Commission. The fourth Commissioner was MIA on this Order, like she is on many others. I'm not sure I understand why a sitting Commissioner doesn't participate in a lot of the Orders that are issued, but I'm sure there's a reason. If only she had participated, I'm sure consumers would have gotten a better deal.

Commissioner Christie compared Valley Link to its predecessor, PATH, and rightly so, since it's the exact same project, in the exact same place, owned by the exact same companies. Attention must be paid! However the other two Commissioners that were not around during PATH failed to pay attention, and therefore consumers are doomed to repeat the PATH experience that cost them $250M.

As Yogi Berra once said, “it’s like déjà vu all over again.” Once again, a transmission developer asks the Commission to put already hard-pressed consumers on the hook for a laundry list of “incentives.” And once again, the Commission approves almost all of the list. As I have said repeatedly over the past four years, it is long past time for this Commission to do its job of protecting consumers by cutting back on its unfair practice of handing out “FERC candy” without any serious consideration of the impact on consumers already struggling to pay monthly power bills. The statute simply does not mandate such lavish generosity to developer interests at the expense of consumers. As discussed in great detail below, this list of incentives is especially difficult to stomach for consumers in Virginia, Maryland, and West Virginia given the egregious history of the Potomac-Appalachian Transmission Highline (PATH) project, about which I have written many times.

No matter how much Chairman Christie tries to reform a regulatory agency gone amok, he just can't get any traction in today's politicized FERC. I'm fast running out of patience myself. Perhaps it's time for Congress to act, since FERC just can't manage to reform its 20 year old incentives policy to comport with the existing statute. Maybe FERC needs to be called in for a hearing so they can explain themselves to our elected representatives? Or perhaps we need to get rid of Sec. 219 of the Energy Policy Act in its entirety. Imagine if utilities could only earn cost plus return on new transmission projects, without any financial "candy" from the all-you-can-eat incentives buffet. I guarantee you that they would still eagerly line up to build new transmission. It's how they make money. Even without incentives, transmission rates are already incredibly generous. Are you earning 10.9% on your investments lately? Yeah, me neither. In fact, while I'm having this dream, how about if we simply eliminate investor owned utilities altogether and make all utilities public? No more fat cats, no more bonuses, no more investors, no more outrageous profits paid by Granny in her electric bill. Just a necessary service paid at cost by struggling consumers.

So, incentives granted. Water under the bridge. But, FERC also set the formula rate and its protocols, Valley Link's Return on Equity and its hypothetical capital structure for settlement and hearing. I will be participating in that so that's all I can say about it until it's over. See you on the other side.

0 Comments

Who Pays for Data Center Extension Cords?

11/13/2024

1 Comment

Virginia is trying to shove the barn door closed after the horses escaped by holding a technical conference regarding its proliferation of data centers and who pays to provide their electric service. Questions to be addressed include:

Whether certain transmission costs should be directly assigned to a new large-use customer class?

In other words, should Virginia create another rate class for electric service to "large users" (aka data centers) and assign them the cost of all the new transmission lines they make necessary?

Well, bravo, Virginia! However, Virginia only has jurisdiction to assign the costs that are assigned to Virginia load serving utilities, like Dominion. The cost allocation of these big lines is a federal responsibility under the jurisdiction of the Federal Energy Regulatory Commission (FERC). FERC approves the assignment of costs made by regional grid operator PJM Interconnection. PJM's current approved cost allocation methodology assigns the costs of lines 500kV and above to the entire PJM region. The PJM region includes all or parts of 13 other states: West Virginia, Maryland, Delaware, Pennsylvania, New Jersey, Kentucky, Ohio, Illinois, North Carolina, the District of Columbia, Indiana, Michigan and Tennessee. When PJM orders a new line 500kV or above, it allocates the costs among all 13 states based on the percent of the entire system that state has used over the past year. Every state in the region uses the PJM system, and every one of those states gets a portion of the cost. Each state then assigns the costs to its electric consumers using state rate classes. Virginia is thinking about taking its portion and charging it directly to the data centers that take service in Virginia.

But what about all the costs for data center transmission lines that are assigned to other states? The other states cannot charge them to Virginia's data centers, they can only charge them to the customers who take service in their own state. We're all still stuck with the cost of transmission extension cords that serve Virginia's data centers.

How can this change? It can only change at the federal level where PJM's transmission cost allocation formula is approved. That's FERC's jurisdiction. When consumers and consumer advocates asked FERC to make PJM change its cost allocation formula to make the state with the data centers needing new transmission responsible for their entire cost, they were rejected 2-1. Only when the entire cost of the transmission gets allocated to the state where the data centers take service can it be properly allocated to the actual users of these new extension cords through the very process Virginia is currently proposing. Virginia's proposal only passes Virginia's share of the transmission line costs to Virginia's data centers. The data centers that need the new transmission are not taking service in those other states and therefore the other states have no choice but to allocate the costs of new transmission service for Virginia's data centers to their own consumers.

Perhaps Virginia should first be asking FERC to change PJM's cost allocation formula so that Virginia is responsible for the entire cost of their transmission needs. Instead, Virginia is happy to be a parasite and let other state electric consumers pay the cost of serving their data centers.

When consumers and consumer advocates questioned PJM's cost allocations for its Window 3 projects last year, the majority of the Commissioners were of the opinion that since PJM's cost allocations are already set and the cost allocations for Window 3 followed that cost allocation scheme, the only thing the Commission could do was approve them. However, Commissioner Christie had a different opinion (although he legally had to concur). He thought that the Commission should take up the issue of who pays for state public policies that cause new transmission, such as building data centers, or closing fossil fuel power plants.

While this matter (and the November 2023 RTEP Order) both arise in PJM, the issue of the proper regional cost allocation for public policy-driven transmission projects is not confined to PJM, but is applicable across all of the nation’s multi-state RTOs. Since RTOs are regulated by this Commission, I believe that the time has come for this Commission to take the lead in its convening role to initiate a proceeding, such as a Notice of Inquiry, a series of technical conferences, or by initiating an FPA section 206 proceeding outside this docket, posing such important questions, among others, as: What is the proper definition of a public policy transmission project? Does the definition of public policy transmission project need to be changed for purposes of regional cost allocation? How should public policy transmission projects be cost-allocated in a multi-state RTO? In my view the states themselves need to be at the forefront of deciding these questions, as it is their own state policies that are largely making these questions unavoidable, as these two recent PJM RTEP cases graphically illustrate.

