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KCC Gets Vanilla Pannacotta, Landowners Get Bupkis

5/14/2019

The Staff of the Kansas Corporation Commission has once again sold Kansas landowners down river. This is hardly surprising in the wake of earlier secret meetings between Staff and Grain Belt Express personnel, despite the recent glimmer of hope provided by Staff acting all tough by requesting GBE acquire a percentage of easements within one year of approval of the sale of GBE to Invenergy. It was pure posturing that meant absolutely nothing.

Staff and GBE have entered into a settlement agreement that allows the KCC to approve the sale in exchange for meaningless conditions. The conditions do nothing to provide "certainty" to landowners, in fact, the conditions actually add another 10 years of uncertainty to their plight. Funny that, since Clean Line initially asked for only a 5 year extension of the Sunset date provision (until 2023). Staff has now agreed to a 10 year extension. Well, that's playing hardball, fellas.

It's now just a matter of the Commissioners approving the settlement, and we all know how that's going to go, right? No sense even bothering to confirm it later.

The settlement agrees that Staff and GBE shall use all reasonable efforts to replace the Sunset provision with some stepped up version of action by GBE. Of course, this is being done in a completely separate docket that the intervenors in the original Sunset docket did not participate in. Essentially, the settlement in the sales docket changes the Order of the Commission in the siting permit docket. Oh sure, they pretend that it still has to be approved in that docket, but it's about as much a nail-biter as waiting to see if the Commission approves the settlement.

So, what does this wondrous "protection" for landowners entail? It's pretty much redacted... confidential, you know. Landowners aren't to know how exactly they are being protected by the KCC, they're just supposed to believe they are.

By December 2, 2024, GBE shall have either (i) obtained executed easement agreements, demonstrably commenced negotiations to obtain easements, or instituted proceedings in state district court to obtain easements, or any combination thereof, for at least **-** of the total number of easements required to construct the Kansas portion of the Project; or (ii) satisfied the Financing Requirement as defined in Paragraph 9.a. hereof. If unable to meet the requirements of the preceding sentence, GBE shall either, at GBE’s election: (a) commit to ** REDACTED **;1 or (b) file for an updated transmission line siting permit under K.S.A. 66-1,178.

The financing requirement is essentially that GBE will not install transmission facilities on easement property in Kansas until it has obtained commitments for funds in an amount equal to or greater than the total cost to build the entirety of this multi-state transmission project. Landowners can't know exactly how many easements GBE would need by 2024, and it really doesn't matter. Because the easement condition is so loose that "commencing negotiations" counts as meeting the easement requirement. GBE could say it was negotiating with any number of landowners, and who could disprove it? That's because landowners don't get to see this "confidential" information. And then there's that line that GBE shall "commit to" a redacted thing. An unknown thing. We can keep guessing here for about forever. What is it GBE may commit to instead of actually acquiring easements?

This easement acquisition nonsense is strung out until 2028, a full ten year extension, when Clean Line originally only asked for five. KCC Staff thinks this provides some "certainty" to landowners. Certainty that this nonsense of not knowing whether or not they can use their own land will continue for at least another ten years before GBE has to buy more vanilla pannacotta, perhaps.

This farce is furthered by the agreement that GBE will include information about its easement acquisition activities with the confidential yearly reports it submits to the Commission. How does this help landowners? It doesn't. But GBE agrees to file a "public version" in the future. About as public as its "commitment" above? That's truly helpful. Not.

GBE needs to keep all these "landowner protections" secret, you see, because if landowners knew about them it could compromise GBE's "negotiations" to acquire easements on their land.

So, let me get this straight, even though GBE would have eminent domain authority to take whatever private land it wishes, it must be further protected from landowners taking advantage during negotiations by keeping landowners in the dark regarding conditions placed by the KCC to protect the landowners? And we're still going to pretend that negotiations with landowners are "fair?" Seems like protecting GBE's interests in negotiations are held to a higher standard than protecting landowner interests. I mean, why not just say it... Kansas landowners don't matter.

And the really funny part here is that the KCC still thinks that the project will transmit wind from western Kansas. How dumb are these guys going to look when GBE ends up transporting wind from other states through Kansas for use by other states? There's absolutely no protection here, and it sure looks like GBE has managed to "wordsmith" its way into an ability to change the project significantly. None of the KCC Staff's "conditions" have any teeth. They do nothing but provide more advantage to GBE.

Landowners get bupkis in this settlement.

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When Deceit Bites Back

5/13/2019

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Oh! What A Tangled Web We Weave When First We Practice To Deceive. -- Sir Walter Scott in Marmion

And that about sums up the legislative situation in Missouri right now, where Invenergy and its minority sympathizers think they may have crippled HB 1062 for the time being. HB 1062 amends Missouri's eminent domain statute to prevent the use of eminent domain for above ground merchant transmission lines that do not erect substations at least every 50 miles. HB 1062 does not prevent the construction of Grain Belt Express, it simply removes eminent domain authority for the currently proposed project. It encourages Invenergy to build a better project, one that provides more benefit to Missouri, without an onerous sacrifice on behalf of Missouri citizens who will receive no benefit from the involuntary construction of the project across their productive agricultural businesses. Can GBE be built without eminent domain? Yes! The project can use existing public rights of way, it can be constructed completely underground, or it can provide connections for Missouri utilities at least every 50 miles.

But Invenergy doesn't want to build its project this way because it costs more, or perhaps it will delay the project enough to cause a missed opportunity for Invenergy to sell electricity from its Wind Catcher turbines to a company that serves other states, who requires the full production tax credit for wind generation.

But the web Invenergy and friends are spinning in Missouri looks like it is intended to deceive.

This says that HB 1062 would "ban the GBE transmission line." That's not even close to the truth. In fact, it's a straight up lie. Nothing new from Renew Missouri, who previously insisted that landowner groups were funded by "dark money" and then could not produce one shred of evidence to back up its concocted accusation. It's like Renew Missouri believes it needs to lie and exaggerate in order to garner support for Grain Belt Express.

And let's think about this... supposedly the Energy Committee members were getting "political pressure" to support HB 1062. Is that some Renew Missouri code phrase for constituent support? According to Renew, some Senators "held strong and voted no." But not because of "political pressure." Therefore, it must be lobbying pressure from a Chicago-based corporation that has no current business in Missouri. And for some reason this is somehow morally superior to what Missouri citizens want? Sounds more like Invenergy's lobbying dollars at work. Isn't it interesting that Invenergy was a recent "sponsor" of one of Renew Missouri's events? I wonder what color the sponsorship dollars were? Were they a dark color, or pure lily white?

Renew Missouri seems pretty tickled that some Senators "filibustered this language and held off the foes of renewable energy..." Phrased another way, these Senators support the use of eminent domain by for-profit corporations. It's a slippery slope indeed. If Missouri is "open for business" for out-of-state corporations to condemn land for their own profit, what flood of corporate eminent domain is on the horizon? Renew Missouri's message to Senators seems to imply that a "savings" for a handful of municipal utility customers, a few jobs and the "forcing" of utility resource supply mixes tips the scales to allow eminent domain. Eminent domain shall only be used to take property for a public use. Eminent domain should not be used solely to provide economic benefit. I think public sentiment toward the use of eminent domain for economic development purposes has been made clear in the wake of Kelo v. City of New London. Nobody's right to own and enjoy property should be compromised by another's "right" to cheaper, or cleaner, electric service. This is not public use. I shudder to think what "showing the world that Missouri is open for business" through the use of eminent domain could do.

