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Finally, Someone Issues a Report Card to The American Society of Civil Engineers

4/19/2017

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New from the guy who brought us "The Rise and Fall of Big Transmission" (see also R.I.P Big Transmission here), is an opinion on the annual "Chicken Little" report on infrastructure from the American Society of Civil Engineers -- Electric Infrastructure: Sky Keeps not Falling.

The ASCE report has been pure crap every single year, and I'm not sure why anyone even pays attention to it anymore.  It is concocted by a trade group of engineers whose paychecks depend on the need to build more infrastructure every year.  If anyone got an "A," there would be a lot of engineers in the unemployment line because there would be little need to build more infrastructure.  This report is sort of like if Hershey's issued an annual report on the need for chocolate, and the report was authored by women.  We know that a day without chocolate is like a day without hope, so therefore we need chocolate every.single.day.  And talk about your coincidences, Hershey's sells chocolate (not the best chocolate, but when a chocolate emergency strikes, it's better than a bag of Skittles).  The ASCE report is self-serving dreck designed for doomsayers and vapid public officials without an expert staff to tell them the truth about infrastructure.

Speaking of telling the truth, it probably isn't real good for business if an energy lawyer actually tells the truth.  But yet, Huntoon persists.  His clients must be brave souls.  Gotta admire that!

Huntoon says everything in the ASCE report is wrong.  That's a pretty wide characterization, but sadly it's true.  It starts with this:
For starters, there is this claim: “With more than 640,000 miles of high-voltage transmission lines across the three interconnected electric transmission grids … the lower 48 states’ power grid is at full capacity, with many lines operating well beyond their design.”

The fact is that 0 (zero) transmission lines are being operated beyond their design capacity. The grid has been and continues to be designed and constructed to cover projected peak demand years in advance. And every line is operated within its design limits. The ASCE claim is alarmist and wrong.
(And so is Clean Line's claim that our grid is so congested that no new renewable energy generation can be built without it's "clean" lines -- and for the same reason!)  And don't miss ASCE's claim that we "need" new processes to get "needed" transmission  lines built for renewable energy.

And then Huntoon tears up the ASCE claim that lack of new infrastructure causes blackouts.

The ASCE habitually conflates the transmission system with the distribution system.  Most outages are due to faults on the distribution system, not the transmission system.  When the rare transmission failure happens, though, more customers may be affected.  But transmission is designed to provide contingencies in the event of transmission failure -- loads are switched to other transmission lines and we don't even notice a problem has occurred.  The distribution system lacks this kind of contingency, so if a tree falls on the line serving your neighborhood, you're in the dark.

What we may need to do is make upgrades to the distribution system, which is sorely neglected by investor-owned utilities who would rather put their cash in the transmission system because it pays higher returns on invested capital.  So we've got utilities pursuing expensive transmission lines to nowhere, while distribution lines are rotting on the pole.

The ASCE report card is an industry-influenced, uninformative, biased joke.  Huntoon suggests that we give the ASCE report a D+.  I think that's much too generous.  I give them a U for useless.
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Smells Like Broken Dreams and Bitter Lobbyist Tears

3/30/2017

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I'm sure you know one... a member of the "Good Old Boys' Club."  I'm talking about a well-fed, middle-aged white guy who may actually use the phrase, "Do you know who I am?" on a regular basis.  He doesn't appear to be particularly bright or industrious, and has absolutely no self-awareness or empathy, but he's managed to claw his way into a position where he makes his living by being connected to other old white men and selling his influence to outsiders who want to make a buck.  What happens when that special, privileged world spits out its own?  Who doesn't love a little schadenfreude?

Remember the "Infrastructure List" that has been gushed over by members of the Good Old Boys' Club and their media lackeys for the past three months?  Turns out it's been kicked to the curb, along with the guys who prepared it, and a new crew of infrastructure critters has been let loose in the Washington Swamp.

No wonder Norman Anderson was having a public meltdown last month.  I think maybe he didn't appreciate being ignored by an administration he thought he had eating out of his hand.  Awww... life isn't fair, is it, Norman?  Let's sing together...
*sniff, sniff*  Could someone hand me a tissue?

The Charlotte Observer published an in-depth report covering the "Infrastructure List" and the shady way it was compiled and pushed by a group of guys who are now out of favor with the Trump administration.
When Donald Trump and Mike Pence met this month to discuss a promised $1 trillion infrastructure plan, the Cabinet Room was filled with half a dozen billionaire executives, from Tesla’s Elon Musk to Steve Roth, a New York developer and longtime friend to the president.

One person who wasn’t there? The man who worked for months to line up priority infrastructure projects for the Trump transition team.

Just a few weeks earlier, Dan Slane had been jetting around the country — on his own dime — to meet with governors, contractors, investors, labor union officials and others eager to influence Trump’s infrastructure plan. He developed a 50-project proposal filled with exactly the kind of “shovel-ready” investments the White House wanted – the kind that needed regulatory relief, not federal dollars.

