Citizens also are concerned about their power bills, as the state Public Service Commission investigates allegations that Potomac Edison has not been reading residential meters in accordance with state law. The case follows customer complaints that the company cut back on its staff of professional readers and replaced them with a band of turbaned gypsies who gaze into the meters and estimate power usage.
Citizens tell the PSC they became suspicious when a bill came with a note predicting that the customer would “find an apple tree with seven apples and after eating one would grow three stag horns and find his flesh separated from his bones.”
Potomac Edison finishes up 2013 as a big joke in The Herald-Mail:
The Columbus Dispatch and a couple of investment analysts gushed all over AEP CEO Nick Akins for "leading on ideas" yesterday.
What's Nick's idea? Getting out of the generation business and betting AEP's future on long-distance transmission.
...a transformation of the company’s structure and a shifting notion of what AEP needs to do to remain relevant in a changing energy landscape.
Maybe ol' Nick missed the EEI report earlier this year, Disruptive Challenges: Financial Implications and Strategic Responses to a Changing Retail Electric Business. The report cautioned electric utilities to avoid "that Kodak moment" for investors by embracing new technology and addressing competitive threats.
While getting out of the competitive centralized generation business "addresses" the threat that AEP may lose some of it's golden eggs in an unpredictable market, AEP is not embracing new technology or making itself relevant in a changing energy landscape. It's simply putting even more of its golden eggs into a business plan that it will help to make obsolete.
As competitive centralized generation closes, it is being replaced by independently owned distributed generation. Distributed generation doesn't need new transmission. Nick won't be collecting any eggs if he kills all the chickens.
A better idea to embrace new technology and establish future relevance was adopted by competitive generation company NRG earlier this year.
...NRG is installing solar panels on rooftops of homes and businesses and in the future will offer natural gas-fired generators to customers to kick in when the sun goes down, Chief Executive Officer David Crane said in an interview.
AEP loves regulated businesses. It's a guaranteed revenue stream for a bulky, staid, not-particularly-innovative company.
AEP, which was reluctant to split its Ohio operations, has responded by focusing on the delivery business.
Meanwhile, the Ohio power plants are a shrinking asset. Because of environmental rules and the age of some of the plants, the company has announced a series of shutdowns that will occur over the next few years.
So, dumping competitive, centralized generation is a smart idea, but increasing investment in long distance transmission to support a shrinking pool of centralized generators is not sustainable.
While AEP is banking on federally regulated interstate transmission to nearly double earnings from transmission activities from 2013 to 2014, AEP seems to have forgotten what happened with its PATH project. Big, interstate transmission projects with long lead times lead to big failure. That's because "need" for these projects is constantly shifting, and if opposition can delay them long enough, they become obsolete. Opposition is growing by leaps and bounds. AEP ain't seen nothing yet!
It's a risky proposition and I don't think it's a particularly good idea.
Akins says he’s having fun and is eager to see the work of the past two years come to fruition.
We'll be "having fun" too, supporting companies embracing the new technology of distributed generation, and dragging the progress of AEP's transmission projects down like a huge anvil. Although AEP can ignore growing public discontent, it ultimately cannot be denied.
The WV PSC's evidentiary hearing in the General Investigation of Potomac Edison and Mon Power Meter Reading, Billing and Customer Service Practices was held in Charleston December 17 -18. If you didn't have an opportunity to watch the hearing live, never fear, we drove 12 hours, spent 2 nights in a hotel, talked to people we don't particularly like, fended off icy stares, and stayed awake for the entire thing in order to generate 13 pages of notes just so you can find out what happened. The media took no notice of the event, even though FirstEnergy media personality Toad Meyers was there to act as their personal hearing interpreter. Maybe they're waiting for him to share his notes...
If you've never watched one of these hearings, let's set the stage. It's a quasi-judicial, court-like proceeding, sans robes and much of the formality. This was an opportunity for the Commissioners to consider evidence and examine witnesses. Witnesses sponsored by the parties to the case filed written testimony and rebuttals in advance. At the hearing, the witnesses took the stand to have their testimony officially recognized and to give opposing parties a chance to cross examine them. The Commissioners also took the opportunity to ask the witnesses questions. The parties to this case are FirstEnergy's Potomac Edison and Mon Power utilities, the Staff of the PSC, and the Consumer Advocate Division of the PSC. Between them, they produced 6 witnesses, 4 from the company, and one each from the Staff and the CAD.
FirstEnergy's first witness was John Hilderbrand, Director of Operations Support for Mon Power, who was grilled by the attorneys for CAD and Staff, and the Commissioners, for more than three hours. From my notes:
Second witness was Kaye Julian, Director of Customer Management.
FirstEnergy counsel helps out by asking witness on redirect if there is a similar billing problem in FirstEnergy's West Penn Power territory. Julian says there is not because WPP didn't suffer the consequences of Hurricane Sandy.
