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WV PSC Puts the Brakes on FirstEnergy's "Corporate Enthusiam" -- Orders Hearing on Harrison Settlement

8/27/2013

2 Comments

 
The WV PSC just issued an Order requiring all the parties who signed that ridiculous settlement agreement to have to defend it during oral argument before the Commissioners.

This is HUGE!
The Commission appreciates the continuing efforts made by the Stipulating Parties, even after the close of the record in this matter, to offer compromises and counter proposals in a concerted undertaking to develop the Joint Stipulation that is now before us. We also understand the desire of the Stipulating Parties to move this matter to resolution with utmost speed. The Commission shares that desire; however, we will chalk up the suggested decision date of “no later than August 30, 2013,” to “corporate enthusiasm.’’ The issues to be decided in this proceeding are too numerous, too significant from a rate making and cost of service perspective, and too important to current and future ratepayers, Mon Power and PE, and the economy of the State to suggest that they be treated in anything other than a detailed and thoughtful manner by the Commission.

The Commission has maintained a policy of receiving testimony from stipulating parties that both explain and support their stipulations in cases with a substantial impact
on ratepayers, This proceeding, with  significant rate base and ratepayer impacts, and where all parties are not in unanimous agreement, requires that the Stipulating Parties address why the Joint Stipulation is in the public interest, and further requires the
opportunity for the non-signatories to state their positions and objections about the Joint
Stipulation.
The Commission, therefore, will require that all parties to this case appear at a hearing with a witness to state whether, and why, the Joint Stipulation is, or is not, in the public interest. The witnesses should also be  prepared to answer questions from the
Commission and the parties regarding the terms and conditions of the Joint Stipulation. In particular, and without limiting the scope of inquiry at this time, the Commission seeks further explanation and clarification about:

Section 1 1 .(a.), Employment Commitment;
Section 1 1 .(f,), Net Payment to AE Supply at Closing;
Section 1 1 .(g.)( l), Rate Base Amount for Surcharge;
Section 1 1 ,(g.)(2), Future Regulatory Treatment of Rate Base Amount;
Section 11 ,(i.), Adjustment to ENEC Rates;
Section 11 .(l,), Accounting for the Transaction; Source of and types of Capital for the transaction; and The effect of the total transaction and all related accounting entries
on the capital structure of Mon Power.
Hooray for the WV PSC for putting the brakes on this crazy train!  And Hooray and THANKS to the WVCAG for being the only party to point the finger and loudly proclaim, "The Emperor is naked!"
2 Comments

Qu'est-ce que c'est "Annual Meter Reading Accounts," FirstEnergy?

8/26/2013

2 Comments

 
Don't you just love it when the mouth-breathers at FirstEnergy explain themselves into a corner?

On August 15, FirstEnergy filed its first monthly statistical report.  The Commission had previously ordered FirstEnergy to submit monthly data for at least a year so they could keep an eye on these shysters.

In its first report, "FirstEnergy stated that its data 'excludes annual meter reading accounts up through 11 months'.”

Now the Commission has ordered FirstEnergy to explain just what an "annual meter reading account" is, and provide statistical data on these accounts as well.

Shhh... if you know why the Commission did this, keep it to yourself.  I want to see if FirstEnergy's brain trust can figure this out on their own...

Too bad stupidity isn't painful.  Ha ha ha!
2 Comments

Investor Owned Utilities and Risk

8/25/2013

4 Comments

 
Risk.  The word has many meanings in the utility industry, but it all boils down to undertaking risk in order to provide a dividend for shareholders. Sometimes the riskiest exploits produce the biggest return.  An investor owned utility's loyalty to the shareholders who continue to fund management's lavish lifestyle overrules any loyalty to the customers being provided a necessary service at a reasonable price.

The competition for investor dollars fuels a ratcheting up of risk in order to provide bigger and bigger returns.

Where does it all end?

From a regulatory perspective, risk means not being permitted to undertake certain actions that will increase income of the regulated company.  The purpose of regulation is to police the actions of private entities operating in a monopoly construct to ensure that customers are provided fair service at a reasonable cost.  Regulators are the final decision-makers on utility proposals, and also serve as creator and enforcer of the rules regulated utilities must follow.  Regulators are supposed to be protecting consumers, while also allowing the utility to make a reasonable profit in order to continue to operate the system.