But as Trump’s attention turns to infrastructure after suffering defeat on his first policy priority, the White House will not even acknowledge Slane, except to say he has “no official or unofficial role” in the administration. He says his infrastructure plan, and indeed his very connection to the president, has become the victim of a power struggle for control of this big-ticket infrastructure agenda between Peter Navarro, a Trump loyalist and economic populist who advised his campaign, and Gary Cohn, a former Goldman Sachs president who now runs the National Economic Council.
Who is Dan Slane?  A quick google search shows he's been working with Peter Navarro on a film called "Death by China."  Apparently these guys believe that trade with China is killing our economy.  Slane ought to know... apparently he moved his wood business to China to collect a 17% profit.  I guess that must have scarred his psyche (while fattening his bank account) so now Slane is anti-China.  Apparently the whole infrastructure thing stems from the fact that China has been investing in its infrastructure lately, and we gotta, you know, keep up with China.  But how does Dan Slane connect with Norman Anderson?  The Charlotte Observer reveals:
Anderson’s company had compiled a list of 100 top infrastructure projects with input from senior-level investors, engineers and developers. The list would have been offered to whichever presidential candidate had won in November, Anderson said.

A week after Trump’s unexpected win, Anderson found a white paper online that Navarro and now-Commerce Secretary Wilbur Ross had written for the Trump campaign. It proposed tax credits to fund infrastructure. He emailed Navarro, and offered some suggestions.

“Navarro asked Dan to talk to me the next day,” Anderson said.

Slane, who was working without a staff, asked Anderson to help him screen a list of projects Navarro wanted for the administration. Anderson in turn hired Boston Consulting Group to analyze how many direct and indirect jobs each project would create.
So, how did this list get presented to the media as a Trump administration list, and how did a project get on Slane/Anderson's list in the first place?  The Charlotte Observer explains how the Good Old Boys' Club gladhanding worked...
Playing the liaison

Leaders at the state and local level, and executives at the National Governors Association, thought they had been working with the White House, through Slane.

Paul Aucoin, executive director of the Southern Louisiana Port, said he assumed Slane was a shoo-in for a White House infrastructure job when he met him at Anderson’s offices in Washington in December.

Aucoin made the trip to DC to promote his port and try to secure federal assistance to dredge the mouth of the Mississippi River.

The meeting with Slane had been arranged for Aucoin by the public relations firm of Gary Meltz, a former aide to Democratic Rep. Eliot L. Engel of New York.

Slane introduced himself as a member of the Trump transition, and Aucoin made his pitch.

Slane promised to get the dredging project on the list he and Anderson were compiling for the transition.

“They were very receptive, they got it, they understood what I was saying, they asked all the right questions,” Aucoin said. “It wasn’t like I was talking to a wall. I was finally talking to some one who understood what I was trying to say.”

Later Slane would visit the port and meet with Louisiana Gov. John Bel Edwards. He reassured Edwards and Aucoin that congressional Republicans would pledge money to the project from the Harbor Maintenance Trust Fund. That promise that has yet to be fulfilled.

Aucoin said he’s since hired a lobbying firm in Washington that was working on getting him a meeting with Gribbin.

“It was a blow for us to lose Dan,” Aucoin said.
Let me get this straight... a PR firm with connections made introductions between an entity with a need for a project and some guys who presented themselves as part of Trump's team?

So when Clean Line's Mario Hurtado said:
"When the Trump campaign was looking at infrastructure, we thought it was a good thing to mention. We're just happy to be part of the conversation."
What he really meant was that Clean Line paid a PR firm to make the introductions between Clean Line, Slane, and Anderson, in order to "mention" putting the company's Plains & Eastern Clean Line project on the infrastructure list?  Mario actually did not bump into these guys in the grocery store.  :-(  It actually cost Clean Line money to buy their way onto the Slane/Anderson list.  Guess what, Clean Line?  Looks like you've maybe been taken, and you're really not on Trump's favored list after all.  Even the union's infrastructure wish list (where all three of CLEP's eastward bound projects showed up) was a Slane/Anderson product that Trump now seemingly wants nothing to do with.
Sean McGarvey, president of North America’s Building Trades Unions, said his organization consulted with Slane on his plan. His union delivered to the White House its own list of priority infrastructure projects in February, after meeting with Trump.

“The way Dan framed it was really good because Dan took projects that had all funding but lacked permitting or some who had permitting,” McGarvey said.

“He did a lot of thoughtful work on the initial ready-to-go, out-of-the gate stuff,” he said. “The projects that Dan was talking about really don’t require a new infrastructure bill. Those are ones that exist, that are both private and public, and have the three elements you need: the financing, the engineering, and permitting. And some of them will happen this year.”
Hey, Good Old Boys' Club, are you paying attention?  Pull up a desk and put on your listening ears.  You could learn something...

Clean Line projects don't have financing!
What they have is a plan to raise financing.  Clean Line's plan requires them to contract with future customers to create a revenue stream that Clean Line can use as evidence to secure financing.  Clean Line doesn't have customers.  Clean Line doesn't have a revenue stream that can support financing.  There is nothing a Trump administration (or the Good Old Boys' Club) can do to create captive customers for Clean Line's projects.

Clean Line doesn't have complete engineering!  What they have is a plan to complete engineering once permitting is complete.  Clean Line has no revenue.  None.  It's living high on investor development cash right now.  Engineering is a construction cost that happens after a project is fully permitted and financed.  There is nothing a Trump administration (or the Good Old Boys' Club) can do to finance final engineering for the Clean Line projects.  Federal money would invalidate the project's merchant transmission status with the Federal Energy Regulatory Commission that allows them to negotiate rates with willing customers (see financing, above).

