Patience and I met two very delightful new friends today. Hyosil Kim, a reporter for Korean newspaper The Hankyoreh
, and her translator Brian Kim, spent the day with us touring Jefferson County and learning about PATH's spectacular, flaming failure to get its transmission project sited and permitted.
PATH's failure is interesting to the people of South Korea because they are engaged in their own furious battle with transmission developer Kepco over a 765kV line intended to export nuclear power out of the country.
The concept of social justice is being debated in Korea, just as it is here. Why should any person have to sacrifice their home and well-being to serve the energy or environmental needs of others?
We took a fond trip down memory lane with many of our fellow PATH opponents during our tour of PATH's proposed route, recalling funny and touching moments during our successful David v. Goliath struggle to take control of our own energy future.
You'll be happy to know that the story of The Coalition for Reliable Power is just as funny when translated into Korean!
The message Hyosil will take back to Korea is encouragement for the people to persevere and refuse to give up!
We'll be posting a link to Hyosil's story here when it's written...
This has been a long time in coming, but FirstEnergy was ordered on Friday to "submit a detailed plan for implementing audit staff’s recommendations and correcting journal entries reflecting an approximate $1.2 million refund to affected customers from its transmission-only subsidiaries with formula rate recovery mechanisms, including Trans-Allegheny Interstate Line Company, Potomac-Appalachian Transmission Highline, LLC, and American Transmission System, Incorporated."The first time this problem reared its ugly head was during the July 2011 PATH Open Meeting to review its 2010 actual transmission revenue requirement. At this phone "meeting" I notified PATH that I had found expenses of the Allegheny Energy/FirstEnergy merger in its PATH rates.In September, FirstEnergy subsidiaries PATH and TrAILCo made entries to their quarterly FERC financial filings to effect a credit for amounts wrongly charged to ratepayers in violation of the company's "hold harmless" guarantee to the Commission that it would not charge merger expenses to ratepayers except under certain circumstances. Over a million dollars was credited, but because PATH and TrAILCo made the correction in the normal course of business, it did not credit ratepayers for interest on the amounts wrongly recovered.Throughout the fall of 2011, PATH counsel continued to argue with me in discovery about recovery of merger expenses, refusing to own up to the fact that other merger expenses had been recovered. In October, PATH filed a motion to dismiss the first formal challenge, claiming that the involvement of Ali Haverty and myself in its annual update review was costly to ratepayers. In response, I pointed FERC to the more than $1M savings ratepayers had realized due to my identification of merger costs wrongly included in PATH's revenue requirement that were subsequently reclassed on the company's Form No. 1 filings.Shortly thereafter, FERC notified FirstEnergy that it was commencing an audit to determine if the company had complied with the Commission's order in the merger case. In December, TrAILCo filed a revision to its revenue requirements to correct merger costs "inadvertently" recovered. It claimed this error had been noticed during an "internal staff review." Right....If you take time to read FERC's FirstEnergy merger order, you will see that parties to that case had argued that adequate safeguards did not exist at FERC to prevent FirstEnergy from ignoring the hold harmless stipulation and recovering merger costs. FERC poo-poo'd this idea, insisting that their processes would be adequate to catch any wrongful recovery.And then FirstEnergy went ahead and recovered the merger costs anyhow! Did FERC's processes identify this wrongful recovery? No, I did. How embarrassing!FirstEnergy made a whole bunch of promises it never intended to keep in order to get its merger with Allegheny Energy approved. In addition to wrongly recovering merger costs in FERC jurisdictional rates, the company has saddled its West Virginia ratepayers with "acquisition adjustment" premiums flowing from its merger, as well as causing hardship to a whole bunch of distribution customers by cutting its meter reading services that resulted in huge erroneous bills and service shut offs.FirstEnergy's past bad deeds seem to be catching up with them lately, and the group of people and entities enjoying the show keeps growing.
Thanks for the earnings call
fun today, FirstEnergy. It gave Patience and I an excuse to dine on fancy sandwiches and cornichons, drink Raging Bitch
, make certain hand gestures at the voices coming out of my laptop, and laugh at all the stupid things your NEOs
said. And a fun time was had by all... at least on this side of the internet connection!"FirstEnergy's third quarter net income this year tumbled to about half of what it was a year ago,"
read the lead of The Plain Dealer's pre-call story. I had to quickly whip up a side of schadenfreude to serve with lunch!Tony the Trickster mentioned that, after recent closings, his "fleet" of generators is now about the same size as FirstEnergy's "fleet" was at the time it merged with and swallowed up the former Allegheny Energy.
