Hannibal Board of Public Works General Manager Bob Stevenson says that he has "spent my career in coal-based energy plants and electric utility systems."  So, you'd think Bob would know the basics of how the electric grid operates, right?

Except Bob recently told a reporter for the Hannibal Courier Post that MISO, the Midcontinent Independent System Operator, would own a Clean Line substation once it was completed.

MISO does not own any transmission assets, including substations.  As an independent transmission system operator, MISO merely operates the transmission assets owned by utilities.  It cannot own any assets and maintain its independence. 

Here's a corporate overview of MISO.  MISO membership includes "52 Transmission Owners with $31.4 billion in transmission assets under MISO’s functional control."  That's right, the transmission assets MISO controls are owned by others.

Eastern grid manager PJM Interconnection is a little more blunt about who owns the transmission assets it controls: 

ISOs and RTOs are federally regulated regional grid managers.  The coordinate electricity flow, markets, and undertake planning to order utilities to build new transmission assets when needed.

Clean Line is not part of any ISO/RTO grid plan.  Instead of having its own plan vetted by the regional transmission organizations to determine if there was a need, Clean Line skipped that process.  Because Clean Line is operating outside the ISO/RTO planning process, it must shoulder all financial burden for its project.  There is no federal, or other, guarantee that the company may recover its costs from electric ratepayers.  Instead, Clean Line is taking a risk that its project will be found beneficial and useful by market participants who voluntarily negotiate a rate to use it.

When transmission projects are found needed and ordered by RTOs/ISOs, the costs of building the project are allocated to electric ratepayers in the region.  Because utilities are ordered to build these projects, they can be granted a special federal incentive that allows the company to collect its investment in the project from ratepayers, even if it is later abandoned and never built.  This is where the "guarantee" comes in.  Clean Line was not ordered by any RTO/ISO and therefore isn't even eligible to apply for this guarantee.

There is no guaranteed return on an investment in Clean Line.  Instead, an investment in Clean Line at this time would be incredibly risky.  Anyone who invests in a Clean Line-owned converter/substation would lose their entire investment if the project is not permitted and built and/or attracts no customers willing to pay to use it.  At this point in time, the Missouri Public Service Commission has denied Clean Line a permit to build the project.  It cannot proceed.  In addition, Clean Line has no customers signed up to pay to use the project.  Clean Line has nothing to back up any investment made by Hannibal or any other investor.  Clean Line will simply spend Hannibal's investment on whatever it wants to attempt to get its project permitted, built and attracting customers.  If that isn't successful, Hannibal loses its entire investment.

I'm not sure where Bob gets his idea that there is a guaranteed 10% return a year through MISO.  Perhaps Bob thinks that the standard 10% ROE for transmission owning MISO members who collect their regional rates through federal formula rates applies to Clean Line?  It doesn't.  Clean Line doesn't have a federal formula rate.  Instead, Clean Line has federal negotiated rate authority, whereby it may negotiate rates with potential customers in a non-discriminatory, just and reasonable fashion.  In order to succeed, the rates Clean Line negotiates with its customers must be high enough to recover its cost of service and return.  Because it is a market-based project, Clean Line will be able to collect any return the market supports.  Clean Line's return is not set or guaranteed by regulators.

If Bob is telling the Hannibal City Council that an investment in Grain Belt Express is guaranteed a 10% return, perhaps the City Council should ask Bob the following questions:

1.  Who is guaranteeing this return?
2.  How is the return collected?
3.  Who is the return collected from?
4.  Where is this guaranteed return set out in a regulatory order?

It's not.  Because Grain Belt Express has nothing to do with MISO regional rates and does not have a formula rate through which to collect its cost of service and return from regional ratepayers.

Whether Bob is getting his misinformation from Clean Line representatives (who should know better!) or making it up on his own, misinformation like this is not serving the people of Hannibal.  Instead, this inexpert review of Clean Line's offer to Hannibal could result in a $12.5 million dollar loss.  The City Council must have any Clean Line offer reviewed by independent experts, just like any other utility contract the city signs.  Failure to do so could be costly.