Clean Line doesn't have permitting completed for any of its projects!  The Plains & Eastern project is the subject of a lawsuit in federal court where the U.S. DOE's preemption of state siting authority in Arkansas has been questioned.  The statute DOE used to run over Arkansas  plainly says it does not affect any requirement of state siting laws.  Although this case has yet to be decided by the court, it's not looking good for Clean Line.  Expect that Clean Line shall have to comply with Arkansas state siting laws for its project.  The Rock Island Clean Line project application for a permit has been withdrawn in Iowa.  Its permit in Illinois has been vacated by the Appellate Court.  It has no permits whatsoever right now.  The Grain Belt Express project's permit in Illinois is on appeal, and the project still needs a permit from the Missouri Public Service Commission.  A recent Missouri Court of Appeals decision prohibits the MO PSC from issuing a permit until Clean Line has the assent of each Missouri county it traverses.  GBE does not have all the county assents it needs and is unlikely to obtain them.  All of these permitting issues are STATE permitting issues.  There is nothing a Trump administration (or the Good Old Boys' Club) can do about state laws which govern state permitting, and if the administration tries to preempt state authority to site and permit electric transmission, it's going to have a hell of a fight on its hands, from the states and from the people.

None of the Clean Line projects are getting done this year.  They're not getting done.  Not now, not ever.  Take them off your list, assuming your list is supposed to be a real list, and not just some "pay to play" Good Old Boys' Club list of bridges to nowhere.

Cry me a river of bitter tears, fellas.  Karma's a real bitch.
6 Comments

PJM Doles Out the Punishment

3/17/2017

2 Comments

 
Well, isn't that fun?  PJM is punishing everyone because it's not getting its way.  Well, really Dominion's way, but PJM and its utility members are just different parts of the same animal.

Dominion finds itself mired in controversy over its Surry-Skiffes Creek 500kV transmission project in Virginia's tidewater region.  The project as proposed would make an aerial crossing of the James River quite near the historic Jamestown settlement.  The people say no.  The National Parks Conservation Association says no.  The National Trust for Historic Preservation says no.  The Army Corps of Engineers, who has to approve the project, isn't saying anything at all.  And we have stasis.

So, Dominion called in its trained gorilla, PJM, to terrorize the townsfolk and make them drop their opposition.  As if that kind of behavior ever works in a situation like this.  The people simply said "meh" to PJM's threats of rolling blackouts.

Now PJM has devised a way to punish them with higher electric rates.  And it has upped the ante by punishing everyone else in the PJM region with higher rates as well.  PJM has assigned cost responsibility for keeping generation units on the Virginia Peninsula running after they would have shut down not only to the folks on the Peninsula, but to every other zone in the PJM region.  That's right, electric customers in Illinois, New Jersey, Pennsylvania, Ohio, Kentucky and other PJM states will pay a percentage of the cost of running the units that wanted to retire.  PJM says:
Based on PJM’s assessment of the contribution to the need for, and benefits expected to be derived from, the facilities, the zonal percentage cost allocation for 2017 (January 1, 2017 through April 15, 2017) is...
...followed by a table of allocation percentages.  I'm going to be paying 3.5%.   Meh.

Trade press RTO Insider says
Opposition to Va. Tx Line May Trigger Unintended Consequences

Sometimes the juice isn’t worth the squeeze.

Protesters of a 500-kV transmission line across the James River might soon learn that the hard way. PJM is responding to the delay in the project’s approval by instituting a multilayered strategy likely to hurt ratepayers in Virginia’s middle peninsula disproportionate to any perceived benefits that could come from blocking construction of the line.

At a series of committee meetings last week, PJM staff detailed several other changes for the area that will have consequences protesters likely haven’t imagined.
Like outrageous electric price spikes.
Really, PJM?  Whose interests do you serve again?  You think hitting senior citizens, and other folks who may just barely be scraping by, with surprise outrageous electric bills, and then blaming the opponents of a transmission line, is really going to work for you?

I thought PJM's purpose was:
Acting as a neutral, independent party, PJM operates a competitive wholesale electricity market and manages the high-voltage electricity grid to ensure reliability for more than 65 million people.
But it sure seems like PJM's purpose lately is to ram through the projects cooked up by its members without any room for compromise with the people who have to live with them.

Who would be hurt by a change to an underground/underwater project?  Oh, too expensive for the ratepayers, you say?  Well, what about your scheme to gouge ratepayers as punishment for opposing the project?  Won't that be too expensive?  Seems like the ratepayers are going to pay more either way, so why don't you just fall on your sword and cap the damages with a buried option?  At least that would come with a finite number, over the life of the project, instead of giving Grandma a nasty surprise she can't pay for.

And speaking of outrageous costs, PJM, who did you fool with your recent re-start of your Artificial Island project, after removing certain components to lower the overall cost?  I don't think it was ever about the amount... but the fact that the cost was allocated to people who would not benefit.  That hasn't changed.  Good luck with that!

Stop being stubborn, PJM.  You exist to serve the people, not the energy corporations.  It's getting harder and harder to build transmission, and do you know why?  Because the people aren't as easily fooled in this day and age of readily available, unfiltered information.  Badly conceived projects will no longer be tolerated.  So, get with the times, PJM, and recognize that compromise gets the job done.  Quicker.  Faster.  Cheaper.  Easier.  Now is not the time to act like a stubborn mule.

