Remember this line from AEP in response to the EPA's Clean Air rules?

About 600 AEP power plant jobs will be lost as a result. -- Pat Hemlepp, AEP spokesman, July 7, 2011

Today, a mere 4 days after stating that 600 power plant jobs will be lost due to EPA rules, AEP made this announcement:

"AEP today announced its participation in a pilot effort to link veterans leaving military service to job openings in the energy industry. The new pilot program, called Troops to Energy Jobs, will last approximately two years and will be carried out by AEP and four other U.S. electric utility companies in conjunction with the Center for Energy Workforce Development (CEWD)."

Okay, so maybe they're not power plant jobs?

Robert P. Powers, president of AEP utilities and chairman of CEWD. "This pilot program will provide veterans with a pathway to job opportunities in our industry and allow AEP to continue its commitment to hiring those who have served our country for skilled positions such as power plant operators, chemical and maintenance technicians, and line mechanics."

Oh, look!  AEP is recruiting power plant operators... the same power plant operators that are going to be laid off due to plant retirements under the EPA rules.

Stars and Stripes says:

With nearly 40 percent of the America’s electric, natural gas and nuclear power workers expected to be eligible to retire by 2016 -- and with the unemployment rate for young veterans higher than for the their civilian peers -- the industry joined with Secretary of Energy Steven Chu on Monday to announce a new program to recruit military veterans to the energy field.

“While veterans are looking for jobs, the energy industry is looking for new workers,” Chu said. That includes line workers and engineers in traditional energy industries, plus new jobs in wind, solar and other renewable energy fields.

In the near-term, the industry will need thousands of new engineers, technicians, line workers, plant operators and pipefitters.

See the project's Power Plant Operator web page.

Yup.  AEP really is recruiting new power plant operators at the same time they are laying off 600 power plant operators.

See the project's "Careers for Women" page:

As if implying that women cannot perform the other "male" jobs listed on the site, such as power plant operator, isn't bad enough, the opportunities offered for women are: "Get Into Energy: Careers for Women Coming soon!"

What sort of careers do you think they'll develop for women?  Making coffee?  Ironing uniforms?  Making lunches for the male employees?

Ladies... I've got a better "job" for you -- How about telling AEP that they're a bunch of liars who continue to contradict themselves over and over?  It doesn't pay much, but at least you're not going to end up barefoot, pregnant and chained to the stove...

And what have our friends at AEP been up to this week?

Yesterday, the EPA issued new standards to cut downwind air pollution coming from coal-fired power plants.  Instead of Mikey embarrassing himself doing another press spectacle whining about plant closures, it looks like AEP quickly shoved him into their popemobile and trundled him off to the Scioto Mile where he could smile and wave and turn on the fountain.

AEP's new plan is to have the underlings do the fear mongering.  Pat Hemlepp and his 30% rate hike isn't the only stooge still running around doing AEP's chicken little routine.  The affiliate company presidents are all doing it.  That way, when the press dig up those Mikey quotes that show him giving a different rendition of facts to AEP's investors, the stooges can pretend they don't know anything about it.  It's pretty hard to deny when you're caught talking out of both sides of your mouth, isn't it, Mikey?  That's what underlings are for!  Honestly, AEP needs to stop their sniveling and get busy cleaning up their plants.

The "30% rate hike" is just a number that AEP has pulled out of their... hat.  They've been tossing a whole bunch of rate hike percentages out... and none of them are consistent or backed up by any hard facts.  When I went looking for hard facts, it turned out that expected rate hikes are more in the neighborhood of $3 - $4 per month for the average customer.  That small amount of change is a small price to pay for cleaner air.  Customers have lately seen bigger increases simply because of the cost of coal, so it's all relative.

Duke Energy says that they've spent the last 10 years cleaning up their plants so the new rules won't be a problem for them.  AEP has spent the last ten years and billions of dollars trying to influence the rules.  AEP is grossly mismanaged and their customers are the ones who are going to pay for their lack of planning.

Now that I'm done with the NOI beast, let's get back to having a little fun!  What have our friends been up to lately?

