The public's response to the Citizens' Public Hearing on Potomac Edison business practices
to be held May 22, jointly sponsored by the Jefferson County NAACP, the WV Chapter of Sierra Club, and the Coalition for Reliable Power, has been overwhelming!Thousands of people have viewed and downloaded the meeting notice, nearly 500 people have "liked" and shared the notice on Facebook, numerous organizations and local governments have disseminated the meeting notice to thousands more, and meeting notice fliers are popping up all over the tri-state!
And, something truly amazing (but completely expected) is happening -- people from diverse backgrounds are coming together to talk about electricity issues, volunteer their time, and to speak with one voice!We heard many horror stories last week while out and about spreading the word. We have made many more connections through emails, social media, phone calls and comments on this blog. Particularly tragic was the story of a customer relying on a ventilator who was told to pay up on the more than $1000 monthly bill his family received
, or Potomac Edison would shut off his service. Meanwhile, Potomac Edison's parent company is proposing to compensate its CEO at a rate of more than $23M per year
. What's wrong with this picture? The investigation of Potomac Edison's billing and meter reading practices in Maryland begins today. The "legal housekeeping" described by Potomac Edison spokesman Todd Meyers in the article is actually the company's effort to prohibit participation in the case by the individual customers who originally brought the complaint last year
. Potomac Edison would much rather deal directly with state agencies and not have to dirty its hands consorting with the hoi polloi.
Meyers said that most of the company’s past problems with the meter readers are “in the rearview mirror.”
“We look forward to going to the hearing and giving our side of the story,” Meyers said. “We’re prepared to go there and cooperate with the PSC, and I think we have a good story to tell.”
Todd's story pales in comparison to all the stories I have heard from disgruntled Potomac Edison customers lately, who continue to receive outrageous bills they cannot pay. Despite Todd's insistence, all the problems are not "in the rearview mirror." That's merely how it looks to Todd as he's driving away from the hit and run that monthly Potomac Edison bills have become. The problems continue.We'd also like to hear Potomac Edison's side of the story about its proposal to purchase a 40-year old power generator from one of its affiliates at an inflated price that will translate into another 6% rate hike. We will be presenting a brief overview of the issue and asking the meeting participants to let the PSC know what they think about the proposal.Potomac Edison continues to make the same old excuses and insist that the problems have been fixed, but the community says that's just not true.Please join us this Wednesday night, May 22, at 7:00 p.m. at Wright Denny Intermediate school in Charles Town. Doors open at 6:30 and we will have information stations and handouts available. We ask that attendees bring along a copy of their most recent Potomac Edison bill for reference in filling out our survey about billing issues. Data collected will be used to develop statistics for use in illustrating the widespread nature of the problem for the Public Service Commission. We hope you will attend and add your voice to our call for the WV PSC to open its own investigation
of Potomac Edison's practices. We the people will not be denied!We have invited your elected officials, both state and local, as well as representatives of the PSC, the Consumer Advocate, and Potomac Edison, to come and listen to your concerns and demonstrate that they actually care about you and are not merely providing lip service while posturing for the press.Electric utilities continually play a divide and conquer game with their customers. The company prefers to deal with each customer individually, where the customer may be at a disadvantage due to lack of knowledge about electric rates and tariffs and a feeling of isolation.
"We take our billing process very seriously," said Gilliam. "It's also personal and private. The conversation is between a customer service rep and the customer."
It's much easier to blow us off, one by one. Potomac Edison's greatest fear is that its customers may unite and rise as one. See you all on Wednesday!
POTOMAC EDISON ELECTRIC BILLING PROBLEMS?
Outrageously high bills?
Month after month of estimated bills?
Poor customer service and too many excuses?
We’ve had enough!
Join us for a citizens’ public hearing on May 22, 2013, at Wright Denny Intermediate School in Charles Town where we will gather information, share experiences, and provide feedback to the West Virginia Public Service Commission, your elected representatives, and representatives from the electric company. Let your voice be heard!
Wright Denny Intermediate School
209 W. Congress St.
Charles Town, WV
7 p.m. Wednesday, May 22nd (doors open at 6:30)
Public input calling for investigation of Potomac Edison business practices and information about additional increases to Potomac Edison bills caused by the company’s proposed generation purchase.