Everything an investor owned utility does in a regulated environment is viewed through the lens of financial risk. 

Should the company file a rate case?  What's the risk that the return will be lowered?  What's the risk that some costs may be disallowed?

Should the company sell assets to itself?  What's the risk that the price will be adjusted downward?  What's the risk that the transaction will not be approved?

Should the company break the rules?  What's the risk that the company will be caught?  If caught, what's the risk that the company will have to pay out more than it made while breaking the rules?

Regulatory risk really isn't risky at all.

Investor owned utilities make huge investments in buying the favor of their regulators.  It's just one great, big utility club, where the regulators and the regulated interact daily, convincing each other that their actions benefit consumers.  Consumers are not allowed to join.  Regulators and regulated will find themselves together again and again, therefore they develop a cozy working relationship.

But it's an unbalanced relationship.  While the regulator may think they're all sitting at the same table, they're not.  The investor owned utility has nothing to lose.  And the regulator's gun is loaded with blanks.  An investor owned utility has access to a bottomless pool of consumer funding to appeal any regulatory decision it doesn't like, endlessly.  Regulators have access to a very limited supply of money for such things, therefore, a utility can simply outspend them until the desired result is achieved.  In many instances, it's not even worth trying enforce the rules for the regulator, and they may cave in before it even gets to this point.

This is a settlement.  Ideally, in settlement, each party gives up something in order to create a balanced outcome.  However, an investor owned utility will never enter a settlement with an equal number of eggs in its trading basket.  Its rate case or asset transfer is thickly padded with things to give away that the utility doesn't really care about.  The regulator's basket has less eggs at the beginning, therefore, each egg that's given away by a regulator means someone goes hungry.  The regulator comes out with one egg, and the utility comes out with a dozen.  This isn't a fair or balanced outcome.

And it's even more skewed when a utility gets caught breaking the rules.  Rules are meant to be followed, not partially followed, or mostly followed, but completely followed.  There should be simply no eggs in the regulator's basket to give away.  It's impossible to break half a rule.  When a utility breaks the rules for profit and gets caught, it's egg basket is full.  A utility can give away some of the profits it made breaking the rule, while the regulator can only give away the rule and violate the trust of consumers, who expect that regulators enforce rules.

When a regulator begins negotiating a settlement in a rule breaking case, they are giving away the ability to break the rules without consequence.

How do you think the investor owned utility views this?

1.  Chances are we won't get caught and we'll get to keep all the profits we made breaking the rule!

2.  Even if we do get caught, we'll only have to give back part of the profits we made breaking the rule!

3.  For every illegal action regulators catch, there are hundreds more where we'll never get caught!

4.  Following the rule - zero profit.  Breaking the rule - priceless!

Breaking the rules is very profitable for investor owned utilities, therefore they will keep doing so until the cost of punishment is higher than the retained profit of breaking the rules.  Breaking the rules is low to no risk.

Filing a rate case, or proposing a ridiculous, overpriced sale of assets to itself, is also low risk these days.  Lazy, captured regulators and ineffectual consumer advocates, who are more interested in maintaining relationships with utilities and their lawyers than with the consumers they are supposed to represent, are failing you.

Those who stand for nothing, will fall for anything.

Enough is enough.


4 Comments

West Virginia Citizens Action Group Files Objection to FirstEnergy Harrison Settlement

8/23/2013

0 Comments

 
West Virginia Citizens Action Group, the only party to refuse to sign FirstEnergy's Harrison settlement, filed an Objection to the settlement with the PSC this afternoon.  The Objection asks that the Commission "...disapprove the proposed settlement and that the Companies’ petition be denied in its entirety."

WVCAG is the only party that didn't cave in and go along with that sugarcoated flashing blue light special settlement the others were pressured into signing.

What?  Pressured?  That's what I think.  Some people accuse me of having too much imagination, but if you pick up a crayon and start connecting the dots, a perplexing picture begins to form.

The public has been increasingly dissatisfied with the actions of the WV PSC over the past several years.  It's not just some obscure agency nobody has ever heard of anymore.  High profile rate cases, the PATH project, and now the intra-company coal plant sale cases have promoted the WV PSC to common dinner table talk.  As well, public anger over the FirstEnergy/Potomac Edison billing investigation has raised the ire of legislators.  The WV PSC, with one expired Commissioner and another re-appointed but not yet confirmed by the Senate, does not want any nasty utility public relations poo stuck to its shoe.  Any decision it would have made on FirstEnergy's Harrison transfer (other than a denial) would have produced more citizen and legislative scorn, possibly turning into the straw that broke the camel's back.  So, the Commission slunk out of the emergency exit by not having to make a real decision.  Because the case was "settled," blame for what went wrong can be foisted off on the settling parties.