For those who have been following the FirstEnergy Little Blue Run poison pond saga, news this week is that a "private meeting" was held between FirstEnergy, the DEP and town officials.  Two other nearby towns wanted to know why they hadn't been offered the same bribes as Greene Township.  Well, duh... FE doesn't need your approval! Maybe these two towns should offer to host the new poison pond in their own town squares and the money may follow... of course, there's that old adage to consider:  Why buy the cow when you can get the milk for free?

Also, it looks like FirstEnergy had a "little accident" at their nuke plant that exposed employees to radiation.  Maybe if their "safety meetings" weren't self-congratulatory food fests paid for by ratepayers, safety would improve. Ya think?

Here's your quick reference guide to the resources available at StopPATH WV to assist you in crafting your comments on FERC's Notice of Inquiry Promoting Transmission Investment Through Pricing Reform.  Hopefully this contains everything you need to know, but if you have additional questions, email me.  You can also leave comments in the individual blog entries, but there's no guarantee I will see them in a timely fashion.

Extended comment deadline - August 25, 2011
How to submit your comments
General Overview of NOI

Overarching Questions pp. 1-10
Sec. 219(a) Statutory Threshold (Rebuttable Presumption) pp. 10-12
Additional Goals in Sec. 219 pp. 12-14
The Nexus Test pp. 14-19
Interrelationship of Incentives pp. 19-20
The Role of Cost Estimates pp. 20-21
Incentive ROE Adders pp. 23-27
Abandonment pp. 27-30
CWIP in Rate Base pp. 30-33
Hypothetical Capital Structure pp. 33-34
Pre-Commercial Cost Recovery p. 34-36
Accelerated Depreciation and Advanced Technology pp. 36-40

We encourage both groups and individuals to submit comments.  For individuals, it might be easier to concentrate on just one aspect of the NOI.  Detailed comments on a particular incentive or aspect are better than generalized comments on the entire NOI.  We are encouraging groups to combine resources and file a comprehensive set of comments.

FERC's Transmission Incentives are the "root of all evil" and the impetus for all the unneeded transmission projects that we've been plagued with.  These projects have cost consumers and landowners hundreds of thousands of dollars in defensive legal costs, years of stress and aggravation, and in some unfortunate cases caused complete financial ruin.  If you want to put a stop to this nonsense once and for all, don't miss this fortuitous opportunity to have a voice.

In the NOI, Promoting Transmission Investment Through Pricing Reform, FERC is seeking comments about the effect of its incentives on promoting transmission.  If you're going to comment, you need to understand what the incentives are, and what they are intended to do.

Beginning on Page 9 of the NOI, the Commission poses some general, overarching questions regarding the effect their incentives have had on the goals set forth in Section 219.  Read the introduction and history on pages 1 - 9, and consider all the other aspects of the transmission incentives covered in the NOI, and let FERC know what you think the effect has been.

The incentives have caused a "gold rush" to new transmission projects, while our existing transmission grid withers and fails from neglect.  Because of the excessive profit to be made with new projects that FERC created with their incentives policies, the original intent of Sec. 219 has been completely perverted.  The ultimate outcome of this is that the consumers have been saddled with an incredible amount of debt while energy corporations rake in an incredible amount of profit.

If you found this helpful in crafting your comments, you are encouraged to browse the entire FERC Transmission NOI category at StopPATHwv.com for other useful material.  You don't have to comment on all aspects of the NOI if that's too burdensome.  In fact, if you want to concentrate in detail on just one aspect that interests you and about which you have strong feelings, that's a perfectly acceptable approach to producing effective comments.

In the NOI, Promoting Transmission Investment Through Pricing Reform, FERC is seeking comments about the effect of its incentives on promoting transmission.  If you're going to comment, you need to understand what the incentives are, and what they are intended to do.


FERC wants your thoughts regarding "additional goals in Section 219," specifically the imbalance that exists between what FERC believes are differing goals in 219(b)(1) and 219(b)(3).

