Hi! You've reached StopPATHWV Blog. Your visit is important to me. I'm sorry I can't come to the website right now... et cetera.
I'm off again, this time until it's over (a week? two weeks?) I predict another 6 days. Too bad there's not some sort of football pool going on. I might actually make some money that way.
If you're in possession of a call-in phone number to listen in to the festivities live, enjoy it. Or just show up... it's a public hearing.
If not, transcripts have begun to be posted on the docket. Go here. Enter Docket No. ER09-1256 and list sub docket 002 in the correct fields. Read.
Meanwhile, remember to play fair and be nice, everyone! Sleep the sleep of the righteous. A guilty conscience can be like a lead weight attached to your ankle. Ain't nobody got time for that...
Drama, drama, drama. I'm pretty sure the media over-dramatized the outages in DC yesterday. Maybe not a bad thing to raise awareness, but they've missed the real message.
OMG - like this outage affected IMPORTANT people doing IMPORTANT things! Like Pepco is sooooooo bad!
This article covers the basics, and with a few additional details from WaPo's more dramatic version, here's the story:
A hot 230-kV transmission line (conductor) just randomly fell off its tower in Southern Maryland. No storm. No damage. It just broke for no apparent reason. Live, uninsulated transmission line on the ground started a grass fire. Lucky it didn't fall on any people, vehicles, etc. that happened to be in the right-of-way at that time. The fault caused a bunch of other lines and generators to trip offline in self-defense against resulting voltage swings. And the lights went out many miles away in Washington, D.C.
So, no big deal, faults happen. But the grid is supposed to be designed so that other lines instantly spring to life and take the load of the one out of service and the fault ends up being nothing more than a barely-noticed blip. But that didn't happen, it started to cascade to other lines and generators. Comparison was made to the 2003 northeast blackout, when a fault on a transmission line in Ohio cascaded into a regional blackout. The concept is quite the same, but the effect not as far-reaching. Do you suppose we'll need a multi-million dollar government task force to examine the incident?
What's the real problem here?
Lack of maintenance and upgrades to existing transmission lines. The industry is so busy chasing the big profits that come from building NEW transmission that they aren't investing their money in maintaining the assets already in service. Perhaps our federal regulatory agencies need to start encouraging maintenance and rebuilds of aging lines with financial incentives?
And then there's the problem of parasites like DC that have no generation of their own and depend on transmission lines from distant generators. The more transmission lines we build, and the more centralized the system that supplies electricity, the bigger this problem becomes.
Stop it. Stupid.
Distributed generation and less transmission lines = reliability.
Below is a press release from Powhatan Energy Fund. Why mess with perfection? Here goes:------------
West Chester, PA - Last week, PJM Interconnection stated that Powhatan Energy Fund's response to FERC’s order to show cause illustrates our “failure to appreciate the unique legal and regulatory framework governing organized wholesale electricity markets.” Yeah, perhaps we do not understand this “uniqueness” – we were under the impression that constitutional protections applied to all regulated markets in this country, including theirs. We’ve raised our voice against the bullying tactics that FERC has employed in this investigation as they have completely ignored these protections, including our rights to due process and fair notice. Powhatan is in the news and people feel compelled to respond to us because we’re not unique – a lot of people know there’s a fundamental problem here.
The industry struggles to understand the rules and the laws under which they can operate their businesses. PJM’s recent statements add to their confusion. PJM’s pronouncement that FERC’s regulatory mission “to protect consumers and other market participants” is held to a “higher standard” than the SEC’s mission to protect investors is simply wrong. We do not believe PJM could cite any authority to support this claim. The SEC’s mission to protect investors is every bit as stringent and important as FERC’s. FERC has even stated that its market manipulation rule is modeled after the SEC’s 10b-5 precedent.
We wish PJM would stop pretending that this investigation has anything to do with “just and reasonable prices” for power, as they put it. There is no allegation that we increased power prices. As a matter of fact, Alan’s trading had no negative effect on prices or on the power markets at all. If PJM wants to argue, we suggest they find a different straw man.
PJM made the rules, and Alan traded under those rules. Our activities were perfectly legal. And the thing is – PJM knows it. Even after August 2, 2010, when Alan stopped trading, PJM continued to wire funds to us for the very trades that are the subject of the investigation. If they really thought there was anything illegal about the trades, we wonder why they repeatedly sent us money.
We suspect that every single UTC trader made money in the summer of 2010. Instead of vilifying us in the press, PJM should thank us for identifying the goose that was laying these golden eggs. If PJM feels compelled to run any more simulations, Powhatan suggests they quantify how much money the big utilities would have “lost” the last five years had PJM continued to pay UTC traders to take transmission service out of the system. It will show the big utilities are better today, in part, because of Alan’s trading.
