There's nothing as certain as death, taxes and yearly FirstEnergy rate increases.  On August 14, the company filed a request to increase its WV ENEC rates by $165M.  If you're a hypothetical customer, using a hypothetical amount of electricity each month, you'll pay an extra hypothetical amount of nine bucks or so a month.  Of course, you can't pay your debt to FirstEnergy in hypothetical dollars.  This rate increase is very real, despite all the hypothetical blather.

So, what kind of kool-aid is FirstEnergy and its PSC minions serving up to help the medicine go down this time?    The PSC's windbag says:
“It’s an annual true-up, and it is to cover the cost of fuel and purchased power,” PSC spokeswoman Susan Small said. “There’s not profit for the company. It’s not going to staff salaries. It’s not operations and maintenance fees. It doesn’t go to rent and pension plans or anything like that.”
Say what?  Of course there is profit for the company built into the transmission costs being recovered, since FirstEnergy owns the transmission capacity being billed in this filing.  Transmission rates also contain staff salaries, operations & maintenance, rent and pension plans.

And about those O&M costs?  The $44.5M correction for under-recovery of the "Temporary Transaction Surcharge" ("TTS") that is being recovered in this rate increase consists of $26.1M of unexpected Operations and Maintenance expense for the Harrison Power Station.  It also includes $5.7M of profit for the company.  I guess Susan Small doesn't know what's she's talking about... again.  Maybe she should read a case filing or two before activating the ol' pie hole?

The TTS was "designed to recover the net increase in non-fuel operation and maintenance expenses, depreciation and amortization expenses and taxes other than income taxes, and a return on incremental net plant, fuel inventory and materials/supplies resulting from the completion of the transaction [sale of Harrison].  The TTS also reflected reduction in non-fuel O&M expenses associated with the deactivation of Albright, Rivesville, and Willow Island power stations on September 1, 2012," according to the testimony filed by FirstEnergy at the PSC.  Sounds like it IS operations and maintenance, Susan...

The TTS was a temporary rate increase approved by the PSC to allow the company to recover the base rate cost of the Harrison power station from ratepayers for the period October 2013 and February 2015, when the new base rates that included Harrison went into effect.  At the time, the company calculated that it would need $199.8M to cover the cost of Harrison for 17 months.
  It designed its TTS to produce $160M of this revenue.  However, the case settlement (negotiated between parties without PSC ruling) only allowed for collection of a $113M TTS.  According to the company's most recent calculations, there is a $44M shortfall, which it is requesting to recover over the next year.  The biggest part of this shortfall is $26M of "higher than anticipated expense related to maintenance outages at Harrison."  In addition, there was an additional $9M O&M expense related to employee pensions and benefits at Harrison.

Hmm... what should you expect when your electric distribution company buys an antique coal plant?  Once the ratepayers own it, the company spends generously performing all the maintenance it has put off while it was the owner responsible for the bills.


There were also some mysterious increases in the book value of Harrison, decreases in the book value of the purchased Pleasants
power station, and a $10M increase in the illegal "acquisition adjustment" FirstEnergy scored from the PSC.  The "acquisition adjustment" was the difference between what Harrison was actually worth and its book value, which produced $256M (now $266M) of pure profit "funny money" for FirstEnergy.  Federal accounting regulations do not allow the recovery of "acquisition adjustments" from ratepayers, but the WV PSC ignored that in its haste to bless the Harrison purchase transaction.  The acquisition adjustment and any adjustments related to it are pure nonsense.

Adding insult to injury, forecasted sales of power from Harrison were much higher than actual... because power market prices were low and Harrison's coal-fired power was more expensive than other resources during the period, reducing Harrison revenue that might have offset some of the costs of owning the power station.

Upon further contemplation, it looks like most of the testimony of FirstEnergy witness Kevin Wise is nonsense.  What else could explain the general advertising expenses totaling nearly $5K booked to the TTS in October 2014, January and February of 2015?  Did you ever see any advertising about Harrison on your TV or in your newspaper?  Hear any radio commercials?  Of course you didn't.  This is probably just a misallocation of general FirstEnergy corporate expenses.  *sigh*  I hope someone goes over this nonsense with a fine tooth comb.
  There's probably plenty of "mistakes" in here that don't belong but coincidentally increase the rates you pay and the profits of FirstEnergy.  Thank goodness for West Virginia's Consumer Advocate, who gets the blinding and thankless task of separating the legitimate from the nonsense in FirstEnergy's filing.

In addition to the $44.4 TTS adjustment, the company wants to recover around $96M of inaccurately estimated fuel, purchased power and transmission costs for the past 2 years, along with $23.6M of new rate increases for 2016, the amount it would be short if it keeps collecting at the current rate through June of 2016.  Total rate increase $165M. 

How did the company estimate its rate so badly that ratepayers are so far into the hole, requiring a 12.5% rate increase?  This increase is for ENEC rates, which are supposed to be filed yearly to cover variable costs incurred
by the company.  ENEC rates are based on an estimate of the yearly costs.  At the end of the year, a true-up occurs, where the company compares its actual costs to the estimate it collected, and either issues a refund, or asks to recover the shortfall.  In contrast, base rates cover the company's fixed costs and are determined through occasional base rate cases, where a fixed rate is established.  The company must operate within that rate until the next base rate case is filed.  The last rate increase was a base rate increase where the company added Harrison to its rate base.  But that wasn't the end of the Harrison costs, because as this most recent filing shows, Harrison was also racking up additional costs that the PSC said it could recover in this delayed ENEC filing.  This filing got delayed because of the Harrison purchase, so now ratepayers are on the hook for 2 years of ENEC true-up, in addition to the Harrison TTS true-up.