Next witness was Gary Grant, FirstEnergy's Director of Customer Contact Centers:
Next witness was Kevin Wise, Director of Rates and Regulatory Somethingorother:
Next witness, Suzanne Akers, Utility Analyst with the Consumer Advocate Division, was cross examined by FirstEnergy's counsel.
Final witness was Michael Fletcher, Deputy Director of Consumer Operations Section at the PSC:
If you found this summary interesting, or laughable, check back for links to the hearing transcripts, when they are available.
And now we wait for the Commission to issue an Order to fix this mess. At some point, FirstEnergy has to right its wrongs and make amends to its customers. Otherwise, this saga will simply continue in another venue.
As a FirstEnergy customer, I'm thrilled to know that my Board of Directors won't be bombarded with cheap foreign junk or moldy fruitcakes this holiday season. Oh no, only the best for the folks who approve the compensation packages of the management that continues to send me inaccurate bills every other month!
The State Journal tells us:
When FirstEnergy selects gifts for its Board members at Christmas, they have one very firm requirement: They must be handmade in America.
Ho, Ho, Flippin' Ho. I hope this doesn't end up in my bill. But, it probably will.
If you're one of the thousands of Potomac Edison or Mon Power customers who have experienced problems with your billing over the past couple of years, fill out this quick and easy online form to consult with an attorney about your unique situation.
As we noted last week, a Jefferson County customer has filed a civil suit against Potomac Edison. When WHAG asked viewers if they had also been over billed on its Facebook page, response was overwhelming! More than 160 people posted comments, many claiming to have received bills in the hundreds or thousands of dollars.
Now Charles Town attorney Andrew Skinner says, "...more suits may follow against the electric company."
The FirstEnergy subsidiary's billing practices have been the subject of numerous consumer complaints and several public hearings this year. While Skinner says a class-action lawsuit is unlikely, customers may be able to file a mass-action lawsuit, in which there are many individual plaintiffs."
An article in the Martinsburg Journal explains the progression of the initial suit filed by Shepherdstown resident John Kilroy. After many months of wrangling with Potomac Edison, and after going through the formal complaint process at the WV Public Service Commission (where the company signed a settlement agreement forgiving half of the amount in question), the company continued to bill Kilroy the full amount. Every avenue short of a lawsuit was explored, but the company continued to insist that Kilroy owed more than $3000.
Before filing the lawsuit, Skinner sent a letter to Potomac Edison, asking the company to correct its billing inaccuracies as required by the Consumer Credit and Protection Act. Potomac Edison representatives failed to respond.
FirstEnergy's Potomac Edison and Mon Power subsidiaries continue to ignore customer complaints. After all, the legislative interim investigation of utility billing practices has come to an end with nothing being done. Perhaps it was nothing more than grandstanding by Senator Herb Snyder in the first place, but maybe we can try again to get something accomplished when the legislative session begins in January.
After sitting through the evidentiary hearing last week, it looks like the company lacks a healthy and respectful fear of our Public Service Commission. Why does the company treat regulation like it's something that can be "fixed?" When I arrived at the PSC for day 2 of the evidentiary hearing last Wednesday, someone asked me if I happened to notice Sammy Gray on my way in. Sammy Gray is FirstEnergy's West Virginia lobbyist. What would a lobbyist be doing trying to influence an impartial, quasi-judicial regulatory board? Why would he ever set foot in that building? Is our PSC just another corporate apologist?
I'm starting to think that consumers (or "business partners," as FirstEnergy training manuals call us) could be mistaken if they believe that West Virginia's legislative or regulatory processes are designed to serve them.
Because we can't get justice through our government, it's time to take it to a higher level and quit wasting our time at a PSC that will not exercise its authority.
What's a consumer to do when the legislators and regulators fail him? Take the matter up with a judge in your own county and seek justice through the court system.
Go ahead, fill out the form. It's your only path to justice in West Virginia.
Ut-oh, Potomac Edison!
Just when the company thinks it has its problems at the WV PSC and the WV legislature solved... one of its unhappy customers has escalated the battle to the courtroom!
John Kilroy received a bill for over $3,000 earlier this year, because the company had estimated his bill month after month, and even when they did read his meter, they read it wrong.
Mr. Kilroy did the right thing and filed a complaint at the PSC, eventually reaching a settlement with the company to split the bill. However, Potomac Edison has completely ignored the PSC settlement and continued to bill Kilroy for the full amount.
Today, Kilroy filed a civil suit in Jefferson County circuit court.
Let the avalanche of lawsuits begin :-)
The West Virginia Public Service Commission's evidentiary hearing in the General Investigation of Potomac Edison and Mon Power Meter Reading, Billing and Customer Service Practices is scheduled to take place this week, December 17 - 19.