Jefferson County NAACP
West Virginia Chapter of Sierra Club
The Coalition for Reliable Power
OPEN TO THE PUBLIC
Please bring a copy of your most recent Potomac Edison bill. We will be distributing a questionnaire to gather information on common problems residents are facing. If you plan to make public comment, please bring a copy of your comments to submit to the PSC.
Another entity has joined the litany of complaints against FirstEnergy subsidiary Potomac Edison. The Jefferson County Commission unanimously and enthusiastically voted last Thursday to send a letter to the West Virginia Public Service Commission asking the regulator to open an investigation of the company's billing and meter reading practices.The Commission heard from WV Delegate Stephen Skinner during the meeting, as well as public comments from three different citizens, regarding the outrageous, unjust, and unreasonable Potomac Edison business practices customers had been subject to over the past year or so.Delegate Skinner has been a vocal advocate for his constituents, many of whom have been hit hard by bills up to 1000% more than usual that are the product of the company's failure to read meters every other month as required by law
, as well as both human and computer error on the part of the company. As a regulated monopoly, Potomac Edison has obligations to its customers, and Delegate Skinner intends to do all he can to ensure Potomac Edison meets those obligations.Since he began questioning Potomac Edison's practices, Skinner has been contacted by the company's government affairs person, who made all sorts of excuses, and promises that have failed to materialize. The complaints continue.Commissioner Widmyer expressed her disappointment with the company's "robo-call" method of attempting to connect with and mollify angry "real people" customers.Meanwhile, the WV Attorney General pretends he is looking out for consumers by making a "hotline" number available for angry customers to call the company. There's already a customer service number on your bill, little consumer. The Attorney General recommends you call it. Personally, I'd rather call Delegate Skinner or the Jefferson County Commission for some real help. The parade of perturbed Potomac Edison patrons persists.
On April 9, 2013, the Maryland Public Service Commission opened an official investigation
into FirstEnergy subsidiary Potomac Edison's meter reading, usage estimation and billing practices.
The Commission hereby initiates an investigation into PE’s meter reading frequency, estimation of bills, and compliance with its Tariff, and delegates this matter to the Public Utility Law Judge Division (“PULJD”) for appropriate proceedings.
The investigation into PE’s meter reading frequency, estimation of bills, and compliance with its Tariff is not limited to the Tufts and Sugarloaf Conservancy Complaints; the PULJD shall determine the full scope of the investigation, and designate additional issues as appropriate. The PULJD shall notify the parties, including the Office of People’s Counsel, of the date and time of a scheduling conference at which deadlines are to be set for, inter alia, PE’s production of documents. The Commission hereby initiates an investigation into PE’s meter reading frequency, estimation of bills, and compliance with its Tariff, and delegates this matter to the Public Utility Law Judge Division (“PULJD”) for appropriate proceedings.
The investigation into PE’s meter reading frequency, estimation of bills, and compliance with its Tariff is not limited to the Tufts and Sugarloaf Conservancy Complaints; the PULJD shall determine the full scope of the investigation, and designate additional issues as appropriate. The PULJD shall notify the parties, including the Office of People’s Counsel, of the date and time of a scheduling conference at which deadlines are to be set for, inter alia, PE’s production of documents.
For more than thirty years, Potomac Edison's Maryland tariffs have provided that the
Company will read most meters every two months. This practice saves customers money, because fewer meter readers need to be used. For example, in Potomac Edison's last rate case in 1994, the expense filed for meter reading was just under $1.3 million for meter reading; if meters were going to be read every month, that requirement would have had to be significantly higher.
Footnote: In fact, even with reading every two months instead of monthly, the Company was spending $2.0 million on meter reading (even without taking into consideration the new hires and other recent measures discussed elsewhere in this response), substantially more than is collected in rates for this function.