Hey, remember when FirstEnergy told everyone that purchasing Harrison would offset itself because Harrison would sell its excess power capacity into the PJM electric market and credit the proceeds to ratepayers?  Well, guess what?  There were no proceeds!  Prices and sales were much lower than FirstEnergy anticipated, making the ratepayers subsidize the Harrison plant, instead of profit from it.  There was no offset, just more expense.  Gee, that's exactly what all the other parties told the PSC during the Harrison proceeding.  "I told you so" x multiple rate increases.  The purchase of Harrison was nothing but a ratepayer-funded subsidy for FirstEnergy and the coal industry.  The plant wasn't economic without these subsidies and should have been closed, instead, FirstEnergy "sold" it to West Virginia ratepayers and collected a huge windfall.  We'll be paying for this mistake made by the WV PSC for a long, long, long time.

This article introduces something I haven't had to contemplate for a long time (and what a nice time that was!), the senseless babble of FirstEnergy spokespuppet Toad Meyers.  As regular readers will recall, Toad uses "Magic Math" to explain the benefit of rate increases.

FirstEnergy spokesman Todd Meyers said the $165 million increase proposed in the Aug. 14 filing is largely the result of lower-than-expected wholesale electric prices over the past year.
Meyers noted the current rates were set partly based on projections of what amount of revenue the utility would be able to pass on to customers as a result of selling the excess electricity generated at its power plants.
“When we set the rates ahead of time based on where we think power prices are going to be, and then power prices aren’t there, we’ve already built in what we project the net benefit of sales to come back to customers will be. That’s built into the rates as they stand,” Meyers said. “That’s why the lower sales then really have an effect in the next true-up.”

Meyers said the Harrison Power transaction was never meant to be evaluated on the basis of a single year, but over the entire projected life of the plant. Prices can change year to year, sometimes in unforeseen ways, he said.
“We’re never looking at things to be a benefit to customers at one particular snapshot in time. We’re looking at what the best-case scenario is over time,” Meyers said. “You just don’t know what’s going to come around the corner, and we thought that having our whole strategy dependent on market purchases, then you’re really at the mercy of the market.

While recent case filings may create the impression that FirstEnergy has continued to seek rate increases, Meyers noted that there have also been decreases, such as the 5 percent rate decrease resulting from the 2012 ENEC filing.

At that time — roughly a year before the Harrison Power transaction was approved — the companies cited lower fuel and wholesale electric costs as reasons for the decrease.
“The perception that we keep raising the rates lately — that perception may be true — but there’s also times that we lower the rates, and people forget about the downswings,” Meyers said. “I wouldn’t call it a pattern. Every year, it’s a different look based on different circumstances.”

Oh, shut up, Toad!  Cathy Kunkel told you what was going to come around the next corner when your company proposed buying Harrison in the first place.
Cathy Kunkel, a fellow with the Institute for Energy Economics and Financial Analysis who testified against the Harrison Power transaction, said the PSC’s 2013 decision has a direct correlation to the scope of the proposed ENEC increase.
Had the transaction never occurred, Mon Power and Potomac Edison would have purchased more electricity from the market than what they generated at the power plants under their control. This means ratepayers would have directly benefited from the low wholesale electric rates during the current ENEC review period, Kunkel said.
“One of the fundamental things we were saying at the time is the transaction was about risk, and it was about shifting risk from shareholders to ratepayers. And whether or not the risk actually materializes, it was still a shift of that risk,” Kunkel said. “And I think now we’re seeing the risk has materialized, and we’re seeing it in this rate increase.”
In recent years, wholesale electric rates have been driven down by low-cost natural gas, Kunkel said. But with a lack of fuel diversity in Mon Power and Potomac Edison’s generation fleet, West Virginia ratepayers haven’t seen as much benefit from this downward pressure on the wholesale electric market, she said.
The Harrison Power Station is one example of a larger strategy that FirstEnergy has adopted in recent years of moving more of its largely coal-fired generation fleet into regulated markets where the company is able to pass on more costs to ratepayers, according to Kunkel.
“I think the big picture is we’re just seeing coal less competitive in the marketplace than it used to be, and ratepayers are paying the difference, because Mon Power has invested so heavily in coal,” Kunkel said. “No one can say what the power prices are going to be, but it looks like a bad deal at least in the short run. It’s a high-risk investment for ratepayers. Let’s put it that way.”
So, what should you do about this proposed rate increase?  Simply whining to the PSC that you can't afford it does no good.  The PSC has already approved the Harrison transaction and the company has already spent this money.  The best you can do is to support the efforts of your Consumer Advocate, who will be busily chopping down the total rate increase and fishing out all the financial funny stuff.
“We are very concerned about the level of rate relief the company’s requesting,” Jackie Roberts, executive director of the PSC’s Consumer Advocate Division, said. “We are in the process of evaluating the filing to understand what drives their cost request.
“This is a very large rate increase following on the heels of other large rate increases, and we will be carefully scrutinizing this case.”
Unless, of course, you want to take on the task of auditing FirstEnergy's filings yourself to come up with a more reasonable rate.  Good luck with that!  Just a cursory review of the thousands of pages filed will make you deeply appreciate what your Consumer Advocate does with little money, and even less respect from the company and the PSC Commissioners.  Maybe you should direct your efforts toward funding and strengthening your advocate?

Because... I've saved the best part for last.  FirstEnergy has proposed doing away with these annual ENEC filings in favor of quarterly filings that raise your rates 4 times per year.  Can you imagine having to go through these thousands of documents 4 times a year, instead of just once?  Your Consumer Advocate won't be able to keep up, unless its funding is increased three-fold in order to hire more staff to do nothing but pore through FirstEnergy's quarterly ENEC filings.  And if the PSC allows FirstEnergy to switch to quarterly filings, then all the other utility kids are going to want the same treatment, until your advocate gives up in desperation.  As well, the news media would soon tire of reporting on small quarterly increases, and there would be no bad publicity for FirstEnergy or the PSC.  Get in line and eat what you're served, little ratepayer...
 