And what of Renew Missouri's message? Any Senator receiving the copied message should be aware that it doesn't come from the minds of constituents, but from the pen of Renew Missouri and its "sponsor" Invenergy.

And then there's the inexplicable behavior of Senator Bill White, who this article tells us "believes private companies have the right to take your land away for the use of a public utility." It also says Senator White sided with Democrats in "slowing debate on the bill."

The question is why? Why is Senator White such a sudden and fierce advocate for Grain Belt Express? He says, "the company is regulated by the PSC which makes it a utility." And

"You have to run a power line somewhere," he told Newstalk KZRG a few weeks ago. "It's kind of like our reservoir down down here, you have to build it somewhere."

“If you [are] transmitting power from point A to point B, you’ve got to go from point A to B,” he continued. “Ideally, you find a place where you can make an equitable agreement with everybody along the way so you don’t have the eminent domain process but if that’s not the case, you have eminent domain proceedings.”

First of all, "you" don't have to run the Grain Belt Express anywhere. It's not necessary to public electric service. It's purpose is for elective alternate supply to select customers. Second of all, what's it to you, Senator White? The previously proposed route of GBE comes nowhere near Joplin, and as near as I can figure none of the contracted municipal electric suppliers who have elected to take service from GBE are in Senator White's district. Why would Senator White become such a strong advocate for a project that doesn't affect his constituents? As well, why has Invenergy taken such interest in Senator White? Why would Invenergy need an ally who is not affected by the project? Maybe Invenergy is getting more bang for its buck than meets the eye? What if Grain Belt Express was rerouted through Joplin? How difficult would it be for Senator White to change his position and oppose the project once it affected his district? Seems to me that Invenergy would have Senator White just where it wanted him. I find Invenergy's courting of Senator White incredibly revealing.

Let's look at the transcript from the recent PSC hearing on the sale of GBE to Invenergy:

Q. Can you very briefly describe what Invenergy's wind catcher site is and what its status is at this point?
A. So wind catcher was a 2,000 megawatt wind project that was being sold to American Electric Power.
Q. Has Invenergy discussed the possibility of developing this site for wind farms?
A. We're-- we're constantly in the process of selling that project.
Q. And this project, in particular?
A. So again, the Wind Catcher project is in the Panhandle of Oklahoma and it was contracted by American Electric Power who failed to receive commission approval to purchase the project.
Q. And my question is, have you looked into
developing that project?
A. Well, we are developing that project.
Q. Okay .
A. I don't understand.
Q. What's the status of it at this point?
A. It's still in development, active development.
Q. Development meaning what?
A. Meaning that we have active land easements for the installation of generators, wind turbines specifically, and we're looking for off- takers for the facility.
Q. And is that site about one hundred miles
from the proposed Grain Belt converter station in Kansas, approximately?
A. Approximately.
Q. Have you discussed internally the
possibility of connecting wind generation at the Wind Catcher site with the Kansas converter station of the Grain Belt line?
A. Not really.
Q. Not really, meaning no?
A. So I mean there is a possibility that an
affiliate may want to purchase capacity on Grain Belt.
Q. An affiliate of whom?
A. An affiliate of Invenergy.

So, Invenergy was going to sell the project to American Electric Power. Except the Texas Public Utility Commission denied AEP's request to recover the cost of the project from ratepayers. And AEP cancelled that plan. However, AEP turned right around and issued a Request for Proposals to purchase a nearly identical amount of wind capacity delivered to Tulsa. AEP requires the proposal to qualify for 100% of the federal wind production tax credit, which Wind Catcher does. In the fine print, AEP also says the company would ultimately want to purchase the wind generator and transmission line. If Invenergy could deliver the Wind Catcher project to AEP in conjunction with a new transmission project that made the connection from the Oklahoma panhandle (100 miles from GBE) to Tulsa, Invenergy would be foolish not to make a proposal for this RFP.

If Invenergy did make a proposal to use Grain Belt Express to deliver from its Wind Catcher site in the Oklahoma panhandle, how might the company re-route the project to accomplish the goals of AEP? Getting Wind Catcher connected to GBE would be no great feat. As long as Oklahoma ratepayers aren't paying for it, there is no law requiring a permit from Oklahoma. If Kansas has approved GBE, it's a simple re-route across the southern part of the state to get to Tulsa. But AEP wants to also deliver this power to its customers in Arkansas, Texas and Louisiana, and GBE promised to make 500 MW of capacity available to Missouri, so might a re-routed GBE continue east into Missouri, and construct a converter station somewhere around Joplin, from which it could make strong, new connections to the other states? It sure sounds plausible to me, and Invenergy would be quite foolish not to attempt it.

What if GBE only impacts Senator White's district? What would his constituents think if they knew Senator White supported the use of eminent domain to build a transmission line across their land that would serve other states? Would he change his mind about supporting it? Why is Invenergy so interested in Senator White, and why is Senator White so interested in GBE?

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It's All About the Eminent Domain, Missouri!

5/2/2019

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High drama in Missouri on Wednesday as reported HERE, HERE and HERE.

HB1062 is about eminent domain. What the Missouri legislature does here will have far reaching effects on its future. Is Missouri another New London, tossing its own citizens under the bus in exchange for the empty promises of an out-of-state corporation? Is Missouri so eager to have the crumbs and fake "friendship" of corporate America that it supports the taking of private property to get it? Of course, the private property being taken belongs to someone else, not the suddenly fierce eminent domain advocates who have sprung up in Missouri to oppose HB 1062.

It doesn't matter what some city thinks it will save on utility transmission capacity costs. It doesn't matter whether eminent domain is "a last resort." What matters is the eminent domain.

Representative Hansen's bill wisely separates above ground HVDC merchant transmission from utilities granted eminent domain for a reason. It's because merchant projects like this are not public utilities who provide service to all customers at consistent "cost of service rates". Grain Belt Express may be the first above ground HVDC merchant transmission project proposing to "fly over" Missouri, but it won't be the last. There's a huge push by big wind and big transmission to build trillions of dollars of new energy infrastructure in the Midwest that becomes America's newest power plant. They're doing this because it's profitable and your federal tax dollars subsidize it. And they don't care who gets in their way.

Merchant transmission like this isn't a public utility because it negotiates rates with only select customers who pay the most for its supplemental, optional service. Unlike public utilities, who provide service to all customers that request it, GBE provides service only to the highest bidders who can afford to buy service. Each customer's rate is different as negotiated, and may favor some customers with lower rates than others. The service provided by merchant transmission isn't necessary to keep the lights on. Nobody will be denied electricity if they can't get merchant service because what a merchant offers is a supplemental "it would be nice if..." kind of electric service. This kind of utility serves private use and does not rise to the level of public need necessary to confiscate the property of others.