219(b)(1) calls for the Commission to promote "reliable and economically efficient transmission and generation of electricity by promoting capital investment in the enlargement, improvement, maintenance, and operation of all facilities for the transmission of electric energy in interstate commerce..."  FERC believes "the enlargement" includes construction of new facilities.

219(b)(3) encourages "deployment of transmission technologies and other measures to increase the capacity and efficiency of existing transmission facilities and improve the operation of the facilities."

FERC wants to know why the vast majority of transmission projects applying for incentives have focused on new transmission lines (the enlargement) and few have focused on improvement of existing transmission lines.

It seems to me that BOTH sections of 219 are, in reality, pointing to the upgrade of existing transmission.  However, the power companies have figured out that promoting projects that call for the addition of new, totally separate transmission projects are more lucrative to their bottom line.  Modernizing existing transmission (average age 40 years) just doesn't cost as much and doesn't provide as much wiggle room for padding of expenses.  Because the power companies earn a very high return on the amount invested, the more they invest, the more they profit.

FERC has stated that the "reliability benefits of operation and maintenance capital spending are obvious, and we expect applicants incurring this type of capital spending will be able to demonstrate reliability benefits and thereby be eligible for incentive treatment."  However, the power companies are not interested in improving existing transmission.  They may become interested eventually, when they have over built all the new transmission they can get away with and have to content themselves with the leftover crumbs, but it will take a whole bunch of improvement projects to equal the profit to be had on one new project.

In the meantime, our landscape is littered with aging, inefficient transmission lines that are increasingly subject to failure, which decreases reliability.  The argument that aging transmission causes the need for supplementation by new transmission is a self-fufilling prophecy.  Instead, if the focus was pushed toward rebuilding of existing transmission, it could obviate the need for new transmission.  We witnessed this happening with the PATH project.  For reasons I'm not going to get into, Dominion proposed the rebuilding of two existing transmission lines as an alternative to the new PATH transmission project.  However, their proposal was given the run-around at PJM, who attempted to sweep it under the rug.  PJM's favoritism of the PATH project (and thereby the PATH parent companies' financial gain at the expense of PJM's ratepayers) aptly demonstrated their bias and agenda to produce profit for their members, instead of their supposed mission of ensuring a reliable transmission system.  I don't know what goes on in the other RTOs, but PJM demonstrated why improvement of existing transmission is not being proposed in PJM.

For these reasons, perhaps FERC should require an independent (and because of demonstrated bias, this would not include PJM) evaluation of new transmission projects to determine if upgrades to existing transmission would serve the same purpose quicker and cheaper before granting incentives.  This would also satisfy the requirement that incentive projects benefit consumers and the whole "just and reasonable rates" mission.

Transmission owners should be required to evaluate their existing lines with an eye toward replacement before proposing new transmission projects, just as the staff of the WV PSC has suggested in their recent petition.  I realize that some new transmission may still be needed to connect new generation, however new long-distance transmission like PATH, intended to increase existing power flows parallel to existing, but "congested"and inefficient, transmission lines won't be needed.

Now that you've contemplated new vs. existing transmission, go look at FERC's questions beginning on page 13 of the NOI and formulate your comments/suggestions for FERC.  I'm sure you creative consumer "stakeholders" can make suggestions that the industry won't even ponder.  The industry will be letting FERC know how they can and should sweeten the pot even further for them.  It's up to you to provide balance with a little real world sanity.

If you found this helpful in crafting your comments, you are encouraged to browse the entire FERC Transmission NOI category at StopPATHwv.com for other useful material.  You don't have to comment on all aspects of the NOI if that's too burdensome.  In fact, if you want to concentrate in detail on just one aspect that interests you and about which you have strong feelings, that's a perfectly acceptable approach to producing effective comments.

In the NOI, Promoting Transmission Investment Through Pricing Reform, FERC is seeking comments about the effect of its incentives on promoting transmission.  If you're going to comment, you need to understand what the incentives are, and what they are intended to do.

