Category: $$$$$$

No Thanks, FirstEnergy!

11/8/2017

You can keep your power plant.

That was the conclusion of the West Virginia Consumer Advocate in its reply brief in the matter of the sale of the Pleasants power station to regulated West Virginia affiliates Mon Power and Potomac Edison.

FirstEnergy has been engaged in a scheme to liquidate its failing competitive generation business. In states where generation is competitive, FirstEnergy is all about selling its money-losing assets. But in states where generation is regulated, FirstEnergy has been pursuing profitable "sales" of its failing assets into the regulated system, where it is guaranteed to recover all its costs to run the plant, plus a regulated profit. Several years ago, FirstEnergy was successful in selling one of its failing assets into the West Virginia regulatory system. Ratepayers have paid higher rates to operate "their" power station at a loss. ITYS. Now FirstEnergy has another failing asset for sale and it wants to double down on increased rates for West Virginia electric consumers. This hotly contested issue has been going on for the past year and is finally facing a decision by the West Virginia Public Service Commission.

Our Consumer Advocate, who represents the interests of West Virginia electric consumers, has done the math:

First, the rate benefit to residential ratepayers is a one year benefit of $11.52. The Companies provided no evidence of rate impacts beyond December 2018. The absence of this information is intentional.

As originally proposed by the Companies, if the acquisition of Pleasants is approved, there will be a $31,486,971 net decrease in rates for the 16-month period of September 1, 2017 through December 31, 2018, which is a 1.6% overall decrease. Residential customers would experience a decrease of about 0.9%. The decrease for a residential customer using 1,000 kilowatt-hours per month would be $0.96 per month, which would result in a decrease to $111.52 from 112.48 per month. It is important to note that the decrease in customer rates is guaranteed only through December 2018.

And that "decrease" is an estimate subject to true up with actual costs. Realized "benefit" may be less. In fact, any "decrease" could disappear entirely and turn into an increase.

As well, all risk from the sale of energy from the plant into energy markets will transfer from FirstEnergy shareholders to West Virginia electric consumers. In addition, the risk of owning and operating the plant itself (and its filthy ash pond) will also transfer to ratepayers. On your behalf, the Consumer Advocate says, "No thank you."

West Virginia captive ratepayers are not hedge managers or virtual traders in the PJM markets. If the Commission approves this transaction that is what they will become: buyers of significant surplus capacity that Companies are betting (on their behalf) will provide benefits for years into the future. Pleasants was rejected by FirstEnergy as too risky. The overwhelming evidence in this case contradicts all Companies’ claims that there will be any benefits to captive ratepayers. Now FirstEnergy wants Companies to manage that risk for 500,000 ratepayers. As the legal representative of ratepayers, no thank you. The Pleasants acquisition should not be approved.

If it's too risky for FirstEnergy shareholders, it's too risky for me. This should be a non-starter.

But yet the PSC Chairman is toying with the idea of a
"conditional sale." I guess he must be feeling the pressure from coal companies who don't want to see one of their buyers disappear, plant workers who don't want to see their jobs disappear, and the community around Pleasants who don't want to see one of their employers and tax payers disappear. Why is it up to West Virginia electric customers to suddenly provide these benefits to suppliers, workers and the community? When Pleasants was profitable, FirstEnergy took all the profits, setting nothing aside to compensate these parties at the inevitable time that the plant was no longer profitable. Perhaps it is FirstEnergy who should be saddled with the costs of its own failure. Ordering West Virginians to pick up the burden of FirstEnergy's failure is a losing proposition. How long should we do this? At what point will closure of this old power station release West Virginians from this burden? Will we be forced to pay extra to support coal companies, workers and communities in perpetuity because no one has the foresight to plan for the inevitable? This has to end, and responsibility for the failure should be placed on the party who caused it... FirstEnergy.

A "conditional sale" won't work out any better than FirstEnergy's last "conditional sale" of Harrison. Despite the PSC attaching "conditions" to protect ratepayers from that disaster, we've paid millions in increased rates. A "conditional sale" is a coward's solution to try to please everyone. And guess where the blame is going to go if a "conditional sale" ends up costing ratepayers more money?

The CAD must begin by emphasizing that if this transaction is approved the harm that redounds to West Virginia captive ratepayers will be a legacy of this Commission.

Why does the WV PSC Chairman want to accept blame for FirstEnergy's failure? Probably because he doesn't have to pay for it. You do.

No thanks, FirstEnergy.

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JCP&L Feels the RAGE

11/6/2017

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Bravo, RAGE! The Residents Against Giant Electric (RAGE) have identified a cheaper, less invasive alternative to JCP&L's Monmouth County Reliability Project (MCRP), currently before regulators.

At a press conference last week, RAGE shared its initial brief to Administrative Law Judge Gail Cookson at the New Jersey Board of Public Utilities in the matter of the MCRP. The brief is a summary of evidence leading to legal conclusions, and RAGE's brief was stunning. JCP&L "expert" witnesses were systematically unmasked and dispatched to the Land of Corporate Biased Quacks. JCP&L was demonstrated to have mislead the public about the MCRP, including hiding the true evolution of its project. The MCRP was dreamed up and a route chosen before PJM Interconnection found a need for it and ordered it to be built. And speaking of PJM, they didn't escape the dead-eye scrutiny of RAGE's legal team, who remarked:

The participation of Mr. Sims [PJM witness] in this proceeding as an enthusiastic cheerleader for an expensive and blighting transmission project even after being presented with a feasible non-generation solution to the P7 contingency raises very serious questions about the neutrality of PJM. As is the case with other RTOs, PJM is by law and FERC decisions supposed to be scrupulously neutral. While this is ordinarily taken to mean that it cannot discriminate in favor of one or more member utilities or independent power producers, it also means that PJM cannot be in the business of advocating a solution that has been given an “exclusive” to one of its member utilities. The Board should express condemnation of PJM’s role in this case.