 
Ever heard the idiom "qui cum canibus concumbunt cum pulicibus surgent."  Probably not, but you must be familiar with its English translation, "when you lie down with dogs, you get up with fleas."  Clean Line has recently exposed its dirty underbelly by publicly scratching its fleas.

Clean Line is now a proud "member" of the Consumers Energy Alliance (#25 under "Energy Providers and Suppliers").

What is the Consumers Energy Alliance?  According to SourceWatch:
The Consumer Energy Alliance (CEA) is a nonprofit organization and a front group for the energy industry that opposes political efforts to regulate carbon standards while advancing deep water and land-based drilling for oil and methane gas. The CEA supports lifting moratoria on offshore and land-based oil and natural gas drilling, encourages the creation and expansion of petroleum refineries and easing the permitting process for drilling. The group also says it supports energy conservation. CEO portrays itself as seeking to ensure a "proper balance" between traditional non-renewable and extractive energy sources and alternative energy sources. The group also supports construction of the Keystone XL Pipeline.

According to Salon.com, which obtained over 300 emails of personal messages between lobbyists and Canadian officials, the CEA is part of a sophisticated public affairs strategy designed to manipulate the U.S. political system by deluging the media with messaging favorable to the tar-sands industry; to persuade key state and federal legislators to act in the extractive industries' favor; and to defeat any attempt to regulate the carbon emissions emanating from gasoline and diesel used by U.S. vehicles.
So, the CEA is a well-known front group for the fossil fuel industry?  But, wait a tick, I thought Clean Line was all about "clean" energy and shutting down the fossil fuel industry?  Money makes strange bedfellows.

What is a front group?

A front group is an organization that purports to represent one agenda while in reality it serves some other party or interest whose sponsorship is hidden or rarely mentioned. The front group is perhaps the most easily recognized use of the third party technique. For example, Rick Berman's Center for Consumer Freedom (CCF) claims that its mission is to defend the rights of consumers to choose to eat, drink and smoke as they please. In reality, CCF is a front group for the tobacco, restaurant and alcoholic beverage industries, which provide all or most of its funding.

Of course, not all organizations engaged in manipulative efforts to shape public opinion can be classified as "front groups." For example, the now-defunct Tobacco Institute was highly deceptive, but it didn't hide the fact that it represented the tobacco industry. There are also degrees of concealment. The Global Climate Coalition, for example, didn't hide the fact that its funding came from oil and coal companies, but nevertheless its name alone is sufficiently misleading that it can reasonably be considered a front group.

The shadowy way front groups operate makes it difficult to know whether a seemingly independent grassroots is actually representing some other entity. Thus, citizen smokers' rights groups and organizations of bartenders or restaurant workers working against smoking bans are sometimes characterized as front groups for the tobacco industry, but it is possible that some of these groups are self-initiated (although the tobacco industry has been known to use restaurant groups as fronts for its own interests).
Front groups are formed and managed by well-paid public relations/lobbying firms.  They are paid for by the industry.  The CEA is managed by HBW Resources.  The group has been "conducting a grassroots operation" in "target states" that would "generate significant opposition to discriminatory low carbon fuels standards" that were created to address climate change.

The term "grassroots" means ordinary people with no financial interest in the proposal at hand.  CEA is not a grassroots organization.  It is funded and directed by the corporations that pay HBW to run it.

But now the CEA  has a new "initiative" to support Clean Line Energy Partners.  The "initiative" supports Clean Line's Plains & Eastern Clean Line.
“Unfortunately, virtually all energy projects face at least some level of opposition. But, in most cases, the opposition comes from the vocal few who stand in the way of the silent majority who see these necessary projects providing tremendous job and economic development opportunities on many levels. The EDJ Alliance will help taxpayers, energy consumers, landowners and businesses to voice their opinion to elected officials so that they embrace the opportunities associated with energy development.”
Vocal few?  Silent majority?  You mean landowners and consumers who object to the Plains & Eastern project vs. Clean Line Energy Partners?  CLEP is hardly silent (paid mouthpieces like HBW stand in evidence) and it's certainly not any kind of "majority" in Arkansas.  In addition, CEA does not represent any actual "consumers" or other "grassroots" interests.  It simply pretends to speak for them.

Like this:
Support landowners in Arkansas and Oklahoma!  Support energy infrastructure!  Support the Plains & Eastern Clean Line!

We need your help!

America's energy infrastructure needs your help!  Lobbying efforts at the white house level have inhibited the passage of an energy infrastructure project beneficial to citizens and landowners in Arkansas and Oklahoma!

........

Support energy infrastructure, land owners, and the Plains and Eastern Clean Line project by simply clicking the link below to sign the petition!  Every click makes a difference!

It is absolutely imperative to demonstrate support as a citizen!  The future of America's energy infrastructure is in your hands!!
When a couple of the landowners CEA claims to represent questioned the group's claims, HBW promptly removed the claims from its facebook page.

How stupid does HBW think the American people are?  Do they ever type a sentence that doesn't end with one (or two!!) exclamation points?  This is ridiculous, ineffective drivel.  C'mon!!!!!!!!

What "lobbying efforts at the White House level" have inhibited "passage" of an energy infrastructure project?  Do you mean the DOE's consideration of Plains & Eastern's Section 1222 application to "participate" in the project in order to override state authority to site and permit transmission?  That decision won't be made until next year.  And it's supposed to be made by DOE secretary Ernest Moniz, not the "white house."  Does HBW and Clean Line know something about some dirty dealings that the rest of us aren't privy to?