We all know about budgets.  People live within their own financial comfort zone, and even corporations and governments must operate within certain set budgets (no, we're not starting a political debate!)  Failure to stay within budget causes personal financial problems, and in the case of corporations and governments, failure to stay within budget can turn a project into financial disaster.  Imagine a product that costs more to make than can be recouped through sale.  You wouldn't stay in business long if you were unable to properly budget.

FERC believes that transmission projects that receive incentives should not be limited by a budget.  In FERC's world, the cost of a project will never outweigh its benefits to consumers.  This is unrealistic because there is always a tipping point when the cost becomes greater than the benefit.  Now FERC ponders if there is a role for cost estimates in their transmission incentives policy.  However, they worry that limiting incentives to original budgeted amounts could be punitive when escalating costs are beyond the control of the transmission owner. 

FERC is under the assumption that the regional planning process places some weight on cost estimates when evaluating projects.  During the PATH battle, we have heard that there is no price too high at which point building PATH would become uneconomical.  The cost of PATH played no role in PJM's selection and stubborn loyalty to this project, even when faced with less costly alternatives, such as the Liberty Line and Dominion's Alternative One.  In fact, PJM went so far as to evaluate the cost of the Liberty Line in a biased manner that created a conflict of interest, in order to make the cost of PATH appear "economical".  We know that PJM is incapable of rationally utilizing cost estimates in selection of projects.  FERC gives them way too much undeserved credit.

FERC should limit transmission incentives to budgeted amounts only.  Their current system encourages unbridled spending because the more the project costs, the greater the financial reward for the transmission owner.  A project should be re-evaluated if cost estimates change.  FERC needs to remember the consumer whose cost of delivered power is being reduced by the transmission project because there will come a point at which project costs actually increase, instead of reduce, the consumer's cost of delivered power.

Now that you've contemplated the role of cost estimates, go look at FERC's questions beginning on page 21 of the NOI and formulate your comments/suggestions for FERC.  I'm sure you creative consumer "stakeholders" can make suggestions that the industry won't even ponder.  The industry will be letting FERC know how they can and should sweeten the pot even further for them.  It's up to you to provide balance with a little real world sanity.

If you found this helpful in crafting your comments, you are encouraged to browse the entire FERC Transmission NOI category at StopPATHwv.com for other useful material.  You don't have to comment on all aspects of the NOI if that's too burdensome.  In fact, if you want to concentrate in detail on just one aspect that interests you and about which you have strong feelings, that's a perfectly acceptable approach to producing effective comments.

In the NOI, Promoting Transmission Investment Through Pricing Reform, FERC is seeking comments about the effect of its incentives on promoting transmission.  If you're going to comment, you need to understand what the incentives are, and what they are intended to do.

FERC says that the granting of an incentive to a transmission project does not preclude the same project from receiving other incentives.  Therefore, they often grant multiple incentives and create a total incentive package that involves absolutely no risk for the transmission owner and their shareholders, and the promise of big financial rewards if a project is completed.  For example, the abandonment incentive allows the transmission owner to recover 100% of prudently incurred costs if the project is abandoned through no fault of their own.  Right there, all risk is removed from the transmission owners and investors and put upon the ratepayers, who shoulder all the burden without any stake in the process.  Once all risk is removed by the granting of this incentive, are any others necessary? 

A project can also receive the CWIP in rate base incentive, which allows them to begin earning a return immediately, while the project is in the planning and construction stages.  And about that return, it's very lucrative, with incentive ROE adders in addition to an already generous base rate.  After that,  FERC can also add in a generous hypothetical capital structure and recovery of pre-commercial costs, and then let the transmission owner recover their rewards at a faster rate through accelerated depreciation.  The effect of all this creates a sickeningly sweet feast that no corporation can resist. 

Because they can't lose, transmission owners will propose all sorts of projects that aren't needed and then try to hold on to them long after they should have rightfully been abandoned.  The transmission owners feel justified to go to whatever devious lengths and stoop to whatever nefarious deeds are necessary to obtain right-of-way and get needed state project approvals because the promised rewards are huge and there is no financial risk involved in failure.