Throughout this five-year investigation, we’ve been very cooperative. Over the last year, we’ve been very open. The analysis of our experts, the interactions we’ve had with the FERC, and even our legal correspondence are available to the leadership team at PJM, who can see it all at www.ferclitigation.com
. We encourage a visit.
C. The Report Contains So Many Obviously Wrong Accusations That Some
Additional Comments On the Most Blatant Inaccuracies Are Warranted
1. Dr. Chen’s “Home Run” Trading Strategy Is Not A “Post Hoc Invention” Because, Among Other Things, 35 Is Less Than 50
2. The Staff’s Analysis Of The “Indicia of Manipulation” Misses The Mark Entirely
3. Dr. Chen’s Trades Were Not “Wash-like” Or “Wash-type” – Whatever The Heck That Means
4. The Staff’s Stubborn Reliance On The Unpublished, Non- Precedential Amanat Case Is Just Lame
5. Uttering the Phrase “Enron” Or “Death Star” Does Not Magically Transform The Staff’s Investigation
6. Who Cares What Bob Steele Thinks?
7. The Staff Has Not Identified Any Actionable “Harm”
Although weighing in at 49 pages, Powhatan's response is a quick and easy read, heavy on the common sense, and light on the bafflement that DC lawyers like to rely on to confuse the decision-makers. It's a modern-day, regulatory version of The Emperor's New Clothes down there, where the object seems to be to simply confuse the issues with lots of big words and complicated concepts until the decision-maker (who most likely doesn't have the technical background to appreciate all the little nuances) is left drooling in his chair, more confused than he was before he entered the room. I believe they hope that the decision-maker, like the long-ago emperor, will simply be afraid to admit that he doesn't get it, for fear of looking stupid in front of his lawyer courtesans. When that happens, the emperor may nod his head and agree with the sagest of experts before him.
And in that spirit, OE's self-designated little conscience has entered the room by filing a public protest on the debacle.
Former compliance counsel and current Super Dad Eric Morris shares:
I would hope the four Commissioners voting on this docket would reflect on the unjustness of treating certain entities that have regular business before the Commission very deferentially and then outsiders who receive zero funding from ratepayers such as the subjects of this investigation very harshly.
He also has some other interesting observations, such as:
If [Kevin Gates] had become rich and bought a utility or five, I would imagine you would treat that future version of Kevin Gates much more nicely.
But what would Kevin Gates want with a utility (or five)? He'd have to abandon his morals in order to run them.
Even Eric can't seem to find the harm that FERC's OE claims was done by Powhatan:
And speaking of protecting the incumbents, all the “harm” is supposedly being done to them. I’d love to see OE prove that that money would have lowered ratepayers’ bills; if so, PJM should be broken-up for ever allowing this. I would guess it is much closer to the old story of private gains (to PJM Members) and public risk (ratepayers paying for this investigation), though. Who knows, maybe the PJM cartel is smarter than the Wall Street banksters like Goldman and I am just not giving them enough credit?
I doubt it.
*FERCenese |ferk in knees| noun: The incomprehensible, acronym-laden gibberish spoken at FERC that is hard for common folks to understand. Origin: Electric ratepayer Scott Thorsen, standing in a field in Illinois.
Wow, what a shocker, right? What happens when a cartel has to make new rules whereby its members have to compete for projects?
Complete and utter failure.
On Thursday, PSE&G filed a complaint against PJM at FERC. The complaint is just a new wrinkle in PJM's failure to carry out a competitive transmission planning process ordered by FERC and set out in PJM's own rules. PJM didn't seem to have any problem coming up with a competitive process in order to comply with Order No. 1000, but it completely failed at carrying out its own rules in its first attempt at a competitive transmission project window.
The complaint alleges that PJM altered all projects submitted in the Artificial Island competitive window, substituting its own project creations for the ones actually submitted, and then allowed a select set of project sponsors to continually alter their projects throughout the evaluation process. PJM still has not selected a "winner," although the process has been dragging on for nearly two years. PJM simply cannot resist using its heavy hand to unfairly influence selection of transmission projects that need to be built.
Funny that when PJM has to operate competitively, it cannot. Everything falls apart.
Is it really about keeping the system reliable and cost effective, or is it about ensuring profits for its most favored members? Where do consumers fit in?
So, why don't we just do away with PJM transmission planning altogether? It's a miserable failure.
RTO Insider reports
that FERC has issued a proposed policy statement regarding "hold harmless" commitments made during utility mergers.
The policy is intended to further define merger costs and how they are accounted for, as well as proposed accounting mechanisms to track them.