Let's review:

1.  Clean Line is responsible for all costs of its project.
2.  Clean Line currently has no rate structure.
3.  Clean Line  has no customers from which to collect rates.
4.  There is no guaranteed return for an investment in Clean Line.

Any investment in Clean Line would be based on speculation that the company could permit, finance, build and attract customers to pay for its project.  If those things don't happen, Clean Line, and any investment in the project, disappears forever.

It's great that Hannibal wants to buy more wind energy for its citizens.  But Clean Line is not the only option.  It's the most risky option.  Hannnibal could purchase wind energy risk-free through MISO's energy market, and have it delivered through MISO's existing or planned transmission system.  It doesn't take a gigantic, new, privately-owned transmission line to deliver wind to Hannibal.  There are better, much less risky, options for Hannibal to lower rates for its customers by buying renewable generation.  Perhaps Hannibal should issue a request for proposals to supply wind power, and examine all its options, before jumping on the first one-trick pony to ride through town?

The Hannibal Bureau of Public Works "stepped back" from Clean Line this week.  Can we get a Hallelujah, brothers and sisters?

The Herald-Whig reports:

Good idea, that research thing.  Clean Line's claims to the BPW haven't quite added up.  Although, I do think other municipalities should observe developments between Hannibal and Clean Line before moving forward themselves, instead of the other way around.  Looks like when push came to shove, there was no contract.  Why couldn't Clean Line put its offered prices in writing? 

In other news:

Well, lookie there, that's how energy contracts are supposed to be evaluated and signed.  Because, "an agreement that would commit the utility to do nothing except be a good witness in front of the Missouri Public Service Commission and be willing to work toward a final arrangement" isn't a bid, an expert evaluation of bids, or a contract.  It's nonsense, and it's selling Hannibal short.

Ahh, so maybe Bob has realized that Hannibal shouldn't be such a cheap date.  Hannibal has something Clean Line desperately wants, and they shouldn't give it away cheaply.

As well, the Missouri PSC and its experts thoroughly vetted Grain Belt Express before making its determination that the project did not benefit consumers last summer.  Hannibal should consider that carefully before making inexpert, snap judgements of its own on the merits of the project.  And so should any other municipalities being courted to "be a good witness" for Clean Line, before signing up.

If the project has merit, it will swim, not sink, on its own before the PSC.  And nobody needs another Prairie State.  Good job, Hannibal BPW!

Clean Line goes home with a big, fat goose egg, as my friend Dave in Arkansas opined.  But something wonderful happened in Hannibal nonetheless.  The Hannibal Ratepayers for Smart Energy grassroots group has formed, and will hopefully continue their efforts to become involved in Hannibal's energy choices going forward.  Public participation is always a good thing!

Nobody.

Not even the residents of those cities, apparently.

For the last 100 years, faraway cities have depended on the sacrifice of rural America to power their progress.  Appalachia has been plundered for its natural resources, and the people who live there have sacrificed their health and welfare to mine coal, burn coal, and ship the electricity it produced to faraway cities via gigantic electric transmission lines.  All the profits from doing so ended up in the pockets of mining and energy companies located in other faraway cities.  The people of Appalachia have been left with nothing.  And so it is that we stand poised to repeat the same mistake.

Faraway cities have developed a sense of entitlement.  Entitlement to cheap, plentiful energy without any of the nasty infrastructure that comes along with it.  And what's worse is that politically connected legislative and regulatory bodies continue to perpetuate the myth that faraway cities are entitled to continue to receive benefits without any skin in the game.

Bloomberg distributed an article recently that proclaimed the benefits of "Tapping the Power of the Great Plains to Light Up Faraway Cities."  But it forgot to chronicle the costs of its bright idea.  Tapping the power of the Great Plains causes sacrifice to those who live there.  Gigantic wind farms that cover the horizon as far as the eye can see, along with proposed new transmission lines, remove farmland from production.  They burden those who make their living off the land with increased production costs, decreased land value, and encumber their traditions and sense of place with industrial blight.  And Bloomberg didn't think balancing its article with the thoughts and opinions of those who must sacrifice for its great idea was relevant.