Lots of transmission opposition groups have demonstrated that utility (and RTO) solutions to purported violations are massively expensive overkill that cannot be supported with transparent and accurate calculation, but RAGE took it one step further. They proposed a fully formed and vetted alternative solution that would not only cost $80M less than PJM's solution, but also would not require new greenfield transmission sandwiched between dense residential neighborhoods and a congested rail corridor.

During testimony, RAGE unveiled its alternative to the transmission line plan — an alternative the group says would cost 70 percent less, and present less danger to the community.

The group’s solution, backed by a power flow analysis and an engineering expert, includes the addition of two STATCOM devices — each about the size of an RV — at the Red Bank substation. It also calls for updating 11 of the existing 34.5 kV lines coming out of Red Bank.

“That’s it — all you need to do is update some existing lines that probably need replacing anyway, and add two big boxes to Red Bank, Kanapka said. “Do these two things and the P7 violation goes away, for a total estimated cost of just $30 million.”

In its most recent estimate, JCP&L said their project could cost $111 million, and that does not include the fee for usage of NJ Transit’s property.

Never underestimate your opposition, JCP&L! RAGE is obviously composed of a bunch of overachievers who leave nothing to chance. What was it General Yamamoto was supposed to have said [Hollywood version]?

I fear all we have done is to awaken a sleeping giant and fill him with a terrible resolve.

The RAGE giant isn't going away. Isn't it time for JCP&L to fall on its sword?

Not only has RAGE excelled at the regulatory game, it's also on top of its political game. Numerous candidates for elected office have fully endorsed RAGE and voiced their opposition to the MCRP. Good luck on election day to RAGE and its supporters!

What's next for this wildly successful transmission opposition group? Reply briefs to the BPU judge, an opinion on the MCRP from the judge, and then the entire case record is forwarded onto the BPU Commissioners for final decision.

My money's on RAGE for the win!

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More Than Meets the Eye?

10/30/2017

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There's that smell again... the pungent aroma of an overflowing outhouse on an August afternoon. The smell seems to be coming from Clean Line Energy Partners. Again.

What do Russian investment schemes, tax fraud, human rights violations, and clandestine meetings have to do with Clean Line Energy Partners? I'm not really sure but there's an aroma that's hard to deny. Somewhere embedded in this scandal is Ziff Brothers investments, the same Ziff brothers who held a majority interest in Clean Line Energy Partners until recently out-invested by Bluescape.

Bluescape has invested more than $73M in Clean Line? Why? Clean Line hasn't been making any headway in getting its proposed projects approved and built. Instead, Clean Line seems to be regressing with the recent crop of court opinions that invalidated permits previously granted, or prevented new permits from being issued. Where's the draw? What makes investing in a company that is retreating further and further from realizing revenue so attractive? Do you smell it?

Now we find Clean Line investor Ziff Brothers smack dab in the middle of today's Russian scandal. The accusation has been made that Ziff Brothers evaded taxes in Russia in the amount of millions, and may ultimately own shares in a Russian company that foreign interests are prohibited from owning. And this isn't the first time Ziff Brothers got a mention in some foreign corruption scandal. There was the African thing. Accusations have been made in Australia.

But what's going on here at home? News reports indicate: "According to available information, the Ziff Brothers were involved in funding both of Obama's election campaigns and have been dubbed by the U.S. media as `the Democrats' main sponsors," Veselnitskaya wrote, in a Russian language document translated by NBC News."

And we've yet to uncover what exactly prompted the Obama administration's Department of Energy to use Section 1222 of the Energy Policy Act as a vehicle to promote Clean Line through a shady RFP with extra-statutory provisions for "renewables" and the subsequent murky two-step march to ramrod it through without proper due process.

Clean Line still bravely claims that its projects are "moving forward," despite its obvious lack of customers and revenue prospects. And investors keep investing in the company, long past the time when any other legitimate transmission company would have abandoned the idea. Other companies have shareholders they have to answer to, and public scrutiny of their finances. Clean Line? Well, it's not a publicly traded company, and it has no public rate structure. It's all a murky mystery. How does a company that hasn't built anything and has no revenue spend upwards of $200M attempting to get permits? Is this all on the up and up?

And when might the U.S. Dept. of Energy launch an investigation of the Sec. 1222 process? Or does the DOE enjoy "participating" in a transmission project with a third-party investor mired in the current Russia scandal? Has our own government participated in this international scheme?

Money, politics, money, influence, money, shell companies, money, tax evasion, money, money, money. And what's that smell?

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Southern Cross Transmission Wants a Free Ride From Texas Ratepayers

10/11/2017

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That seems to be the conclusion of the Public Utility Commission of Texas (PUCT) in its most recent Order regarding the Rusk to Panola transmission connection that will move cheap electricity out of Texas as part of the Southern Cross Transmission project.

Southern Cross is another merchant transmission project supposedly "for wind" that wants to export cheap Texas power into Southeastern states via a new 400-mile HVDC transmission connection. A "merchant" project is one for which investors shoulder the risk because it doesn't have a guaranteed ratepayer-financed revenue stream. Merchant projects are not found needed for reliability, economic, or public policy purposes, therefore ratepayers shall not be forced to finance them. Merchant projects generally negotiate rates with willing customers to finance their projects.

Southern Cross had to jump an additional hurdle that other Midwestern merchant projects did not. Southern Cross proposes to export wind generated transmission from the Electric Reliability Council of Texas (ERCOT) into another electric region. ERCOT is its own little one-state electric region island in order to escape the jurisdiction of the Federal Energy Regulatory Commission (FERC) that applies to other multi-state electric regions. In order to connect ERCOT resources to another region, Southern Cross went through a process at FERC that allowed the connection without compromising ERCOT's independence. Part of that deal required a connection from within ERCOT to another portion of Texas that was not within ERCOT. This is the proposed Rusk to Panola project, a double-circuit 345kV line. Southern Cross's transmission project would then connect to this project and move the electricity further across Louisiana and Mississippi, and connect with the grid in Alabama. Rusk to Panola (known as RPTP by Southern Cross) is only necessary to provide electricity to Southern Cross. RPTP needs the permission of the PUCT to build the project. While PUCT acknowledges that it must approve the project, it may do so with conditions. And the conditions PUCT placed on its approval have been met with resistance by Southern Cross.