You know, this statement is completely ludicrous.
PJM works closely with stakeholders throughout the development of the RTEP. Stakeholder input is a key part of the PJM planning process. The Skiffes Creek project was reviewed in numerous open meetings of the PJM Transmission Expansion Advisory Committee where public comment was sought prior to approval of the project by the PJM Board. As part of that process, Dominion transmission staff provided PJM its own thorough and comprehensive analysis of system needs as well as potential solutions for PJM consideration. Most importantly however, the Dominion analysis, which itself was based on PJM’s initial determination of reliability criteria violations that needed to be addressed, was then independently validated by PJM and publicly vetted through the PJM stakeholder process prior to PJM recommending Board approval of the Skiffes Creek project.
Public comment was sought?  How did that happen, PJM?  Did you contact community leaders and ask for their comment?  Did you perhaps take out an ad in the local paper soliciting public comment about the project?  Did you go door-to-door and take a public poll?  Of course you didn't.  PJM doesn't interact with the public in any way while considering a transmission project.  It doesn't seek public comments... it simply accepts (and ignores) the comments of any "public" that may somehow happen to accidentally find their way into a PJM TEAC meeting.  The idea that PJM is a publicly accessible stakeholder-driven process is as bogus as it's ever been.  It's time to come out of the shadows, PJM, and interact with the scary public, instead of simply devising ways to punish them for defying you. 
2 Comments

FERC Orders $7M Refund of PATH Advertising, Lobbying and Front Group Costs

1/20/2017

5 Comments

 
On January 21, 2011, Ali Haverty and I filed a "Formal Challenge to Potomac-Appalachian Transmission Highline, LLC 2010 Formula Rate Annual Update." This was after several months of rather frustrating information requests to an active and threatening PATH transmission project.  We had no expertise or legal help, we simply did the best we could with available processes.

Now, nearly 6 years later, the Federal Energy Regulatory Commission has confirmed our contentions that PATH should not have collected from ratepayers the costs of its reliable power coalitions (West Virginians for Reliable Power, Marylanders for Reliable Power and Virginians for Reliable Energy), its PATH Education Awareness Team (or "PEAT"), its memberships in civic and social groups, its lobbying for release of a conservation easement in Loudoun County, Virginia, its hiring of a well-connected lobbyist in West Virginia, its cost of public opinion polling and focus groups in West Virginia, Virginia and Maryland, and the cost of all of PATH's television, radio and print advertising promoting its project in all three states.  The Commission has ordered PATH to refund these costs (plus unearned return and interest) to millions of ratepayers in PJM's 13-state region.
It truly was no bed of roses.  We combed through hundreds of thousands of documents, learned FERC's accounting rules, learned how to write and file all sorts of legal pleadings, made dozens of trips to FERC's offices in DC, and suffered through some middle of the nighters in order to meet deadlines.  We've spent the past 6 years jumping one hurdle after another to get to this point.

And we're still friends.  Never once did we consider giving up or splitting our team.  No matter how heavy the burden, we kept our eyes on the prize.

Opinion No. 554
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The Commission also ordered accounting transactions to remove an additional $1.1M of public relations & advertising expenses PATH booked to its asset account in 2008, before Ali and I began to challenge PATH's annual rate filings.  This $1.1M of cost has been sitting neatly in an account where it earned 14.3% (and then 10.4%) return on equity for the PATH companies every year since.  Not only will PATH have to deduct those costs from its ultimate recovery, it has also been ordered to make a compliance filing to essentially correct and replace each of its annual accounting filings for the past 8 years.  This approach allows crediting of that undue return to ratepayers.  So, while the total disallowance to PATH is more than $7.1M, the total ratepayer credit effected will be much more.

We appreciate the Commission's order, and our overall experience at FERC.  In an era where the agency has been kicked around by protestors and the media, we can honestly say that we were treated well by FERC staff, judges, and commissioners.  We never felt dismissed or marginalized.  We felt that our concerns were heard.

We wouldn't change a thing.
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Landowners Step Up to Protect Property Rights in Missouri

12/10/2016

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The Missouri Public Service Commission held four public hearings this week on Grain Belt Express' second application to build an enormous electric transmission line across Missouri that is intended to serve eastern states.  Four more hearings are scheduled for next week.
Dec. 13, 2016: Cameron, 12:00 p.m.*
Cameron Community Center, 915 Ashland Avenue
Dec. 13, 2016: Faucett, 6:00 p.m.
Mid-Buchanan High School, Multipurpose Room, 3221 SE Route H
Dec. 14, 2016: Polo, 12:00 p.m.*
Community Center at Stagecoach Park, 1010 Main Street
Dec. 14, 2016: Carrollton, 6:00 p.m.
Rupe Community Center, 710 Harvest Hills Drive
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Landowners have filled the public venues, like they did during GBE's first run at the PSC.  Some have spoken quite eloquently about the detrimental effect the project will have on their land, their business, their heritage, and their life.  It doesn't have to be fancy, just heartfelt.  I encourage everyone to get up and let the Commissioners present know how this project will affect them.
Kelly Sherman of New London:  "The irony of this sickens me...our sons are in the military and are willing to die for our country, but they can't come home to the very land they will inherit, it will be taken from them and devalued forever."