But it is.  Thousands of rural Americans across eight states* have joined forces to protest the approximately 3,000 miles of new "Clean Line" transmission touted by Bloomberg as a $9B "opportunity" for the transmission industry.  These transmission stakeholders don't want to sacrifice to light up faraway cities, and they will continue to oppose Clean Line's get rich quick transmission scheme and hold on to what is theirs.

Bloomberg says that transmission lines to ship energy from Great Plains wind farms to faraway cities are "missing."  That's just not true.  Regional grid operators plan and order necessary transmission for reliability, economic and public policy purposes.  An electric provider that wants to buy wind energy has numerous opportunities to do so.  What the regional grid operators don't do is build transmission lines for generators that don't exist and customers who have not expressed a need.  Enter, Clean Line.  Clean Line purports that if the company builds it, they will come.  And since Clean Line's fanciful notion is not backed by any demonstrated need, it is not included in any regional transmission plan.  Therefore, Clean Line must shoulder all financial risk of its own business plan.

Except it doesn't want to.  Clean Line wants to transfer its financial risk to rural landowners and public power providers like Hannibal, Missouri.  Clean Line wants states to grant it the power of eminent domain reserved for utilities building infrastructure planned to satisfy an electrical need within the state or region.  This is because landowners have resoundingly rejected Clean Line's purported "market leading compensation package" to secure easements.  Obviously, if Clean Line's compensation package was so wonderful, it wouldn't need eminent domain to secure easements.  Using eminent domain to secure easements from landowners who reject Clean Line's compensation package keeps Clean Line's land acquisition costs lower than they would be if the company had to negotiate with landowners in a free market.  In this way, Clean Line is foisting a portion of its financial risk onto landowners.

When the State of Arkansas rejected Clean Line's application for public utility status to acquire the power of eminent domain, Clean Line requested that the U.S. Department of Energy get involved to use its eminent domain authority to override the State of Arkansas and enable the taking of private property.  It's not about the federal government issuing a permit for a transmission project after determining a need for it, it's about the federal government overriding state authority in order to own and enable a speculative transmission project that will pay financial return to its super-rich, foreign investors.  This is picking winners and losers in the energy industry.  And it's not a done deal.

Bloomberg supposes that "these projects are seen as essential to helping states comply with President Barack Obama’s Clean Power Plan."  Seen by whom?  Clean Line is not part of any state's Clean Power Plan compliance.  Adding insult to injury, the Clean Power Plan itself has been stayed by SCOTUS pending judicial review.  This only adds an additional layer of uncertainty -- shall Clean Line be built as "essential" to a state's plan for compliance with a rule that could be vacated by the courts?  Should states, utilities, and regional transmission organizations continue to spend taxpayer and ratepayer funds on plans to comply with a rule that may later be invalidated?  That seemed to be the basis for SCOTUS's decision to issue the stay in the first place.  It's only a matter of time before the complaints about wasting money on compliance plans begins.  We can start with Kansas.

Not that anyone sees the fate of the CPP as changing the migration away from coal.  The CPP is but an unnecessary motivation to complete what market forces have already begun.  Cheap gas has gutted coal.  Do we really even need the Clean Power Plan anymore?  Maybe just to fuel statements that projects like Clean Line are seen as "necessary" for compliance.  And that's picking winners and losers in the energy biz, not any economic necessity for ratepayers.

The first step for the faraway cities is to take responsibility for their own needs.  If they need to light up their cities all night to bolster their own tourism and sense of place, they should look a little closer to home.  There is a vast, untapped renewable resource in their own backyard.  The elephant in the room is offshore wind and wave energy, something that gets forgotten in articles like Boomberg's.  The faraway cities are only falsely convincing themselves that rural America is eager to provide for their needs.  It's just not true, and the quicker faraway cities are to build their own clean energy infrastructure, the cheaper it will be, and the quicker they will get there.