Holy shell companies, Batman! RPTP is supposedly owned by the City of Garland, Texas, but will be paid for by some entity known as Rusk Interconnection, LLC. Just like peeling an onion... layer after layer after layer... but back to the main event...

PUCT has directed that any costs caused by the RPTP be assigned to Southern Cross Transmission, and not ERCOT ratepayers. ERCOT ratepayers are already shouldering the burden of ERCOT's CREZ projects, a series of new transmission lines intended to move wind-generated electricity from western Texas to load centers in the eastern part of the state. CREZ hasn't come cheap for ratepayers, and it looks like Texas may have overdone it, supplying so much "cheap" wind power that there is a surplus. Southern Cross proposes to alleviate that surplus by exporting it to other states. But yet, Southern Cross doesn't want to pay the full cost of its project's effect on the ERCOT system, instead purporting that ERCOT ratepayers would receive some "benefit" from Southern Cross and must therefore pay for that "benefit." Except these aren't "benefits" that ERCOT ratepayers need. At best, they are "benefits" that ERCOT ratepayers don't need or want, "benefits" that are foisted upon them because of Southern Cross's project. Who wants to pay for "benefits" they don't need?

PUCT says:

The current market design in ERCOT primarily places the responsibility for system costs on ERCOT customers. This docket has revealed that the Southern Cross DC tie will result in additional costs to ERCOT, which include extraordinary costs that arise specifically from the Southern Cross DC tie, the Garland line, and the Garland or Oncor substations. Because the customers of exported power are not ERCOT customers, under the current market design and rules, they will not bear any responsibility for the extraordinary costs specific to the Southern Cross DC tie, Garland line, and Garland or Oncor substations that they impose on the ERCOT system. Southern Cross believes that those customers—and therefore Southern Cross—should get a free ride as to these extraordinary costs. The Commission disagrees and determines that the public interest demands that ERCOT ratepayers should not bear any of the costs associated with the Garland line, the Oncor substation, the Garland substation, or the Southern Cross DC tie that are properly borne by others.
The costs that a user of the ERCOT system causes cannot be determined simply by focusing on the costs of the facilities on the last forty miles of a multi-thousand-mile network. There is little doubt that additional facilities will be required in ERCOT because of the electricity flowing over the Southern Cross DC tie. Southern Cross believes that the costs of those facilities should be borne by customers in ERCOT, not the out-of-ERCOT customers that cause those costs. And Southern Cross opposed even an investigation into whether revisions to the current ERCOT cost-allocation method were needed. Southern Cross attempts to justify this free-ride position based on theoretical benefits that this project will provide to ERCOT.

The Commission agrees, however, that no party met the burden of proof to prove what benefits, if any, Texas ratepayers will enjoy as a result of the Garland line and the Southern Cross DC tie and concurs with the ALJs that any benefits are questionable. This is one of the issues that will be evaluated by ERCOT and if subsequent investigations show any benefits, then any such benefits could be reflected in the new market-design rules. The record in this case does not justify a free ride for these questionable benefits. Texans are in the process of paying billions of dollars for the newly constructed CREZ transmission lines, and for substantial other facilities, that are integral to transmitting electricity to the Garland line and the Southern Cross DC tie. As proposed by Southern Cross Transmission, the Garland line would simply interconnect with these CREZ lines and reap benefits without paying its fair share of costs.

Further, Southern Cross argues that the DC tie will not cause a substantial increase in ancillary services needed in ERCOT, and that no change in the current manner that ancillary costs are assigned is necessary. Southern Cross argues that the DC tie should get a free ride on these extraordinary costs also. The Commission agrees that this is a highly technical question and has requested ERCOT to evaluate this matter. The Commission also agrees, however, with ERCOT and other parties that additional ancillary services will likely be required to support the operation of the DC tie, and at certain levels, that requirement may be significant. And, as with the other extraordinary costs discussed in this Order, it is appropriate that the cost causer be responsible for the costs, not for ERCOT customers to bear the costs of others. The Commission does note that Southern Cross softened its position some by agreeing that it could and would provide reactive-power service through the DC tie.

One benefit offered by Southern Cross is the lowering of the price of electricity in ERCOT during high-load periods. However, Southern Cross Transmission's analysis does not appropriately account for the effect on the ERCOT energy market, which sends market signals through scarcity pricing when electricity resources are becoming scarce. Distortions to ERCOT's market signals could prevent the energy-only market from appropriately responding to shortages, leading to inadequate resources in this market. This risk to ERCOT's market structure and the grid's reliability must be assessed and addressed through recommended changes.

PUCT did a great job fishing out the "but for" costs of the project, that is those costs that would not occur "but for" the construction of RPTP. Other states could take a lesson from this Order.

Southern Cross has asked for another rehearing on this matter by PUCT. Just paying their own way doesn't seem to be an option for Southern Cross. Is that because the project is not profitable unless it is subsidized by ERCOT ratepayers?

Meanwhile, Southern Cross doesn't seem to be very popular in Mississippi, where numerous landowners have intervened in the permitting process at the Mississippi Public Service Commission. Bravo, landowners! To see the Mississippi docket, go here and search for Case Year 2017, Case Type UA, and Case No. 079.

Southern Cross seems to have at least as many problems as the Clean Line projects proposed to its north. It's a fact: Landowners in fly-over states object vociferously to the use of eminent domain on their property to benefit electric ratepayers in other states and financially support private enterprise that wants to make a killing speculating in the electric power markets. Multi-state transmission projects "for wind" are money pits on regulatory minefields that will never succeed.

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Transource Lies About Project Benefits

10/9/2017

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It's a noun, not a verb.