Potomac Edison has been losing money on its meter reading function to the tune of $700,000 per year. This could be easily remedied by filing a new rate case with the Maryland PSC to collect this difference. However, the filing of a new rate case could also cause Potomac Edison to lose substantially more than $700,000 per year by setting a new rate of return for the company. The rate of return that the company is allowed to earn on fixed costs in Maryland is currently set at 11.9%, and is the second highest ROE in FirstEnergy's distribution affiliate stable
. If Potomac Edison filed a new rate case, the ROE would be updated and adjusted to today's financial realities. It is in FirstEnergy's financial interest to continue to collect rates set in the 1993/1994 settlement. If it were not, the company would file a new rate case. It has not done so.The annual loss on meter reading expense compared to the risk to ROE stemming from a new rate case was a loss Allegheny Energy was willing to accept. But when Allegheny Energy merged with FirstEnergy, apparently that was no longer true. FirstEnergy wanted the best of both worlds -- collection of the full amount of meter reading costs AND the 1993/94 rate case ROE. But because FirstEnergy couldn't collect more for meter reading AND maintain an 11.9% ROE, FirstEnergy opted to simply cut the cost of meter reading by slimming down their meter reading staff and not performing scheduled meter readings required by law. If Potomac Edison cut their meter reading expense to match the amount they were collecting, the loss would stop and the company could keep its 11.9% ROE, having its cake and eating it too!But now it appears the game is up. If I were the Maryland PSC, I would
require Potomac Edison to issue a refund to customers amounting to the difference between what Potomac Edison spent and what it would have cost to perform meter readings as required by law (around $700K per year, according to Potomac Edison.) And then, as a punitive measure, I would make them file a new rate case. :-) How about it, FirstEnergy?
FirstEnergy has also been pulling the same stunt in other states in which it operates. West Virginia's ROE is 10.5% and was set in 2007. Pennsylvania's ROE is 11.5% set in 1994. These jurisdictions are where FirstEnergy affiliates have also been failing to read meters. Coincidence? I think not.West Virginia legislators are not happy with Potomac Edison's excuses
. Could an investigation by the West Virginia PSC also be on the horizon?
The authority to site and permit high-voltage transmission lines has historically rested with the states. However, the federal government has been trying to wrest this authority from the states for years
.The states consider local need and issues when evaluating a project. Affected stakeholders are afforded due process to participate in the debate at the state level. Occasionally, a state will deny an application for a transmission project that provides no benefit to the state. The feds, and the investor owned utilities who relentlessly lobby them, want to remove consideration of new transmission projects to Washington, DC, where due process will be smothered by national policy goals.
But it hasn't been smooth sailing for the feds. Congress has repeatedly declined to federalize transmission permitting and siting, preferring to leave authority with the states. But the feds and the utility lobbyists have found other ways to try to gain what they haven't been granted by Congress.
The Energy Policy Act of 2005 hid a few little wormholes for the feds to override states and claim eminent domain to site transmission under certain conditions. One was Section 1221, the creation of National Interest Electric Transmission Corridors and backstop siting authority for FERC to site transmission in these corridors in the event a state failed to act. That section has been neutralized by the courts.But, a second federal eminent domain tool that has not yet attracted much attention is about to be deployed through Section 1222, Third-Party Finance, in order to execute one of the worse abuses of federal eminent domain authority in history.
Section 1222 provides:
The Secretary, acting through WAPA or SWPA, or both, may design, develop, construct, operate, maintain, or own, or participate with other entities in designing, developing, constructing, operating, maintaining, or owning, a new electric power transmission facility and related facilities (“Project”) located within any State in which WAPA or SWPA operates if the Secretary, in consultation with the applicable Administrator, determines that the proposed Project--
(1)(A) is located in an area designated under section 216(a) of the Federal Power Act [16 U.S.C. 824p(a)] and will reduce congestion of electric transmission in interstate commerce; or
(B) is necessary to accommodate an actual or projected increase in demand for electric transmission capacity;
(2) is consistent with--
(A) transmission needs identified, in a transmission expansion plan or otherwise, by the appropriate Transmission Organization (as defined in the Federal Power Act [16 U.S.C. 791a et seq.]) if any, or approved regional reliability organization; and
(B) efficient and reliable operation of the transmission grid;
(3) will be operated in conformance with prudent utility practice;
(4) will be operated by, or in conformance with the rules of, the appropriate (A) Transmission Organization, if any, or (B) if such an organization does not exist, regional reliability organization; and
(5) will not duplicate the functions of existing transmission facilities or proposed facilities which are the subject of ongoing or approved siting and related permitting proceedings.