So while Virginia is acting parochially to solve problems for its own ratepayers, it is avoiding asking FERC to weigh in on this issue and solve the transmission extension cord rate burden on other states. What's it going to take to solve this issue at FERC? The other states need to speak up to ask FERC to solve it.

Meanwhile, Virginia will be taking comments after it holds its technical conference on December 16. You don't need to live in Virginia to submit a comment asking them to raise the issue at FERC so that ALL its data center extension cord costs are allocated to Virginia, who can then re-allocate them to the data centers. Nothing is ever going to change unless the other states speak up.

Click here for more information about Virginia's technical conference, Case No. PUR-2024-00144.

1 Comment

DOE Uses Your Money to Bribe Transmission Advocates

7/25/2024

1 Comment

The U.S. Department of Energy announced yesterday that it is handing out a stunning $371M of your tax dollars to purchase advocates for proposed transmission projects. However, DOE's spending spree will only be disbursed when the transmission project begins construction. That's a long time from now...

I have written about this absurd use of your tax dollars to purchase advocacy for transmission projects here, here and here.

If a transmission project is needed, then regulators will approve it. Should regulators approve an unneeded transmission project simply because someone not impacted by it gets a freebie? This turns transmission permitting and siting into some sort of advocacy battle. Who has more people in their army, and what motivates them? On one side are impacted landowners, who have to live with the transmission project in perpetuity. These are the ONLY people who are impacted by new transmission, which can lower their income by taking land out of use, harm their property values, pose a dangerous hazard on their own land, and a daily eyesore forever. On the other side are a bunch of people who will not have to look at transmission and will not have to suffer any impacts whatsoever. These people are motivated by pure GREED. They are being offered something in exchange for the suffering of other people. The landowners must be compensated for something that was taken for them, but those greedy people don't deserve a damned thing. They are disgusting people who want to profit off the misery of others.

Advocacy battles like this have been taking place for decades. Utilities always buy advocacy to try to shout down transmission opposition. The DC Court of Appeals recognized such transmission advocacy efforts by describing the actions of one such project, PATH:

From 2009 through 2011, PATH spent more than $6 million on various activities to support its applications for Certificates. Through hired public relations contractors, PATH organized "reliable power coalitions" that would recruit individuals—often prominent business and labor leaders—to testify before the state utility commissions in support of PATH's certificate applications. PATH's contractors also polled public opinion of the project, ran promotional advertisements, and sent lobbyists to persuade state officials that the Certificates should be granted.
There is little question that PATH made these disputed expenditures to influence the decisions of public officials. The record is full of statements to that effect. The internal communications of PATH's public relations contractors, for example, declared that "[w]e have but one singular goal—to help get PATH approved," a goal that would be achieved by "generating the political cover that commissioners/legislators need to ‘do the right thing.’ " J.A. 66; see also J.A. 142-44 (contractor agreement with public relations firm). And the advertisements PATH's agents ran were persuasive rather than merely informational, focusing on arguments in support of approval and construction of PATH's proposed transmission line. See, e.g. , J.A. 115, 117-18, 121.
Newman v. Fed. Energy Regulatory Comm'n, 27 F.4th 690, 693-94 (D.C. Cir. 2021)

And now, the federal government, under the auspices of "reducing inflation", is providing the proverbial carrot for greedy people by promising them some free money if they can successfully advocate for a transmission project that doesn't affect them. They only get their carrot if they can outshout the impacted landowners and other opponents and convince the regulators to approve the transmission project based on advocacy alone. I have never been so thoroughly disgusted by my own government, and believe me, I have seen A LOT of bullshit coming out of DC over the past sixteen years. This is the epitome of government graft.

So, let's look at who bellied up to the bar to get some free money in exchange for transmission advocacy.

There were two different kinds of awards made under this program. The first is grants to an entity with regulatory authority to approve a new transmission line. That's right DOE is even bribing the regulators who make these decisions!

The Illinois Commerce Commission got $8.2M to speed up its approval of MISO's Tranche 1 projects.

The Public Service Commission of Wisconsin got $3M for doing the same, plus it will "increase its outreach and engagement with the public, improve its coordination with other siting entities, and develop plain language educational materials on high-voltage transmission lines."

The Pennsylvania Public Utilities Commission got $4.5M to "accelerate its siting decision-making process on certain PJM Regional Transmission Expansion Plan Projects traversing the state by expanding its public and community engagement, participating in more site visits and public input hearings, and providing education and training opportunities to its staff." Which "certain" projects are those? Maybe someone wants to ask them?

And Alamosa Co. Colorado got $1.7M to study three different routes for a transmission project and pick one.

And now let's look at a couple of the "economic development" awards for communities "along major new and upgraded transmission lines." What the hell does that mean, and how close does a community have to be, exactly? DOE never would say. As the awards show, these projects are not actually for impacted individuals, but their greedy neighbors who are not impacted at all.

First, there's a couple of merchant transmission projects owned by Michael Skelly's GridUnited that were showered with multiple grants.

Southline Transmission project:
$1.8M to Lordsburg, NM to revitalize their town. I'm going to bet the revitalization isn't going to include a gigantic transmission line in the middle of Main Street. Instead, the transmission line will impact some landowners outside the town.
The City of Willcox, AZ got $10M to create a new conservation area. I'm going to bet that the conservation area won't have a gigantic transmission line running through it. Instead, the transmission line will impact some landowners elsewhere.

North Plains Connector Transmission project:
City of Mott, ND got $14.2M for a community center. I'm betting the transmission project is nowhere near the community center.
The Montana Department of Commerce got $47.4M to distribute to the counties of Rosebud, Fallon and Custer and the Northern Cheyenne tribe for "funding critical community infrastructure, including emergency and medical services, transportation, water, and sewage services, and climate mitigation projects." Here, North Dakota, have a handful of colorful beads while we rape and pillage your state.
The Roosevelt Custer Community Council got $700K for a new Fire Hall in Amidon.