When Transource was faced with the reality that its Independence Energy Connection (also known as "Projects b2743 & b2752" and "Market Efficiency Project 9A" in PJM parlance) did not provide much benefit to the geographic area sacrificed for the new transmission lines, it re-wrote its project "Fact Sheet" to gloss over this shortcoming.

Transource now says:

Who benefits from the project? For this project, PJM projects $622 million in cost savings for consumers in 10 power zones. Those zones are listed below and displayed on the map to the right. Generally speaking, when low-cost electricity is introduced into the market, it helps drive the overall competitiveness of the electric grid for all power zones.

Benefiting Power Zones Identified by PJM:

American Electric Power Co., Inc, Allegheny Power Systems, Baltimore Gas & Electric, ComEd, Dayton Power and Light Company, Duke Energy Ohio and Kentucky, Duquesne Light, Dominion, East Kentucky Power Cooperative, Potomac Electric Power Company.

The high-voltage electric grid operates across towns, counties and state boundaries. As such, the benefit of this project is not confined
to geographical boundaries. Customer-driven improvement projects in one area of the grid can benefit customers on another part of the electric grid. For example, recent improvements made in Indiana and Westmoreland counties, more than 100 miles away, improved how the grid operates in York County.

And here is the power zone map supplied by Transource.

Transource wants the public affected by this project to believe that benefits will be spread evenly over all power zones.

But that is not the case. Transource must have run out of room because it did not also supply the Cost Responsibility percentages for the power zones on its map. Or maybe they purposely didn't include it because it did not support their propaganda narrative.

One of the most basic rules of assigning cost responsibility for new transmission projects is that cost must be commensurate with benefit. Therefore, the first step to assigning costs to certain zones is to determine benefit for each zone. PJM did that analysis and posted its cost responsibility assignments here.

Since cost is directly proportional to benefit, you may interpret this chart to show the percentage of benefit to each power zone.

AEP zone = 6.56%
APS zone = 8.73%
BGE zone = 19.73%
ComEd zone = 2.16%
ConEd zone = 0.06%
Dayton zone = 0.59%
DEOK zone = 1.02%
DL zone = 0.01%
Dominion zone = 39.92%
EKPC zone = 0.45%
PEPCO zone = 20.87%

If you add up the BGE (Baltimore Gas & Electric), Dominion (Northern Virginia) and PEPCO (Washington, DC) zones, you will get 80.52%. That means that 80.52% of the benefits of this project will be confined to those zones. Baltimore, Northern Virginia and Washington, DC, will receive more than 80% of the benefit from this project.

There will be no new transmission lines in Baltimore, Northern Virginia or Washington, DC (oh, the horrors, the horrors!). If PJM tried to build new transmission in these urban areas, even to lower prices by a few cents per year, the pushback would be enormous. Instead, PJM (and Transource) have moved the burden of new transmission lines into the APS zone (8.73% of project benefit) and Metropolitan Edison Co. zone (ZERO percent of project benefit). The APS zone will receive just 8% of the $622M benefit, but it will shoulder 100% of the project burden. In the case of MetEd, the people will shoulder 100% of project burden in exchange for... NO BENEFIT WHATSOEVER.

So, when Transource says that everyone benefits, that's just not true. Some benefit more than others. And the ones receiving the lion's share of benefit from this project are people who have sacrificed absolutely nothing in exchange for saving a few pennies on their electric bill.

As well, "generally speaking" providing new pathways for power exports from a constrained area serves to raise prices for the previously constrained area. If an area is flooded with cheap power that has no where else to go, competition is at work to keep prices at the lowest possible. Once the area is no longer constrained, the area must now compete for pricing with new areas where power is more expensive. If a generator can sell its power at double the price in Baltimore, it has no incentive to compete with other suppliers to keep prices low in the previously constrained area. Instead, power prices in the previously constrained area will rise, becoming competitive with prices in Baltimore. Market efficiency transmission projects perform a leveling of prices across certain regions between source (generation) and sink (power users). Transource forgot to tell you this, as well.

Baltimore, Northern Virginia and Washington, DC, will receive more than 80% of the power savings from this project. Transource has lied through omission.

Hmm... maybe it is a verb after all.

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Maryland Sues States for Providing Cheaper Power for Marylanders

10/6/2017

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No, that's not a riddle. Maryland really is suing neighboring "upwind" states who foul its air with their fossil fuel burning electric generators. According to The Baltimore Sun:

The lawsuit seeks to require 36 generating units at 19 plants in upwind states to install the same scrubbers and other air-cleaning technology that Maryland requires plants within its borders to install.

Maryland produces little of the electric energy it consumes. How little?

Maryland's electricity consumption exceeds its net generation. Almost half of the power consumed in the state comes from the PJM Interconnection, the Mid-Atlantic regional electricity transmission grid.

...according to the U.S. Energy Administration. Maryland is an energy leech, sucking "dirty" fossil fuel electricity from neighboring states. And now Maryland is suing those states to demand they clean up their cheap, dirty generators.

Also in the works is the Independence Energy Connection, a set of new transmission lines intended to funnel more dirty Pennsylvania electricity to Maryland. Grid planner PJM Interconnection says that the project will produce lower electric costs for Marylanders, especially in the Baltimore metro area.

But what if Maryland's lawsuit is successful and those cheap and dirty Pennsylvania generators PJM is counting on are required by court order to install new scrubbers and air cleaners? The cost of that equipment is going to increase the cost to produce that dirty power to be shipped to Maryland by IEC in the future. I'm going to make a wild guess here that the increased cost of power produced in Pennsylvania is going to change the projected economics of the IEC significantly, negating any benefit at all. No benefits, no need to construct IEC.

Maryland has also recently outlawed shale gas fracking. Maryland doesn't want to compromise its own environment to produce cheap shale gas, but yet it has no problem helping itself to cheap shale gas electricity produced in the fracking state of Pennsylvania.