It would be nice if I had a red car, I've always wanted a red car. The dealership in the next state over promised me I can have a $500 discount on a shiny new red car if I bring them my neighbor's antique pick up truck for trade. The dealer has always wanted an antique pick up truck almost as much as I want a red car, but my neighbor has refused to sell it to him willingly. But, hey, that's what eminent domain in Missouri is for... so I can take something that belongs to my neighbor and use it to barter a deal that benefits only me and the dealer.

Sound silly? Yes, but this is exactly what the opposition to HB 1062 is asking the Missouri Legislature to do.

It's time for Missouri's legislators to take a stand against eminent domain abuse by making HB 1062 into law. And Grain Belt Express needs to step up to create a project that provides real benefit to Missouri and stop asking for a handout. Invenergy CAN build GBE without eminent domain authority, it just doesn't want to because it's less profitable to bury the project or negotiate with landowners in a truly free market where eminent domain isn't an option.

Tell your senators to do the right thing, Missouri!

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FERC Transmission Incentives - Evaluating Existing Incentives

4/30/2019

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Here's where FERC should have started with its transmission incentives review, except it got so excited by proposals for new incentives, the existing incentives ended up at the back of the rack as a mere afterthought. While not as exciting as FERC's proposals for new incentives, these still require a look because they are the source for all the "FERC candy" comments, and have driven many bad transmission ideas that are bankrupting consumers and causing increased opposition to bad projects.

ROE Adders for Transmission Only Companies: This incentive adds 50 points to a transmission company's return on equity. In people-speak, that equates to an additional half a percent of interest on a company's rate base. Rate base is the cost of projects that have not yet been repaid by consumers. When a project is completed, its total cost goes into the rate base and it is repaid to the transmission owner over the useful life of the asset (approximately 40 years for transmission). With transmission projects costing multiple billions, that extra half a percent interest on a balance that slowly depreciates over 40 years can add up to big bucks. So, the Commission wanted to give an incentive to independent transmission owners, who perhaps it felt needed a leg up to compete with incumbent utilities. Independent transcos also should not have any interest in generation or distribution companies that may cloud their thinking about what to build, nor compete for parent company investment dollars. Sounds good on the surface, but guess what happened when FERC put this into practice? Suddenly all the incumbents created spin-off companies that were supposedly "independent" in order to win that extra interest. These spin-offs enjoy parent company benefits, such as being able to borrow money at a low rate to finance the project, then collect extra interest on their borrowed "equity." If a parent can borrow at 3%, then use that money to inject "equity" into their transmission-only spin-off, they can earn maybe 10% (or more) on that money, while only having to re-pay the loan at 3%. That extra 7% is gravy for the parent company.

Q 57) Does the Transco business model continue to provide sufficient benefits to merit transmission incentives? What information should an entity seeking a Transco incentive provide to demonstrate sufficient benefits?

Q 58) Should the Transco incentive remain available to Transcos that are affiliated with a market participant? If so, how should the Commission evaluate whether a Transco is sufficiently independent to merit an incentive?

Q 59) Should a Transco incentive be awarded on a project-by-project basis?

Q 60) Should the Transco incentive exclude assets that a Transco buys, rather than develops?

Another gravy-maker is the RTO/ISO membership incentive. Sec. 219 tasked FERC with developing incentives for transmission companies that JOIN an RTO/ISO, figuring that membership provided benefits to consumers. Can't change this now, it's in Sec. 219. The incentive FERC developed for this instance was another 50 points on the ROE. However, FERC interpreted Sec. 219 incorrectly in order to award the incentive to every transmission company that IS a member of an RTO/ISO. Therefore, companies that have been members for years are routinely awarded that extra interest just for maintaining their membership, something they were most likely going to do anyways. Providing extra interest isn't going to make or break RTO membership, except maybe in the case of a new entrant. In addition, the incentive may be awarded to multiple spin-offs and projects of the same parent company, based on one membership. The incentives for continued membership simply have to stop. It's a misinterpretation of Sec. 219 that costs consumers billions they wouldn't spend otherwise.

Q 61) Should the Commission revise the RTO-participation incentive?

Q 62) Should the Commission consider providing incentives other than ROE adders for utilities that join RTO/ISOs, such as the automatic provision of CWIP in rate base or the abandoned plant incentive for all transmission-owning members of an RTO/ISO? If so, what other types of incentives would be appropriate?

Q 63) If the Commission continues to provide ROE adders for RTO/ISO participation, what is an appropriate level for an ROE adder?

Q 64) Should the RTO-participation incentive be awarded for a fixed period of time after a transmission owner joins an RTO or ISO?

Q 65) Should the RTO-participation adder be awarded on a project-specific basis?

Q 66) In Order No. 679, the Commission found that “the basis for the incentive is a recognition that benefits flow from membership in such organizations and the fact that continuing membership is generally voluntary.” Should voluntary participation remain a requirement for receiving RTO/ISO incentives?

Transmission companies can also request an additional 50 points for using "advanced technology" in their transmission project. However, requests for this incentive have been few and far between. What exactly defines "advanced technology," and for what period of time is this technology actually "advanced" before it becomes routine? FERC created an impossible task of defining "advanced technology," and besides, transmission owners are a pretty staid bunch, preferring to use "technology" that would be recognized by Thomas Edison. More Tesla, less Edison.

Q 67) Why have few transmission developers sought transmission incentives for the adoption of advanced technology?
Q 68) Do NERC reliability standards affect the willingness of transmission developers to enhance existing transmission facilities by deploying new technologies because of concerns these technologies may increase the risk of standards violations?
Q 69) Are there any types of transmission incentives that could better encourage deployment of new technologies? If so, please describe them.

Now let's move on to the non-ROE incentives, incentives that do other financial things other than increase a transmission owners' ROE.

FERC's jammed several things into a topic called "Regulatory Asset/Deferred Recovery of Pre-Commercial Costs and CWIP". Pre-Commercial costs consist of a company's expenses that happen before FERC grants incentives and recovery of a transmission project's costs. So, that could include everything from the moment some transmission genius rolls out of bed with an idea for a new transmission proposal, and FERC rate approval (including all costs to seek that approval in the first place). This incentive allows the company to recover all these costs, plus interest, from consumers, generally over the first 5 years of rate recovery.

CWIP stands for "Construction Work In Progress," which is basically a holding account for the capital costs of building a transmission project. FERC's CWIP in Rate Base incentive allows the company to include its CWIP account in the Rate Base number upon which it earns a yearly return. Even though a transmission project has not yet been built, or completed, a company can earn a return on its investment. CWIP doesn't depreciate because the project has not yet gone in service, so this balance continually builds until the project's in service date, then it begins depreciating.

It's helpful to think of transmission finance sort of like a home mortgage you're familiar with. ROE is interest, and depreciation is principal. You pay interest for 30 years while your principal is slowly paid off during the term of the loan.

FERC doesn't ask many questions about these combined incentives... perhaps because they don't intend to change them at all, just expand them?