*See Block RICL
Preservation of Rural Iowa Alliance
Block GBE-MO
Arkansas Citizens Against Clean Line Energy

Clean Line Energy Partners was back in Hannibal, Missouri, last week, where "Development Director" Mark Lawlor continued his desperate courtship of the Hannibal Board of Public Works.

The goal of the evening was an "agreement that would commit the BPW to nothing accept [sic] 'being a good witness' in front of the PSC and being willing to work toward a final arrangement."

This wasn't about cheaper energy for Hannibal, it was about Clean Line using Hannibal as a witness at the PSC.  What are the qualities of a "good" witness, I wonder?  Does a "good" witness represent the interests of the citizens of Hannibal, or does a "good" witness represent the interests of Clean Line?

Clean Line made several presentations to Hannibal.  One of the presentations cooked up by Clean Line was a table showing "wind options" for Hannibal.  The table compared 4 wind power purchase agreements with Clean Line's Grain Belt Express project and came to the conclusion that GBE was the cheapest "wind option" for Hannibal.  But, how does the information in this table compare with previous claims made by Clean Line?

The first project in the table is an "unnamed" Westar wind project located in Kansas, part of the Southwest Power Pool (SPP) transmission region.  The energy was priced at $22.70/MWh, but transmission costs to move it through the SPP region into the neighboring MidContinent Independent System Operator (MISO) transmission region to deliver it to Hannibal were pegged at $10/MWh, bringing the total cost of the Westar option in at $32.70/MWh.

The second option was Apex Clean Energy Ford Ridge project located in Illinois, part of the MISO transmission region.  Price for the generation was quoted around $40/MWh.  Because the wind project in Illinois and Hannibal are both located within the MISO region, the transmission cost is estimated at only $2-4/MWh, much less than paying transmission through two transmission regions.  This brought Apex's total in somewhere in the mid $40s/MWh.

The third option was EDF Red Pine located in Minnesota, also part of the MISO region.  The energy price was quoted in the mid $30s/MWh, with transmission costs at $4-6/MWh.  EDF's total was quoted at "High $30s/MWh."

The fourth option presented was an Iberdrola project located in Iowa, also in MISO.  The energy cost was quoted at $30-33/MWh, with transmission costs of $2-4/MWh.  When Clean Line added up this option, they used their highest estimates, instead of the lowest, or even splitting the difference with an average, to come up with a price in the "high $30s"/MWh.  However, using the lowest costs presented here, Iberdrola could come in at $32/MWh, not the $37/MWh quoted by Clean Line.

Apparently that high quote was necessary because Clean Line's estimate of its Grain Belt Express project came in at a remarkable $30-34/MWh.  Using the lowest Iberdrola figures would have made it competitive with Clean Line's quote.

Let's look at Clean Line's quote for using its Grain Belt Express as a wind option for Hannibal.  While the other 4 options were 20-year power purchase agreements with actual wind generators at a set price, Clean Line's option includes only the transmission price and locks Hannibal into a contract to purchase that amount of capacity for the life of the Grain Belt Express project.  A typical transmission line has a life of 40-50 years. 

Clean Line's presentation included a line about whether the quoted project is eligible for the federal production tax credit.  Clean Line claims its project is eligible for the credit.  That's just not true.  The production tax credit is available for generators, not transmission lines.  There is no guarantee that any future wind farms that may use the Grain Belt Express would be eligible for the credit.  While existing wind generators are most likely taking advantage of the $23.00/MWh credit, recent action by Congress to phase out the credit lowers it beginning in January, 2017:

It's doubtful that any wind farms will be built to provide energy for Grain Belt Express before the PTC starts being reduced.  The current $23.00/MWh credit is going to be cut by 60% before Clean Line's proposed in-service date of 2019.  Without the sweet taxpayer subsidy provided by the PTC, wind farm operators will have to add the additional subsidy cost onto their energy price.  Clean Line's quoted energy price doesn't reflect this reality.

And while Clean Line told Hannibal that it was not receiving any government subsidies, the quoted energy price included the production tax credit, which is a 10-year taxpayer-funded subsidy for wind generators.