As if it's about some accounting "confusion," and not about utilities willfully violating the commitments they make as a condition of approval for their merger. But, hey, FERC has to start somewhere, I suppose. Maybe some proactive monitoring of utility financial filings could begin to put a damper on the merger cost recovery free-for-all. But then will the utilities just find more creative ways to improperly recover their merger costs? How about some penalties for utilities found to have improperly recovered merger costs? I think maybe a $30M fine for each occurrence would be appropriate.
On that tape, Dr. Bowring says that the trades did not violate the rules, that he understands why the traders engaged in them, and that the rules need to be changed to remove the incentives that drove the trading. He also says that he would not refer the trading conduct to Enforcement if the traders stopped the trading in question.
Powhatan says that accused trader Alan Chen had a similar conversation with Bowring, but did not record it.
The problem here stems from OE's failure to turn over the recording when it was asked to produce exculpatory evidence, i.e. to disclose all evidence that is "favorable to an accused" or "would tend to exculpate him or reduce the penalty."
This seems to be a bit of a double standard, since FERC is relying on the statements of a different trader to make its case to the Commission.
Powhatan also points out that Bowring is obligated to refer trading that he thinks might be market manipulation to FERC's Office of Enforcement. I wonder how many little phone calls he's made to traders over the years, instead of fixing all the flaws in his "markets?"
How is anyone supposed to know what's allowed and what's prohibited? Or do those rules reside only in Bowring's head? So, keep that recorder handy, just in case... unless you've got $30M or so laying around and don't mind parting with it.
The solicitation for commitments, expected to last about seven weeks, will be a gauge in determining the interest in using the line.
GBE is soliciting customers in accordance with the plan it filed with FERC last year to negotiate rates in a fair and non-discriminatory manner that results in just and reasonable rates.
Despite GBE's media push that FERC has "approved" its project, FERC has no jurisdiction to approve the siting and permitting of the project. What FERC does have an interest in is ensuring that the rates GBE charges to its customers are just and reasonable. FERC simply approved GBE's plan to undertake this process fairly. Once GBE completes the negotiation process and assigns capacity, it must make a compliance filing with FERC demonstrating that it complied with the plan as approved. That may be be the tricky part!
Who wants to make a contractual commitment to purchase capacity on a transmission line that may or may not be permitted, and may or may not be built? It could be generators, that Clean Line admits have not yet been built. It could also be utilities, who commit to purchase the capacity. Or it could be no one at all.
In the case of generators, the generators would need to have customers (utilities) that want to purchase their generation delivered to Indiana (and incur additional transmission costs on other systems to get the power to load). Since these generators have yet to be built, and the transmission to Indiana has yet to be built, committing to a purchase price for delivered power could be risky. Utilities hate risk. A utility seeking to add renewable generation to its portfolio has many options, including existing generators and transmission. Utilities plan their resources many years in advance as part of their obligation to provide a public service. They are obligated to seek the cheapest price. They want to know the resources they commit to purchase will actually be there when needed, not possibly unavailable at some later date, which would leave the utility scrambling to fill some hole in its plan at whatever price they can find. Utilities hate risk. Risk is costly.
In the case of utilities purchasing capacity directly... more risk! Purchase of capacity on a transmission line that may or may not be there when needed, connected to unnamed generators that may or may not be there when needed, is risky. Utilities hate risk.
I read an article long ago regarding Clean Line's business plan. Some panned the plan, saying there is no market for this kind of risk. So, I thought about it. If Clean Line's plan is such a sure thing, why aren't there hundreds of transmission companies building merchant lines outside the regional planning process? Utilities have transmission affiliates, and they like to make money, too. Maybe it's because experienced transmission developers know that there truly is no market for Clean Line's business plan?
Last year, Clean Line opened a different FERC-jurisdictional solicitation process for another of its projects, the Plains and Eastern Clean Line. Regarding that process, Clean Line recently claimed:
It was encouraged by the strong response to a solicitation of customers for another power line it plans to build to deliver wind energy from Oklahoma to Southern states.
Encouraged? Strong response? If the response was strong and encouraging, Clean Line should have negotiated contracts with the respondents and made its compliance filing at FERC and announced to the world that it had committed customers for that project, right? What happened?
From May through July of 2014, Clean Line conducted an open solicitation for transmission capacity on the Plains & Eastern Clean Line. 15 potential customers submitted more than 17,000 MW of requests for transmission service.
Clean Line's negotiated rate authority for Plains & Eastern requires the company to:
... make a compliance filing disclosing the results of the capacity allocation process within 30 days after the close of the open solicitation process, as discussed in the body of this order.
