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

1/20/2017

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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.
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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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FirstEnergy Scheme to Pass Risk to West Virginians

8/6/2016

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It's a risk hot potato.  While some states have deregulated electricity generation, others have not.  This makes for two different economic schemes for power plants.  In the deregulated scenario, plants compete with each other to sell power in electric markets.  A deregulated plant's income is derived from what it earns.  Earnings minus the cost of producing power equals profit.  But a regulated plant comes with a guaranteed profit.  Regulation takes the place of a competitive market to guarantee a generator a fair return (but no more).  A regulated plant is guaranteed to collect its cost of producing power, plus a fair return, to generate a set amount of profit.

When power market prices are high, deregulated plants earn more, because there is no regulated cap on the amount they can earn.  However, when power market prices are low, regulated plants earn more, because they are guaranteed to earn a certain amount over their cost of service.

A deregulated plant must cover its own operation costs, everything it earns above its cost to produce power is profit.  The owner of the plant shoulders all the risk of operating a plant that doesn't produce adequate profit.  If a plant cannot produce adequate profit, it fails economically and will likely close.

A regulated plant's operation costs are covered by ratepayers.  If the plant fails to produce an adequate profit margin, it can continue to operate because it is guaranteed to collect its operating costs and a small profit from ratepayers.  The ratepayers shoulder all risk of operating a plant that doesn't produce adequate profit.  It cannot fail economically because the ratepayers are there to make up any shortfalls between the cost to produce power, and the market price of that power.

It's all about who shoulders the economic risk. 

FirstEnergy used to love deregulated plants when power prices were high.  FirstEnergy made huge profits.  But then power prices started falling because generators that were cheaper to operate entered the market.  FirstEnergy's plants use coal for fuel.  New plants use cheaper natural gas for fuel.  Suddenly, FirstEnergy's deregulated coal-fired plants weren't economic any longer and couldn't cover their operating costs and still generate a profit.  In a pure market situation, these plants would close.  However, FirstEnergy has been looking for ways to transfer their deregulated plants into a regulated system, so they can continue to operate at a loss, courtesy of electric ratepayers.  FirstEnergy wants to transfer its risk from the company to ratepayers.
“We cannot put investors and our company at risk.”
So said FirstEnergy CEO Chatty Chuck Jones during a conference with the company's stockholders.  The company is planning to transfer its unprofitable Pleasants coal-fired plant into West Virginia's regulated system so that the company no longer has any risk associated with owning it.

If it's too risky for FirstEnergy's shareholders, it's too risky for West Virginia consumers.  We simply cannot afford to shoulder more risk for the Ohio power conglomerate.  Several years ago, FirstEnergy was successful in transferring its failing Harrison Power Station into West Virginia's regulated system.  West Virginians are now paying above-market prices to operate it, and sell excess power into the regional market.  Electric bills increased to cover the cost of owning and operating the plant (and paying for a whole bunch of maintenance on the plant that FirstEnergy deferred because the plant was losing money), plus a guaranteed profit for FirstEnergy.

Late last year, FirstEnergy filed its Integrated Resource Plan with the WV Public Service Commission.  The IRP is a long-range plan by the company detailing how it plans to acquire the generation resources necessary to meet the needs of West Virginia customers.  In its plan, it contended that buying another coal-fired power plant from its parent company was the best option for the customers.  Other parties intervened to argue against it, but the Commission ultimately approved the plan, noting that actually buying the coal-fired plant would necessitate another filing and review by the Commission and parties could argue against it at that time.

However, during the last coal-fired power plant purchase case for Harrison, the company contended that there wasn't time to issue a request for proposals to solicit power supply contracts from other generators that may compete with Harrison to produce the lowest cost for West Virginia ratepayers.  Therefore, Harrison stood alone as the only "solution."

Since the PSC neglected to require the company to solicit competitive bids for supply as part of its IRP, when is an RFP supposed to happen?  It can't happen during the IRP, because it's too early in the process.  But yet it can't happen when supply is needed, because it's too late in the process.

The Staff of the PSC and the West Virginia Consumer Advocate say the time is now.  They have jointly filed a request that the company be required to file RFPs for all future capacity and energy requirements above a certain threshold.  If West Virginians deserve to pay the cheapest prices for the power they need, then the company should be required to solicit competitive bids.