As you contemplate the interrelationship of multiple incentives, keep in mind that FERC is attempting to strike an acceptable balance between consumer and investor interests and reduce your cost of delivered power!  On the investor side of the scale you have zero risk and huge financial incentives and on the consumer side of the scale you have all the risk of badly planned and executed transmission projects and huge financial costs.  Where's the balance?

In the real world, we know that too much of a good thing often has catastrophic results.  You need to explain that to FERC, in as plain a manner as possible.  On page 19 of the NOI, FERC asks a few questions about the interrelationship of incentives.  I'm sure you creative consumer "stakeholders" can make suggestions that the industry won't even ponder.  The industry will be letting FERC know how they can and should sweeten the pot even further for them.  It's up to you to provide balance with a little real world sanity.

If you found this helpful in crafting your comments, you are encouraged to browse the entire FERC Transmission NOI category at StopPATHwv.com for other useful material.  You don't have to comment on all aspects of the NOI if that's too burdensome.  In fact, if you want to concentrate in detail on just one aspect that interests you and about which you have strong feelings, that's a perfectly acceptable approach to producing effective comments.

In the NOI, Promoting Transmission Investment Through Pricing Reform, FERC is seeking comments about the effect of its incentives on promoting transmission.  If you're going to comment, you need to understand what the incentives are, and what they are intended to do.

The nexus test is the next step after the statutory threshold (rebuttable presumption) has been met.  The nexus test is supposed to ensure that the incentives granted are "rationally tailored to the risks and challenges faced by a project."  There is no actual "test."  The Commission states that the test is "not prescriptive by design."  In other words, it's completely subjective and hard to pin down.  Perhaps this is because it's impossible to make a rational decision based on subjective analysis. 

FERC believes that the "most compelling candidates for incentives are new projects that present special risks or challenges, not routine investments made in the ordinary course of expanding the system to provide safe and reliable transmission service."  Hey... wait a minute here!  Section 219 (b), which gives FERC their authority in granting these incentives says nothing about "new" projects.  In fact, Sec. 219 (b) specifically requires that FERC's incentive rule promote transmission improvements that:  Are economically efficient; that enlarge, improve, maintain and operate facilities; are related to transmission technologies; that increase the capacity and efficiency of existing transmission facilities and improve their operation; comply with mandatory reliability standards; and relate to transmission infrastructure development.  I don't see a thing in there about limiting incentives to "new projects," and in fact, it specifically calls for improving existing transmission facilities.  It also allows for "routine" projects such as those necessary to comply with mandatory reliability standards.  FERC has completely perverted the original intent here to encourage "new" transmission projects.  Is it any wonder that hugely expensive and totally unnecessary projects such as PATH have begun to proliferate while existing transmission lines like Dominion's Mt. Storm - Doubs and FirstEnergy's Mt. Storm - Pruntytown deteriorate to the point that they are in danger of falling down?  The PATH project satisfies NONE of the Sec. 219 (b) requirements.  PATH is just more of the same old technology we've been using for 100 years, just bigger, more expensive and more destructive.  There's nothing "technologically advanced" about PATH.  In fact, PATH ultimately became the rotten apple in the barrel that spoiled things for everyone else and caused FERC to re-examine their transmission incentives policies. 

But, back to the nexus test.  One of the Commission's criteria used in evaluation is whether the project is routine or non-routine.  According to the Commission, routine projects aren't eligible for incentives.  Again, this isn't in keeping with Sec. 219 (b).  However, in order to make a determination of the non-routine nature of the project being evaluated, FERC's criteria are:

• the scope of the project, including the cost, increase in transfer capability, and size
• the project's effect on reducing congestion and/or improving reliability
• the challenges or risks faced by a project, such as siting, long lead times, regulatory and political risks and financing challenges