are federal power marketing agencies set up to sell and deliver hydropower across central, western and southern states. WAPA and SWPA, as federal agencies, are endowed with federal eminent domain authority to take private property for use in their systems. Doesn't sound so bad, does it? However, Section 1222 allows the Secretary of Energy to utilize WAPA's & SWPA's eminent domain authority for benefit of third-party projects in the agencies' territories that are not connected or necessary to their systems. And this is where the slippery slope starts, friends. Congress tried to prevent this kind of bad behavior by including qualifying standards for third-party projects, such as being approved in a regional transmission plan or equivalent, which would prevent duplication of projects, and requiring a finding of increased demand necessitating such a project. Congress also put a cap on the amount of money WAPA and SWPA could accept from third parties.
(g) Maximum funding amount
The Secretary shall not accept and use more than $100,000,000 under subsection (c)(1) for the period encompassing fiscal years 2006 through 2015.
And Congress also stipulated that Section 1222 could not override existing state laws.
d) Relationship to other laws
Nothing in this section affects any requirement of--
(1) any Federal environmental law, including the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.);
(2) any Federal or State law relating to the siting of energy facilities; or
(3) any existing authorizing statutes.
But, personal relationships between DOE personnel and leadership of a private, for-profit corporation made things just so cozy that an RFP for Sec. 1222 projects
was issued in 2010 that coincided with the development of this company's long-haul HVDC projects.
Jimmy Glotfelty – Executive Vice President of Clean Line Energy Partners
Mr. Glotfelty brings a wealth of public and private sector transmission experience to Clean Line. He is a well-known expert in electric transmission and distribution, generation, energy policy and energy
security. He most recently held the position of Vice President, Energy Markets, for ICF Consulting. Mr. Glotfelty served in the US Department of Energy where he was the Founder and Director of the Office
of Electric Transmission and Distribution, a $100 million per year electricity transmission and distribution research and development program. Mr. Glotfelty also was the lead US representative to
the joint US-Canadian Power System Outage Task Force investigating the Blackout of August 2003.
While at the Department of Energy, Mr. Glotfelty worked extensively with utility chief executive officers and senior management in the electric power and energy sectors. He led teams that focused on researching transmission and distribution technologies, gaining Presidential permits for cross-border transmission lines, studying the impacts of Regional Transmission Organizations, identifying major transmission bottlenecks, and securing the critical energy infrastructure of the United States.
DOE and Southwestern understand and agree that their ability to acquire through condemnation proceedings property necessary for the development, construction and operation of the Project is one of the primary reasons for Clean Line’s interest in developing the Project with DOE and Southwestern and through the use of EPAct 2005 section 1222.
DOE and Southwestern agree that, if the Secretary of Energy ultimately decides upon the conclusion of such evaluation as DOE and Southwestern deem appropriate that (i) the Project complies with section 1222, and (ii) to participate in the Project’s development pursuant to section 1222, then, DOE and Southwestern will use their condemnation authority as may be necessary and appropriate for the timely, cost-effective and commercially reasonable development, construction and operation of the Project.