This wouldn't be the first time I pondered if the merger's sole purpose was to carve up the Allegheny carcass,
saving that which benefited FirstEnergy and tossing the rest on the rubbish heap. When does the sale of troubled Allegheny distribution subs begin, now that FirstEnergy has accomplished its evil plan to raise cash by sucking the lifeblood out of Mon Power/Potomac Edison and leaving a dried up, debt-laden shell that no longer provides service to its customers?
For example, we have reduced the size and mix of the fleet by closing and selling competitive units. Last month, we closed the Hatfield and Mitchell Power plants and we expect to complete the sale of certain hydro assets later this year. In addition, we completed the Harrison and Pleasants transfer this quarter. Once the RMR units are deactivated, our competitive fleet will be a little more than 13,000 megawatts. This is about the same size as our fleet prior to the Allegheny merger, but it's a much stronger platform of units, more environmentally controlled and more efficient overall.
It's all about Tony's "plan" to pull his ass out of the fire. It never was about serving customers, or any of that other dreck two of the WV PSC Commissioners wanted to believe.
Let's turn to an update on the financial plan that we introduced in February. Through a series of actions this year, we have made significant progress towards completing the plan, strengthening our credit metrics and reducing our risk profile.
This financial plan, which is now virtually complete, successfully improves the balance sheet at our competitive and regulated businesses and enhance liquidity in a very short period of time.
Tony's next great plan is to plop his "spend" into regulated transmission investment accounts that earn risk-free, high returns.
Last week, our Board of Directors approved as a part of our energizing the future program, a new multiyear $2.8 billion incremental investment in a transmission reliability excellence plan. The plan includes additional transmission investments above current plans, which are expected to be about $500 million in 2014, growing to about $700 million in 2015 and about $800 million in both 2016 and 2017. This program will begin with investment primarily in ATSI, but will ultimately extend throughout our service area. We currently expect to fund these investments with a combination of debt and equity. These projects include rebuilding lines and equipment to improve reliability and reduce future maintenance costs, enhancing and expanding communication networks to harden the system and increasing system capacity to meet the service level and reliability requirements of our customers.
This announcement turned the analysts on the call into curious monkeys
who wanted to know all about tricky Tony's tantalizing transmission targets, but that wiley old geezer strung them along, talking about rebuilding lower voltage lines that don't require regulatory approval and said he would talk more about it at an upcoming EEI conference. Tony also said that the company is primarily looking to "spend" inside its footprint and not looking for projects that have long lead times with respect to either approval processes or likely construction processes. Because they learned their lesson with PATH? Someone's been paying attention in class! But he forgot to tell them about FirstEnergy's proposal for a project to solve PJM's Artificial Island issues
, and any lingering ratepayer-funded PATH assets that may still be kicking around. Do you think the curious analysts were only pretending to be that clueless?In response to a question about coal costs, Donny started talking about pulling his lever. I'll spare you the hand gestures that instigated. And before the laughter had died down, Tony started talking about the possibility of things being soft down the road...I love my job.
Interested parties ask for information and clarification.
Time is quickly running out to send in your RSVP for PATH's upcoming "Open Meeting." Follow the instructions here
to send your RSVP for the meeting to PATH's lawyer on or before Oct. 28.This isn't a real "meeting." An overconfident and arrogant PATH wasted your money for several years holding actual in-person meetings, complete with coffee & donuts,
at its fancy DC counsel's office. However, the whimpering remains of PATH now holds this "meeting" over the phone via conference call.During the call, you can ask PATH any questions about its plan to collect another $39.8M from you in 2014.
If you are a party to the abandonment case, you cannot ask about that case, but only about the information contained in the 2014 Projected Transmission Revenue Requirement filing linked above. Silly, yes, but when has PATH ever been logical?A lot of you have been asking me what's going on with the abandonment case and why PATH continues to collect money from you. Until that case settles or is heard, PATH is permitted to continue to collect the reimbursement it requested when it filed for abandonment. If, after the case is over, it is determined that PATH has collected more than it is allowed, PATH will have to refund the difference to you.So, send in your RSVP for the November 1 @10:00 a.m. phone meeting and belly up to the farcical ratepayer question bar.
If you don't come, PATH will think you don't love them anymore.
...and they'rrrrrrrrrrrrrrrrre off!Eager and hopeful transmission builders in PJM are now busy with their transmission line routing Etch-a-Sketches, drawing a new transmission line through your back yard, and hoping that their proposal will be anointed Miss Market Efficiency 2013
and take home the big prize. In mid-August, PJM "began inviting competitive proposals for transmission improvements to provide relief at its 25 most congested locations."