Q 70) Should the Commission continue to provide regulatory asset treatment and CWIP as incentives? Should these incentives be granted automatically to certain types of transmission projects? If so, how would the Commission determine what types of transmission projects?
Q 71) Should the costs of unsuccessful Order No. 1000 proposals be recoverable through regulatory asset and deferred pre-commercial cost recovery incentives? If so, what costs are appropriate for recovery?

Hypothetical Capital Structure -- Since rate setting begins before a transmission project is built and operational (remember, that guy rolling out of bed with an idea), FERC must set a capital structure long before it actually happens. It's hypothetical. A transmission owner's capital structure determines how much of the cost of the project is equity (money contributed or invested by the company out of its own funds) and how much is debt (money borrowed by the transmission owner to use to build the project). Defining this is necessary because equity earns the "Return on Equity" or ROE interest rate set by FERC, and debt earns at the rate the money is borrowed. Since the transmission company probably hasn't even borrowed the money, or set any real capital structure when rates begin, FERC has to guesstimate. A basic rule of thumb is that 50% of the cost of the project will be equity, and 50% will be debt. That is, half of the rate base earns at ROE rate, and half earns at debt rate. However, a transmission owner may request a different split of equity/debt, such as 60% equity to 40% debt. Obviously, this capital structure makes more money, right? FERC can grant an incentive allowing return at this higher rate before actual capital structure is set by the borrowing of money.

Q 72) Should the Commission continue to utilize hypothetical capital structures as a transmission incentive? If so, what entities should be eligible to apply for a hypothetical capital structure?
Q 73) Have hypothetical capital structures been effective in reducing the overall cost of debt by rendering the capital structure more predictable? Q 74) In what circumstances, if any, should hypothetical capital structure incentives granted to an entity also be authorized for that entity’s yet-to-be formed affiliates?
Q 75) Under what circumstances, if any, should hypothetical capital structures extend beyond the construction period?
Q 76) Should the Commission provide a consistent hypothetical structure (e.g., 50 percent debt and 50 percent equity)? Alternatively, should the Commission cap the equity percentage at some upper limit (e.g., 50 percent)?

Abandoned plant incentive. This one is a particularly bitter pill for ratepayers to swallow, where they end up paying for a transmission project that never actually gets built... and we're talking in the hundreds of millions of dollars, plus ROE over a set recovery period. FERC's abandoned plant incentive guarantees that the transmission owner can recover its sunk costs if the transmission project is cancelled through no fault of its owner. How does this happen? When a project is "ordered" by an RTO/ISO and later found not to be needed at all. This should be a very rare occurrence, but it's not. It's happening with more frequency, as RTOs stick their necks out ordering the unneeded projects proposed by their members. What happens to unneeded projects? They're opposed by affected communities. And what happens if the opposition is successful (and this also is happening with more frequency)? The project does not receive state siting and permitting approvals and is cancelled by the RTO, causing the transmission owner to abandon its project through no fault of its own. Nobody's at fault, nothing to see, pay the money and let's move on. What??? The only way to stop the proposal of bad projects is to make their owners responsible for their own failure. Instead, FERC makes ratepayers responsible for the faults of transmission owners and RTOs, when the ratepayers have been the voice of reason all along. This is truly absurd.

Q 77) Should the Commission grant the abandoned plant incentive automatically, rather than on a case-by-case basis? Under what circumstances might an automatic award of the abandoned plant incentive be appropriate?
Q 78) How, if at all, could the Commission grant the abandoned plant incentive without encouraging transmission developers to pursue unnecessarily risky transmission projects or take unnecessary risks in transmission development? Could such behavior be reduced if the developer shared some risk associated with the abandonment, e.g., 10 percent of abandonment costs? If so, what level of developer risk is appropriate?
Q 79) How should the Commission evaluate whether the costs of an abandoned facility were prudently incurred?

Accelerated depreciation -- Essentially, this allows the transmission owner to recover its costs quicker than the traditionally used "life of the project." If a transmission line is supposed to last 40 years, then its total cost is broken down into re-payment over 40 years (plus interest). Each component of a transmission project has a determined "life" of how long it's supposed to last before needing replacement. This sets a transmission line's depreciation schedule, the rate at which principal is paid back. But say a transmission owner wanted to recover the cost of a 40-year transmission line over a period of 20 years? Sure, the transmission owner would get its money back faster, but it would earn a lot less interest. This incentive has never been popular. Can you guess why?

Q 80) Should the Commission continue to consider accelerated depreciation as an incentive?
Q 81) Does the accelerated deprecation incentive provide meaningful benefits to transmission developers?
Q 82) Should the Commission grant an accelerated depreciation incentive with a generic depreciation period or continue to determine such a period on a case-by-case basis?

For the last in this series, we'll tackle the dregs of FERC's inquiry -- the mechanics and implementation of incentives. Coming soon....

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PJM Interconnection Gets Gored on Social Media by Mama Bear

4/29/2019

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This is an aerial view of Amanda Elisaon-Scott's property, where she recently constructed her "dream home" in Harford County, Maryland. It's just a few feet from the new right of way for Transource's proposed Independence Energy Connection. Her house is about 300 feet from the tree line, and Transource plans to put its right of way in between her house and the tree line. This puts the transmission line less than 200 feet from her house, and even less than that from the backyard swing set where her three small children play. Moreover, because the right of way is just off her back property line, she will receive absolutely no compensation for what could be taken from her. She worries about her children and her family living within the shadow of giant electric transmission lines. And she's not going to stand for it. She's a self-admitted "Mama Bear," and everyone knows what happens when you get between a mama bear and her cubs.

Amanda took it home to its source at PJM Interconnection, in the wake of Saturday's Maryland Public Service Commission Public Hearing. Amanda went to PJM's Facebook page, where she saw many posts about PJM's community involvement and a recent "take your child to work day." But there was no place for her to make a post. PJM has shut off that feature, preferring a "one-way street" for its social media presence, where only PJM may disseminate information. The only place for the public to interact with PJM on social media is by posting a comment on one of PJM's posts. And even then, those comments are "hidden" and not viewable by anyone other than their author and that person's Facebook friends. This is what Amanda posted:

PJM Interconnection why do you filter the comments on your page, why do you not allow the public to share comments or post concerns??? Don't appreciate it when the public calls you out on your lies??? After our community hearing with the Maryland Public Service Commission I am back into full fledged pissed off mama bear mode, and I have ZERO plans of backing down. The entire project is unfounded, unjust, unnecessary and provides no benefit to anyone but YOU and your own financial gain. It will be a cold day in hell before I willingly allow you to destroy my community, our homes, property or my childrens back yard.
*EDITED*, I never expected all the shares, so I wanted to write a bit more of an explanation for those who aren't aware of that's going on.
PLEASE SHARE AND TAG TO SPREAD MORE AWARENESS!!!!!
I'm reaching out to everyone single person I can and through every single avenue there is. Crazy long story short for those who have no idea what's going on. A huge multi million dollar electric company PJM Interconnection has plans to build a new high tension powerline in northern Harford county MD, Washington county MD and Franklin county PA. This is a powerline that serves no purpose, and does nothing to benefit the general public, only the big power companies will reap the benefits. To make matters worse, there are existing underutilized towers that could solve the problem, without having to build a new transmission line. Currently they have plans to enforce eminent domain (steal our land) to build this line, and plan to disrupt homes, farms, orchards and small businesses. They have intentionally chosen farms in agricultural preserve because the land is "cheaper", and hold "less value", so therefore more cost efficient for them to steal. Unfortunately if the state allows this to happen, it will set a precedent that huge money hungry corporations can steal land from whomever they chose for their own financial gain. Does this directly impact you now ?? Maybe not, but I certainly never thought I'd be facing this issue, but here I am. Please Help spread the word. Share share share and share again!! They currently plan to go directly through my husbands great grandparents farm that we were blessed to have been able to build our dream home on, the land that we thought would allow our 3 small sons to safely grow, learn, play and explore. This project, if approved is going to ruin those hopes and dreams. So please, help make this issue known, and spread the word.