So, who are the faces of CEA's "initiative?"

Ryan Scott, Outreach Director

Since 2005, Ryan has provided strategic advice to clients across a number of industries with a focus on the oil and gas sector in particular.

While working as an attorney, before joining HBW, Ryan focused on commercial litigation, often representing business clients in contract disputes.  Prior to practicing law, Ryan worked at Deloitte & Touche’s Strategy & Operations Consulting practice.  While with Deloitte, he worked with clients such as Bristol-Myers Squibb (BMS), developing and delivering Financial Reporting & Legal training to a BMS executive team.  Ryan evaluated Finance function processes to improve and transform them leading up to a major SAP implementation for Wal-Mart.

Ryan received a B.A. in Economics from the University of Southern California, and a JD – MBA from Case Western Reserve University in Ohio.  Ryan is licensed to practice law in Illinois and is a member of the Illinois State Bar Association.
Here's Ryan Scott trading papers with Clean Line public relations "manager" Amy Kurt at the second Mendota Illinois Commerce Commission public forum in the fall of 2013:
And here's Ryan Scott interacting with the ICC judge at the forum:
Here's what Ryan Scott had to say about the Rock Island Clean Line at the forum:
MR. SCOTT: My name is Ryan Scott;
R-y-a-n, S-c-o-t-t. I'm here as a resident of Illinois and representative of Consumer Energy Alliance. We're a trade association representing virtually every sector of the economy from trucking, to organized labor, to energy producers. The reason I'm here to speak in favor of Rock Island is simple. Consumer Energy Alliance and I support this project because it represents an important piece of the energy puzzle to supply consumers with affordable and reliable energy.  Anyone who plugs in their smart phone into an electrical outlet, fires up their television to watch the Bears or perhaps a better football team or just uses their air conditioner will benefit from this project. The bottom line is in the United States demand is increasing. As one of the previous speakers stated, according to the Department of Energy and Energy Information Administration, forecasts of 25 percent increase in demand for electricity over the next three decades are expected in the United States. At the same time, the supply of electricity is expected to decrease due to aging plants and tightening Federal regulations. Many coal-fired power plants will be shuttered in the coming decades. In Illinois coal, which we expect to be decreasing in production, actually makes up approximately 40 percent of the State's energy base level. So that's an important piece of the puzzle that will no longer be available to Illinoisans. For all the reasons stated above and in order to meet Illinois' energy needs, the Consumer Energy Alliance and I support the Rock Island Clean Line project. Thank you.
That's funny.  Ryan didn't mention that Clean Line Energy Partners is a member of the CEA.

Who does Ryan Scott work for?  It's not CEA or its "initiative," it's HBW Resources.  HBW doesn't do anything for free, so I believe that Ryan was paid to appear at the ICC forum and make that statement.

Didn't Clean Line have the opportunity to present its case to the ICC as the applicant?  Why, then, did Clean Line feel it necessary to have paid speakers posing as third party "consumer" interests supporting its project at the forum?  Did Clean Line think it was fooling the ICC into believing that consumers supported RICL?

And now Ryan, HBW, and its new "initiative" think they're fooling a whole new bunch of folks at the "white house" and in the Mayberry towns of Arkansas and Oklahoma?

I wonder what Clean Line's big green supporters think about its getting into bed with fossil fuel interests in the CEA?  At what point are these environmental fools going to conclude that Clean Line isn't about "green" energy, but a different kind of $green$?

And, as far as Clean Line's attempted deception about the "benefits" of the Plains & Eastern Clean Line?  Report to your battle stations, Mayberry!  We're going to have some fun!   You've got to get up pretty early in the morning to fool a farmer.  Also an idiom you've probably heard.  Not translated into Latin.
 
 
I saw lots of your tax dollars at work over the past couple weeks.  They're everywhere.

Long, boring road trips allow lots of time for pondering.  Lots of wind farms allow for lots of comparison.

Why were some turning while others were not?  It sure seemed like the closer to the road they were, the more they turned.  Like stage dressing for eager Sierra Club motorists, puttering along in their polluting conveyances.  Or perhaps the ones encroaching on highways were newer and earning the $0.023/kWh production tax credit, while the ones farther away had been abandoned or were simply priced out of the market at the time?  Why was a wind farm on the right hand side of the road turning away, while one on the left hand side sat idle?  I did see more turning than not, which probably means there's adequate wind transmission capacity for what's been built.

This report says that wind is curtailed for 3 main reasons:

1.  Transmission constraints.  Not enough transmission for peak periods.  Since the capacity factor for wind averages 35%, is it economic to build additional transmission for the odd times when wind is producing at a higher rate?  Probably not.

2.  System balancing.  High wind penetrations make it hard to keep the system in balance because they require curtailment of base load generators during periods of low load.  That's not economic either.  "
Some utilities or grid operators have curtailed generation from wind plants when minimum generation levels on fossil-fuel plants are reached, because stopping and restarting fossil units within a few hours can be significantly more expensive than paying for a few hours of wind curtailment."

3.  Other reasons:  voltage issues, interconnection issues, frequency and stability issues.  Too much intermittent wind can make the grid unstable.  Wind generators also "self-curtail" to protect bats and enable de-icing.  Probably not a problem, since it was well over 100 degrees when clusters of wind turbines sat idle.

The expired production tax credit pays wind farm owners $.023/kWH generated.  How much is that on an annual basis?  Not information easily found.  Why not?  This article says that the PTC has cost American taxpayers $30B over the past 35 years.  Of course, the Koch monster gets blamed for spreading "misinformation," but nobody offers a corrected figure. 

Warren Buffet has bragged that the production tax credit is the only reason to build wind farms, "they don't make sense without the credit."