According to RTO Insider, the deadline to submit new transmission proposals for consideration is September 26.FERC's Order No. 1000 removed the historical "right of first refusal" to build new projects from incumbent transmission owners. Under the prior scheme, when PJM determined that a new project was needed, it was first offered to the incumbent transmission owner in that zone. If the incumbent declined to build it, then the project was opened to competitive bidding.
But I'm not sure that ever happened. After all, what greedy transmission owner would ever turn down the chance to make more money with new transmission investments returning double digit interest? Under the new scheme, when PJM identifies a new transmission building opportunity, a project proposal window is opened and all transmission owners who have been pre-qualified
may submit new project proposals that solve the transmission issue. PJM then descends into its secret underground lair with all the bids and makes a subjective selection of the contest winner.PJM's "Market Efficiency" project "need" is based on identified "top 25 congestion events." What is economic congestion? It's when not enough transmission capacity exists to wheel the cheapest power available to all users. It doesn't mean
that someone's lights will go out if this power can't be transmitted from point A to point B. It simply means that the user may have to pay slightly more for power produced locally, instead of relying on "cheaper" generators hundreds or thousands of miles away. Economic congestion is a constantly shifting premise that can never be entirely eliminated. At some point, the cost of building new transmission to ship power from point A is going to obviate any cost savings at point B. Trying to build new transmission to solve an ever-changing economic and demand situation is like trying to herd cats. And it's going to cost you... a lot!So, where are these "top 25 congestion locations?" RTO Insider has a handy-dandy chart here. And it's a good thing they do, because if you want any more details than that, you have to know PJM's secret handshake to be allowed to delve into "Critical Energy Infrastructure Information" (CEII).
Transparent, right.RTO Insider tells us that 8 of the 25 are
flowgates between PJM and MISO, where power is traded between regions. Within PJM, the most congested point is the AP-South interface with Bedington-Black Oak. According to PJM
, the Bedington – Black Oak Transfer Interface (Bed-Bla) includes the Bedington Black Oak 544 line, and the AP South Transfer Interface includes the Doubs - Mt. Storm 512 line and the Mt Storm – Meadow Brook 572 line. Sound familiar, former PATH opponents? Bedington is located in Berkeley County, WV, and was part of PATH's original configuration. Black Oak is located near Rawlings, MD, in Allegheny County, just to the west of PATH's proposed Kemptown substation.But, wait a tick... just last year, FirstEnergy told the WV PSC that everything was hunky-dory with its West Virginia transmission system.
Guess not, but then admitting your problems and fixing them before they get out of hand and cause the construction of new transmission projects doesn't bring home the bacon for Big Daddy Tony, now does it?Earlier this summer, PJM's Steve Herling had much to say about PJM's new transmission proposal competition.Steve Herling doesn't think much of you little people. In fact, it appears that you are just so much doggie doo on his shiny, expensive shoes. Herling sees you as someone who must be kept in the dark so that you don't interfere with PJM's "open and transparent" project selection process.Such information would include “a line from A to B, impedance modeling, so people can analyze [the proposals],” Herling said. “We won’t put out right of way information. You’d get the public all stirred up that ‘we’re looking at your property.’”Right, Steve, but why shouldn't "the public" get stirred up about having their property taken by eminent domain to construct new transmission lines of dubious necessity? We've already been stirred and shaken by PJM's last little foray into big, new transmission projects that brought us the wasteful, and since abandoned, PATH and MAPP projects.
We pretty much stay stirred here at StopPATH blog. All.
the.time.And Herling also gives us a look at how PJM will evaluate project proposals in its secret underground lair:“If you have half the right of way in hand, that certainly will have an impact on cost and regulatory risk and would probably affect construction time,” Herling said. “To give you credit, we would have to disclose some information. We don’t have to talk about individual pieces of property you have."So, a transmission developer who has land held for future use in its collection of assets would have a leg up on building new projects? That hardly seems fair, when that property was paid for by ratepayers, and the competition does not have the same ability to have the public pay to buy it valuable assets that can be used to win future transmission projects. In fact, it's sort of like a new and even more lopsided ROFR, isn't it?
FERC said ROFRs are no longer legal in Order No. 1000.In another thoughtless move, "the RTO plans to hire independent consultants to validate developers’ cost estimates and identify potential regulatory risks, such as the likelihood of obtaining siting for rights of way."