Clean Line Energy Partners is a privately held company owned by Michael Zilkha
and ZAM Ventures
that is proposing to build four HVDC merchant transmission projects originating in the midwest. A merchant transmission project is a for-profit venture that is paid for entirely by its owner. In exchange for investing billions, Clean Line's super-rich owners will earn a hefty return on their capital by selling transmission capacity on the transmission lines to both generators and load serving entities. Merchant transmission projects are speculative ventures that are proposed and built outside the regulated regional transmission planning process. Merchant lines proposed outside a planning process have not been determined to be needed by anyone other than their owners. If a transmission project is needed for reliability, economic or public policy reasons, it is approved by and included in the plan of a regional transmission operator. A merchant transmission project is the wildcatter
of the transmission business.Without Section 1222 and SWPA's ability to take land for Clean Line via eminent domain, the company would have to apply for and receive public utility status and the power to condemn private property for its private gain from each individual state that it crosses. This could prove onerous to the super-rich and muck up or delay their profit.In exchange for stealing private property from citizens to be used for a private company's gain, SWPA could be granted a certain amount of transmission capacity on Clean Line's project, however, SWPA isn't in the wind business. But DOE can use authority it was granted under Sec. 1222 to pick winners and losers in the renewable energy business, and Clean Line's investors put together a team with strong DOE connections. Coincidence? Probably not.So, does Clean Line's project meet the requirements of Sec. 1222?(1)(A) is located in an area designated under section 216(a) of the Federal Power Act [16 U.S.C. 824p(a)] and will reduce congestion of electric transmission in interstate commerce; or
(B) is necessary to accommodate an actual or projected increase in demand for electric transmission capacity;Sec. 216(a) has been nullified by the courts, so (A) isn't even an option.
Here's Clean Line's justification for qualifying for (B) from their application: "In addition to the general demand for more transmission oriented to renewables, there is and will be a specific demand for transmission to address the following concerns:
Additional Transmission is Needed to Develop Wind Resources in the Southwest Power Pool;
Additional Transmission is Needed to Relieve Congestion in Western SPP;
Additional Export Capability is Needed from SPP; and
Additional Transmission is Needed to Import Power in the Southeast.
The Plains & Eastern Clean Line meets each of these needs."No actual projected demand for the project from any official authority tasked with determining same was included.
The company points to bits and pieces of out-of-date studies that it feels justifies its desire to build this project, along with studies privately commissioned by the company. I don't think this is the kind of "actual or projected increase in demand" that Congress had in mind. It's pure posturing of the worst kind.Other requirements stipulate that the project:(2) is consistent with--
(A) transmission needs identified, in a transmission expansion plan or otherwise, by the appropriate Transmission Organization (as defined in the Federal Power Act [16 U.S.C. 791a et seq.]) if any, or approved regional reliability organization; and (5) will not duplicate the functions of existing transmission facilities or proposed facilities which are the subject of ongoing or approved siting and related permitting proceedings.Clean Line's idea of compliance with this requirement?"SPP repeatedly has identified the need to build additional transmission to fully develop wind potential in
the region and to export it to neighboring regions."
Right, but SPP did not identify Clean Line as the solution in its transmission expansion plan, or otherwise determine its project was needed.Clean Line also relies on:"The Plains & Eastern Clean Line is consistent with transmission needs identified in the Joint Coordinated
System Plan 2008 (JCSP). The JCSP was the first inter-regional transmission planning effort in the
Eastern Interconnection. The JCSP was a collaborative effort and involved most of the major
transmission operators in the Eastern Interconnection, including, MISO, SPP, PJM Interconnection, TVA,
Mid-Continent Area Power Pool and several key members of SERC."And this 5 year old plan has been scrapped.
Also not what Congress had in mind for this requirement.When DOE questioned Clean Line's eligibility under Sec. 1222, the company submitted an "updated application" that contained the same old lack of convincing evidence of qualification.Nevertheless, DOE issued a letter entering into an agreement with Clean Line to move forward with the NEPA process. DOE has not completely committed to the project yet, but if it does:
- Clean Line will agree that eminent domain authority would be used only as a last resort after negotiations in good faith have concluded with all affected landowners;
- Clean Line will agree that the Department will retain the option to select and oversee any land acquisition company required for the Project.
In that case, DOE needs to take a look at the complete and utter mess Clean Line has made out of the public information and land acquisition process. Clean Line's idea of good faith negotiations with landowners, according to its updated application, put landowner notification last. Clean Line makes much of meeting with "stakeholders" such as environmental organizations, state agencies, state legislators, members of the governors’ teams, and federal congressional delegations. But only after all these entities, who are not personally affected and will not have to live with a Clean Line in their own backyard, have drunk the Clean Line Koolaid, does Clean Line consult with landowners:"After the workshops, Clean Line will host public
open houses to gather feedback on the preferred and alternative routes from landowners and other
affected parties. These outreach efforts are designed to assure that relevant stakeholders have early and multiple opportunities to provide feedback..."