It used to be that the transmission company had to pay these bribes out of their own funds, especially merchant transmission companies that don't have guaranteed cost recovery from ratepayers. Merchant transmission is not found needed or planned by regional grid planners. Merchant transmission is a speculative proposition based purely on profits. The merchant bets its own capital that if it can build a transmission line between point A and point B that it can attract enough voluntary customers to pay for the line and provide a profit. Why in the world are taxpayers paying bribes to buy advocacy for transmission developers who are supposed to be paying for their own projects? It boggles the mind!

But DOE wasn't done supporting the merchants with GridUnited... there's also a couple of grants to Guymon, OK totaling $167.5M to build a new school and a water project. Only one of these projects seems to be tied to transmission at all. The other one seems to be an unrelated gift to the City of Guymon. Spending Other People's Money is such a generous activity!

Barnstable, Massachusetts, is getting a new school in exchange for a landing zone for offshore wind transmission. I'm going to guess the school will be nowhere near the transmission line.

Michigan is getting $35M to "...invest in workforce development initiatives to build a skilled workforce to support transmission construction and clean energy investments in the two counites affected by the Helix-Hiple transmission line, one of the MISO Long Range Transmission Planning Tranche 1 projects. LEO will provide specialized education and training through electric utility apprenticeship and pre-apprenticeship programs, as well as training for EV infrastructure construction and installation. LEO will also invest in a low-income energy fund to support a residential weatherization program, as well as provide utility stipends to residents in disadvantaged communities (DACs) impacted by the siting of a new transmission line." This is garbage. It doesn't actually help landowners impacted by the transmission line.

There's more... LOT$ more... read it and weep (while clutching your wallet and your private property rights.)

So, just like I thought in the beginning, no communities that are actually impacted by new transmission are benefiting from these grants in any way. Communities impacted by new transmission are linear, just like the transmission itself. They do not coincide with traditional cluster communities.

Absolutely NO LANDOWNER EVER said that they would gladly give up their own property for new transmission if a nearby town could only have a new school, a new fire hall, a Main Street makeover, or a park, or any of this other ridiculous nonsense DOE found grant worthy. Landowners will NOT give up their fight in the face of federal government bribes.

DOE simply gave the money to anyone who applied, not to impacted communities.

How does this "reduce inflation" again?

1 Comment

FirstEnergy Files For Incentives For MARL, Delays Project

7/3/2024

0 Comments

The MidAtlantic Resiliency Link, or MARL, transmission project has been assigned by PJM Interconnection to two different transmission builders. NextEra is assigned to build the majority of it, but FirstEnergy ended up with the portion that runs through Frederick County, VA and Jefferson County, WV.

Long ago, even before PJM ordered MARL, NextEra filed an application for transmission incentives with the Federal Energy Regulatory Commission. FERC approved them back in January. Nobody bothered to get involved and comment or protest.

Everyone's been treading water, waiting to get more information, but neither NextEra or FirstEnergy has held public meetings to share information with impacted communities. Seems like nobody is in a hurry at all.

Remember that when PJM ordered MARL, it said the project was needed to be operating by June 1, 2027 or else there would be darkness.

Back in May, FirstEnergy finally got around to requesting transmission incentives for its portion of the MARL. It asked FERC to grant it the abandoned plant incentive. Grant of the abandoned plant incentive begins the tally of project costs that can be recovered if the project is abandoned (cancelled) before being built. Anything FirstEnergy spends before receiving this incentive is only eligible to be recovered at 50%. That would mean that FirstEnergy could only collect half of the money it spends on MARL in the case of abandonment. The other half would come out of FirstEnergy's pocket. Fitting, don't you think, since FirstEnergy insisted on being assigned this portion that rebuilds and expands lines FirstEnergy already owns? However, that's not what FirstEnergy asked FERC for... it asked FERC to allow it to recover 100% of whatever it has spent (plus interest) if the project is abandoned.

FERC Commissioner Mark Christie is at war against certain transmission incentives. FERC opened a rulemaking to examine and revise its incentives more than 4 years ago, but has punted it to the side without action, allowing the overly generous incentives to continue.

I'm taking this opportunity to object to FirstEnergy's request for the abandoned plant incentive. Do they really need it, since they were so eager to have this project that they engineered some secret deal behind the scenes at PJM?

NextEra's cost cap for MARL (as crappy as it is) did not transfer to FirstEnergy when it took over this section of the project. FirstEnergy can and will spend however much it wants... currently estimated at $341M for a very short "rebuild" segment. How much will they actually spend, and how soon will they spend it? How much spending is planned *before* state approvals, which if denied can cause abandonment? FERC should place a limit on running up the spending before project approval.

These are the comments I submitted to FERC.

er2401998.pdf
File Size:	112 kb
File Type:	pdf

Download File

And here's the worst part! As part of their filing, FirstEnergy included a copy of its acceptance letter of PJM's designation of a portion of the MARL. In their acceptance, FirstEnergy has changed the in-service dates for its portion of the MARL. The Virginia portions (both in Frederick and Loudoun counties) are supposed to be in-service by June 1, 2028, delayed a year from the date PJM said they were needed. The in-service date for the West Virginia portion in Jefferson County is delayed until June 1, 2030. That's right... 2030! MARL is not planned to be completed and transmitting energy until 2030! That's six years from now! Are Virginia's data centers going to hang around waiting to build and be connected to the electric grid for another 6 years?

NO! They won't wait. They will go somewhere else where they can build a data center and get electric service before 2030. The bottom may be about to fall out of Virginia's data center craze.

Here's what FirstEnergy's acceptance letter looks like:

potomac_edison_designated_entity_acceptance_letter.pdf
File Size:	339 kb
File Type:	pdf

Download File

Once the in-service date for PJM's transmission projects starts slipping, it often keeps slipping... right off into oblivion. It can be delayed if expected load doesn't show up (but goes elsewhere). It can be delayed if the utilities run into permitting problems, such as taking a state denial in a NIETC to FERC for permitting. It can be delayed if the utilities have difficulty procuring project components; there is a huge supply chain issue for transmission components right now. It can be delayed if there are issues with land acquisition. It can (and will) be delayed even further. And, as I said in my comments...