But the company doesn't want to.  FirstEnergy wants to sell its Pleasants power station to West Virginians without any competition.  That's not fair, or in the best interests of West Virginia ratepayers.  FirstEnergy is whining that it shouldn't have to bear the risk of its unprofitable Pleasants plant, because it still has "life left in it."
“Is it frustrating that we’re shutting down tens of thousands of megawatts of generation in our country that’s got life left in it because of the way this market is working?” Jones said. “That is very frustrating to me.”
While the plant may still have physical "life" in it, it doesn't have any economic "life" left.

West Virginia can't afford to bail FirstEnergy out of its bad economic decisions any longer.  Subsidizing FirstEnergy is "frustrating" to West Virginians, too, who sometimes have to make a choice between paying their electric bill and buying food.  Go peddle your lemon somewhere else, FirstEnergy.
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Southern Cross Transmission - Just One More Attempt to Take Private Property for Corporate Gain

7/31/2016

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It's not about where to put the Southern Cross Transmission line, it's about whether to build it at all.

Here we go again...
However, most the attendees at the Bell Schoolhouse Fire Station meeting opposed the project. Dennis Daniels, who organized the meeting, said he has already been a victim of eminent domain once and does not want to go through the process again.
 
"Honestly I don't have any questions for (representatives)," he said. "I just don't want them to come through my property."
 
He's concerned that the power line will decrease property values, restrict further development on his land and be an eyesore.
 
"It bothers me most that it's a private, for-profit company," he said. "They're going to use eminent domain to take our property rights away to give to a company in San Francisco to make millions of dollars off of each year."

The Southern Cross transmission project is another unneeded HVDC merchant project intended to ship renewable energy into higher priced markets for corporate profit.  But this one isn't owned by Houston-based Clean Line Energy.  It's owned by a different company, San Francisco-based Pattern Energy.  Pattern proposes that it shall build a 400-mile HVDC transmission project across Louisiana and Mississippi in order to serve energy markets in "the southeast electric grid" with wind energy generated in Texas.

The Texas wind market is tapped out.  They've built so much wind generation and transmission to ship it around the state that sometimes they have to give it away for free. 
But yet, Texas wants to be its own little electric grid, islanded from the rest of the nation's power grid.  Except when all its renewable energy goodness tanks prices.  Then Texas wants to connect to the rest of the grid in order to export its excess wind generation into other markets where it will fetch higher prices.  And that's the only purpose for Southern Cross.

This project has been in the works for years, but was only recently sprung on landowners along its 400-mile route.  And chaos ensued.  Of course the landowners don't want to be forced to sacrifice their property, personal wealth and peace of mind for the benefit of electricity consumers in other states in "the southeast."  Southern Cross will only interconnect with the rest of the grid serving Louisiana and Mississippi at two converter stations, one near the Texas-Louisiana border, and the second near the Mississippi-Alabama border.  What's in it for all the residents of Louisiana and Mississippi in between?  Not much.

And to make matters worse, landowners in Mississippi are getting smoke blown in their faces by one of their PSC Commissioners, who is urging them to communicate with Pattern Energy instead of the PSC.
In a public meeting at the Bell Schoolhouse Fire Station just outside Starkville Thursday, Public Service Commissioner Brandon Presley urged residents to reach out to representatives from Southern Cross Transmission if they have questions about the company's proposed wind energy transmission line.
 
"Let it not be said of you that you didn't call on these people and that you didn't file an objection," Presley said at the meeting.

While eminent domain is not out of the question, Presley said he believes the company will do everything in its power to avoid having to use it. Southern Cross representatives have told him they have put in similar lines in other parts of the country without resorting to eminent domain.

Presley said his office received a plethora of letters, emails and phone calls from property owners who received letters. In a meeting with company representatives, Presley said someone from the company has to meet with property owners one-on-one at the time and place of the landowner's choosing.
 
In an interview with The Dispatch Thursday, Presley said a Southern Cross representative had already begun meeting with landowners individually. Presley also had the company designate a point of contact for landowners to call. Since then, his office has received fewer calls from concerned citizens.
 