The hearing will be held in the PSC hearing room in Charleston. The hearing is open to the public as spectators only. There will be no opportunity for the public to make comments during the hearing. The public comment hearings were held in October in Shepherdstown and Fairmont.
If you would like to watch the hearing, but don't have the time or money to travel to Charleston, you can watch the hearing live on the PSC's webcast.
Click here to watch the hearing.
The hearing begins at 9:30 a.m. on Tuesday, December 17 and will probably run the entire day. If needed, the hearing will continue at 9:30 a.m. on Wednesday, December 18, and if still more time is needed, continue again on Thursday, December 19. I really can't imagine it taking that long, there are only 6 witnesses.
The witness order will be:
1. Mon Power/Potomac Edison
a) John C. Hilderbrand
b) Kaye G. Julian
c) Gary W. Grant
d) Kevin Wise
2. Consumer Advocate Division
a) Suzanne Akers
3. Public Service Commission Staff
a) Michael L. Fletcher
Read more about the case and the testimony that has been filed here.
And be sure to check back here, or on the Coalition's Facebook page, for updates during the hearing.
Will justice be done?
Give up, FirstEnergy. You're not going to win this one. Why not try to go out with a little dignity and customer goodwill, instead of as a flaming failure, kicking and screaming all the way to the door?
FirstEnergy filed rebuttal testimony in the General Investigation case yesterday that can only be described as desperate.
FirstEnergy even stoops so low as to single out its customers by name and call them liars. I really hope that FirstEnergy's electronic billing data was not adjusted to hide the truth, as one of those accused of being a liar claims. Does FirstEnergy really want to put its computerized data up against someone's paper bills in a civil suit?
FirstEnergy also admits that it was taking names at the hearings and browsed through its call recordings to see who was rude to who. Without giving any examples, FirstEnergy claims that the customers were rude because they didn't like the answers they were given. Maybe that's because the answers were factually incorrect or completely unhelpful?
FirstEnergy's customer service supervisor guy comes across as arrogant and hateful toward the customers he's supposed to serve. Nice touch! That pretty much illustrates the source of the customer service bad attitude. That's a shame, because there actually are (or were?) a couple of nice people at the call center.
One last thought, FirstEnergy, but I'm sure you're well aware of this already. The long hold times do not come at the beginning of the call under your ASA statistics. They come after your "rude" customers get an incorrect or unhelpful answer from the CSR and ask to speak to a supervisor. That's when they are put on hold for periods up to one hour, hoping they will hang up and go away before a supervisor deigns to pick up the phone. Go ahead... listen to a few calls... you desperate little creatures.
What an admirably nasty, last ditch effort to pull your corporate keister out of the fire. It's hot, isn't it?
It's guaranteed to be quite a drama. Don't miss it!
FERC issued its findings in the TrAILCo audit yesterday. No big surprises, if you've been following along the FirstEnergy audit trail with us.
As noted in the FirstEnergy merger audit last month, FERC spanked the company for recovering merger costs in its transmission formula rate. But today's audit report contains some details that the other one lacked and is just plain funny in spots.
For instance, here's FERC's description of the TrAIL line.
The TrAIL Project originated in 2005 as part of PJM’s Project Mountaineer, whose objective was to enhance west-to-east transfer capability in the PJM transmission system. PJM planned to use its RTEP process to identify a comprehensive plan for the project. Following PJM’s announcement, Allegheny began reviewing transmission enhancement opportunities within the AP Zone of PJM that could expand west-to-east transfer capability and be incorporated in the RTEP. On February 28, 2006, Allegheny formally proposed TrAIL to PJM as an effective solution to long-term reliability needs in the PJM region, and requested that PJM include this proposal in the RTEP as part of a major expansion of the PJM system.
Reviewed materials on the Allegheny and FirstEnergy web sites and other key industry and news sources.
Along those lines, FERC also wanted to find out how the merger cost recovery error was discovered:
Analyzed the revised reconciliation that TrAILCo submitted December 19, 2011 to remove certain transaction costs related to the FirstEnergy-Allegheny merger improperly included in its 2011 formula rate. Issued data requests to understand Allegheny’s procedures for tracking, accounting for, and allocating such merger-related costs to TrAILCo. Examined how merger-related costs were improperly included in TrAILCo’s revenue requirement, how the error was detected, how TrAILCo worked with PJM to revise customer billings and refund the costs to customers. Scheduled conference calls and interviewed TrAILCo staff during the site visit to clarify our understanding of these matters.