The PTC allows wind generators to bid into energy markets at low, or even negative, prices.  This makes it harder for unsubsidized base load generators to stay afloat.  As a result, these generators beg for ratepayer subsidies and foist the cost of their failing generators off onto ratepayers.


Who thinks that we can replace all fossil fueled electric generation with intermittent renewables like wind? 

Not PJM, whose recent capacity auction provides additional money to generators who can produce when called upon (you know, those baseload fossil fueled generators).  This is going to cost consumers an additional $3.4B in yearly capacity charges.

And there we are.  New intermittent wind capacity is being built at an alarming rate because it is profitable.  New wind transmission capacity is being overbuilt at an alarming rate because it is profitable.  All this intermittent generation is causing increased costs for consumers.

But the industry is raking it in.  Thoughts to ponder...

 
 
Apparently FERC's Office of Enforcement had nothing better to do yesterday than to enjoy a summer drive down to Richmond for an enjoyable afternoon of venue shopping.

I guess they found exactly what they were looking for, because they dropped off a petition requesting a jury trial at the U.S. District Court for the Eastern District of Virginia, Richmond Division, in the matter of:

PETITION FOR AN ORDER AFFIRMING THE FEDERAL ENERGY REGULATORY COMMISSION'S MAY 29, 2015 ORDER ASSESSING CIVIL PENALTIES AGAINST POWHATAN ENERGY FUND, LLC, HEEP FUND, INC.,
HOULIAN "ALAN" CHEN, AND CU FUND, INC.


Although the Commission issued an Order assessing civil penalties on May 29, the accused had 60 days to cough up the roughly $34.5
M in penalties and disgorgement.  They didn't pay.  FERC wasted no time filing its petition after the 60 days were up.

"It has taken Powhatan almost five years to get to court for a very simple spread trading strategy that has been blessed by 12 independent experts at our website, ferclitigation.com," said Powhatan's Richard Gates.


FERC listed six, count 'em, six lawyers as counsel for the plaintiff.  It listed only two lawyers for the defense, one for Powhatan Energy Fund and one for Alan Chen, HEEP Fund and CU Fund.
  Does it really take six FERC lawyers to equal one defense lawyer?  Who is paying for this?  How much has FERC spent on this investigation over the past 5 years, and how much will it spend down in Richmond?  At what point will the cost of this litigation be more than the recovery?

"While the costs of fighting off the bogus allegations have been huge and will just grow for us, we're glad we are able to stand our ground and not be forced into settlement the way others firms have. Plus, it will be nice to be in the neutral venue of a courtroom instead of this Orwellian organization that has trapped us the last 5 years," added Gates.


Richmond?  FERC says it selected Richmond because:

Venue is also governed by FPA section 317, 16 U.S.C. § 825p, which provides that “[a]ny suit or action to enforce any liability or duty  created by . . . this Act, or any rule, regulation, or order thereunder may be  brought in [the district wherein any act or  transaction constituting the violation occurred] or in the district wherein the defendant is an inhabitant.”
And the trades occurred in PJM.  And Powhatan's "principal place of business" is in Henrico, Virginia.  Of course FERC probably knows that the Gates brothers actually live in Pennsylvania and Chen in Texas.

Why Richmond?

Oh, there it is!

Respondents’ unlawful scheme resulted in
the misdirection and capture of over $10 million in PJM market payments, including
approximately $1,147,087 that would otherwise have flowed to Dominion Virginia Power and inured to the benefit of Dominion and its ratepayers, including ratepayers in this District.
So, FERC wants this case heard before jurors who might believe they were personally cheated out of more than a million bucks?  I do hope they fully explain their use of "to the benefit of Dominion and its ratepayers" to show how much would have ended up in Dominion's pocket and how much would have ended up in Dominion's ratepayer pockets if not for the defendant's actions.  Maybe FERC can also explain how much of the $34.5M in penalties and disgorgement will end up in Dominion's pocket and how Dominion will flow that recovery into the rates that will make the ratepayers on the jury whole (or not).  And do tell where the rest of the money will go, FERC...

I will admit that I haven't read everything in this case, but FERC has yet to convince me that any actual ratepayers were damaged here.  If Dominion had collected the MLSA payments instead of Powhatan and Chen, would they have directly reduced rates, or simply gone into Dominion's corporate coffers?  Since FERC has yet to adequately explain, I'm leaning toward the latter option.  Who is FERC really protecting here?  Ratepayers or its pet incumbent utilities?

Gates seems to agree, "By filing the lawsuit, FERC has shown the world it continues not to support open and competitive power markets. Instead, FERC favors incumbent utilities that function without incentives to do better. Indeed, earlier this year the WSJ* described how utilities get profits by just spending more. While we believe in the societal benefits of competition, and know the law allows for it in these markets, it makes sense utilities may not want any."

Is FERC confused about who it serves?  Is this case supposed to hinge on a jury's failure to understand it and instead be swept away by platitudes and grandstanding from FERC's sextet of lawyers?  FERC used the word "Enron" something more than 30 times in its District Court Petition.  Maybe the defense can use the word "McCarthyism" an equal number of times just to keep things fair?  I suppose the jury's view of these two competing terms is going to depend on its average age.

And the quality of the public relations battle deployed.


Richmond?

*If you don't subscribe to WSJ and can't read this article via the link, type the phrase "Utilities’ Profit Recipe: Spend More" into Google and click through on that link.  No, we're not advising that you engage in newspaper subscription link manipulation, through a scheme to engage in fraudulent Headline Googling (HG) transactions in internet search engine markets to garner excessive amounts of certain free reads of stories behind a paywall. I also recommend that you not engage in any views that constitute a wash viewing scheme in violation of the WSJ’s prohibition of that practice.
 