PJM exists to serve electric ratepayers in its 13-state region. All PJM's money comes from ratepayers. Each one of the 66 million ratepayers in the PJM region pays a portion of PJM's budget (and it's huge!) And, in return, what do they get?

Can't even make a public comment on PJM's Facebook page. PJM thinks the ratepayers who pay its bills should have no voice.

Here's what PJM thinks it does:

Does that say "understand customer needs"? How could PJM understand customer needs when it shuts itself off from communication with those very customers? PJM is out of touch with its customers and has no idea what they need. However, it is very in tune with its "members," like Transource, whose "needs" trump customer needs every time. It's the epitome of "cartel."

So, like Amanda asked, share. It's time for every one of those 66 million PJM customers to let their "needs" be known.

To learn more about Amanda's story, watch this video.

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Take a Drive, PJM!

4/28/2019

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Stop Transource filled the house yesterday at the Maryland Public Service Commission public hearing on the Transource project. It is estimated that around 200 people gave up their Saturday to come out and show their staunch opposition to this project.

Transource opponent Patti Hankins asked PJM to take a drive...

Welcome to our Mason-Dixon Community. A Community at risk due to a broken PJM process.

PJM holds the view, that agricultural land is “undeveloped land” ready and waiting for their transmission projects. PJM fails to consider or care about the negative impacts their transmission projects have on our local economy, local agricultural businesses, rural pastoral viewsheds or the rural Community in general. PJM fails to recognize that agriculture is an intended land use designation. Harford County retains approximately 75,000 acres, or 27%, of the County’s land area dedicated to farming. Agricultural land is in decline and both MD & PA have made preserving agricultural land a priority. We can’t make more farmland.

On November 6, 2017 members of this Mason-Dixon Community, along with elected and appointed officials from both MD & PA met with PJM staff, Paul McGlynn (PJM System Planning), Matthew LaRocque (Manager Regulatory Affairs for MD, VA & NC), and Darlene Phillips (PJM State and Member Services) as a result of a written request to PJM’s Board Chairman. The purpose of this meeting was to resolve the need for any new “greenfield” transmission projects in our Community.

What was and is still disturbing is the failure of PJM and their staff to acknowledge that, as citizens, we know what is best for our Mason-Dixon Community. On November 6, 2017, those PJM staff chose to ignore the invitation by Councilman Chad Shrodes to take a five-minute drive to see the underutilized transmission line, the Otter Creek-Conastone line near Shaw’s Orchard in Norrisville. In fact, the Otter Creek-Conastone line parallels and is located within sight of the proposed Transource IEC-East line almost the entire proposed pathway. To validate this one only has to take a drive.

In addition, we were told that “some states have requirements” to utilize existing brownfields vs. building new greenfield transmission. And that “we are all working with the states to work within and respect the state’s regulations”. And that (the project) “was submitted based on state policy”. If those statements were true, PJM wouldn’t have approved Transource to build an unnecessary, redundant IEC-East transmission line in a Community already beset with existing underutilized transmission lines. Something that is very clear to the members of our Community. All one has to do is take a drive.

We expressed concern to PJM staff that the Benefit/Cost analysis only included costs of siting, costs of ROW’s, substation and equipment costs – transaction and infrastructure costs only, costs specific to building the project. A member of the York County Planning Commission told PJM staff, “those are transaction and infrastructure costs only, project costs specifically related to building the project. You are not looking at the farm economy for local farms. Where is the B/C for the Community? We need to come up with this impact.” There was just silence from the PJM staff present. Matter of fact, our Community still has yet to receive an answer from PJM. So, PJM what is the negative impact to our Community? Are you ever going to answer?

Our Mason-Dixon Community urges the Commission to provide that answer to PJM. Tell PJM that their project, the Transource IEC Project is denied. Tell PJM that existing underutilized transmission infrastructure is the best solution for “Market Efficiency” and/or “emerging reliability issues”. Tell PJM that the next time they propose a problem and search for solutions that they need to just take a drive.

Too bad PJM officials couldn't be bothered to give up their Saturday to listen to citizens concerned about the impact of a project PJM supports. You drive me crazy, PJM!

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FERC Transmission Incentives - A Handful Of Awful Ideas

4/28/2019

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We've finally gotten to a handful of really awful ideas buried deep within FERC's Transmission Incentives Inquiry. Basically, these ideas seek to encourage new, bigger, longer, transmission lines for the express purpose of favoring one kind of generation. No sense beating around the bush, FERC wants to provide financial encouragement for the building of new interregional transmission with the intent of connecting Midwest industrial wind to both coasts. It intends to do it through five new incentives for: Interregional transmission projects; Unlocking locationally constrained resources; Ownership by non-public utilities; Order No. 1000 transmission projects; and Transmission projects in non-RTO/ISO regions.

But before we delve in there, let's go back to Sec. 219. Sec. 219 was created before industrial wind was a thing (a thing that makes buckets of money for wind companies). Congress never envisioned using incentives to favor certain kinds of generation, or to encourage the building of a whole bunch of new transmission for the sole purpose of making energy "cleaner." Sec. 219 is for the purpose of "...incentive-based (including performance-based) rate treatments for the transmission of electric energy in interstate commerce by public utilities for the purpose of benefitting consumers by ensuring reliability and reducing the cost of delivered power by reducing transmission congestion." There's a lot in there that just doesn't go with these five ideas. In addition, Sec. 219 was more about "...the enlargement, improvement, maintenance, and operation..." "... to increase the capacity and efficiency of existing transmission facilities and improve the operation of the facilities." Nothing in there about wind. Nothing in there about new transmission, or the size or reach of new transmission, and it is specifically reserved for public utilities. Aren't we off to an auspicious start?

An interregional transmission project has the potential to improve interregional coordination, help to eliminate seams issues, and provide more efficient power flow among regions. Although Order No. 1000 required coordination among neighboring transmission planning regions to identify potential interregional transmission facilities, such projects have been scarce to date.
Q 44) Should the Commission use incentives to encourage the development of interregional transmission projects? How, if at all, would any such incentive interact with Order No. 1000’s reforms?
Q 45) If the Commission should use incentives to encourage interregional transmission projects, should all interregional projects be eligible or should it be based on some other criteria? How should the Commission consider the benefits of an individual interregional transmission project?
Q 46) If the Commission were to grant incentives for interregional transmission projects, what incentive(s) would be appropriate?