Imagining how a certain someone must have looked twitching his way through that is a never ending giggle fest. I'm going to enjoy it immensely for a long, long time. :-)
And here's what FERC's audit determined:
Audit staff found that TrAILCo included three categories of merger costs in its 2011 formula rate: (1) $14,823 in postage, hotel rooms, security, and other outside services incorrectly charged to operating costs rather than to the special, non-recoverable accounts established for merger costs; (2) $347,654 in executive bonuses charged to recoverable accounts based on an incorrect determination by Allegheny’s accounting department that the bonuses were not merger-related; and (3) $43,718 in 2010 merger integration costs charged to recoverable accounts due to an incorrect interpretation that the Merger Order required only transaction-related costs to be excluded from rates.
Another problem FERC discovered is that TrAILCo was filing erroneous data in its Form 730, Report of Transmission Investment Activity.
Audit staff’s review showed that TrAILCo reported cumulative spending on TrAIL in its FERC-730 reports rather than actual spending in the latest calendar year, as the FERC-730 instructions on the Commission’s web site require. For example, in its first FERC-730, TrAILCo reported spending $2.3 million on TrAIL during 2006. For 2007 through 2011, TrAILCo reported spending $32.9 million, $105.9 million, $546.0 million, $930.6 million, and $1.009 billion, respectively. These figures total $2.63 billion, 2.6 times the amount TrAILCo charged to Project work orders in 2006-2011.
In other words, TrAILCo made a really dumb mistake because they didn't bother to read and follow instructions readily available on FERC's website. I think they've discovered the root cause of FirstEnergy's accounting problems!
And that about sums it up.
Every year, the Federal Energy Regulatory Commission issues a report of its enforcement actions. The 2013 report was issued last month.
There was an interesting section of the report about formula rates. A formula rate is a type of rate setting that involves a forward-looking collection of rates based on a projected budget. Interstate electric transmission rates are set under FERC's federal jurisdiction and simply passed through unscathed in your state ratemaking process to your electric bill. A formula rate is a blank template that calculates the rate according to set formula in compliance with FERC's accounting and ratemaking guidelines. Each year, the transmission owner populates the formula with numbers from its projected budget to arrive at the amount it is permitted to charge for service, and then collects that amount from its customers during the year. At the end of the year, the transmission owner must file another formula rate calculation that trues up the projected rate by comparing it to actual spending. The company then adjusts the following rate year to make up any difference between the two, whether an over-collection or under-collection.
Now, here's the rub. This is all being done on the honor system. And, as the old saying goes, there's no honor among thieves. FERC audits a small percentage of formula rates every year, either on its own initiative or through referral when a problem is reported. FERC does not audit every formula rate every year. Instead, FERC relies on the people who pay these rates to raise the red flag if something is amiss. There are special protocols (instructions) attached to each formula rate that detail the procedures to be followed to review the formula rate and file a legal challenge if any discrepancies between transmission owner and customer cannot be resolved. So, who is doing this job for you, little ratepayer? Is it your local electric company? Is it your state public service commission? Is it your state consumer protection office? Chances are it's none of the above, and NOBODY is reviewing the transmission rates you are paying. It's not that these entities don't care that you may be being ripped off, it's that they don't have the resources or knowledge to do the job, so they simply skip it and hope for the best. This situation does not serve your interests.
Transmission owners know that nobody is minding the store, therefore they have been taking advantage of the situation to "accidentally" include all sorts of expenses and incorrect calculations that jack up rates and cost you extra money. I say "accidentally" because there's always the chance that they will get fingered for a FERC audit, or get challenged by a couple of housewives from West Virginia. In case they are caught by FERC, they pretend any misdeeds were an "accident" and promise to issue refunds. It's a gamble the transmission owner is willing to take because chances are they won't get caught. If they do get caught, they may not have to refund the whole amount they stole from customers, either because the entire amount of the thievery isn't discovered, isn't proven, or is negotiated through a settlement. It's a risk that's profitable to take. Therefore, transmission owners are routinely ripping us off.
FERC notes that certain trends are developing in the way transmission owners rip us off.
This is completely unsurprising to me, since I've seen (and challenged) many of these incorrect practices. But what does continue to surprise me is that nobody has the inclination to stop it. If formula rates are to be used to set transmission rates, and FERC knows that they are subject to manipulation and purposeful over recovery, then there simply must be some entity designated to monitor them in the interest of consumer protection. While states have agencies designated to protect their consumers from greedy utilities, there is no federal counterpart at FERC.
FERC's mission is to "assist consumers in obtaining reliable, efficient and sustainable energy services at a reasonable cost through appropriate regulatory and market means." FERC is failing us on formula rates.
About the Author
Keryn Newman blogs here at StopPATH WV about energy issues, transmission policy, misguided regulation, our greedy energy companies and their corporate spin.
In 2008, AEP & Allegheny Energy's PATH joint venture used their transmission line routing etch-a-sketch to draw a 765kV line across the street from her house. Oooops! And the rest is history.