Maryland, you're a big, fat hypocrite. How about you stop depending on dirty fossil fuel generators in other states and step up to produce your own clean electricity? You've got an ocean of offshore wind opportunities just off your shore. Offshore wind is so clean it produces no emissions at all. Start walking your talk, Maryland!

But wait, clean electricity is more expensive! And Maryland doesn't want to pay more for electricity. It wants to pay less by supporting the construction of new transmission lines from dirty Pennsylvania generators.

You can't have both, Maryland. What's it going to be? Cheap electricity? Or clean air? Or you could just shut off the lights.

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FirstEnergy's Cornucopia Runneth Over

10/4/2017

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What happens when a company plants too many greed seeds and they all ripen at the same time? Dilemma!

FirstEnergy has been experiencing a serious issue with low market prices in PJM making its merchant coal-fired generators unprofitable over the past few years. FirstEnergy's merchant generation company is in serious trouble, with the word "bankruptcy" being mentioned more than once. These generators operate on a market basis -- that the cost to produce power (plus a profit) is recovered in the sales they make. If it costs more to produce power than can be recovered through sales, then these generators create a loss, not a profit.

Instead of simply selling these money-losers at a loss and shedding the liability though, FirstEnergy got greedy and has tried to turn them into a profit for the company. FirstEnergy has been busy trying to stash these plants into its affiliates' regulated rate base in fully regulated states like West Virginia. Once successful, the plant can earn "cost of service" rates at the state level, where FirstEnergy is fully compensated for the cost of operating the plant, plus a regulated profit, by captive ratepayers. Any excess generation produced not needed by affiliate load is sold in the unprofitable regional energy market. And affiliates don't need the generation from these plants when they can purchase cheap power in regional markets instead. Any loss from selling excess power at rates that don't cover the cost to produce it are covered by the affiliates' captive ratepayers. Such a scheme! Why it's positively brilliant to generate a profit from an asset that has been producing a loss!

And so that's what FirstEnergy did. It sold its money-losing Harrison Power Station to Mon Power and Potomac Edison, which has produced a $160M loss to ratepayers in just a few short years. And it is currently deep into the process of selling its Pleasants Power Station to Mon Power and Potomac Edison as well, which will produce additional losses for ratepayers in the future.

But then what happens if the energy markets recover and coal-fired plants are once again made profitable through new revenue streams meant to compensate them for "resilience" and other currently uncompensated benefits provided by baseload generators with on-site fuel supplies? Will new market rules make merchant generators profitable again? Will FirstEnergy suddenly want to own merchant baseload plants again? And, more importantly, will Mon Power and Potomac Edison suddenly want to "sell" these formerly merchant plants back to its merchant generation affiliate because they make more money as merchants than they can in a state regulated system?

What's a greedy company to do?

FirstEnergy, along with other merchant generators, has been pumping the political well for years trying to find some mechanism to make merchant plants profitable again by raising market prices. When that didn't happen quickly enough, FirstEnergy charted a course to dump its unprofitable merchant generators in the state regulated system.

But suddenly, the political seed has sprouted! Last week, Secretary of Energy Rick Perry lobbed a curve ball at FirstEnergy. Perry issued a Notice of Proposed Rulemaking at FERC that requires:

Each Commission-approved independent system operator or regional transmission organization shall establish a tariff that provides a just and reasonable rate for the (A) purchase of electric energy from an eligible reliability and resiliency resource and (B) recovery of costs and a return on equity for such resource dispatched during grid operations. The just and reasonable rate shall include pricing to ensure that each eligible resource is fully compensated for the benefits and services it provides to grid operations, including reliability, resiliency, and on-site fuel assurance, and that each eligible resource recovers its fully allocated costs and a fair return on equity.

The Rulemaking also defined just which resources would not be subject to the new rule, such as those generators "subject to cost of service rate regulation by any state or local regulatory authority."

So, if FirstEnergy is successful in "selling" Pleasants to state regulated Mon Power and Potomac Edison, it cannot take advantage of any new rule to make its merchant plants profitable again.

FirstEnergy must now consider a gamble. Will the new rule happen, and if it does, will it make Pleasants more profitable than it might be in the state regulated system? Or should it continue on with its plans to sell Pleasants into the state regulated system and possibly lose future profits? Or might FirstEnergy have the best of both worlds by selling Pleasants into the state regulated system now, with the intent of buying it back at a later date if the new rule happens and it proves more profitable to operate the plant as a merchant generator? After all, the West Virginia Public Service Commission is just a patsy, standing by to assist while FirstEnergy buys and sells generators into and out of the state regulated system in order to squeak the most profit out of them.

Will West Virginia ratepayers be left holding the bag on FirstEnergy's losses from Pleasants forever more, unable to take advantage of any new rule? Or will FirstEnergy change its mind and decide to gamble that Pleasants will once again be profitable for them under any new rule and withdraw its request to sell Pleasants to Mon Power and Potomac Edison? Or will the WV PSC actually grow a set and deny FirstEnergy's request to sell Pleasants, forcing the company to rely on other new alternatives to bail itself out of bankruptcy, such as new rules?

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Looks Like Clean Line Has Overstayed its Welcome in Missouri

9/13/2017

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The St. Joseph News-Press published an editorial today stating:

Officials with Clean Line Energy Partners are complaining about Missouri and its set of laws, as if the company didn’t know what it was getting into when it proposed stringing a high-voltage power line across the state.

The editorial went on to say:

...the problem is Clean Line has not yet done enough to allay concerns of key decision-makers — in this case, county commissioners who by law have a big say in this matter.

And concluded with this:

Our preference is for Clean Line to continue to negotiate with the counties where it has met opposition. Short of that, both opponents and Clean Line should expect to be governed by the web of laws and regulations — both state and federal — that govern these matters.

Clean Line's insistence that Missouri law must be changed to accommodate its desire to be above the law and build its project without county assent doesn't seem very popular with Missourians. And it's not just project opponents anymore. It's now the editorial board of a large newspaper, too.

The sheer arrogance of these out-of-state interlopers will be their undoing.