 
You know it's a slow news day when...
The Federal Energy Regulatory Commission (Commission) hereby gives notice
that members of the Commission and/or Commission staff may attend the following
meetings:
North American Electric Reliability Corporation
Member Representatives Committee and Board of Trustees Meetings
Board of Trustees Corporate Governance and Human Resources
Committee, Finance and Audit Committee, Compliance Committee, and
Standards Oversight and Technology Committee Meetings

The Ritz Carlton Toronto
181 Wellington Street West
Toronto, ON M5V 3G7
Honestly, I don't how they expect to attract anyone to this meeting without golf outings, winery tours, massages, and hookers and blow in the Hospitality Suite.  And then the heavies from FERC show up.  Way to ruin the party!
 
 
The only news story to leak out of the Illinois Commerce Commission's three public hearings on Clean Line's Grain Belt Express project presents an opinion that is not factual.
"To bring Illinois forward in clean energy, we need dedicated direct current lines here in our state," said Taylorville's Patty Rykhus.
"Dedicated?"  Dedicated to what?  If Patty thinks Grain Belt Express is "dedicated" to clean energy, she's mistaken.  Electric transmission is "open access," and even though Clean Line asked the Federal Energy Regulatory Commission for permission to give preference to wind generators when assigning capacity on its project, the Commission denied their proposal.  Clean Line cannot be "dedicated" to any form of energy.

Does Patty think that HVDC lines bypassing Illinois will actually move "clean energy forward" in Illinois?  Where might she have gotten that idea?

GBE spokespuppet Mark Lawlor tries to tell the reporter "In the first five years of this line being in operation it will reduce wholesale rates by $750M."  Where's the proof of that, and why would he say such a thing?

First of all, the Missouri Public Service Commission recently examined the company's claim that the project would reduce wholesale rates in Missouri and rejected it.
The GBE production modeling studies do not support the GBE allegation that the Project would result in lower retail electric rates for consumers.
Let's hope the ICC does a similar evaluation.  Lawlor goes on that way because the promise of lower wholesale rates is the ONLY reason the ICC granted the company a CPCN for their Rock Island Clean Line project last year.  But the ICC did not find the project "needed," only that it might "...promote the development of an effectively competitive electricity market that operates efficiently...".

That still doesn't give Clean Line the eminent domain authority they seek in Illinois.  Maybe Patty should educate herself before making statements on TV that aren't factual.  And Lawlor should know better.

Dumping a whole bunch of "cheap" energy into a local market may have the initial effect of lowering prices through supply and demand, but Clean Line isn't selling electricity at wholesale.  Its entire business model is based on power purchase agreements between generators in Kansas and east coast utilities.  Lawlor leaves out quite a bit in his quest for the perfect (if not entirely factual) sound bite.

Big win for landowners in the story though.  Landowner Clint Richter clearly articulates the problem of using eminent domain for purposes of enriching investors speculating in "clean" energy markets:
Shelby County landowner Clint Richter said that, "it's not that we're not for renewable energy, but we're against a private company coming in and taking land that's ours for their own private gain and I think that's what is really happening here."

WAND-TV's Ed Cross asked, "why is that such a concern?"

"Well it's a concern because I think all of us know what it's like to work hard to save up money to buy land to something that's special and important to you and to have someone come in and basically say 'hey I want that, I'm going to take that land, and I'm going to make some money off it,' I don't think that sits well with a lot of people," added Richter.
That's what the viewers will take away from this story.  Way to go, Block-GBE Illinois!
 
 
As if it's not bad enough that investor owned utility regional transmission organization cartels decide which of their members get to profit from building new transmission of questionable worth, now ITC thinks these cartels should take over transmission ratemaking from the Federal Energy Regulatory Commission.

In a Petition for Declaratory Order filed yesterday, ITC wants the Commission to rule:
1) that binding revenue requirement bids selected as the result of Commission-approved, Order No. 1000-compliant, and demonstrably competitive transmission project selection processes will be deemed just and reasonable when filed at the Commission as a stated rate pursuant to Federal Power Act (“FPA”) Section 205; and 2) that such binding bids are entitled to protection under the Mobile-Sierra standard, and may not subsequently be changed by means of a complaint filed under FPA Section 206 unless required by the public interest.
FERC's Order No. 1000 was supposed to open the doors to competition in order to make transmission cost competitive.  RTOs are now supposed to consider costs when deciding who gets to build a project.  Some, like PJM, require bidders to submit a total project cost with their bid.  It is not subject to accuracy checks, so a company can submit a low bid to win the project, and then recover cost overruns.  This makes the cost bid worthless.  Other RTOs, such as MISO and SPP, require the bidder to submit yearly revenue requirements for the life of the project (40 years).  Unlike a "total project cost" estimate of a project's total capital investment, a revenue requirement also includes the utility's return, Operations and Maintenance costs, taxes, and other costs to more accurately represent a ratepayer's actual cost.  Of course, these revenue requirements are just estimates, actual rates may differ.

On top of that, competition has inspired transmission companies to offer not to exceed "cost caps," where a transmission company eats any overages.  This serves to make cost bids more accurate and encourages the company to actually perform, instead of its usual apathy to cost concerns because the company is simply passing its costs into rates that someone else pays.

Good idea, right?  Except when a cost cap and company performance actually makes the project come in under budget, ratepayers can reap the benefits of even lower rates.  ITC wants that to stop.  It wants to recover the full amount of its cost cap, even if it spends less.  How rickety will transmission become once corporate greed and shareholder returns enter the picture?  How many equipment cost and construction practice corners will be cut to decrease costs and increase profits?

Here's a better idea:  Dangle a fixed reward of a percentage of cost underruns for the economical company when a project is successfully constructed, instead of encouraging them to adopt a culture of greed by proposing an endless cycle of cost cutting to increase profits.  ITC's proposal is crap.