Larry Markley:  "If this energy is so good for Missouri then why don't they sell it all here?"
Read many more landowner comments in news articles here and here.
In the second article, the pictures tell a story that the reporter failed to mention.  Notice the sea of Amish hats in the foreground?  That's right, these public hearings were well attended by the local Amish communities.  Several Amish folks spoke against the power line.  You might be thinking, "big deal," but it actually is a VERY big deal!  The Amish rarely involve themselves in what they consider "resistance" and "worldly things."  It is uncharacteristic for the Amish to participate in social protest, or to do anything other than "turn the other cheek" when they are threatened.  The fact that they came, and spoke, should take the PSC's breath away.

As expected, Grain Belt Express stepped up their game to deliver even more clueless advocates for their project than before.  The first day, they presented a bunch of students from St. Louis University.  FREE FOOD AND DRINK, and at a popular St. Louis brewery no less!  Do you all need me to buy you a drink in exchange for showing up and speaking your mind?  (Or really, my mind, because that's more apt.)  Pathetic!

So, what did these students, and their Sierra Club counterparts have to say for themselves?  They told the PSC that Grain Belt Express would shut down existing coal-fired power plants in Missouri and clean up the air.  Nothing could be further from the truth!!  I'm betting they didn't get a copy of Grain Belt's "contract" with Missouri municipalities to go with their free beer.  The "contract" also includes up to 50MW of transmission service from Missouri to Indiana, where the line is proposed to connect with PJM Interconnection, the regional grid that serves the mid-Atlantic states.  What are Missouri municipalities planning to ship to Indiana?  Will they be re-selling their "clean" electricity to eastern cities?  Of course not!  They are creating an arbitrage opportunity whereby they may sell their own dirty, stinking generation (such as Prairie State) into PJM markets when price differentials are favorable.  This will create new markets for dirty Missouri generation and prolong the life of the coal-fired power plants that currently foul Missouri's air.  Without a "clean" line to open new markets for them, these plants would be forced to close when competing with regional renewables.  With a "clean" line, however, they can continue to belch their dirty exhaust into Missouri's air, and sell their output into expensive eastern markets for many years to come.  Silly beer-powered advocates!  If you'd spent more time actually researching the project, instead of simply repeating Clean Line's glitering generalities, you might actually take some action to clean up the air you breathe.

The same goes for the GBE advocates who simply accept and repeat the falsehood that GBE will save consumers money on electric rates, instead of spending just a moment to research the facts.  Where did this magical "savings" come from?  Did you ask?  It came from here:
Preliminary calculations, assuming existing production tax credits for wind project participation in the project, could reduce costs by as much as $10M/year or $10 per megawatt hour compared to delivery of other wind projects from SPP to MISO.
That's right... it came from Clean Line's guesstimate of savings that it used to promote its transmission line to Missouri municipalities.  No cost study was ever performed!  There are no firm generation costs included in pricing, because Clean Line does not own or sell generation, and the wind farms in its guesstimate have not yet been built.  What's wrong with that?  Clean Line's guesstimate includes hypothetical pricing from wind farms that are eligible for the full production tax credit.  Those farms have not been built, and the tax credit begins phase out after December 31 of this year.  Even if the wind farms are eventually built, they will receive a reduced credit, and that means that their cost of generation will be increased by an amount at least equal to the foregone credit.  Any actual "savings" will be much less than the quoted $10M, and then split between more than 30 cities, and millions of customers.  How much could ratepayers save?  Pennies, perhaps, but it could also end up costing them even more in the long run.  It's so hypothetical, nobody knows!

And those Clean Line advocates from economic development and chamber of commerce offices?  They believe they will be showered with tax payments and jobs.  Reality will be far different, and not equal to the cost of hosting the line and a few temporary, low-wage jobs.  They're in it because they think they smell a big payday.

Which leads us to the another kind of advocate -- companies who think they will be awarded contracts for supplies and labor.  They support the project simply to fill their own pockets.

A landowner at one of the hearings observed that many of the Clean Line advocates left the hearing as soon as they had spoken.  They have no skin in the game.  Those sincerely interested in the project stayed through the entire hearing... those were the landowners.

And as far as the handful of landowners who have popped up to support GBE, isn't it funny that they all touted the same fictional "$10M savings"?  It's almost as if their comments and Letters to the Editor were heavily edited by Clean Line.  I wonder if that cost extra, aside from any easement payments made to date?  Greed can make some folks do despicable things.  At any rate, they are soundly outnumbered, hundreds to one.

So, week one of public hearings have come and gone.  Score one for the landowners, who won the moment by simply showing up and being genuine!  Bravo!
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Pavlov's Energy Markets

12/6/2016

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What's the difference between a generator over-forecasting its output in order to collect DAMAP payments from MISO when their day-ahead schedule is higher than their actual real-time output, and an electricity market trader making trades designed to collect MLSA transmission credit payments from PJM?

It sure looks like it's based on pre-conceived notions of the "goodness" of the recipient of the regional transmission organization payments.

A recent article in RTO Insider details a report to MISO's market subcommittee by Market Monitor David Patton, which revealed "
some wind generators appear to be deliberately over-forecasting their output to inflate their revenues."
Two-thirds of MISO’s $7.5 million in DAMAP payments to wind resources in 2015 and 2016 was because of over-forecasting and only $2.5 million was spent on curtailment, Patton said. “Most of our wind DAMAP payments are unjustified,” he said.
DAMAP payments are described like this:
The purpose of DAMAP is to provide an incentive for Market Participants to be flexible in their offers in the real-time market.