In June, Southern Cross Transmission sent letters to landowners whose property is within 500 feet of one of the proposed routes and promised to hold meetings and answer questions from landowners. The company then hosted an open house for property owners, but many left that meeting with more questions than answers, Presley said.
 
Legally, Southern Cross Transmission doesn't have to communicate with the public at all until it has decided on a route and filed a proposal with the Public Service Commission. But Presley wants to ensure that the company shows landowners the dignity and respect they deserve.

Sure, that makes Presley's job easier if all the landowners have folded and granted easements to Pattern Energy before it files its application for a Certificate of Public Convenience and Necessity and eminent domain authority in the state.  But, for the landowners, it's not simply about where to put the line, but whether or not to build it in the first place.

Pattern is misleading landowners about FERC's authority to permit this project.
FERC has previously found that the interconnection of the Southern Cross Project to the ERCOT transmission system is in the public interest and that the Project will create substantial benefits both for the ERCOT and the Southeast regions.
But FERC has no authority to permit this transmission project, or to grant eminent domain authority over private property to Pattern Energy.  Only the states do.  Both Louisiana and Mississippi will have to find need and public benefit for the project in their respective states.

Landowners can make a big difference by participating in the PSC process, and that's where they should be directing their energies right now, not wasting their time discussing where to put the project with Pattern Energy.
Southern Cross Transmission plans to settle on a route and file its proposal with the commission this fall. Once that happens, Presley said, citizens have 20 days to file an objection, which gives them legal rights in the case.
Not much time, opponents need to prepare to file objections, or better yet to intervene in the case.
He requested landowners write down whatever questions they have, take those questions directly to the company and wait until they had met with Southern Cross representatives before deciding whether to oppose the project.
Don't waste your time, landowners.  Begin crafting your "fact-based" arguments now, but the only facts you need to begin is that Southern Cross's proposal will affect your interest in real property located on or near a proposed route.  And don't think if your property is on a proposed route that is later taken off the table that you're safe.  Until an actual siting permit is granted, routes can and will change, with very little notice.  In fact, the companies like it better if landowners don't know anything about the project until the bulldozers show up.  How can you cause trouble for them if you're unaware?

Exactly... and that's why landowners are getting such late notice about this project.  But there's still plenty of time to organize and legally intervene.  The bigger the stink, the better the chances the project will be cancelled.
Presley has also said he will not approve the project unless the company can prove it has some benefit to Mississippi.
 
"I'm as much for clean air and clean energy as the next guy, but it's got to be about more than renewable energy," he said. "For us, that's a plus, but there has to be other things."
I'm sure Commissioner Presley is "for clean air and clean energy."  After all, the Sierra Club was a big donor to his campaign to be elected to the PSC.  And Sierra Club has never seen a transmission project "for wind" that it didn't love.
"At the end of the day, the ability to connect into wind energy, which does not cost anything as far as burning coal, burning natural gas, (is) obviously an energy source that could have a benefit to the state," Presley said.
 
"That's the benefit," he added. "But also obviously if this electricity is low cost, I'm not going to be supporting trucking it through Mississippi to pump it to Atlanta, Georgia, and our people have cheap electricity ran over the top of their property and not being able to take advantage of it."
That's nice to hear, but Commissioner Presley has coyly avoided the elephant in the room.  Eminent domain.  While eminent domain has historically been used to construct transmission lines for which there is some reliability need, using that authority to build transmission lines for the sole purpose of moving renewable energy to higher priced eastern electric markets is an issue of first impression.  In the case of transmission solely for profit, eminent domain takes on a whole new purpose:  Eminent domain for the private gain of a company located in San Francisco.  And that's just the rub.
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What's Beyond Coal?  More Coal!

7/23/2016

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Block Clean Line in Arkansas made a stunning discovery the other day.  In testimony filed at the Georgia Public Service Commission, Clean Line Vice President David Berry informed that his Plains & Eastern "Clean" Line project could be used to "deliver bulk power from the SPP system" when it's not being used to deliver "wind generation."  That's right, "Clean" Line is now being marketed as just another transmission line to transport "bulk" fossil fuel electricity between regions.

And in its recent application to the Missouri PSC for its Grain Belt Express transmission project, "Clean" Line's Berry said that service from Missouri to Indiana on his project could be used to "provide opportunities for Missouri load-serving entities to earn additional revenue from off-system sales."