It's been 6 months. No compliance filing. No contracts. No customers. What happened? Is Clean Line still negotiating? Doesn't sound very strong and encouraging to me. What if the bids Clean Line received were unacceptably conditioned to manage risk, or not satisfactory to economically support the project? Remember, the bidding window has closed. Would Clean Line have to award capacity to the top bidders, no matter the conditions? If so, then perhaps it is busy evaluating the economic reality of its project.
Or is Clean Line planning to reject the first round of bidders and open a second solicitation window, hoping for better bids? Would that be fair in FERC's eyes?
Don't forget to get your bids in. ;-)
Utilities hate risk.
FERC bad-boy Kevin Gates says he's going to create an animated monkey for his website that explains how to make money in PJM's badly-designed markets.
Gates therefore said he stands by his earlier statement that FERC created a market "where a monkey could have made money that summer" by randomly picking nodes, MWs, congestion caps and hours. "We now have the data and I intend to prove it empirically," Gates added. "Once I'm done with the analysis, I intend to create an animated monkey to put on my website to present the results of my work and help explain the market that FERC created."
But what kind of monkey? Will it be a nice monkey?
Or will it be a naughty monkey?
For instance, staff said Chen and Powhatan's investors, including Gates, should have known that it was improper for Chen to submit trades in PJM's up-to congestion, or UTC, market on the funds' behalf just to maximize the rebates PJM gives market participants that use its transmission lines when it collects excess line-loss payments.
Staff further alleged that Gates and Chen suspected as much, citing an email exchange between the two parties suggesting that they "contact a law firm, the FERC, or PJM to try to get more insight into this issue." They never did, however, but instead decided to have Chen ramp up the trading activity, staff asserted.
Gates told SNL Energy that the problem with most of the emails and other information cited by staff to support its case is that they were taken out of context.
For instance, when asked if he indeed suspected that the types of trades in which Chen was engaging might be improper and why he did not seek advice on the issue, Gates recalled that the email exchange regarding the potential need for guidance took place in March 2010 and Chen did not begin trading in an allegedly illegal manner until the following June.
“The timing and the content of the email shows we weren't talking about Alan's trading at all — it was about the rebates themselves. We were concerned that FERC would try to retroactively take them back — not just for us, but for everyone," Gates said. He insisted that he never thought Chen's trading would be considered illegal.
Gates further explained that he did not contact an energy attorney at that time because he thought the possibility that FERC might punish market participants retroactively for flaws in existing rules was "preposterous when those rules were clearly approved." He also thought that while an attorney could quantify the risk or the likelihood that FERC may do so, contacting one would do nothing to protect him from that risk.
According to Gates, his decision not to seek legal advice at that time was the right one. He noted that after FERC in July 2011 tried to retroactively "claw-back those rebates" by ordering virtual (financial) traders such as Powhatan to return the previously refunded amounts, a federal appeals court in August 2013 remanded that decision, finding that the agency failed to justify its mandate. Moreover, Gates stressed that FERC staff has not alleged that any of Chen's trading activities prior to June 2010 were improper.
To be fair, SNL Financial also did an article featuring FERC's perspective
, but that one is behind a pay wall, so I guess nobody cares...
Personally, I'm looking forward to the animated monkey! I hope it's an evil monkey! They're ever so much more fun!
As if PJM's electric market rules aren't already complicated enough, now PJM is insisting that RPM participants follow rules that aren't even rules yet.
Well, yeah, we all know that PJM answers to no one. No, really, a certain PJM employee actually told a reporter once, "PJM answers to no one," when he was trying to sell the PATH project to West Virginia citizens.
And PJM's market monitor told a newspaper once, "following the rules does not mean you are not manipulating the market."
So, it appears that PJM gets to make up its own rules, often before or after the fact, and nobody can protect you, because PJM is omnipotent and all. Following the tariff doesn't appear to offer any protection against being accused of manipulation. And, now it seems that PJM members have obligations to abide by proposed rules that aren't even in the tariff...
Recently, PJM filed changes to the capacity market portion of its tariff which, if approved, will establish a deadline for data submittal. The new deadline will occur in early January each year. In its filing, PJM has asked FERC to approve the tariff revisions by April 1st.
But, PJM and Monitoring Analytics seem to think the proposed portion of the tariff is already in effect and are requiring capacity suppliers to submit certain data now. FERC has yet to approve these new rules! But, what could happen if the new data is not submitted by the proposed deadline in January, even though the tariff revisions are proposed to be effective in April and are NOT YET IN EFFECT? Could the market participant be referred to FERC under a tariff violation claim?
So, not only is it possible to be guilty of something without actually violating PJM's rules, it is now also unacceptable to violate new rules that are not yet in effect!
I think the bloated bureaucracy that is PJM needs to be slimmed down and cleaned up, because free M&Ms only have so much charm.