What does the size of a project have to do with Sec. 219 (b)?  Bigger is not always better!  Project cost also doesn't correlate -- just because a project has a huge price tag on it doesn't necessarily mean it should be encouraged with incentives.  In fact, since the Commission is supposed to guarantee that rates are just and reasonable and not unduly discriminatory or preferential and Sec. 219 is supposed to reduce the cost of delivered power, this is diametrically opposed to their mission.  It's not about encouraging projects just because they are expensive!  Regarding a project reducing congestion and improving reliability, isn't that a separate test that's already been covered by the rebuttable presumption before a project actually reaches the nexus test?  And last, but certainly not least, utilizing a project's "risks" to evaluate its award of incentives is just plain wrong.  By categorizing as incentive deserving "risk" a project's siting, regulatory and political risks, FERC is encouraging and incentivizing bad behavior by project owners, which only compounds any risks of this nature.  As an example, let's look at the PATH project (oh, come on, you knew that was coming!).  PATH has engaged in a multi-million dollar propaganda, state regulatory commission lobbying and influence buying campaign that has been recovered from ratepayers.  They have defended themselves by stating that this campaign was necessary because of the siting, regulatory and political "risks" FERC recognized by granting them incentives.  And I suppose PATH also feels justified in their harassment, coercion and lying to landowners in an effort to get them to sign ROW and purchase agreements without the advice of a lawyer because of "siting risks."  This is outrageous!

Another of FERC's nexus test evaluations involves whether the project is individual or a group of projects.  FERC allows applicants to group projects so that one set of incentives covers them all.  This is bad practice considering FERC's decision in the partial abandonment of the TrAIL project.  When a distinctly separate portion of the TrAIL project (Prexy) was abandoned due to its failure to be granted approval in Pennsylvania, FERC determined that its abandonment was merely "an engineering and siting change" and instructed TrAILCo to recover all Prexy's costs, plus a 12.7% ROE, along with the rest of the project costs.  Prexy was never needed, as evidenced by it's willful abandonment by TrAILCo when denied a permit, but it was originally added in by TrAILCo to sweeten their profit margin.  If FERC will not allow abandonment of distinct project segments but only abandonment of entire projects, then projects should never be grouped and should be broken down into even smaller segments so that partial abandonment does not end up costing ratepayers additional unnecessary expense.

Now that you've been so patient reading along while I ejected a huge blast of steam, go look at FERC's questions about the nexus test beginning on page 16 of the NOI and formulate your comments/suggestions for FERC.  I'm sure you creative consumer "stakeholders" can make suggestions that the industry won't even ponder.  The industry will be letting FERC know how they can and should sweeten the pot even further for them.  It's up to you to provide balance with a little real world sanity.

If you found this helpful in crafting your comments, you are encouraged to browse the entire FERC Transmission NOI category at StopPATHwv.com for other useful material.  You don't have to comment on all aspects of the NOI if that's too burdensome.  In fact, if you want to concentrate in detail on just one aspect that interests you and about which you have strong feelings, that's a perfectly acceptable approach to producing effective comments.

I came across an article in the Charleston Gazette this morning and got a great big laugh out of it!  It's not that the subject is funny, it's the reactions of AEP and FirstEnergy to the petition as shown by the statements of their PR guys.

AEP spokesman Pat Hemlepp said Friday the utility is reviewing the petition. FirstEnergy spokesman Todd Meyers said "We will review the petition and respond appropriately."

Hmm... where have I seen those exact comments before?  I know!  It was in the power companies' press responses to the Formal Challenge Ali Haverty and I filed in January.  We filed it on a day when they weren't expecting it, and it was much worse for them than they had ever imagined.

Here's one of the many examples from Todd:

The formal complaint asks FERC to begin a broader investigation. Todd Meyers, spokesman for Allegheny Energy, said Tuesday by e-mail that the company would review the filing and respond appropriately.

Funny how the exact same words get used, isn't it?  Todd must have them printed out and taped up inside the footwell of his desk so that they're handy when he crawls under there to primal scream and sob uncontrollably about a PR "crisis" created when someone surprises FirstEnergy with a hard punch to the gut.

Here's a translation of "we will review the insert legal term for what they got clobbered with out of the blue and respond appropriately.": 

"OUCH!  That really hurt!  We didn't expect that and we have no idea how we're going to try to spin it yet!"

Surpriiiiiiiiiiiiiiiiise, Todd!  Hahahahahahaaaa.