Cutting through the jargon, Berry says that his "Clean" Lines can now be used to ship fossil fuel generation.  In its desperate search for customers to financially support the project, Clean Line is dropping its "clean" purpose.  Clean Line is now "clean" in name only.

This isn't really surprising to me.  For years, opposition to the projects have been telling everyone who will listen that "Clean" Lines are a fantasy that only works on paper.  All electric transmission lines are "open access" to all customers, no matter what fuel they use to generate electricity.  And now that the rubber has hit the road, Clean Line has dropped its "clean" mask to reveal its true purpose -- to make money transmitting any kind of electricity.

Will environmental groups continue to support transmission projects that breathe new life into old Midwestern coal plants by creating new markets for their generation?  The Sierra Club and other groups supporting "Clean" Lines should have been on notice that new transmission lines supposedly "for wind" would ultimately be used "for coal."  However it looks like they got snowed by a fast-talking front man to forget what they already knew and believe in the fantasy of "clean" transmission lines.  And what was it the environmental groups knew?

As far back as 2009, The Sierra Club was wondering about the true purpose of new long-distance electric transmission lines:

Is the project just an excuse to expand the reach of coal-fired power plants rather than supporting a clean energy project?
In the case of Clean Line, the answer is now an unequivocal "yes."  The Sierra Club has been had.

Back around the time Clean Line created its corporation around the idea of "green" transmission lines, it was common knowledge that transmission lines being marketed as a way to increase the penetration of renewable energy would end up being used to increase the penetration of coal-fired power instead.

In May of 2010, a presentation was made at the National Coal Council's Spring Meeting entitled POTENTIAL IMPLICATIONS OF “GREEN TRANSMISSION” FOR
COAL POWER GENERATION
.  The presentation was made by Roger H. Bezdek, Ph.D., President of Management Information Services, Inc.  Dr. Bezdek also co-authored an article on the same subject in industry magazine Fortnightly in 2012.

Dr. Bezdek proposed that new transmission "for renewables" would instead be used to increase use of existing "middle U.S." coal generators.
Existing coal fleet utilization currently ~ 72% -74%

Can increase to ~ 85% with adequate load & transmission

Most underutilized coal capacity in Middle U.S.

Current U.S. coal capacity ~ 310 GW, furnishes ~ 2 trillion kWh annually, U.S. consumes ~ 1.1B tons of coal

If new transmission increases existing coal fleet utilization 10%, then:
--Coal could provide additional 200B kWh
--Coal demand would increase by 100M tons
--Even assuming no new coal plants are built
--However, new transmission could facilitate new coal plants

Bezdek summarized:  "Thus, RES transmission could enable expansion of coal-fired generation by equivalent of 30 new plants by 2020."

And he put the idea that new transmission could be restricted to "clean" energy firmly to bed with this simple quote:
“Restricting new transmission to green electrons is as bad as restricting a new highway to only electric vehicles.”
You can't restrict transmission lines to renewable energy.  The environmental groups have denied this in the case of "Clean" Line, believing that because the transmission line is HVDC, building additional converter stations to load coal-fired power along the way would be prohibitively expensive.  But Clean Line's recent marketing of itself as a pipeline for coal-fired power proves that if coal-fired generators can get their power to the planned end-point or midpoint converter stations, then "Clean" Line shall carry coal-fired power.  Siting the end point converter in a "renewable energy zone" is no guarantee of cleanliness, especially when combined with midpoint converters in Missouri and Arkansas that will pick up dirty power on the line's way east. 

Instead of "shutting down coal plants," Clean Line will actually be breathing new life into existing coal plants in the Midwest that may otherwise be displaced by increased in-state use of renewables, and end up shipping dirty generation to other regions.

Will the environmental groups continue to support "Clean" Lines that they know aren't really "clean?"  Will they equivocate to make trade-offs to imagine the "clean" energy will balance out the "dirty" energy on the Clean Line? 

The environmental groups need to admit the truth -- "Clean" Line isn't about "clean" energy at all.  It's only about the money to be made owning transmission lines, no matter what kind of electricity they will ultimately carry.
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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.

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