FERC doesn't seem to like the parochialism of regional transmission planning. A transmission region only plans for its own region. Some of these regions include more than a dozen states. Isn't that large enough already? But FERC wants to join multiple regions together to plan even bigger transmission. FERC tried to get this idea going with its Order No. 1000 a number of years ago, however that initiative failed. Two or more regions simply can't work together to plan big interregional projects. Why? It's financially infeasible. Each region that plans for its own transmission needs allocates the cost of the projects it plans to captive electric customers in its own region. If a region plans to build new transmission, ratepayers in its region foot the bill. Interregional transmission, by its very nature, doesn't benefit all regions equally, therefore there is too much conflict regarding who will pay for the transmission. Let's use an example of a transmission line originating in the Midwest for the purpose of exporting wind to the East Coast. The Midwest region's ratepayers get little to no benefit from such a project because they aren't the ones being served and will use little to none of the electric capacity of the new line. Midwest ratepayers should not have to pay for the project. There's no need for this project, and certainly no benefit for these ratepayers. Therefore, where's the interest in doing it? The East Coast region gets the benefit of new power sources, but it does not want to pay for the entire project. Midwest wind isn't so cheap when the cost of big new interregional transmission projects get added to the cost of generation. It does nothing but raise prices in the East Coast region, and that region may instead choose local renewable resources that don't come with a huge transmission bill (not to mention the reliability issues inherent to being dependent on one very long transmission line for huge amounts of generation). It's cheaper for the eastern region to use its own renewable resources, and it also provides jobs and economic development within the region. Why would the eastern region's ratepayers want to spend their energy dollars in another region? Now FERC wants to add financial incentives on top of a project that is already too expensive. That only compounds the problem. Interregional transmission doesn't work simply from a cost perspective. That's why Order No. 1000 didn't work, and that's why incentives won't work either.

Unlocking locationally constrained resources -- nice words for building new transmission to export power from a region where generation is being overbuilt.

The 2012 Incentives Policy Statement provided that “projects that unlock location constrained generation resources that previously had limited or no access to the wholesale electricity markets” may be eligible for incentives. In subsequent years, interconnection queues in many regions of the country have expanded considerably, with many of the potential resources clustered in specific geographic areas with limited transmission access.
Q 47) Should the Commission use incentives to encourage the development of transmission projects that will facilitate the interconnection of large amounts of resources?
Q 48) If so, what metrics could the Commission consider when evaluating whether a transmission project facilitates the interconnection of generation?
Q 49) Should such an incentive focus on resources already in the queue, a region’s potential for new resources, or some other measure? How could the Commission evaluate the potential for further resource development in a particular geographic area?

See that sleight of hand? It's not that Sec. 219 wanted to unlock constrained resources, it's that FERC decided that could be a thing in its last Transmission Incentives review. There's simply no foundation for this in Sec. 219. Building on a flawed interpretation doesn't fix this. It's simply not eligible for incentives. If we're going to go outside Sec. 219 to cook up incentives, how about using the incentive money to encourage the building of new generation near load centers? I bet if FERC offered financial incentives to new generators, it could get a whole bunch built near load for the same amount of money. No transmission needed! And, can we be frank here... big new cross-country transmission stands about as much chance of being built as a snowman stands in hell. Think of the sheer volume of properties and communities crossed by a transmission line of this magnitude. Transmission opposition develops on just about every project, and the more audacious the project, the bigger the opposition. Transmission opposition has been wildly successful against these kinds of projects, adding years of delay, and ultimately, cancellation. The only thing FERC could do here is waste a whole bunch of money on transmission ideas that are destined for failure. Nothing will get built, but ratepayers will be out billions of dollars. This is a really awful idea.

Incentives for transmission by non-public utilities? Can't be done. Sec. 219 is specifically for public utilities. So, FERC seems to suggest doing an end run here, and providing incentives to public utilities that "partner" with non-public utilities.

Section 219(b)(1) encourages the Commission to facilitate capital investment in transmission infrastructure, regardless of the ownership of those facilities.
Q 50) Are there barriers to non-public utilities’ ownership of transmission facilities?
Q 51) Should the Commission consider granting incentives to promote joint ownership arrangements with non-public utilities and, if so, how?

Since FERC can only provide incentives to public utilities, it wants to add them to non-public utility projects. Doesn't this just add another layer of cost? And here's the thing... public utilities collect all their costs from their captive ratepayers. Non-public utilities don't have captive ratepayers. They don't have ratepayers at all. So, in an example here, say Google wants to own a transmission line that will deliver Midwest wind to a string of its data centers all the way to the east coast so that the company can claim to be "powered by wind." Who is supposed to pay for that? Are the captive ratepayers of a public utility who partners with Google supposed to pick up the tab for Google's corporate propaganda? They get no benefit from it, therefore they should bear no cost. Is Google going to pay for it? I think something of that magnitude would be too rich for Google's blood. They don't want to pay for it. So, if nobody wants to pay for the actual transmission project, who is going to pay for the cost of incentives?

And why would Google need to partner with a public utility in order to build new transmission for its own needs? Two words... eminent domain. If Google wanted to build and own a transmission project for its own needs, it would not qualify for eminent domain authority to take right of way for the transmission project. I guess FERC thinks that a public utility could use its eminent domain authority to clear a path for Google's transmission project. This would never work in practice. State courts have taken a hard line against non-public utilities (which are essentially private enterprise) using eminent domain to increase their own profits.

This idea is just crazy. Let's move on...

FERC wants to use incentives to encourage its failed Order No. 1000.

The Commission has considered whether it could reduce transmission developer risk by granting blanket pre-approval (i.e., a rebuttable presumption) of three risk-reducing incentives for transmission projects selected in a regional transmission plan for purposes of cost allocation: CWIP, abandoned plant, and regulatory asset treatment.
Q 52) Should these or other incentives be granted automatically for transmission projects selected in a regional transmission plan for purposes of cost allocation?
Q 53) If so, what specific incentives are appropriate for such automatic treatment and how should such incentives be designed?

Following Order No. 1000, the Commission has exercised it discretion to grant certain incentives to non-incumbent transmission developers under section 205 of the FPA, in order to further the public policy goal of placing non-incumbent transmission developers on a level playing field with incumbent transmission owners in Order No. 1000 regional transmission planning processes.

Q 54) Should the Commission continue to use certain incentives to seek to place non-incumbent transmission developers on a level playing field with incumbent transmission owners in Order No. 1000 regional transmission planning processes? If so, should the Commission consider requests for such incentives under section 205, or should the Commission consider requests for such incentives for non-incumbent transmission owners under section 219?

I think the Commission should stay within Sec. 219's bailiwick and quit trying to apply incentives to transmission clearly outside the statute.

And last in this post... incentives for transmission projects in non-RTO/ISO regions. The "non" regions cover a huge chunk of geography -- huge chunks of the Northwest, Southwest, as well as Southeastern states. Why doesn't FERC award incentives here? Because it created a threshold for incentives that requires a project to be part of a RTO/ISO plan, or for the owner to demonstrate how its project meets Sec. 219's purpose.