The DAMAP compensates suppliers when (i) the real-time dispatch of a resource is reduced below the day-ahead schedule's level, and (ii) the market participant would have been financially better off in real-time had it operated at its day-ahead schedule.

Read the whole article for an explanation of how DAMAP can and is being manipulated by wind generators to receive higher compensation payments. 

This is complicated stuff!  Regional energy markets are extremely complicated, to the point that they are nearly incomprehensible to the regular folks who fund millions of dollars in "market compensation" payments every year in their electric bills.  But don't feel too bad, it appears that energy markets are also complicated for the experts who create and police them to try to prevent manipulation by traders and other participants.  Every regional electric market would be well-served by a couple of whip-smart analysts whose only job is to continually test the market by attempting to find ways to manipulate it for profit.  Obviously the creators and monitors of these markets are completely blind to the opportunities they create that allow participants to unwittingly "push the money button" and be rewarded by compensation payments.  To expect Pavlov's dogs to immediately report the unexpected reward they received, instead of continuing to push the button and feast at will, is unnatural.  If the creators and monitors of energy markets expect an unnatural response, they need to provide a compensatory reward for it.  In lieu of having staff dedicated to and capable of rooting out flaws, market monitors should look at providing the stimulus necessary to find volunteers within the market participants.

So, how did the MISO Market Monitor propose to solve this problem, once discovered?  He proposed changes to the market, instead of punishing the wind energy dogs who had been pushing the money button that brought it to his attention.  He chose to stop ringing the bell.

But how did the PJM Market Monitor propose to solve a similar "money button" problem that developed in his own market?  He worked with FERC to punish the traders who pushed the button and brought it to his attention.  He beat the dog.  In fact, FERC has proposed fining the traders somewhere in the neighborhood of $35M.

Why the disparate treatment?  Is it because the general public looks disparagingly upon "Wall Street" (and therefore traders big and small) as the root of all evil?  Is it because wind energy is looked upon by the same public as a "clean" and "good" struggling industry?  I've got news for you, general public.  Big wind is a hugely profitable industry whose greed knows no bounds!  What may have started out as a cottage industry predicated upon selfless environmental gains has morphed into a gigantic subsidy- and compensation-gobbling monster that fills the pockets of foreign investors with your gold.  Years of environmental propaganda has conditioned you to behave just like Pavlov's dogs when you hear the words "clean energy."  You may believe anything with a "green" label must be "good" and therefore more valuable, without examining any actual benefits to you.

Energy markets will only work if they are consistent.  Allowing one group of participants to escape the punishment heaped upon another group isn't consistent.  What kind of bell are they trying to ring?

Oh, and big wind is ripping you off... big time!
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FirstEnergy's Coal Plant Purchase Has Cost You $130 Since 2013

9/20/2016

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That's according to a recent report from the Institute for Energy Economics and Financial Analysis (IEEFA).

Back in 2013, FirstEnergy, parent company of West Virginia distribution electric utilities Mon Power and Potomac Edison, came up with a bright idea to sell the Harrison Power Station to itself in order to raise cash to shore up its sagging balance sheet.  The plant was originally owned by FirstEnergy's competitive electricity supply company, Allegheny Energy Supply.  When owned by Allegheny Energy Supply, the plant was required to cover its own operating costs and make any profits by selling electricity into regional markets at a cost higher than its costs to produce the power.  However, market prices for electricity began falling due to the glut of cheaper gas-fired generators, making it harder and harder for Harrison to compete and turn a profit.  FirstEnergy proposed that Allegheny Energy Supply "sell" the plant to its West Virginia distribution affiliates at a jacked up price.  Once Mon Power and Potomac Edison owned the plant, their ratepayers would cover the cost of operating the plant, with electricity sold to the power market at going rates.  Except the going rate for power not only didn't produce any profit for the company's ratepayers, it didn't even cover its own operating costs.  Therefore, ratepayers of Mon Power and Potomac Edison have been subsidizing the cost of operating the plant at a loss since 2013.  The IEEFA estimates that the bill for ratepayers has climbed to $164 million.  That equals roughly $130 in extra electric bill charges for every customer of Mon Power and Potomac Edison, paid to cover the losses of operating the Harrison Power Station.

The IEEFA calculated the costs by using monthly reports of operating costs and market prices submitted to the Public Service Commission since 2013.  The IEEFA report reveals that the plant has produced a net cost (not benefit) to ratepayers for 28 out of 33 months.  And future prospects for the plant turning a profit remain dim.

FirstEnergy "still believes the plant is still a good deal for customers in West Virginia."
Todd Meyers, a spokesperson for MonPower, responded to questions about the study by saying the company believes the purchase benefits their customers and that it supports coal mining.

“It continues to provide reliable, low-cost power to our customers, and has preserved the opportunity to use more than 5 million tons of West Virginia produced coal annually, supporting hundreds of coal miners with solid, family-sustaining wages,” he said.
No word on whether Meyers still believes in Santa Claus, the Easter Bunny, and the Tooth Fairy as well, but I recently bumped into a leprechaun riding a unicorn and he told me that he does.

What are customers of Mon Power and Potomac Edison paying for?  Are they paying for the electricity they use, or are they paying to subsidize the coal industry?  Or are they instead simply subsidizing FirstEnergy's quarterly dividends paid to shareholders?