MARL’s in-service date is already slipping. Why is that relevant? Because the electric grid abhors a vacuum. When a planned transmission (or generation) project fails to come online when needed, other projects will take its place. That’s exactly what happened with the PATH project, and what is likely to happen with the MARL project, including the Potomac Edison portion that is the subject of this filing.

Giving these transmission companies the greenlight to spend as much of our money as they want before they finally abandon MARL many years in the future is not just and reasonable.

This transmission project may never happen, but PJM and the utilities involved feel they should pursue it anyhow. Is that because there are no other options? Or is it because there’s no harm done to them if it fails. All the burden of failure falls on ratepayers, and this encourages the utilities to take more of a chance than they would it they had some skin in the game. Utilities shoulder no risk, while collecting all the rewards.

Consumers have zero control over the project’s risk factors, but they are the ones left holding the bag when it fails. As consumers, we simply cannot afford to continue to financially cover the failures of grid planners and transmission developers simply because we are the one entity without a voice in incentive awards.

FirstEnergy has asked FERC to approve its incentive request before July 15. Once consumers have thus insured the reimbursement of FirstEnergy's project spending, then maybe FirstEnergy can actually start working on MARL.

But what happens if FERC doesn't grant this incentive? Will FirstEnergy still want to build its part of the MARL? Or will it have to go back to PJM for revision?

Stay tuned...

0 Comments

Independence Energy Connection Causes Uncontrolled Congestion and Reliability Violations

6/15/2024

0 Comments

Did you oppose the Transource Independence Energy Connection transmission project ordered by PJM in 2016 to run through York and Franklin Counties, Pennsylvania?

THANK YOU!!!

After years of battle, PJM has finally re-evaluated IEC and made the determination that it causes uncontrolled congestion and reliability concerns starting in 2030. You can read PJM's re-evaluation here, beginning at page 19.

If you had not stood up to PJM and delayed this project like you did, it would be built and causing problems right now. You saved PJM's ass!

It's about time PJM acknowledged that IEC was a folly that never should never have been approved.

However, Transource has managed to spend $107.96M (that's millions, folks!) on this project, and it's going to want its money back. That's right, we'll all get to pay Transource back for all the money it spent harassing landowners, conducting turtle hunts and netting bats, and of course all its costs to pursue appeal of the Pennsylvania Public Utility Commission's denial of a permit for this loser project.

PJM has *still* not abandoned this project. It is still "suspended." As long as it is suspended, ratepayers are on the hook for anything Transource spends on lawyers to pursue its appeal. The appeal is currently before the Third Circuit. You can read the PA PUC's brief here.

If PJM abandons IEC, then we stop paying for Transource's lawyers, but PJM has not done that. Here's why... Transource's appeal to PA state court was unsuccessful, so it bumped it up to federal district court. That judge found that the PA PUC's denial was unlawful because the PUC should be forced to accept PJM's determination of need for the project and was prohibited from making its own evaluation of need. Essentially, that court decision hamstrings all state utility commissions from making their own determination of need for new transmission and makes them subservient to the RTO's findings of need for a transmission project. It turns the PUC into a kangaroo court, where they must rubber stamp an RTO's need for a project. This is incorrect on so many levels, but the only way to set things right again was for the PUC to appeal the district court's decision to the federal circuit court. And that is where it currently sits.

Never mind that PJM has now found that the project isn't really needed after all, PJM wants to have the power created by that federal district court decision to usurp state authority to make the need determination required by state law going forward.

And the costs continue to rack up...

If PJM actually officially abandons IEC (instead of leaving it in a suspended state) the handouts would cease and Transource would have to proceed to FERC to have them determine how much of Transource's costs will have to be repaid by ratepayers. When PJM ordered IEC, Transource went to FERC and asked them for a rate of return of 10.4% and special incentives for the project. One of those incentives is what is known as the Abandonment incentive. That incentive, granted by FERC, allows Transource to make a filing to collect all its sunk costs that are determined to be prudent in a future filing, plus the 10.4% rate of return. Transource says it spent $107 MILLION dollars, and once PJM abandons the project, it is likely that FERC will order ratepayer reimbursement.

It's all over but the payback.

Shame on Transource for spending so much money on a project that never stood a chance of being approved!

And shame on PJM for approving this project in the first place and avoiding its ultimate abandonment!

0 Comments

I Told You So!

3/7/2024

0 Comments

This may be the first of several blogs with the same title.

I told you so, DOE!

It seems that one of the first merchant transmission projects that DOE gifted with a capacity contract has gone belly up because it couldn't find any other customers.

FACT: Merchant transmission capacity contracts are NOT like painting Tom Sawyer's fence... just because the federal government is stupid enough to sign a capacity contract for service doesn't mean anyone else is equally stupid.

Last October, the U.S. Department of Energy announced the first three recipients to be granted transmission capacity contracts paid for by taxpayers. And I blogged about it here.

DOE is buying something that it doesn't need and won't ever use, but will put a lot of money in the pockets of private investors who otherwise would have no buyers for their overpriced service. Can I just say "I told you so" in advance? This program is wasteful, illogical, and unfair.

Taxpayer funded merchant transmission capacity contracts for projects that have no other customers DO NOT inspire other buyers to sign a contract.

I've been telling DOE this since the dawn of this stupid idea.

But they didn't listen, being all concentrated on political nonsense and lacking common sense such as they are.

And this week, I was right. The Twin States Clean Energy Link was cancelled. It was cancelled because it couldn't find any other customers besides the U.S. DOE. That's right, even when the DOE put up our tax dollars to support a merchant transmission project nobody needed, it still didn't inspire any other customers to sign up. This experiment in propping up unneeded merchant transmission projects with taxpayer dollars is a miserable failure.

Undaunted, the DOE recently issued a second solicitation for more loser merchant transmission project contracts.

Sometimes you just can't fix stupid, especially when their pockets are full of Other People's Money.

Speculative merchant transmission projects are not viable. Quit wasting our money, DOE!

Did I mention I TOLD YOU SO?

0 Comments

As The Dollar Turns

2/24/2024

3 Comments

Cost allocation for PJM's 2022 Window 3 projects has now officially turned into a long-running soap opera at FERC, and eventually through the courts.