Gosh, I wonder where PJM is going to find an "independent" consultant who hasn't worked for any of the pre-qualified entities in the past and is not expecting to do so in the future
? Yeah, good luck with that, PJM.Herling believes all this nonsense is transparent:“If it becomes obvious that we’re relying heavily on one piece of information we’re going to have to make it public — and you might still not get chosen,” he continued. “… We’ll have to make sure it’s transparent and above board to defend ourselves against challenges.”And now, thanks to the invaluable RTO Insider and this blog... it is a little more transparent than PJM envisioned
it would be. Now YOU
know about it. Stay tuned...
Transmission's biggest cheerleaders met last month in San Diego
to talk about a subject near and dear to their wallets. During his presentation to his fellow speculators, Ray Wood, head of U.S. power and renewables at Bank of America Merrill Lynch said:
“Transmission assets, when they're already built, are goldmines,” he said. “They've got a long life, they're stable, and generally not as subject to tariff reductions as other asset classes because the percentage of the bill that ultimately goes to the end user that revolves around transmission is relatively light.”
Wood wasn't just bragging, however, but trying to convince everyone that transmission needs big, double-digit rates of return in order to attract capital.
According to Wood, funds for transmission are readily available, however transmission is so risky that no one wants to invest in it until a project has been awarded a "notice to proceed."
This is a lie. There is no risk involved in building transmission. Transmission incentives awarded by FERC routinely place all risk on consumers. One incentive awarded by FERC to all who ask is guaranteed recovery of 100% of prudently-incurred project cost. Another is the ability to collect a return on investment during the construction period (CWIP in rate base). The investor cannot lose if he is guaranteed to receive his entire investment back, plus a generous return, even before the project is constructed.
What Wood is whining about is that brief period of time between the day some transmission owner rolls out of bed with the idea to build a transmission goldmine, and the day incentives and a formula rate are approved by FERC. This is the only time when investment isn't earning a great big return. After that, it's all $$$$$!
Wood pretends that there's some further risk during other necessary approvals, such as a state CPCN or an environmental review. The investor is still earning during this time -- where's the risk? The only "risk" is that a project may be abandoned if it cannot buy necessary approvals, therefore the "sky's the limit" amount of investment that it was possible to make actually constructing the project is curtailed, and the investor is left with a smaller investment that is still earning around 12%. Oh, boo hoo.
And what about projects sponsored by transco spinoffs of gigantic investor owned utilities? These companies often self-finance the early cost of a project by borrowing at the parent company level at extremely low rates, and then earning a 14.3% return on that investment. In the case of the PATH project, the company never borrowed any money, however they still collected a 14.3 or 12.4 percent return on money they probably borrowed at 3 or 4%.
So, how do we fix this to make both Wood and electric consumers happy? How about setting limits on incentive rate of return periods to coincide with the "risky" periods of a transmission project? Transmission is only competing with other investments at the beginning. Once the investment is made and the project constructed, all risk disappears. So, what if incentive ROEs were gradually lowered over the life of the asset? As well, incentive ROEs should not kick in until an actual investment in the project has been made by an entity other than the company or its parent. Transmission owners are scamming us big time!
Last week, PATH held its "Open Meeting" to discuss its 2012 transmission revenue requirement true up
and answer questions from interested parties. Well, at least that's what the meeting notice said...
However, PATH couldn't (or wouldn't) answer questions, instead PATH made crap up. Randy's never going to learn, is he?
Emboldened by a question from one participant about the cost of legal counsel to defend the formal challenges, Randy answered a question about how PATH-Allegheny could have possibly had 5.1 full-time employees on an abandoned project in 2012 by telling everyone that "most" of that time was spent answering information requests about its formula rate filings.
Let's see, Randy, 5.1 full-time employees at 2080 hours each equals 10,608 hours spent answering 270 individual questions, "most" of which PATH refused to answer because they were alleged to be harassing, oppressive, annoying and burdensome. That equals 39.28 hours per question, including those where a refusal to answer was merely copied and pasted into PATH's response. That's nearly a work week. It took PATH one full work week to answer each question?
Stop making crap up when you're talking to accountants, okay?
And when given the opportunity to answer questions informally over the phone during the Open Meeting and save all those work hours in 2013? PATH refused and asked interested parties to submit written information requests.