And guess what?  FirstEnergy has recently proposed selling ANOTHER of its competitive coal plants to Mon Power and Potomac Edison, citing the "model" of Harrison as the basis for another "good deal for customers in West Virginia."  We can't afford another one of FirstEnergy's "good deals!"

Heads up, West Virginians, we're going to need all hands on deck to stop this one!
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You Can't Trust a Utility CEO

8/18/2016

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U.S. Attorney Josh Minkler said:
“CEOs hold positions of special trust and authority, not only in the companies they serve but as leaders in society. We expect them to act with integrity,” Minkler said in a press release. “Exploiting that special trust for personal gain is an egregious crime, especially when those defrauded are friends and neighbors in a community that the CEO was hired to serve.
While I can agree with his sentiment on the egregious nature of the crime committed, I just can't believe that utility CEOs should ever be trusted.  I don't expect them to act with integrity.  I expect them to do whatever they want in pursuit of the almighty dollar, and if that action was somehow illegal or shady, to cover it up.  I'm so not surprised by what Donnis Mizelle did.

Mizelle, once the CEO of an Indiana electric cooperative, has agreed to plead guilty to fraud after an investigation revealed he had collected over half a million bucks in personal expenses from the cooperative since 2009, while claiming they were "business expenses."
Mizelle allegedly siphoned funds from the company’s expense account for his own personal use on a routine basis, according to Minkler.

As CEO, Mizelle was permitted to seek reimbursement for legitimate business expenses. Since at least 2009, however, Mizelle submitted dozens of fraudulent expense reports that disguised personal expenses as business expenses, Minkler said.

For instance, on an April 2009 expense report, Mizelle claimed approximately $650 for business entertainment. According to the federal charges, however, he actually bought a black sapphire bracelet and Mont Blanc pen from a local jewelry store for his own use.

On an October 2014 expense report, Mizelle claimed $1,250 for sponsoring a business-related dinner event. According to the charges, Mizelle had actually purchased a Eurail train pass for a family vacation in Europe.  

His fraudulent claims allegedly resulted in reimbursement checks not only for personal vacations and jewelry, but also for iPhones and iPads, tickets to sporting events, clothing, meals, and even groceries.

No amount was too small. According to the charges, in January 2012 Mizelle claimed $20 for a business lunch that actually went toward the purchase of a pizza delivery to his home.

Does this shock you? 

Do you know what the CEO of your electric utility, cooperative or municipally-run electric supplier claimed on his or her expense reports last year?  Probably not.

What if your CEO also bought a black sapphire bracelet,  but then presented it to a business associate as a trinket of company appreciation?  Would it then be a business expense?  What if your CEO joined an exclusive social club, and then invited business associates there for "meetings?"  Would that membership then be a business expense?  What if your CEO had a clause in his employment contract that allowed him and his family to use the corporate jet for personal travel?  Would that still be a business expense?  It's all in how you package it.  I guess Mizelle wasn't very good at the "ratepayers pay for everything" game.

The article doesn't explain how Mizelle's issues came to light.  How did a cooperative accountant continue to process these "business expenses" month after month for at least 6 years and never once think something was amiss?

If you think you're safe because regulators or "the government" is watching out for you, you're just kidding yourself.  CEO excess is the rule, rather than the exception.   Shame on Mizelle... for getting caught.
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Clean Line Whack-a-Mole

8/12/2016

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In the game of whack-a-mole, the moles begin popping out slowly and are easy to whack.  But as the game speeds up, so do the moles, making it virtually impossible to hit them all at the same time, and then you lose.
Clean Line has been playing permitting whack-a-mole for years, and the game is speeding up.  As soon as they whack a particular jurisdiction's mole, another mole pops up somewhere else.  And now the moles previously whacked are popping up again, too.

On Monday, Clean Line thought it had whacked the Iowa mole for its RICL project when the IUB issued an Order setting a procedural schedule.  With a permit for RICL from Illinois in hand, the only thing Clean Line needed to build RICL was a permit from Iowa. 

But on Wednesday, the Illinois mole popped back up, not easily whacked and disposed of.
The Illinois Third District Appellate Court issued an opinion that disposed of the Illinois permit Clean Line thought it had in hand.  The Court found that RICL was not a public utility and therefore the Illinois Commerce Commission could not issue it a permit.  Clean Line is back to square one in Illinois, without a permit, although now its Iowa case is now running along at full speed (and expense).  Clean Line has no options in Illinois but to appeal the appeal, a time-consuming and expensive prospect with no guarantee of success.

And if RICL cannot be an Illinois utility, neither can Clean Line's Grain Belt Express project, whose permit mole is currently on appeal in another Illinois district.  Meanwhile, Clean Line is busily engaged in trying to whack the GBE mole in Missouri, and is expected to file another application for a permit at the end of this month.

Why bother spending time and money whacking moles in Iowa and Missouri, when the Illinois moles refuse to stay whacked?  Clean Line cannot build any project unless it has whacked all that particular project's moles, and they actually stay whacked.