First of all, RTOs don't know diddly doo about rates and ratemaking and care even less.  RTOs are NOT regulators in the public interest.  They operate in the interest of their investor owned members.  There is no real public involvement in any of their decisions, and more importantly, no due process for ratepayers to participate in examination of the rates proposed in the cost cap "revenue requirements" that ITC wants to lock in at the RTO level.


There's a whole lot that goes into ratemaking aside from known costs, such as the company's rate of return.  How is an RTO supposed to decide that?  In addition, only the Commission has jurisdiction over transmission rate incentives that can increase return.  Does ITC propose that the RTO take over this process in order to set the return at a "competitive" rate decided through the bidding process?  And what about incentives that don't have anything to do with rates, such as guaranteed recovery in the case of abandonment?  Would those still be the domain of the Commission, or shall they delegate those to RTOs as well?

Message unclear.  Ask again later.

Having the utility design its own rates in a "competitive" manner would do nothing but encourage collusion that results in rates that are not just and reasonable.  No rate should ever be bullet proof.

 
 
Today was the deadline for reply briefs in the matter of the Formal Challenges to PATH's rates as well as PATH's recovery of abandoned plant, which was heard by the Federal Energy Regulatory Commission back in March and April.

Here's what turned up:

Reply Brief of Keryn Newman and Alison Haverty

Reply brief of FERC Trial Staff

Reply Brief of the Joint Consumer Advocates

Reply Brief of PATH

Th... tha.... that's all folks!  Now we wait for the Presiding Judge to issue his initial decision on September 14.  The Judge's decision must then go before the Commission for approval.  Possibly more briefs (and replies) on exception at that time.

Now go enjoy summer!  I'm going to!

 
 
Ask a transmission developer proposing a new transmission line and you'll get an answer in the neighborhood of 10 times the cost of an overhead line.  (Example: $1B overhead = $10B buried)

Ask an engineer for a company proposing an underground project and you get an estimate that burial would double the cost of a similar overhead line.
(Example:  $1B overhead - $2B buried)

I've been told both of these things.  So, who to believe?  Who might be exaggerating to serve their own purposes?

Apparently it only does "almost double" costs to bury HVDC transmission.
  That's what the Department of Energy concluded in its recently released draft environmental impact statement on the ill-fated Northern Pass project.

A complete burial of the Northern Pass transmission line would nearly double the project’s cost, but reduce potential negative impacts on the environment, tourism and local property values, according to a draft report released by the U.S. Department of Energy Tuesday.

While the proposed Northern Pass project — made up primarily of overhead lines strung between Pittsburg, N.H., and Deerfield, N.H. — would be the cheapest option at roughly $1.02 billion, it would also pose the greatest environmental and visual impact, the report says.

Four of the alternatives call for a complete burial of the transmission line. Another calls for partial burial beneath Interstate 93 through Franconia Notch, or along Routes 112 and 116 through the White Mountain National Forrest.

Five call for burial along existing roads and highways, options with the least environmental impact, the report says. All of the underground alternatives carry the highest costs, ranging from $1.83 billion to $2.11 billion.
But nowhere near a magnitude of 10 times the cost.  Liar, liar, pants on fire!

In addition, a buried line provides significant benefits over its aerial cousin.
The visual impact, which includes “large industrial-appearing lattice structures,” could negatively impact New Hampshire’s tourism and recreation, the report says. And the proposed overhead route likely would cause the largest drop in residential property values and have the least economic tax benefit to host communities.

Putting the line underground, as opposed to overhead, lessens the impact on tourism, recreation, historic resources and the environment, the review says.

Burying the line requires less vegetation removal and has fewer effects on wildlife, including protected species. The buried lines are less susceptible than the overhead lines to damage from extreme weather.

Construction of the overhead line would generate fewer short-term and permanent jobs than an underground alternative, the report says.
But wait...
But, the report says, blasting during construction would generate more noise than putting the lines overhead. And burial of the line would increase the potential for erosion.
Really?  That's the only drawback?  Noise from blasting?  So, how much "blasting" would Clean Line need to do to bury its proposed transmission lines across Midwest farmland?  Little to none?  What if much of the additional cost of burial was tied to blasting up the "Granite State" to create trenches?  And erosion?  I think that could probably be handled.  Once buried, out of site, out of mind, right?

C'mon, Clean Line, get with the program and re-engineer your projects as underground lines!  How much have you spent (and moreover how much will you have to spend in the future) trying to get your lines permitted?  It would have been much cheaper (in terms of both money and time) to have done the smart thing and proposed your projects as buried lines in the first damned place!

And don't give me any of that crap about how its technologically impossible to bury long lines.  The engineer who gave me the spot on double cost estimate also told me there is no mileage limit.  He's got a lot more cred than you do at this point...

How much does opposition cost?  How much does buying support cost?  How much does lobbying to change laws cost?  How much are a whole bunch of contested eminent domain cases going to cost?  How much do repeat or additional approval processes cost?

Clean Line says its currently proposed transmission line will only add something like 2.5 cents per kw hour to the 2.5 cent cost of wind energy.  So, even doubling the project costs, it's still possible to deliver at 7.5 cents/kwh, right?  Well, unless Clean Line has been lying about the delivered price of wind via its projects...

Maybe Clean Line's projects won't be "economic" enough to provide big returns to their investors without foisting some of its costs off onto bypassed landowners by taking land as cheaply as possible through condemnation and eminent domain?

We all know that the public's appetite for "green" energy only stretches so far as their wallet.  When faced with increased electric bills for "green" energy, the majority of the public will snap their wallet shut and oppose it.  So, why would this same public expect that Midwest landowners should accept economic sacrifice and burden to keep urban electric bills low?  It's only appealing when its been greenwashed and politicized, and none of that nasty infrastructure gets planted in THEIR backyard!