The News-Press must realize that the only thing standing between Clean Line and its success is... well... Clean Line! During recent oral argument before the Missouri PSC, Clean Line begged the PSC to issue an advisory opinion on the merits of the project, even if the PSC denied the project. Clean Line's attorney told the PSC that it needed that advisory opinion to take to the counties in order to convince them to assent to the project.

CHAIRMAN HALL: Yes, I have a few. I want to start with your alternative argument that
the Commission go through the Tartan analysis, determine that Grain Belt has met each of those factors, but then withhold issuing the certificate. Would that be an appealable decision?
MR. ZOBRIST: I think it would be because if you construe Neighbors United to say that you cannot issue a CCN, you're making these other findings and you're simply withholding it at that point. To be honest, I really haven't thought through that. It may be -- it depends on what your language is. I think if you say that this part is final, you view it as appealable, that that might be something for us to take a look at because it may not be an appealable order until either --
CHAIRMAN HALL: I think that would be your worst-case scenario. Then you're sitting in limbo here and you can't take the order up. MR. ZOBRIST: Well, I'm being the optimist, Chairman. I'm assuming we get favorable factual findings on the public convenience and necessity. We'd use those to go to the county commissions and say the Public Service Commission has weighed in and says the public is not going to be harmed and you should issue your county assents and then we'll be back. Now, if you -- if you deny it, if you dismiss it, then I think --
CHAIRMAN HALL: Well, that's --
MR. ZOBRIST: Pardon me. Go ahead.
CHAIRMAN HALL: That, to be perfectly blunt, seems a little naive to me that this commission's decision on public interest is going to sway the county commissions, and so --
MR. ZOBRIST: Like I said --
CHAIRMAN HALL: I think the reality is that that would be almost your worst nightmare because then the case just sits in limbo here and you can't take it up on appeal.
MR. ZOBRIST: Well, let me put it this way. The nightmare is if you just dismiss it out of hand because then the project's dead. The
problem --
CHAIRMAN HALL: I would say that's better than this because at least then -- oh, okay. I'm sorry. I'm with you now. Keep going.

But Clean Line has used the PSC's "concurrence" on the project's merits for everything BUT going to the county commissions. The county commissions haven't heard a peep out of Clean Line in months. Now Clean Line and its environmental friends from the big cities want to use it to change Missouri law for their own benefit.

And the people of Missouri perhaps think that's a step too far for a bunch of interlopers who want to use Missouri land and resources for their own gain. Clean Line is financed by deep pocketed investors from New York, Texas and the United Kingdom. None of these investors live or work anywhere near Missouri and won't have to suffer the consequences of their own actions. These investors have knowingly funneled around $200M into a very risky investment in Clean Line Energy Partners. When Clean Line goes belly up, these investors lose their entire investment in the company. I'll assume these sophisticated investors went into this transaction with their eyes wide open, so they must not have invested more than they could stand to lose. They'll probably hardly feel it. On the other hand, the damage to Missouri would now not only be a scar on its landscape and an obstacle to its productivity, but a long-lasting surrender of its authority through legislative change. I don't think Missouri is going to lay down willingly, and instead of winning the state's cooperation, Clean Line has obliviously lit a fire in Missouri's belly.

Perhaps Clean Line's executives don't really care if they ever build a project or not. Perhaps their only interest at this point is to continue their own personal gravy trains as long as possible, even though they realize this train is headed for a gorge where the bridge is out. As long as the investors keep handing them cash to engage in hopeless battles, like trying to get Missouri to legislate away its own authority, the executives continue to live high on the hog. That could be the only explanation for why Clean Line even wants to engage in Missouri when the fate of this project is currently in the hands of the Illinois Court system.

Did you listen to the oral arguments at the Fifth District Court of Appeals on the Illinois Commerce Commission's grant of a permit to Grain Belt Express under the wrong statute of Illinois law? If you haven't, you should. Based on questions from the justices, it isn't looking too swell for Clean Line, although the Court has yet to issue its opinion in this case. The opinion can come at any time.

As well, did you watch to the oral arguments before the Illinois Supreme Court on whether the Rock Island Clean Line can ever be considered a public utility? That didn't go so well for Clean Line either. An opinion could be issued at any time. And, if RICL isn't a utility under Illinois law, then neither is GBE. The Court's opinion can yank the rug right out from under both Clean Line's Illinois projects at any time.

And speaking of the Rock Island Clean Line, did you know that the Iowa Legislature legislated it's ability to use eminent domain out of existence during its last session?

May 12, 2017
Today is a day to celebrate!! It is a historic day for property rights!
Governor Branstad signed a bill Into law forbidding merchant high voltage transmission lines such as RICL from having condemnation power to take private property by eminent domain. Click here to read
Senate File 516: an Act relating to state and local finances by making appropriations providing for legal and regulatory responsibilities, concerning taxation, and providing for other properly related matters, and including effective date and retroactive applicability provisions. This bill passed the Iowa House on April 21, 55-39 and the Iowa Senate on April 21, 27-13.
Read the language related to merchant transmission lines beginning on page 18 of the bill.

And then let's take a peek at Clean Line's Plains & Eastern Clean Line that wasted more than $15M getting the U.S. DOE to "participate" in its project in order to usurp the laws of Arkansas. Despite DOE's decision to "participate" in this project 18 months ago, it's no closer to actually being built. In addition to being the subject of a lawsuit in federal court, Plains & Eastern has no customers to finance the project. No revenue, no project. Plains & Eastern is stalled out, making no progress whatsoever.

Honestly, I don't think Clean Line Energy Partners is ever going to accomplish anything, except to spend its investors' money tilting at windmills and engaging in hopeless and increasingly expensive battles at the state and federal level. How much longer must the party in Houston go on?

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FirstEnergy's Dog and Pony Show Tours Martinsburg

9/12/2017

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FirstEnergy's dog showed up to listen to the local ponies whinny and chomp at the bit last night in Martinsburg. It was all so predictable. How many times have we done this in recent memory?