except for landowners. Landowners are not considered "relevant stakeholders" by Clean Line.DOE should think long and hard about making the federal government liable for the legal mistakes of a private company. Just because the feds were successful in asserting federal eminent domain in another dissimilar situation, does not mean that helping the rich get even richer at the expense of the common man is a good idea. How much money does Congress have budgeted for another federal court beatdown over eminent domain takings?And DOE needs to take a good, hard, objective look at Clean Line's "qualifications" under Sec. 1222. The company doesn't qualify without torturing the language in the statute, and a finding that it does qualify is also likely to lead to a separate, but equally vicious, court showdown.Sometimes, it's just not worth the risk to help your "friends" by overstepping your legal authority and bending federal law. Maybe the incoming Energy Secretary needs to do a little housekeeping before Congress does it for him, or he finds himself explaining DOE's taking of ordinary citizens' private property for use by super-rich investors. Congress has resolutely rejected federal transmission siting authority over and over again and will likely continue to do so.
Scary, huh? Evil personified up there is just begging for you to draw some horns and a tail on him to complete the picture.
"The Akron power company tried but failed to get the standards scuttled or frozen just before Christmas by asking legislators to slip an amendment into unrelated legislation. But lawmakers scattered when the tactic was publicly revealed.
This time, FirstEnergy is sending a form letter written by its lobbyists to some of its larger commercial and industrial customers, asking them to fill in their company's name and send it by Friday to the Ohio Senate, which is trying to decide whether to tinker with the efficiency rules.
The company defended its tactic to gin up support for its position.
"FirstEnergy remains concerned that meeting the state's energy efficiency goals will continue to place burdensome costs on our customers, particularly Ohio businesses," the company said in a prepared statement."
Why does FirstEnergy want to do away with energy efficiency programs in Ohio? It's hurting their bottom line and working as intended to save consumers money. More money in consumer pockets through energy efficiency, less money in FirstEnergy's pocket. Investments in energy efficiency cost much less than investments in new power plants. The cheapest resource is the one you never have to build.
"FirstEnergy CEO Anthony Alexander [aka "Satan"] has said in public meetings that the rules have interfered with normal market growth, already made tough by the recession."
Right... and FirstEnergy thinks its customers are dumb enough to hurt their own bottom line by signing form letters opposing energy efficiency programs. Good luck with that, FirstEnergy, your arrogance is stunning. Some things just can't be fixed by lying to your customers, legislators, regulators and the media.
The City of Boulder, Colorado has been engaged in battle with private, investor-owned utility Xcel for the past several years. In 2011, the City passed a referendum
to form its own municipal electric utility and give utility giant Xcel the boot. Since then, the City has been negotiating with Xcel to give the utility one last chance to shape up or get kicked out.
A recent article in the New York Times
discusses the pros and cons of municipal utilities."Roughly 70 percent of the nation’s homes are powered through private, investor-owned utilities, which are allowed to earn a set profit on their investments, normally through the rates they charge customers. But government-owned utilities, most of them formed 50 to 100 years ago, are nonprofit entities that do not answer to shareholders. They have access to tax-exempt financing for their projects, they do not pay federal income tax and they tend to pay their executives salaries that are on par with government levels, rather than higher corporate rates.
That financial structure can help municipal utilities supply cheaper electricity. According to data from the federal Energy Information Administration, municipal utilities over all offer cheaper residential electricity than private ones — not including electric cooperatives, federal utilities or power marketers — a difference that holds true in 32 of the 48 states where both exist. In addition, they can plow more of their revenue back into maintenance and prevention, which can result in more reliable service and faster restorations after power failures."Not only have municipal utilities proven themselves more reliable during recent extreme weather events
, they're also cheaper. While the private utility mega-corporations have touted their "economies of scale" as more cost effective, that's no longer true. With increasing pressure to turn a profit and pay shareholder dividends every quarter, these corporations are increasingly looking for ways to increase profits and cut expenses. Reliability and service suffers first, instead of cutting exorbitant executive salaries, lobbying budgets, and "corporate stewardship" waste, such as buying naming rights to football stadiums and other ridiculous expenditures. The fundamental problem is that shareholders don't care where the profits come from, as long as they show up every quarter. Company executives are loathe to dip into their ever-increasing perks, so the customers are the ones who take a hit for the team.When the corporate baggage of multi-million dollar salaries and frivolous executive waste are taken out of the picture, a municipal utility may more than make up for any "economies of scale." Check it out in your local area!