Last year, PJM solicited new transmission to solve future issues with the retirement of 11,000 MW of existing generation in the eastern part of its region due to state "clean energy" policies, and the addition of 7,500 MW of new data center load concentrated in Northern Virginia. In December, PJM selected and approved a huge portfolio of new transmission that looks like this.

You don't need to be a transmission engineer to notice that the majority of the new lines have a concentrated end point -- data center alley in Loudoun County, Virginia. Power from southeast and southwest Pennsylvania (feeding from huge coal-fired plants in West Virginia) and power from central Virginia is being piped into data center alley on new transmission extension cords. In the eastern portion of the map, power from southeastern Pennsylvania is being piped into the Baltimore area via new transmission extension cords. The destinations for the new power is directly tied to PJM's statement of need -- new power for data centers and to replace closing coal-fired plants in the Baltimore area. These are the causers of the new transmission.

In January, PJM made a filing at the Federal Energy Regulatory Commission (FERC) to allocate the more than $5B cost of this new transmission according to its regional cost allocation formula for big, regional lines. Lines needed for regional reliability are allocated 50% to all load-serving utility zones across the region based on each zone's share of peak load for the preceding year. The zones with the largest load receive a bigger share of this 50% of the cost of the lines. The other 50% of the cost is allocated based on zones who will use the new lines. Here's a map of PJM's utility zones.

PJM's territory is vast and stretches from the east coast as far west as Chicago, and as far south as North Carolina. Under the 50% to load allocation, the ComEd zone around Chicago uses the most power so therefore it receives the largest share of these costs. What benefit is Chicago getting from data centers in Virginia or "clean energy" in Maryland? The correct answer is... zippety do dah! However, the old thinking goes that since PJM is a connected region, any threat to reliability anywhere in the region could black out the entire region. Therefore, everyone "needs" transmission to ensure reliability.

The old thinking also went that load increased incrementally around the entire region, with it being impossible to finger just one region for increased load, therefore everyone paid for regional increases in load. It was too hard to measure exactly where load was increasing over time, and no new user created an outsized increase in load that could be isolated and allocated to the cost causer. PJM cannot be changing its cost allocations constantly every time a new industrial plant asks for a connection, and these new users didn't cause a huge jump in power use when compared to the amount of power flowing across the region.

Toss that old thinking out the window! PJM's latest portfolio of projects CAN be tied to just two things... closing baseload generators in eastern PJM and increased data center load concentrated in a tiny spot on PJM's vast map. And what is causing that? State "clean energy" policies that require the closing of existing fossil fuel baseload generators and prohibit their replacement with similar generators that can produce hundreds of megawatts of electricity when needed. Replacement with renewables is a fairy tale. Renewables take too much land for the amount of power they produce, and the power they produce is not reliable. It takes many more megawatts of renewable power to equal one megawatt of fossil fuel power because renewables are such weak generators and they are intermittent and cannot be relied on to produce power when needed. If we rely on renewables to keep the lights on, we're only kidding ourselves. We cannot build enough renewables to take the place of all the fossil fuel generators in PJM that keep the lights on. Here's a graph showing the source of PJM's power this morning that is powering this computer, and everything that's making your Saturday happy.

Without coal, gas and nuclear, we wouldn't have electricity. This isn't a one-off, PJM's graph looks like this on a daily basis. If we are ever going to get to zero carbon, we need to start building lots of nuclear power... yesterday. Wind and solar and "other renewables" are not going to get there... EVER. PJM has no control over power generation. It only has control over transmission to get available power to load. Generation is a state issue... except we deregulated it years ago so the states have no control over it either. Generation is controlled by market, that is when it's profitable to build new generators, the market will inspire new builds. However, PJM steps in long before the market can actually work and builds transmission to ensure reliability. In certain states with "clean energy" policies, it is impossible to build new fossil fuel generators. And it doesn't help that Big Green is putting pressure on existing generators to retire early with threats of lawsuits. It's accelerating, and we are so screwed! When The Sierra Club is in charge of your power supply you should be frightened. They have but one goal... to shut down fossil fuels. They have no responsibility to keep the lights on.

Now that I've set the table (or maybe it was just a rant), let's get back to PJM's cost allocation filing. PJM makes numerous filings like this every year, and other regional grid operators do as well. It's usually routine... filing is made and FERC rubber stamps it. Sometimes a few entities will file objections, but they are rarely sustained. Once, about 20 years ago, numerous states objected to PJM's cost allocation for its Project Mountaineer transmission projects. These 500kV projects were for the purpose of increasing the use of coal-fired electricity in eastern PJM by 5,000 MW, and states in the other parts of PJM objected to paying for them. That case (Illinois Commerce Commission v. FERC) ended up at the 7th Circuit Court of Appeals... twice... before PJM adopted its current cost allocation methodology. The Court said that FERC had to demonstrate that the costs of those projects were allocated to the cost causers. Since then, things have settled down.

However, PJM's latest projects have lit another fire that is probably going to burn as bright as the last one. Something extraordinary is happening in PJM's cost allocation FERC docket. In addition to the comments filed by consumers, and the protest of the Maryland Office of People's Counsel that more of the cost should be allocated to Virginia than Maryland, last week the Virginia State Corporation Commission filed comments basically calling Maryland a hypocrite and stating that Maryland is equally to blame for these new transmission lines. I tend to agree... that both Maryland and Virginia are hypocrites! These are the two states causing all the "need" for new transmission lines that will be paid for by other states.

But it's not going to end there... a giant parade of entities have intervened in this case at FERC. Being an intervenor means you are a party to the case. Only parties have standing to request rehearing at FERC and eventually appeal the case in federal court.