Applications for transmission incentives to date have almost exclusively been for transmission projects proposed to be developed within RTOs/ISOs.
Q 55) Are there factors that discourage developers of transmission projects in non-RTO/ISO regions from seeking incentives?
Q 56) What, if any, additional types of incentives could appropriately encourage the development of transmission in non- RTO/ISO regions?

Sort of looks like FERC has boxed itself in here, perhaps unintended. If it wants to award incentives to "non" regions, then it needs to rework its threshold for all projects. It's incredibly easy for a transmission idea to be approved by an RTO/ISO in order to receive incentives. Maybe it's not a good test in the first place.

What a frightful handful of transmission incentive ideas. If adopted, these incentive uses will do nothing but increase the cost of power. And where will the increase come from? Consumer pockets. And where will the increase go? Transmission developer pockets. It's antithetical to the purpose of Sec. 219... "for the purpose of benefitting consumers by ensuring reliability and reducing the cost of delivered power by reducing transmission congestion."

Almost done here... just one last look at the existing incentives, which were bad enough on their own. Maybe FERC thought that by adding a whole bunch of new awful ideas it could make the existing incentives look good by comparison? That's fodder for another day...

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Maryland PSC Public Hearings! This is Your Moment, Folks!

4/24/2019

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Starting this Saturday, the Maryland Public Service Commission will begin public hearings on the Transource Independence Energy Connection project. The public -- that's you! It's time for you to be heard!

It's a rare moment indeed when a government commission volunteers to work on a Saturday in order to provide the widest opportunity for working folks to participate in the very important public hearing process. In fact, I've never heard of one like this before. Don't let this important process go by without your comments!

When: Saturday, April 27. Hearing begins at 11:00 a.m., but please come early in order to sign up to speak and find a good seat.

Where: North Harford High School, 211 Pylesville Rd., Pylesville, MD

What: The Maryland PSC, who will make a decision whether or not to permit this project to happen, wants to hear from the public in order to inform their decision. If you want to address the Commission briefly (3 minute limit), sign up with the PSC personnel in the lobby before the meeting. If you think you can't speak, or the idea of doing so simply gives you the willies, you may submit written comments to the PSC staff at the sign-up table. If you're undecided, come prepared for either action. However beware that a certain magic happens at these hearings. The feeling of camaraderie and community you will experience listening to the heartfelt comments of your friends and neighbors has been known to inspire even the most squeamish to trek back out to the lobby to add their name to the speakers' list. And if you think you don't have a comment to make, please come and listen. You may find that you want to participate after the hearing gets going, and that's okay. Many in your community have been working hard, contributing both time and money to preserve your community and stop this expensive and unnecessary project and they would welcome your support during this important hearing.

Who: YOU! You don't have to be a Maryland resident to participate. You don't have to be an affected property owner. You're probably an affected ratepayer who will end up paying for this project through increased electric bills for the next 40 years. Even if you spoke at the Pennsylvania public hearings last year, you may speak again. This is a whole new commission, making a completely different decision. Make sure they make the right one!

If you miss this hearing, or it's too far away, you'll have another opportunity on May 18 at Smithsburg High School in Smithsburg, MD, also beginning at 11 a.m. If no one shows up for this hearing, what message does that send to the PSC Commissioners? Please make time to attend the hearing closest to you!

Why are public hearings so important? Public hearings let the commissions know what the affected public thinks about the project and help to drive the opinion they will issue. A project nobody seems to care about is taken as acquiescence. But a hotly opposed project causes the commission to take notice that the public who would supposedly "benefit" from the project doesn't want it.

Has public hearing participation made a difference in other states, on other projects? Absolutely! Decked out, verbal and prolific public participants have rocked public hearing venues in other states so hard that the project has eventually been denied by the state commission.

It's time to stand up and stand out against Transource. I guarantee you'll leave the hearing with a full heart, energized and inspired to do the best for your community. Don't miss this important event! You'll remember it proudly for a long, long time!

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Anger Makes You Dumb

4/19/2019

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The opposition to Missouri HB 1062 is one of desperate, ever-shifting arguments of questionable veracity, and an increasing amount of anger. The angrier these opponents get, the dumber they sound.

I think we reached a pinnacle with today's Wind Energy: Attempt on by state politicians to thwart Kirkwood wind power (sic). In this article, the director of Kirkwood's Electric utility claims support for the legislation is coming from only 15 people, and that he's going to "appeal" the legislature's action to the Federal Energy Regulatory Commission and it will be decided there.

This guy has some really crazy, misguided thoughts. FERC isn't some federal appeals court for state transmission decisions you don't like. FERC is a regulator, not a legislative body. FERC's regulatory jurisdiction applies only to electric transmission RATES. It has no siting, permitting, or eminent domain authority for electric transmission, federal or state. Since HB 1062 deals only with state eminent domain law (not rates, not permitting, not siting) there simply is no role for FERC here. Aside from that, how does one "appeal" an act of one body to a completely different body?

“I would contend that an interstate transmission line is an issue regulated by the Federal Energy Regulatory Commission,” added Petty. “And this issue may ultimately be appealed and decided in that arena.”

Good luck with that, Ace! It's not happening. Ever.

And then there's this:

“State Rep. Jim Hansen, R-Frankford, has filed legislation which says no private entity has the power of eminent domain for the purposes of building above-ground merchant lines,” explained Petty. “ But he’s clearly not the only legislator feeling the pressure from about 15, or fewer, out of 500 landowners that share this ‘not-in-my-backyard attitude’ about transmission projects for any type of transmission project.”

Just 15, you say?

Perhaps you incurred an error while manipulating your abacus?

Sure looks like a lot more than 15 to me. Perhaps your magnifying glass was really a mirror? Because I can maybe count 15 people who are opposed to this legislation... a handful of you city guys and a few party line legislators who have been resoundingly outvoted. You claim to speak for the majority, but I don't see any grassroots opposition to this bill. Nobody is simply going to get excited enough to rally at the Capitol over a $3.00 savings on their electric bill. It wouldn't even pay for their gas to Jefferson City.

Nevertheless, Petty is concerned that Hansen’s bill could pass the Missouri House and go to the Missouri Senate as early as next week. If it becomes law, it will be back to the courts for the much-delayed project.

Terrified sounds more like it.

Back to the courts? So you're going to challenge the constitutionality of an act of the legislature? That sounds kind of expensive. Are you strictly speaking for Kirkwood, or are you speaking for some other entity with deep enough pockets to engage in years of fruitless litigation? Or are you simply making idle threats?

And then there's the guy from The Sierra Club, who apparently has no idea what the legislation is about, so he makes stuff up based on Sierra Club's all-purpose "dark money" narrative that continues to erode any credibility it once had.

So, what makes Grain Belt line different?
“The difference is it carries clean wind energy, so it threatens the fossil fuel industry, as well as the monopoly utilities that depend on coal,” Hickey said. “So, the issue of ‘eminent domain’ is only an issue for these legislators when it involves wind energy. If it is coal energy, or a tar sands pipeline, eminent domain is all okay.”

According to Hickey, Rep. Hansen is being joined in his fight against the transmission line by House Speaker Elijah Haahr, R-Springfield. He said the legislators are clearly carrying water for the fossil fuel industry.