Utility proposes some scheme that will increase its profits. Regulators schedule the required public hearings and maybe one will show up in your locale. The regulator sits at the front of the room and "listens" to the public comments while trying not to look bored. Earnest public ponies put forth time and effort to attend and speak from the heart, hoping they can say something that gets through to the regulator. A court reporter transcribes the comments into a written record that can be read by the other commissioners, or perhaps used as evidence when a decision is issued. I seriously doubt that anyone at the WV PSC even reads the public hearing record, and I've never once seen anything from a West Virginia public hearing used as the basis for any decision. Why? Because the WV PSC is the utility's dog, captive and controlled like any good pet on a leash.

The WV PSC is a captured, reactive regulator who prefers to follow a utility's lead to set policy. The WV PSC isn't a leader, it's a follower. Without a clear vision of its own regarding how utility policy should work in the best interests of the state, the WV PSC allows utilities to chart our course by merely reacting to utility proposals. While other regulators have clear policy goals and demonstrate leadership to utilities by setting the standards that shape utility proposals, West Virginia prefers to let utilities shape the regulatory landscape.

It shouldn't come as any surprise, considering WV's regulatory leadership. C'mon, the WV PSC is lead by a former utility lawyer who took direction from utilities for his entire career. Why would anyone think he'd become a utility leader when sliding through the revolving door from regulated to regulator?

The WV PSC believes its mission is to "balance the interests of all parties." It shouldn't be. As a fully regulated state, the WV PSC should be a utility leader. Regulation is the price utilities pay for the privilege of operating a monopoly for a necessary public service. Regulation is supposed to serve as a substitute for competition where none exists. If a utility cannot perform in the public interest, then it should lose its franchise privilege, allowing others to compete for the privilege of serving the captive customer base.

Instead, the WV PSC behaves as if we must keep the utility happy and healthy, and puts the utility's interests first in any proposal before them. The captive customers the PSC is supposed to protect become nothing more than chattel, used to support utility profits. The WV PSC doesn't care what the customers want, nor what is truly best for the customers. The WV PSC has become completely detached from the public interest, only serving political interests that the utility purchases.

Commissioner Brooks McCabe presided over last night's public hearing in Martinsburg, looking like a brave little puppy, absorbing public scorn over FirstEnergy's proposal to sell a failing asset into West Virginia's regulated system in order to bail out the company. He began the meeting reading a description of the case and giving an overview of the proceedings thus far. He mentioned over 900 comments in opposition to the proposal, balanced by something like 35 comments in support. The audience laughed. If it were all about balancing the interests of all parties, this case would be over.

The few brave souls who made comments in support of FirstEnergy's proposal were all motivated by money, whether it was as a contractor whose income depended upon future operation of a failing power plant, or some political creature dependent on campaign contributions and quid pro quo. And then there were the unions, rightfully concerned about the future of the plant employees, however misguided they were in where funding for power plant jobs would come from in the future.

FirstEnergy has owned and operated Pleasants as a source of profit. The hardworking men and women who have kept this financial asset of FirstEnergy performing for many years have done an admirable job. FirstEnergy owes them a huge debt for their faithful service. But FirstEnergy doesn't care about them, FirstEnergy only cares about profits, and Pleasants is no longer profitable. FirstEnergy owes its workers a soft landing and transition into other jobs of equal pay and responsibility. But FirstEnergy wasn't squirreling away a tiny portion of its profits over the years into a soft landing fund for benefit of its workers. FirstEnergy spent every last penny of the profit these workers created on other important things, like naming rights to a football stadium, or a corporate jet and tax planning services for its over-compensated executives. Now that Pleasants is no longer profitable, FirstEnergy and the PSC believe captive ratepayers should pick up the burden of supporting Pleasants employees and the economic contribution it makes to its community. But the ratepayers never shared in the profits from the plant when times were good, it is only after the profits evaporate that FirstEnergy wants to pass the cost burden onto captive ratepayers. There's no "balance" here either.

A regulator who was a true utility leader might put an end to ratepayer-financed corporate welfare. It would make the utility responsible for the failure of its asset, including the economic impact to its workers and the surrounding community. A true utility leader would chart a clear course for a solid energy future in the public interest for our state, and require franchised utilities to adhere to it or forfeit their franchise privilege.

But we don't have a true utility leader. We have a corrupted and captive utility follower.

Thankfully, there are stronger, smarter, policy leaders in other regulatory venues who also have authority over FirstEnergy's proposal, because the WV PSC is a lost cause.

Neigh.

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Missing Buyer Syndrome

9/5/2017

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Say what? "Missing buyer syndrome?" That's not a "syndrome," that's a capitalism fail. If someone offers a product or service that nobody wants to buy, it's not a "syndrome" that can or should be cured. It simply means that the product or service offered is not marketable, not needed, and not beneficial to targeted customers.

Except what if the seller wants to force the purchase of its product or service because it sees an opportunity to make a lot of money if someone buys the product or service? Then it's a "syndrome" that must be cured through government intervention. That's absurd. Why don't we call it what it is... government-facilitated corporate greed?

"Missing buyer syndrome" is the bastard child of greedy corporations who want to make a bundle of money building new wind farms in the Midwest and huge new transmission lines to move the electricity generated to population centers.

The proposed Chokecherry Sierra Madre wind energy project could face challenges selling power in the desert southwest, officials told lawmakers in Casper last week.

The energy generated from the proposed 1,000-turbine site will be carried along a high power transmission line to California and the desert southwest.

California, however, is being difficult.

“We have a huge issue in California in that Californians would like to keep all of the development and buy all of their power from within their borders,” she said.

“We call it the missing buyer syndrome. The need is still there … we believe the market is there, but we are right now caught in a limbo.”

Ah, sweetcheeks, if your buyer is "missing" then there is no market. There is no need. There is no "limbo." It's simple supply and demand. Economics 101. It's not up to Wyoming, or Chokecherry Sierra Madre Wind, to determine what energy suppliers in other states buy. Nobody cares what you think, especially because you're driven by greed.