The Grain Belt Express energy prices of $20-24/MWh quoted by Clean Line are in line with Westar's Kansas project, however Clean Line cannot guarantee or write a contract for those energy prices.  Clean Line can only sell transmission capacity, not energy.  Hannibal would be on its own to negotiate energy prices with any future wind farms that might connect with Clean Line's future Grain Belt project.  And Hannibal would be locked in to receiving its energy from Kansas via Grain Belt Express for 40-50 years, no matter what cheaper options may become available in the future.

Clean Line claims the transmission cost for Grain Belt Express will be approximately $10/MWh, bringing the total cost of the Grain Belt Express option in at $30-34/MWh.  Except that can't be right. 

In 2014, Lawlor told Midwest Energy News the price of energy delivered by Grain Belt Express was between $40 and $45/MWh.

(Editorial note: 1,000 kWh = 1 MWh, however I am presenting these quoted figures in MWh for uniformity).

And also in 2014 Grain Belt Express witness David Berry, Clean Line's Executive Vice President of Strategy and Finance, told the Missouri Public Service Commission in his sworn testimony that it would cost $15 to $20/MWh to transmit energy via Grain Belt Express.

In 2013, Clean Line told MISO that its transmission costs for the Clean Line projects were $20 to $25/MWh.

So what happens when we substitute these previously quoted transmission figures for the transmission figure in Clean Line's "Wind Options" chart?  Grain Belt Express' cost balloons to $45 to $49/MWh, the highest priced "Wind Option" on the chart! 

We all know that estimates can vary, but how is it that Clean Line's estimated transmission costs keep getting cheaper and cheaper over time?  It's still the same project.  It's still got the same price tag.  Clean Line is still promising to use the same "local" vendors to supply parts and labor.  Where is Clean Line planning to cut costs?

Clean Line's falling prices also overlook increased project costs over the years.  Time is money on a project like Clean Line.  As a start up with no functioning product, Clean Line has no revenue.  Early time estimates by Clean Line had the projects going on-line by now.  However, due to overwhelming opposition and permitting issues, Clean Line is years behind schedule in generating revenue.  Each year the company operates without revenue adds to the final cost of its product.  Each permitting hurdle costs more money.  Clean Line's first application for a permit in Missouri likely cost several million dollars.  A second application will double that cost.  Every penny that Clean Line spends on unforeseen development costs must get added to the ultimate cost of its product.  Clean Line's $10/MWh transmission cost could be completely cooked in order to make it appear that Grain Belt Express is the cheapest option for Hannibal.

And if Clean Line fudged its own numbers, how much liberty did it take with the numbers from the other projects it included in its "Wind Options" table?  The quoted prices from the other wind options have no validity unless quoted by the companies that own them.  Hopefully Hannibal will request proposals from all these companies before committing to "being a good witness" for Clean Line at the MO PSC.

Is this how Hannibal purchases the cheapest energy for its ratepayers?  By receiving quotes from one company that takes the liberty of quoting for other companies in order to make its own quote the cheapest?

Going back to the "Wind Options" table, take a look at the transmission prices across the board.  Clean Line's cost is one of the highest.  Why is that?  Because all the other transmission prices quoted use existing transmission that is paid for by all ratepayers in the region.  The MISO region includes 42 million ratepayers.  In contrast, Grain Belt Express will be paid for only by the users of this particular transmission line, a much, much smaller population.  Spreading costs over a larger population results in cheaper pricing.  Grain Belt's customer base is limited by the size of its project -- it can only sell a fixed amount of capacity.  Therefore, Grain Belt's costs can do nothing but go up.  Grain Belt's transmission cost is so high because it is user-financed by a smaller group of consumers.

Clean Line's "Wind Options" presentation begs the question:  Is Clean Line even needed?  Clean Line seemed to have no trouble presenting four other options for "cheap" wind energy for Hannibal to be delivered via existing transmission lines planned and operated by a regional transmission organization.  How can we believe that "cheap" wind can't be delivered without building an expensive Clean Line?  This presentation demonstrates that it can.