And The Sierra Club is clearly carrying water for the wind industry... or maybe it's just handfuls of cash.

Maybe someone should ask The Sierra Club how much air pollution will be emitted in Missouri to create the extra coal-fired power that the city utilities plan to ship east on Grain Belt Express in equal amounts to the "clean" energy they think they'll receive? If the wind power substituted by the cities is created in Kansas, emissions gain will be had there. If the power produced by the cities in Missouri creates emissions, the emissions will stay in Missouri, even after the power is exported to eastern states. Kind of like putting a poor idiot in a round room and telling him there's a penny in the corner.

And at that, let's move onto the repetitive, garbled and patently untrue comments made by MPUA lobbyist Ewell Lawson. It's pretty hard to hear what this guy is saying, but it seems to go like this: The developer has had no opportunity to even talk with landowners about easement acquisition because they couldn't do it without PSC approval, and that just happened. He also thinks the PSC built special authorities and protections for landowners into its order.

First of all, how did GBE acquire 39 easements in Missouri over the past 6 years or so if it wasn't allowed to talk to landowners until PSC approval? Landowners have had about all the "talking" with GBE that they can stand. Their answer is "no." Perhaps Ewell missed the PSC testimony where GBE's representative talked about having to condemn property quickly just to do surveys? Landowners didn't miss that. And about those "special authorities and protections," they were written by GBE! It's a fox's plan to secure the hen house. It doesn't protect landowners. This guy needs to quit trying to speak for those poor, poor landowners who just want an opportunity to talk with GBE about easements. That's nothing but a fantasy.

What will these guys think up to say next? The exaggerations are wildly entertaining, but ultimately futile. Watching this is more entertaining than prime time TV.

Nexxxxxxt.......

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FERC Transmission Incentives - Improving Existing Facilities

4/19/2019

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Much of Sec. 219 directed FERC to provide incentives for improving existing transmission facilities. To date, FERC has done nothing to provide incentives to companies making improvements to existing facilities. Instead, FERC has focused its incentives policies on NEW transmission.

New transmission costs more, increasing the dollar value of incentives and allowing large investments that pay very lucrative returns. However, new transmission on new rights of way is inarguably the hardest kind of transmission to build. No matter where, or how it is proposed, opposition inevitably develops. This increases transmission owner risk and raises the cost of the project significantly due to delays and large sums of money spent trying to neutralize, or merely run over, opposition. It's like banging your head on a brick wall. But FERC has rewarded this behavior with high returns and guaranteed cost recovery (even when the project ultimately fails). There's simply nothing to lose for transmission owners, who profit even in failure. Has FERC been encouraging the right kind of transmission? Does FERC's incentives policy align with Sec. 219?

The next section of FERC's Incentives inquiry we're going to look at deals with possible incentives for existing transmission (finally!). However, it's not clear that FERC's interpretation of this goal aligns with Sec. 219, which deals with existing transmission in two separate and different ways.

The first requirement:

The rule shall--
(1)
promote reliable and economically efficient transmission and generation of electricity by promoting capital investment in the enlargement, improvement, maintenance, and operation of all facilities for the transmission of electric energy in interstate commerce, regardless of the ownership of the facilities;

And second:

(3)
encourage deployment of transmission technologies and other measures to increase the capacity and efficiency of existing transmission facilities and improve the operation of the facilities

FERC deals with the second first.

Section 219(b)(3) directs the Commission to encourage investments in technologies and other measures that increase the capacity and efficiency of existing transmission facilities and improve the operation of those facilities. Such investments could include advanced management software or application of technologies, such as energy storage, in order to improve utilization of existing transmission system assets.

But doesn't "other measures" also include simple rebuilds and upgrades that increase capacity? Instead, FERC focuses entirely on the technology aspect.

Q 37) How should the Commission incentivize the deployment of technologies and other measures to enhance the capacity, efficiency, and operation of the transmission grid? How can the Commission identify and quantify how a technology or other measure contributes to those goals? Please provide examples.

Q 38) Can the Commission distinguish between incremental improvements that merit an incentive and those maintenance- related expenses that a transmission owner would make in its ordinary course of business?

FERC seems quite opposed to awarding incentives for "maintenance" issues. And while this may have some merit, it also overlooks a huge opportunity to make improvements to existing transmission as directed by Sec. 219. Rebuilds and improvements sail through approvals with little to no opposition because they don't seek new rights of way. Existing assets should always be considered first, before proposing new rights of way.

Q 39) How should a transmission owner seeking this type of incentive demonstrate increases or improvements in the capabilities or operations of existing transmission facilities?

Q 40) Should the Commission provide a stand-alone, transmission technology-related incentive? If the Commission provides a stand- alone transmission technology-related incentive, what criteria should be employed for a technology to be considered as meriting an incentive? Should the Commission periodically revisit the definition of an eligible technology?

Q 41) Certain utility costs, such as those associated with grid management technology, including dynamic line rating technology, are typically recovered through operations and maintenance expenses within cost-of service rates. For such costs, should the Commission, instead, consider inclusion of these expenses in rate base as a regulatory asset? If so, what costs should be eligible for such treatment and over what period should they be amortized?

Q 42) Are there ways the Commission could incentivize RTOs/ISOs to adopt better grid management technologies and/or other technologies to improve the efficiency of individual transmission assets to promote efficient use of the transmission system and improved market performance?

Q 43) Should the Commission interpret section 219(b)(3) to encourage improvements that are not historically considered part of the transmission system, such as, for example, software upgrades, technologies that allow for faster ramping, or other innovative measures that achieve the same goals as new transmission facilities? What types of incentives could increase the adoption of these technologies? Are there forms of performance-based ratemaking with respect to transmission that the Commission should explore? If so, describe such alternative ratemaking structures.

Ahhh, there is is... RTOs need to adopt better policies that consider re-purposing existing transmission first. But, providing incentives? RTOs are not-for-profit entities. They have no shareholders. What do they need with financial rewards? Instead, why can't FERC just order them to do it? Incentives not required!

And as far as moving approved technology improvements from O&M to rate base goes, here's the reward: O&M is reimbursed dollar for dollar. Rate base is amortized (paid for) over the asset's useful life, and earns a return on the carried over balance every year. Would you be willing to pay a little more for technology that improves existing facilities? How about if improving the existing facilities prevented the building of new transmission? Perhaps that should be a requirement, proven with actual numbers.

From there, FERC launches into a discussion of some really bad ideas that have absolutely no foundation in Sec. 219. I'll cover that in another post.

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Forward>>

KCC Gets Vanilla Pannacotta, Landowners Get Bupkis

Confidential Commitment Guesses

When Deceit Bites Back

It's All About the Eminent Domain, Missouri!

FERC Transmission Incentives - Evaluating Existing Incentives

PJM Interconnection Gets Gored on Social Media by Mama Bear

Take a Drive, PJM!

FERC Transmission Incentives - A Handful Of Awful Ideas

Maryland PSC Public Hearings! This is Your Moment, Folks!

Anger Makes You Dumb

FERC Transmission Incentives - Improving Existing Facilities

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