And here's another "missing buyer" for a greedy company that also found there was no demand for its service.

Clean Line Energy Partners, a Houston-based company that proposes to bring wind-generated power from Oklahoma and Texas to the Southeast along a $2.5 billion transmission line, says it could deliver power to TVA at less than 2 cents per kilowatt-hour.

But the utility has yet to commit to buying any of the 3,500 megawatts of wind-generated power Clean Line Energy will bring to the western edge of TVA's territory along its 720-mile transmission line from near Diamond, Okla. TVA said it doesn't need more power generation because of the stagnant demand for electricity in its seven-state region, and Johnson said TVA still would have to maintain or build other generation capacity to make up for the Clean Line energy when the wind doesn't blow.

"The price [from Clean Line Power], in and of itself, is a good price for wind," Johnson said. "But it actually costs us a lot more to import it and to make sure we have gas plants running or capable of running in case the wind doesn't show up."

Johnson estimates having the additional capacity to make up for when the wind doesn't blow or the sun doesn't shine typically adds at least 2 cents per kilowatt-hour to the quoted price of such renewable energy.

"At the moment, we have yet to conclude that [buying power from Clean Line Energy] is the right fit for what we are doing," he said.

"But I am mostly pro consumer, so we want what is the best price, the most reliable and the cleanest power for the consumer," he said. "Given our demand projections, we actually don't need any additional generating capacity at this time."

But yet environmental groups continue to sing and dance at each quarterly TVA board meeting, and certain news outlets continue to eat it up and present it to the public as if environmentalists are better at planning and running the TVA system than the slate of professional economists and engineers employed by TVA. Unlike urban environmentalists, TVA professionals plan its resources based on need and economics, not some pie in the sky environmental goals. TVA is "pro consumer." Environmentalists are "pro environment," no matter the cost. Clean Line and other wanna be transmission developers are "pro profits." The only one in this menage a trois who is looking out for consumers is the TVA.

And how do these greedy corporations think they can cure "missing buyer syndrome?"

The Trump administration could help by pushing for an infrastructure package that would see the government “buying down a portion of the capacity” on big transmission projects so they can enter construction more quickly, or perhaps through an investment tax credit, Skelly suggests.

“All the ideas come down to a temporary underwriting of the project so you can get these things over the top, or some sort of tax mechanism.”

This one wants to force the federal government to take the place of the "missing buyer." And if the federal government became the "missing buyer" then its customers would be forced to shoulder economic risk and financially support corporate greed through higher electric rates.

The Anschutz Corp. wants state governments to force "missing buyers" to purchase its product and service through legal mandates. It's all the same corporate greed looking for a government bailout for bad investments in renewable energy and electric transmission.

While these investors thought they saw a financial opportunity to use government tax credits to build something that's only needed through forced mandates, their gamble has not paid off. The government mandates are shifting and there's a new call to keep energy local. While the industrial wind industry thought it could exploit windy states to produce energy for export, the target importing states have a greed of their own to keep their energy dollars in state. This creates the mythical "missing customer."

If a state can choose between local economic development and sending those same dollars out of state to develop the economy elsewhere, the choice is simple. But what about those states that think they can develop their own economy becoming an exporter? They're selling themselves short. Instead of becoming an industrial wasteland in exchange for a few jobs and tax dollars, those states should be marketing themselves as a cheap energy mecca. Instead of exporting energy, perhaps they should try importing energy-intensive businesses?

And what about all those "fly over" states caught between states that want to export renewable energy and their "missing customers?" They're getting nothing in the deal and they're not going along with it.

Dozens of developers are competing to offer Massachusetts the best price for long-term contracts to supply clean energy to hundreds of thousands of homes. But many of the projects face a challenge: convincing residents of northern New England that it's in their interest to host the Bay State's extension cord.

I think it's pretty clear. Those corporations who gambled that they could make a lot of money developing remote generators and transmission lines to connect the generators to demand centers made a bad investment. It was a bad idea fueled by greed. We've all made bad investments in our lives, from huge market-crashing bad deals to the weekly waste of buying lottery tickets that never win. But when we lose, we realize we can't demand a government bailout to save us from our own bad decisions. And that's the difference between us regular folk and the one percent, who aren't used to taking responsibility for their own losses. Nobody cares how many millions Philip Anschutz, National Grid, or the Ziff brothers have poured into these bad renewable energy ideas. They made a bad decision and they no more deserve a government bailout than the guy on the corner who is holding a worthless lottery ticket.

Remote renewables are dead. Stop throwing good money after bad. Local renewables are on the rise. Quit wasting the remaining years of the production tax credit on bad ideas. Here's the next great thing:

Offshore wind is still a relatively costly technology, but here's one advantage: You can build ocean-based windmills pretty close to the demand centers, and avoid all those long transmission lines.

Because aerial transmission lines on private property are the problem. There would be no need to "work closely" with regulators, governments, or landowners if you were creating partnerships and providing value for customers. "Working closely" is another euphemism that needs to go. "Working closely" means "we're lobbying them intensely but they're not buying our bullshit."

Instead of trying to beat everyone into submission, perhaps you should offer a product or service that people like, want, and need? That would turn your "missing customer" into "eager customer." Unless you just really like swimming upstream, against the current. There are smarter and easier ways to make money. Some days I wonder how you rich people got that way in the first place...

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No Thanks, FirstEnergy!

JCP&L Feels the RAGE

More Than Meets the Eye?

Southern Cross Transmission Wants a Free Ride From Texas Ratepayers

Transource Lies About Project Benefits

Maryland Sues States for Providing Cheaper Power for Marylanders

FirstEnergy's Cornucopia Runneth Over

Looks Like Clean Line Has Overstayed its Welcome in Missouri

FirstEnergy's Dog and Pony Show Tours Martinsburg

Missing Buyer Syndrome

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