Intervenors include:

FirstEnergy (utility building some of the new lines)
New Jersey Board of Public Utilities
American Electric Power (utility building lines)
Dominion (utility building lines)
Exelon (parent company of utility building lines)
Delaware Division of Public Advocate
PPL (utility building lines)
Calpine (generation company)
Rockland Electric (utility in PJM assigned costs)
Duquesne Light (utility assigned costs)
New Jersey Division of Rate Counsel
Old Dominion Electric Co-op (utility assigned cost)
Organization of PJM States
North Carolina Electric Membership Corp. (utility assigned cost)
Pennsylvania Office of Consumer Advocatte
Maryland Office of People's Counsel
Maryland Public Service Commission
PSEG (utility building lines)
West Virginia Public Service Commission
Southern Maryland Electric Co-op (utility assigned costs)
Pennsylvania Public Utility Commission
Dayton Power and Light (utility assigned costs)
Ohio Consumer's Counsel
American Municipal Power (utility assigned costs)
Long Island Power Authority (utility assigned costs)
Virginia State Corporation Commission
Northern Va. Electric Co-op (utility assigned costs)

That's a lot of intervenors! Many more than a normal FERC docket. You may even be able to sort them into "camps" based on whether they are entities that will pay these costs, or whether they are entities that will benefit financially from building these projects. It really sucks when they can be placed in BOTH camps, such as the utilities assigned costs that also benefit from building new projects. Do you think these entities will side with their ratepayers against being assigned costs for these projects, or will they side on gladly accepting costs because their financial interests are greater than their public utility responsibilities to their customers?

So, what happens next? There may be more intervenors and more comments, but eventually FERC will issue an order. No matter what FERC decides, one "camp" or the other isn't going to like it. That camp will file for rehearing. FERC will reconsider the matter and issue another order. One camp won't like that and will file an appeal in the federal circuit court(s) of appeal. The Court will decide the matter and remand it to FERC with instructions to issue a new order that comports with the Court's instructions. Once FERC issues the new order, it may be appealed again, and back to the courts it goes. One camp may decide to appeal the federal court's order to SCOTUS. It's going to drag on for years, like a bad soap opera.

Meanwhile, PJM will continue to pursue its projects. If any cost allocation adjustment are made due to the appeals, that's a money issue that will be taken care of through rates. The utilities assigned to build these projects will file applications for permits to construct with some of the intervening states. Think about how that will go... If a state denies a permit, permitting may be bumped up to FERC under new backstop permitting laws created by the Infrastructure Investment and Jobs Act in 2021. The longer the permitting process for these projects, the higher their costs climb.

And what about those costs? Will the possibility that zones in Virginia and Maryland are eventually assigned more of the costs become a risk factor that will impact the need for these projects in the first place? Will data centers want to continue to build in Virginia and accept the risk that the cost of their electricity is going to skyrocket in the future when the legal cases are finally settled? Or will they decamp to cheaper pastures without the risk? (Don't let the door hit you in the ass on the way out!). And what about Maryland? Will skyhigh electricity costs cause Maryland to re-think its clean energy policies that prohibit the building of new fossil fuel plants? Will Maryland begin a nuclear generation renaissance that could be equally expensive?

Those are the only changes that will make a difference in PJM's load forecast, but getting there will be rough. PJM never changes its mind, once it is made up. FERC should require PJM to create a new cost allocation method for new transmission due to state "clean energy" policies that is involuntarily allocated to the states whose policies cause the new transmission. PJM should also create a new cost allocation policy dealing specifically with data centers. This relatively new electric user stands out as a huge load that must be separated from normal, incremental load increases. Data centers use so much power, they are in a class by themselves. While FERC cannot allocate costs directly to data centers, it can allocate costs to the zones in states where the building is causing need for new transmission. It would then be up to the state whether to spread the costs of the transmission among all users, or allocate it to data centers directly. Whatever happens, it won't be an easy decision, and someone isn't going to like it.

Probably you. Your electric bill is going to skyrocket.

Be sure to tune in to our next episode when FERC issues an order on PJM's cost allocation filing... this is going to be the longest running soap opera in history!

3 Comments

PJM Charges Ratepayers in Other States for Data Center Extension Cords

2/11/2024

0 Comments

Virginia has a problem with data centers. It created tax exemptions to draw them in. Northern Virginia is situated near a bloated federal government that needs a place to store all its data. And "data center alley" was born. It has since reached outlandish proportions, and more data centers are being approved every day. Data center sprawl is a serious problem.

Perhaps the biggest problem for the largest concentration of data centers in the world is powering them all. Data centers use huge amounts of electricity, and as new technology created more ways for data centers to burn electricity, it soon became impossible to power them with the electricity available. Couple this with state "clean energy" policy that prohibits the building of any new fossil fuel generation, and you've created a recipe for disaster.

This disaster recently manifested as PJM's 2022 Window 3 transmission plan. Regional grid operator and planner PJM Interconnection was tasked with finding a solution to the closing of 11,000 MW of existing fossil fuel generation in Virginia and Maryland combined with 7,500 MW of new data center load in Northern Virginia. PJM did the only thing it knows how to do... create new electric extension cords across the region that will import electricity to data center alley from fossil fuel generators in other states. The only two states in PJM that export electricity are Pennsylvania and West Virginia, where coal is still king. Pennsylvania produces electricity mainly from natural gas and nuclear, with a significant amount of coal still in its mix. West Virginia's electricity mix is over 90% coal.

The new extension cords are 3 new 500kV transmission lines pumping electricity to data center alley from Pennsylvania and West Virginia. It's bad enough that the new extension cords will plow through communities in other states, expanding transmission easements and cutting new ones, but PJM also expects electric customers in other states to pay for a significant share of the cost of these new extension cords. What do Pennsylvania and West Virginia get from this? New transmission lines, property destruction and devaluation. They don't get any electricity... that's all going to Northern Virginia.

When approving this destructive (and unlikely to actually happen) transmission plan, PJM selected the cost allocation scheme that spreads the costs of the projects as widely as possible across its region. The thinking there is that spreading the $6B cost among as many people as possible won't be noticed by individual electric consumers. If PJM allocated the costs solely to the causers of the new transmission lines (the state of Virginia) then the rate increases they cause will be very noticeable. In fact, it may be so noticeable that businesses and residents may begin to leave Virginia for neighboring states where electricity is more affordable.

PJM is complicit with the State of Virginia to cover up its data center disaster by inflicting new transmission on other states instead of the state that caused it. Sure, Virginia is being allocated a huge chunk, but not all. Another huge chunk is still being spread among all PJM consumers as far away as Illinois, Indiana, Ohio, New Jersey, Kentucky, Tennessee, North Carolina, Maryland, Pennsylvania and West Virginia. This is because PJM selected the cost allocation scheme that allocates 50% of the cost of the new projects to everyone in the region based on their peak load percentage from the prior year. An area that uses a lot of electricity gets a bigger share, for instance electric customers in Northern Illinois are paying a larger share of this 50% than electric customers in Virginia that will actually use the electricity piped in on the new extension cords. Why is anyone in any state other than Virginia paying for this new data center transmission?