And... this question bubbles up... why does the DOE's draft EIS for the Northern Pass include multiple routing options that require underground lines when DOE's draft EIS for the Clean Line Plains & Eastern project proposed NO underground options?  Are the people and environment of Oklahoma and Arkansas worth less than those in New Hampshire?  Or is it just that Northern Pass has gotten bigger, politically-connected, push back and top-notch legal help?

It's about time to recognize that the public will no longer accept the burden of overhead lines.  Anywhere.  There's a better way.  "Green" energy costs more.  Deal with it.
 
 
Well, isn't that cute?  FirstEnergy has mated with itself and given birth to MAIT, Mid-Atlantic Interstate Transmission, LLC.  Who thinks up these stupid names?  This one rolls off the tongue with as much excitement and pleasure as the phrase "hand over your wallet and nobody gets hurt," or perhaps the descriptive "hot turd."

So, FirstEnergy needs to create another "independent" transco in order to energize its balance sheet by creating the world's sweetest investment account that will pay lucrative double-digit returns for many decades to come?  Well, that's good for everyone, right?  No, it's not.

FirstEnergy proposes that its "eastern" retail distribution companies "sell" their transmission assets to the newly formed "MAIT" in exchange for a backseat interest in the company and annual "lease" payments for right-of-way and other real estate interests that the retail companies will continue to own (along with the tax liability).  Will the "lease payments" be enough to cover all the liabilities of owning the real estate?  Or will the retail distribution customers end up financing a portion of that to make the "lease" cheaper for MAIT?  Who's going to be supervising that to make sure it's an arm's length transaction?

FirstEnergy says they need to do this because it is consistent with the public interest.  You know, you "public" are supposed to benefit from it.  So, what are the benefits?

MAIT will not result in cross-subsidization of a non-utility associate company or the pledge or encumbrance of utility assets for the benefit of an associate company.

It supposedly won't have an adverse impact on competition, rates, or regulation.

FirstEnergy commits to hold customers harmless from transaction costs.  (oh, like they did in the FirstEnergy/Allegheny Energy merger?)


So, "the public" won't be harmed?  Even if we believe that, it's not a "benefit."  It's "do no harm."

But, wait, there's more!!
MAIT results in the creation of a stand-alone transmission company, which provides a number of
benefits to customers and the PJM region!

Tell us more, Rod Roddy....

FirstEnergy is in the midst of a major  investment cycle in transmission infrastructure. In 2014, FirstEnergy commenced its EtF initiative, which is intended to identify the need for, and facilitate the investment in, improvements to the security, resiliency, efficiency, and operational   flexibility of its transmission systems. EtF projects include building and re-conductoring transmission lines; building and enhancing substations; modernizing transmission
communication infrastructure; and installing dynamic reactive resources to regulate system
voltage. In all, FirstEnergy plans to invest approximately $2.5 to $3 billion in the  FirstEnergy East Operating Companies’ service territories through this program over the next five to ten years.
FET formed MAIT in preparation for this significant planned investment. As Mr. Staub
explains in his testimony, utilities face significant challenges in their efforts to simultaneously meet the service requirements of retail customers while also making   sustained investments in their transmission assets. A utility’s investment in transmission infrastructure competes with other business lines of the utility for capital, and transmission investments “can be deferred in favor of more immediate or emergency investments in distribution” facilities. The singleminded
focus as a transmission-only entity will enable MAIT to commit to addressing the significant investment needs of the transmission system.
This stand-alone structure also will allow MAIT to attract capital on more commercially reasonable terms. Mr. Staub explains that lenders view stand-alone transmission companies favorably due to their transparent and easy-to-assess risk profile. The  Commission has also observed that stand-alone transmission companies typically enjoy an enhanced ability to respond to transmission needs and have a superior track record of investing in new infrastructure.
MAIT’s improved access to capital will increase the likelihood that the planned investments are carried out and completed in a timely fashion and at a lower cost.  Moreover, MAIT will incur debt in its own name, without a parent guarantee. Any debt MAIT incurs to finance new transmission projects, therefore, will not affect the financial condition and credit ratings of the FirstEnergy East Operating Companies. Hence, the migration to a stand-alone transmission model not only better supports the sustained level of   transmission investment needed at MAIT but also preserves and enhances the FirstEnergy East Operating Companies’ capacity to issue debt for their respective retail and distribution needs.
Oh bull...oney, FirstEnergy!  You forgot to mention FERC's extra special .5% ROE adder for transmission only companies, or "transcos."  And, hey, if MAIT joins PJM, you can get another .5%!!  You also forgot to mention in that breath that you do plan to immediately make a section 205 filing to set up a formula rate for MAIT that provides a lot of financial goodies that you can't get through a stated rate.  Are you also going to be applying for all the other FERC transmission incentives?  I bet you are, you coy little company!

So the real benefits here are for FirstEnergy, not "the public."  Since the public is not receiving a benefit, and if we believe FirstEnergy that this won't increase rates (and profits), then why in the hell would FirstEnergy want to do this and shell out the "transaction costs" it can't pass to ratepayers?  Do you really expect us to believe there's nothing in it for Y-O-U, FirstEnergy?  I mean, you guys are kind of stupid, but I didn't think you were complete idiots.


And I do believe you are attempting to remove a whole bunch of transmission from state regulatory oversight so that you can plow your "transmission spend" into making "investments" of questionable worth in your lower voltage transmission lines that aren't part of any PJM transmission plan.

So, does anyone care?  Apparently not much.  The only parties to intervene in this docket are competitor PSEG and FERC settlement gadflies AMP and ODEC.

Remember, these companies are regulated to protect  you.  Except there's nobody minding the store on your behalf.