"The evidence is clear that generators are profiting excessively from RTO power markets, and that sellers’ rates are not ‘just and reasonable’ as the law requires. Consumers are paying the price, to their detriment and that of the overall economy."That's the conclusion of a report on FERC's restructured regional electricity markets published in December by Elise Caplan of American Public Power Association and Stephen Bobeck of the Consumer Federation of America.The report takes a look at how FERC has restructured regulation of wholesale power to rely on market based rates and regional transmission organizations. "FERC has chosen to rely on supposed market “competition” to ensure that prices are “just and reasonable,” as required under the Federal Power Act."Do these markets work to protect consumers?
No. The report opines that, "Instead, evidence is mounting that customers have been harmed by the markets."
Despite repeated attempts to get FERC to do some sorely needed analysis and adjustment to its competitive market experiment, "FERC has still not undertaken such an analysis. But there is a wealth of data available to support the conclusion that consumers actually have been harmed by the restructuring of wholesale electricity markets and that access to alternative retail suppliers does not solve the fundamental problems of the wholesale market from which those suppliers must purchase power."
In the report, "...we discuss specific RTO rules and structure that have provided opportunities for excess generator earnings at the expense of consumers."
In uncompetitive RTO cartel
electricity markets, "Offers into the energy market need not reflect the sellers’ actual costs of generation, as FERC would have required under a traditional cost-of-service ratemaking regime. Rather, the sellers set their own price offers, regardless of their actual costs, subject only to review and possible adjustment by the RTOs’ market monitors. In PJM, the market monitor typically mitigates less than one percent of the energy offers in both the real-time and day-ahead markets."Thanks, Market Monitor! Always looking out for my interests, aren't you? It's just too bad that PJM's attempt to replace the Market Monitor isn't intended to provide more protection for consumers, but LESS.
And here's another problem we've written about before that pops up in the report: "The conceptual basis for LMP is that these differential prices will send “price signals” to indicate where there is a need for new generation or additional transmission capacity, or to reduce load through conservation or shifting the times when energy is consumed. As discussed below, this theory has not borne fruit in practice."In PJM, new transmission is always proposed before new generation has a chance to happen, and demand side resources aren't given serious consideration. This is why consumers are now paying half a billion dollars for two failed transmission projects
-- transmission projects that were approved and intended to be quickly rammed through before demand side resources and new generation could be recognized. Ultimately, PJM's Project Mountaineer scheme failed, along with the transmission projects, when demand side resources and generation developed despite PJM's best efforts to squelch them."The theory behind locational pricing is to provide price signals indicating where new transmission and generation is most needed. But in reality, new resources have not developed to respond to higher prices in these markets. Instead of inducing new resource development, the higher prices provide a financial incentive for incumbent generation owners to keep supplies constrained, or at least to ensure that prices bid by new market entrants remain high.
The financial benefits of constrained supplies can be seen in the candid presentations by merchant generation owners to the financial community wherein the potential closure of coal plants is touted as a benefit to their earnings."You know... like how FirstEnergy's wave of coal plant closures last year provided the company with jacked up capacity prices in ATSI
and a whole bunch of new transmission projects in which to invest its "transmission spend" to increase the company's earnings. Remember that?
So, what protections are built into RTO markets, and do they work? "FERC relies solely on market monitors for each RTO to determine whether the wholesale electricity markets are competitive. These market monitor analyses are based on a limited frame of analysis that ignores evidence, such as the profitability data presented later in the report, which raises questions about the competitive nature of these markets. Moreover, the reports issued by the market monitors do not always support a definitive finding of competition. For example, in the most recent State of the Market Report for PJM, the market monitor found that the local market structure in the energy market and both the local and aggregate market structure in the capacity market were not competitive, as was the structure and the performance in the regulation market."