The arrogant energy industry and their paid media pimps continually pretend they know what consumers want. They believe that if they write and publish enough lies that consumers will start to believe them.Not.Forbes "contributor" Ken Silverstein tells us that "Utilities would have an easier time building transmission lines if it were not for a feisty public, which generally feels that those ugly lines ought to be built somewhere else."Really? This guys bills himself as "editor-in-chief for Energy Central's EnergyBiz Insider. With a background in economics and public policy, I've spent two decades writing about the issues that touch the energy and financial sectors. My EnergyBiz column has twice been named Best Online Column by two different media organizations."
However, his NIMBY name calling
merely showcases his complete ignorance of the dynamics of current transmission policy debate. Is he really this clueless, or is he merely posturing for the crowd to parrot power company propaganda?Let's take a look at just a few of the facts Silverstein gets wrong:1. "...the transmission grid is aging and it needs to be updated and expanded so that it can fulfill the needs of consumers — many of whom don’t want those unsightly lines near them."WRONG! The transmission grid was not designed to wheel energy from coast to coast to fill the pockets of greedy traders. The industry is not spending enough capital "upgrading" for any real need, but has been banging its head against a brick wall attempting to "expand
." Let's look at just one example: While PATH was shooting blanks attempting to get its new build project approved, Dominion slipped in and quietly punked AEP/FirstEnergy with the rebuild of an existing line
that completely obviated the PATH project.Consumer issues center on NEED and COST. It's not about NIMBY anymore. How loud do you suppose Silverstein would squeal if someone routed a transmission line through his own backyard? Silverstein loves new transmission... as long as there's no personal sacrifice on his part involved and it's not in his backyard, therefore, Silverstein is the real NIMBY.2. "Inevitably, disputes emerge that typically center on the potential ecological harm that a given line may take. In other instances, the arguments are that the development is occurring in states that will not get the benefit of the added electricity, or that it would increase the usage of coal.
Such was the case when American Electric Power and FirstEnergy Corp. tried to build the so-called Potomac Appalachian Transmission High-Line, which would have stretched 275 miles from West Virginia into Maryland. The PJM Interconnection, which coordinates the transmission planning for the MidAtlantic states, has now withdrawn the project. It has done the same for Pepco Holding’s Mid-Atlantic Power Pathway, although both concepts could get resurrected once the economy is in full swing."WRONG! PJM cancelled the PATH project because it was not needed, not because of cost allocation, environmental or coal-related issues
. The opposition to PATH was ALWAYS
based on the fact that the project was not needed. PATH and MAPP are not going to be "resurrected," and neither is an energy-wasting economy that increases energy demand. Consumers in the PJM region are already on the hook for the quarter billion dollars wasted developing the unneeded PATH project, a project that will never provide consumers with any benefits. None.
Zero. PATH and MAPP were part of an industry money-making scheme named Project Mountaineer
and were never needed for reliability or market efficiency.3. "While the concerns and the subsequent legal battles are well intended, they oftentimes perpetuate uncertainty. That is, investors are skeptical because they can make more money in alternative investments while the delays impede reliability. And if brownouts or rolling blackouts occur, the financial toll can mount."WRONG! Brownouts and blackouts? I haven't heard that kind of fear-mongering since PATH got shelved. Get a grip, Silverstein. You and I both know that is NEVER GOING TO HAPPEN. Silverstein goes on about new transmission needed for renewables and then toss
es in the blackouts invective? Sorry, but the lights will not go out if renewables can't be transported coast-to-coast. Investors are salivating at the prospect of plunking their dollars into transmission investments making double-digit returns, despite the industry's "the sky is falling" whining. As well, transmission projects can and do request formula rates and incentives that provide them with a continual return during the development and construction period. There's absolutely no risk to transmission investors. None. Zero. Maybe Silverstein should do some research before he approaches a keyboard in the future.
There's plenty of information to be had on this website. Maybe Silverstein could learn a few things about his topic here
? And maybe, just maybe, he might want to consult a consumer
before writing more folderol about what they want.
It's that time again, PJM ratepayers! PATH's yearly shuckin' and jivin' about how they spent your money last year is coming up on August 1. On June 3, PATH filed their 2012 Annual Update to true up the amount it collected from you during the year to the amount it actually spent. It looks like PATH made an inaccurate estimate and now your bill is much, much higher than you expected. PATH says you owe them an extra $5M that they will collect from you in 2014
.If you have questions about PATH's filing, send in your RSVP to join the phone "meeting" to get answers. Just follow the instructions in the meeting notice.You must RSVP before July
26 so our friends at PATH can have enough imaginary food, drinks, and goodie bags on hand for all telephonic participants.