So, let's add this up:
  1. State permitting process in Iowa underway which will require quick deployment of land agents and expensive exhibits, in addition to legal and expert fees.  The IUB also added engineering consultant fees to Clean Line's bill in order to evaluate the project according to Clean Line's foot-dragging schedule.
  2. RICL appeal process in Illinois.  Lots of legal fees.
  3. State permitting process in Missouri soon to be underway, which will require legal and expert fees, along with various SWAG paid to garner political  support for its project.
  4. GBE appeal process in Illinois, with very little chance for success.  Lots of legal fees.
  5. Trying to engineer, site, and acquire land in three other states for its Plains & Eastern project.
  6. Other projects in western states Clean Line is currently trying to "develop."
Cha-ching!!!  That adds up to millions of dollars every month, and Clean Line doesn't have a dime of revenue.  It's getting more and more expensive to be Clean Line and try to whack moles.  Where does Clean Line get its money?  Investors.  At what point will the investors close their wallets and post a loss on the ol' balance sheet?  Are Clean Line's prospects to win the Whack-a-Mole game getting better the longer it plays?  Nope.  It's getting harder to hit all the moles and make them stay whacked.  Eventually, investors are going to reach the tipping point where they stop throwing good money after bad.

Clean Line created a bigger mole field than it could handle when it decided it needed to "develop" multiple projects at the same time.  A smart company may have concentrated on just one project to begin with, to see how viable the Clean Line business model actually was.  But not Clean Line... it was so certain of its success, that it began dumping investor money into multiple projects at the same time.  And now, 7 years later, they're still whacking an increasing amount of moles, and need an increasing amount of cash to do so.  Will the company tighten its belt and start abandoning the least likely projects, in order to concentrate its resources on the most likely?  What if none of the Clean Line projects are very likely at all?  What if the investors finally acknowledge just how hopeless Clean Line actually is?

Game over.
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Constructability Calamities

8/10/2016

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Who comes up with the "constructability" summaries for PJM's transmission projects?  Do they hire a professional blackjack player to study the odds of approved projects pissing off the wrong people?  Where's the surety in spinning the wheel to determine whether a project is "problematic," when actual results depend entirely on circumstances beyond PJM's control?  The human factor is going to get them every time.

So, PJM's eternal Artificial Island project has been "suspended."  It's ever-changing scope and price tag have affected its "constructability."  The states of Maryland and Delaware were outraged that PJM's cost allocation assigned the majority of the project's costs to them, when they would receive little benefit.  "Suck it up, buttercup, we'll do better next time," said PJM.

Oddly enough, PJM's suspension of Artificial Island didn't even mention the cost allocation issue.  But nevertheless, the states are claiming victory.

Lesson:  With enough opposition, even PJM can change its mind.  And as the Delaware Public Advocate reminded PJM, this isn't the first time.
The DPA is not asking PJM to do something it has never done before. PJM has reevaluated
projects in the past. After reconsideration, PJM canceled the Mid-Atlantic Power Pathway ("MAPP") and the Pennsylvania-Allegheny Transmission Highway ("PATH") projects.

While the reasons for cancellation may be different in this case, the fact of the matter is that simply because PJM has approved a project does not mean that it gets done come what may. In cancelling the MAPP and PATH projects, PJM acknowledged that changed circumstances had caused it to reevaluate the projects; unfortunately, however, ratepayers are paying significant abandonment costs. We ask PJM to re-evaluate this Project before LS Power and PSE&G incur costs that will ultimately be recovered from ratepayers of all PJM members.

The DPA asks PJM to remember that end-use customers are ultimately the ones that pay
for projects such as this. Indeed, neither PJM nor its member companies would exist if not for customers. And those customers are not a wallet from which PJM and its member utilities can obtain unlimited funds.

Stop making poor "constructability" choices, PJM!

Speaking of... PJM approved a bunch of new projects yesterday.  Among them is a scheme to construct two new greenfield transmission projects across the Maryland/Pennsylvania border.
Picture
Sorry, but the PJM-supplied project map really is that crappy and devoid of recognizable locations.  PJM's world revolves around a map of substations and transmission lines.  Ringgold is really a place though, so that narrows down the approximate location of the western line.  Furnace Run is a town in western Pennsylvania, but the eastern line on this map begins south of York and Lancaster and probably ends somewhere near Towson, Maryland.  But don't worry about the lack of any recognizable places, because PJM's constructability summary has determined this project "is located on undeveloped land" and therefore the only likely obstacles may be bats, acquiring easements on Pennsylvania state land, and a few permitting hurdles.  No human factors acknowledged.

But I'm pretty sure people own that "undeveloped land," and those people probably will mind having a transmission line constructed on their property.  What remains to be seen is how big a squawk they can make about it.  Because, as PJM has demonstrated numerous times already, its planning isn't infallible, and when approved projects run into a buzzsaw of opposition, PJM has no choice but to go back to the drawing board and come up with a better project.

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    About the Author

    Keryn Newman blogs here at StopPATH WV about energy issues, transmission policy, misguided regulation, our greedy energy companies and their corporate spin.
    In 2008, AEP & Allegheny Energy's PATH joint venture used their transmission line routing etch-a-sketch to draw a 765kV line across the street from her house. Oooops! And the rest is history.

    About
    StopPATH Blog

    StopPATH Blog began as a forum for information and opinion about the PATH transmission project.  The PATH project was abandoned in 2012, however, this blog was not.

    StopPATH Blog continues to bring you energy policy news and opinion from a consumer's point of view.  If it's sometimes snarky and oftentimes irreverent, just remember that the truth isn't pretty.  People come here because they want the truth, instead of the usual dreadful lies this industry continues to tell itself.  If you keep reading, I'll keep writing.


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