Go ahead, click through and read this analysis: "Prior to examining the empirical evidence of the effects of RTO markets on electricity prices paid by utility customers, this section describes the structural flaws in RTO markets – conceptual problems that have led to higher prices than would have occurred absent such markets. These fundamental features of RTO markets, discussed below, provide both incentives and opportunities for merchant generators to earn excess revenues at the expense of consumers".
How does PJM "fix" their markets when things go awry? "When a given market structure does not achieve its goal of providing satisfactory revenue to RTO generators, the response – prompted by generators, many of them the spun-off affiliates of formerly vertically-integrated utilities – has been to induce the RTO to add a new, more complex market or a rule to prop up prices, such as a tightening of the minimum offer price rule in PJM."
This kind of "make the rules up as you go" is the basis for the most recent bickering over new MOPR rules secretly concocted by PJM and its incumbent generators. This is the behavior of a cartel, not a competitive market.
If competitive markets save money for consumers, why do "RTO generation owners’ 10-K reports to the Securities and Exchange Commission list restrictions on competition as a potential risk to their earnings?"
The evidence examined in the report "lead[s] to a conclusion that the restructured RTO-operated markets have increased prices above what would be seen in the absence of restructuring.
How much? "...a possible $12 billion excess payment from consumers to generating companies that do not face genuine market competition – demonstrates the scope of restructuring’s negative impact."
And this about sums it up: "The greatest beneficiaries of restructuring have been not consumers, as was promised, or innovative companies that were expected to emerge, but the “usual suspects” – owners of previously regulated, largely depreciated generating units."
How do we fix this mess? "It is crucial that FERC, as the regulator responsible for ensuring under law that wholesale prices are just and reasonable, determine whether RTO markets are achieving their cost-reducing potential, and, if not, to implement needed reforms."Don't hold your breath. FERC refuses to even examine the results of their RTO experiment, much less take any action to fix it. Perhaps it's time for Congress to step in.
Legislation requiring West Virginia's electric utilities to perform Integrated Resource Planning was introduced in the House today.
Integrated Resource Planning (IRP) legislation requires our power companies to submit long-term plans to the Public Service Commission every two years to determine the mix of resources to best meet future energy needs. Power companies would be required to give investments in energy efficiency (reducing demand) equal consideration to investments in traditional power plants, which they currently do not do. Over half the states in the country currently require their utility companies to use IRP. Learn more at EEWV's website.Integrated Resource Planning
is also supported by James Van Nostrand, Director of WVU College of Law's Center for Energy and Sustainable Development, in this report
.Integrated Resource Planning will help to keep your electric bills manageable by optimizing the mix of
resources needed to provide electric service at least cost. It would also prevent further scurrilous schemes from our out-of-state investor owned utilities to dump their uncompetitive, antiquated resources into West Virginia's captive rate base where YOU will continue to pay the utility a profit on resources that are long past ripe for retirement.Here's what you need to do: Visit EEWV's Action Alert page here and click the link to email
Delegate Morgan to show your support for the bill. All you have to do is add your name and click "send." Three clicks to keep your electric rates low. It couldn't be simpler. Do it now!
It's not rocket science. The longer the distance between generation and load, the more unreliable the "grid" becomes. Long haul transmission lines provide opportunity for all sorts of failure... or mischief.Apparently the Chinese military is hard at work compromising the security of the U.S. electric grid. No big surprise. Investor-owned utilities don't want to waste precious shareholder pennies on silly stuff like cybersecurity
when there are memberships to The Duquesne Club
to be purchased instead!No matter how much the industry insists that it can regulate itself on the honor system, there is no honor among thieves. Looks like Congress is going to have to intervene and bestow authority to FERC to regulate cybersecurity of the grid.
Just imagine how much this is going to cost when the obvious solution is so much cheaper and quicker -- stop "expanding" the grid and making it more vulnerable. We don't need a whole bunch of new transmission, and a bigger, more interconnected grid exposes larger and larger geographic areas to one massive failure instigated by the click of a single key somewhere in China.Thanks, Jimmy!