The other 50% of the costs are allocated based on cost causation, with load areas at or near the data centers paying a higher percentage. However, the load areas near the data center are enormous. The Dominion zone where the data centers are being built also consists of customers in all parts of Virginia, plus some in North Carolina. The Allegheny Power zone contains customers at/near the data centers, but it also spreads to cover a huge chunk of West Virginia and Pennsylvania. Why are consumers hundreds of miles from the data centers paying so much money to build extension cords for Virginia's new data centers? This isn't fair.

PJM's cost allocation schemes are part of its FERC-approved tariff. However, PJM must receive FERC approval for each individual collection of transmission projects to ensure they have chosen the correct cost allocation scheme for the projects. PJM filed to spread the costs across the region back in January, which opened a 30-day comment period.

While lots of entities intervened in the FERC docket for this cost allocation, only 3 comments were received. That's right... only 3 entities thought this was unfair. Two of them are residential ratepayers, and the other is the Maryland Office of People's Counsel.

I filed these comments. I asked FERC to open an investigation into the justness and reasonableness of PJM's cost allocation and took the position that the "clean energy" policies of Virginia and Maryland caused the retirement of 11,000 MW of baseload generation in their states. Also, only Virginia is responsible for the 7,500 MW of new data center load. West Virginians should not be paying for these new transmission lines. Being the "power house" for the electric supply for Virginia's data centers ties West Virginia into many more years of coal-fired electricity production. Even if West Virginia wanted to close those old, dirty plants, they cannot because Virginia needs the power for their data centers.

20240209-5129_er24-843_final.pdf
File Size:	995 kb
File Type:	pdf

Download File

Pennsylvania electric consumer Barron Shaw filed these comments. Barron's comments are similar and underscore the way Pennsylvania and West Virginia are being used to power some of the wealthiest companies in the world. People in Pennsylvania and West Virginia get little to no benefit from these companies or their new extension cords and will actually end up paying higher power prices in their own states as all the "cheap" electricity is sucked out of their own states to power a wealthier economy in Northern Virginia. It's basic supply/demand. Plenty of power makes cheap electricity prices. When so much power is exported that electricity becomes scarce, prices rise.

20240209-5183_er24-843comments.pdf
File Size:	145 kb
File Type:	pdf

Download File

Those two comments are probably understandable to the average reader. However, the Maryland Office of People's Counsel also filed comments and expert testimony purporting that PJM picked the wrong allocation scheme and should have used the one that allocates all the costs to the state responsible. PJM's other cost allocation scheme is called the "State Agreement Approach" and is used when a state agrees to shoulder the entire cost of transmission made necessary by its public policies. SAA has been used for New Jersey's offshore wind planning. PJM planned new transmission to support NJ offshore wind, and NJ agreed to pay for it. Maryland OPC believes PJM must break down the suite of transmission projects to determine which ones are for other reasons, and which ones are for the data centers. Once this breakdown is made, Virginia should be charged for the entirety of the data center portion. Maryland's filing is probably a hard read if you don't speak FERC though, so read at your own risk. It may seem like you're reading a foreign language.

20240209-5220_mdopc_protect_and_affidavit_of_r._nelson_er24-843_02-09-24.pdf
File Size:	1972 kb
File Type:	pdf

Download File

Now it's up to FERC to decide... should electric consumers in other states be charged for Virginia's data center extension cords? Maybe if Virginia had to shoulder the entire cost of its data center debacle it would have to realize that approving a whole bunch of new data centers comes at a cost. Outrageous electricity prices in Virginia are the consequence of out-of-control development. PJM is helping Virginia avoid the true cost of its policies and shuffling costs off onto other states that had no part in approving the data centers and certainly will not see any benefit from them. PJM also selected new transmission projects that put most of the burden on other states. PJM could have selected the proposal that kept new transmission lines in Virginia by connecting to AEP's 765kV transmission system west of Richmond. But it did not. PJM is complicit in Virginia's irresponsible energy policies and therefore responsible for the energy crisis that is the logical result of continued data center development. Why, PJM, why?

PJM won't be successful in getting all these new transmission lines built in other states, and certainly not by their projected "need" dates in 2027. What then? Will the lights go out? PJM made the wrong choice and we're all going to have to pay.

0 Comments

Your Lack of Planning is NOT my Responsibility!

11/13/2023

0 Comments

PJM Interconnection's solution to 2022 Window 3 transmission needs is comprised of a collection of new and upgraded 500kV transmission lines, along with a number of 230kV new lines and upgrades. Why does this matter? It's all about who pays.

PJM will assign project costs to different subregions of its territory according to its existing FERC-approved cost allocation rules. As noted in a recent FERC Order, these rules are:

PJM utilizes a hybrid cost allocation method, which the Commission found complies with Order No. 1000, for Regional Facilities and Necessary Lower Voltage Facilities that address a reliability need. Under this method, PJM allocates 50% of the costs of Regional Facilities or Necessary Lower Voltage Facilities on a load-ratio share basis and the other 50% based on the solution-based distribution factor (DFAX) method. PJM allocates all of the costs of Lower Voltage Facilities using the solution-based DFAX method. Cost responsibility assignments pursuant to the Order No. 1000-compliant cost allocation method are included in Schedule 12-Appendix A of the Tariff.

500kV lines are "Regional Facilities". It is likely that the 230kV improvements will be "Necessary Lower Voltage Facilities." Therefore, 50% of the cost of these new lines, estimated at $5.4B, will be allocated to ALL customers in the PJM region based on their load-ratio share. The load-ratio share, in layman's terms, is the amount of PJM's total load used by each sub-region. Everyone who pays an electric bill in PJM will pay for their share of $2.7B of new transmission that is only necessary because of the building of new data centers in Northern Virginia and the closing of fossil fuel generation made necessary by the clean energy laws of certain states. Although the reason for the lines is caused by only a portion of the region, everyone pays.