Regional transmission organizations exist to plan and manage electrical supply in their own regions.  Each transmission organization has a robust planning process that orders new transmission to be built when it's needed, whether for reliability, economic, or public policy purposes.  Clean Line is not part of this process, but is completely superfluous.  No transmission organization has ordered Clean Line to be built for any purpose.  Clean Line is simply a venture capitalist attempt to build an extraneous transmission line in order to make money moving power between regional transmission organizations.

Hannibal simply must do its due diligence before committing its ratepayers to 50 years of higher energy prices, or selling itself out as "a good witness" for billionaires hoping to increase their wealth building nonessential transmission lines.

Get excited, FirstEnergy ratepayers!  Your mega-conglomerate electric company is launching its first major advertising campaign in 19 years!  And YOU get to pay for it.

Yippee Skippy!

FirstEnergy wants you to believe that it is environmentally friendly because it has "invested" lots of money over the years trying to make its antique coal plants meet new environmental regulations.  What happens when FirstEnergy "invests" in plant upgrades?  You pay them back, plus interest!  The more FirstEnergy "invests," the more profit they make for their shareholders.  And it's not like FirstEnergy ever made these upgrades voluntarily, it was dragged, kicking and screaming all the way, by new regulations.  FirstEnergy does the bare minimum to comply, but that's often after spending money trying to influence or prevent the regulations in the first place.  And then they scheme up underhanded plots to prolong the lives of their dirty coal plants by "selling" them to regulated affiliates in West Virginia, or forcing Ohio ratepayers to enter into power purchase agreements with the plants at above-market prices.

The Ohio debacle has been going on for months and FirstEnergy's reputation is in the toilet.  Does FirstEnergy think that pretending to be environmentally responsible will somehow improve its chances of getting its coal plant bailout approved?  Highly unlikely, but it's going to cost ratepayers a mint.  FirstEnergy's uninspired dreck is reminiscent of its failed 2012 advertising battle with rival AEP.  It's too complicated and it's boring.

Like anyone is going to read their sustainability report? 

Or that anyone wants to listen to their CEO in a suit blather on making empty promises? Was that an attempt at plain folks propaganda?  If so, it fails miserably because that guy isn't presented as a "plain" folk.  It's a rich guy disconnected from reality that's just tooting his own horn.  Boring!

Their infographic is just a bunch of hot air.  "We're changing!" is but a glittering generality.  How is FirstEnergy changing?  Oh, they promise to reduce their environmental footprint by some unknown percentage, if only Ohio ratepayers prop their dirty coal plants up for a number of years.  Gosh, FirstEnergy, why not start your environmentally responsible game plan right now, close those old plants, and withdraw your request for a ratepayer bailout?  Nothing like a little deed to back up your promises, right?

And speaking of deeds, FirstEnergy is going to spend millions advertising its community largesse during the Super Bowl.  FirstEnergy donated 4 lights to a community project to make over a football field.  That's great!  FirstEnergy employees donated their time to install them (Did the company pay these employees for their donated time?  I doubt it!)  FirstEnergy's actual charity pales in comparison to the amount of money the company is spending crowing about its goodwill on television.  What if... FirstEnergy spent those millions in the community, instead of pissing them away on self-aggrandizing advertising?  How many football fields could be built with $5M?

How much is this new advertising presence intended to support and influence the regulatory process for FirstEnergy's Ohio coal bailout?  And how much is reimbursable "goodwill" advertising?

Compare FirstEnergy's weak advertising campaign with the one launched the other day by competitive Ohio generators pooling their resources as the Alliance for Energy Choice.  In their ads, plain folks are charged $20 for a cup of coffee and $58 for a pizza because the merchant is relying on old and inefficient equipment to deliver the product.  Take a note, FirstEnergy, these are the kinds of commercials to which regular folks pay attention and respond.  Nobody needs an infographic to understand them, nobody needs to read a dry, boring report to get the message, and nobody is wearing a suit and reciting a monologue.

FirstEnergy's advertising ideas as just as uninspired and uninteresting as they've ever been, however the price tag for them is bigger than ever.  What a bunch of dopes!