The other 50%, or $2.7B, of the costs will be allocated using the DFAX method which, in layman's terms, would be the specific sub-regions who use the new facilities.

This is set in stone and it cannot be changed unless PJM petitions FERC to change its cost allocation rules, or FERC takes the initiative to begin a proceeding to investigate electric rates that have become unjust and unreasonable.

This cost allocation for PJM's new projects is not fair. However, there is nothing you can do about it.

In a recent case, PJM filed a cost allocation document for recently approved projects intended to solve the closing of the Brandon Shores coal-fired plant in Baltimore. Most of the cost was allocated to the sub-region around Baltimore that would use the new facilities, with some smaller portions assigned to other sub-regions. Maryland regulators didn't like this. They thought PJM should have found other solutions to the generator closing instead of a quickly approved transmission plan that cost nearly a billion dollars. The Maryland regulators filed a protest in PJM's cost assignment FERC docket. FERC said that since the cost allocation PJM made was in accord with PJM's existing, FERC-approved cost allocation rules, there was nothing they could do but approve it.

However, something interesting happened there. Commissioner Mark Christie, a champion for electric ratepayers, said it wasn't fair, although he was obligated to approve it. You should read his Concurrence because it may be a harbinger of things to come.

PJM has told us that if we fail to approve those transmission projects in this RTEP driven by the closure of the Brandon Shores coal generating unit located in Maryland, the grid will likely suffer a severe voltage collapse in Baltimore and the surrounding zones, including Northern Virginia, the District of Columbia, Delaware and southeastern Pennsylvania. Such a result could be potentially catastrophic.
While these projects are very costly – and I take seriously the concerns expressed by the Organization of PJM States, Inc. (OPSI), Maryland Public Service Commission (MD PSC) and Maryland Office of People’s Counsel (OPC) – given this Hobson’s choice I concur with approving PJM’s RTEP filing.
While I concur, I note that this element of the RTEP filing raises more questions than it answers, and some of those questions are extraordinarily important.

Although perhaps he did not find the cost allocation fair, Commissioner Christie chose to approve it because of the extreme risk of blackouts if the projects were delayed by a FERC investigation into the justness and reasonableness of PJM's cost allocation policies.

We are hobbled by PJM's bad policies and poor planning practices into a future that never allocates project costs fairly. Will people complain about the upcoming cost allocation of PJM's 2022 Window 3 projects? Absolutely. But will FERC open an investigation, or will it be forced into another Hobson's choice?

Commissioner Christie shared his thoughts on how PJM's cost allocation rules have been rendered unjust and unreasonable by recent events.

Let me emphasize that the State of Maryland, within its sovereign police powers, clearly has the authority to mandate any particular mix of generating resources it prefers. Maryland’s new climate law is well within its inherent authority to enact. Such policies are for Marylanders to choose, not RTOs or FERC. But if the resulting transmission projects under protest in this RTEP filing are caused more by Maryland’s policy choices than by organic load growth and economic resource retirements, then a salient question that may be asked is whether these transmission projects are more accurately categorized as public policy projects, essentially the same as the transmission upgrades caused by New Jersey’s offshore wind projects?
And if they are more accurately categorized as public policy projects, should such projects be regionally cost-allocated, potentially to consumers in Pennsylvania, West Virginia, Ohio, et al.?

A very relevant question that can also be applied to the current problem with PJM's 2022 Window 3. Is the closing of more generation in certain states due to their climate laws, and the out-of-control building of new data centers that will only benefit one or two counties in Virginia, more of a public policy issue that should be paid for by the states/localities involved? After all, it is their choice to put pressure on the amount of generation available in PJM. Before passing laws that mandate the closing of existing generators, or before approving the building of new facilities that require extreme amounts of new electric supply, the states or localities responsible need to make sure that they still have adequate generation available to serve their load. It is within their power to include a provision in their law that the closing of generators must be balanced with the building of new generators. It is also within these state powers to make sure there is an adequate supply of generation in the state/locality to serve big, new electric customers like data centers, before approving them. Instead, the states/localities are making these choices and leaving the consequences on the doorstep of others who have no vote on that state's policy choices. This is not just and reasonable. It's irresponsible. It's selfish. It pushes the consequences of a state's policy choices off on residents of other states. In this same vein, do the voluntary policy choices of one state that requires new transmission also compel other states to use their eminent domain authority to take property from their state's residents to create easements for new transmission that serves the state making the selfish policy? Why would I be asked to give up my property to build transmission that is caused by the building of data centers in Northern Virginia?

The "New Jersey" approach Commissioner Christie refers to is what's known as the "state agreement" approach to cost allocation. It is a more recent construct that allows a state with a new public policy to voluntarily agree to shoulder all the costs of new transmission made necessary by their state policies. This construct would prevent the unjust and unreasonable allocation of costs to states that did not cause the need for new transmission. It's exactly where we find ourselves now. The question is, would FERC open an investigation to correct PJM's current cost allocation for Window 3 to order it be allocated according to the public policy "state agreement" cost allocation approach?

It is ultimately the job of each state to ensure resource adequacy to serve its consumers, even in a multi-state RTO.

Amen, Commissioner Christie! Perhaps if they did, they'd stop prematurely shutting down fossil fuel generators before replacement generation is available. And perhaps they'd stop approving new data centers without any viable means of powering them. Instead, it's been left on the doorstep of all the other states in the PJM region to pay for, and house, transmission only made necessary by the thoughtless politics of certain states and localities. This is not just and reasonable.

0 Comments

<<Previous

Checking NextEra's Math

FERC Checks the Box

Who Pays for Data Center Extension Cords?

DOE Uses Your Money to Bribe Transmission Advocates

FirstEnergy Files For Incentives For MARL, Delays Project

Independence Energy Connection Causes Uncontrolled Congestion and Reliability Violations

I Told You So!

As The Dollar Turns

PJM Charges Ratepayers in Other States for Data Center Extension Cords

Your Lack of Planning is NOT my Responsibility!

About the Author

About
StopPATH Blog

Need help opposing unneeded transmission?
Email me

Archives

Categories

About the Author

AboutStopPATH Blog

Archives

Categories

About
StopPATH Blog