The Consumer Advocate will be retiring at the end of next month.  A new one will be appointed by the Chairman of the PSC (let's not even worry about what a very stupid idea this is right now!)  Any consumer advocate division employees who may be hopeful of moving up to the top spot and filling the vacancy would be beholden to pleasing the Chairman right now.  Perhaps one way to cement the Chairman's approval would be a willingness to divert public anger from the Chairman (who doesn't need anymore public disapproval before his re-appointment is confirmed).

Once the PSC staff and Consumer Advocate rolled over for FirstEnergy, the rest of the parties just went on a feeding frenzy to pick up what stray crumbs they could (with the exception of WVCAG, who exhibited good, old fashioned ethics).

Maybe I just think too much... or maybe I just know too much.  Anyhow, that's my theory of why this happened.

But... here's something else to think about!

How did a proposal that FirstEnergy said would raise your electric rates 6% settle for a 1.5% decrease in your rates?

The settlement changed the amount of the $1.1B purchase price consumers will pay by requiring Mon Power to book a $300M+ impairment for a portion of the purchase price.  The cost ratepayers will have to pay is $795M.  An impairment is an amount that comes out of shareholder dividends, instead of out of your pocket.

In addition, the $25M credit for the included sale of Pleasants will be amortized over the first 16 months of new rates, which causes an artificial and temporary rate reduction that will expire at the end of 2014.  Without this Magic Math, there would be no "decrease." 

This resulted in a yearly surcharge (rate increase) of $113.4M.

However, this rate increase was offset by a $129.5M yearly credit that FirstEnergy will include in their projected rates through the end of 2014.  This $129.5M is based on projections, not reality.  At the end of 2014, this projection will be trued up with actual expenditures and the resulting shortfall will turn into a rate increase.  From the look of FirstEnergy's unrealistic projections (cooked for the transaction proposal to show what FirstEnergy wanted them to show), it's going to be a BIG rate increase of a magnitude never before experienced.

The difference between $129.5M and 113.4M is only $16M.  While $16M sounds like a lot of money, it's a very small margin for error at a company whose annual coal costs are estimated at well over $500M and whose annual revenue from off-system sales of Harrison's excess electricity are nearly $300M.  If FirstEnergy's calculations are off just $16M, then your rate decrease completely disappears.  If they're off by more than $16M, the rate increase starts.

In addition, as the proud new owner of a creaking, old coal plant, you're now fully responsible for the expected $244M cost of retrofits to comply with EPA rules.  FirstEnergy opted to close other coal plants rather than spend their own money to retrofit, but in this case, they're spending YOUR money.  This $244M cost will also translate to more rate increases. 

So, enjoy your temporary "rate decrease," because the rate increase you're going to receive on January 1, 2015 is going to be a shocker.  But, Chairman Albert hopes his re-appointment will be safely in the bag by that time and that you all will have forgotten all about this crappy deal he handed you.

0 Comments

Grain Belt Express Clean Line Bullies Opposition

8/19/2013

10 Comments

 
Building transmission is a dirty business.  Grain Belt Express "Clean" Line has become a leader in dirty practices by physically manhandling its opposition and dragging them out of public meetings.

Grain Belt Express claims it is "committed to engaging with local communities throughout the project area. We believe that our outreach process must be methodical, responsible and transparent. We will continue to engage interested parties and seek feedback throughout the routing process."

Except when the local communities actually produce feedback... then it's time for armed guards, physical violence and verbal abuse.  That's what happened when Amy attended a Grain Belt Express Open House in her community recently.
I looked up some European studies and copied them off in order to take them with me to the Grain Belt Express Open House the evening of July 17, 2013 in Cameron, Missouri, at the Cameron Community Center.

When my husband and I entered the meeting it was immediately apparent that this was NOT an "open" house. My training as an ad designer had taught me a few lessons in different styles of propaganda and Grain Belt Express was clearly exercising the manipulation tactic called "The Delphi Technique." I had spent the night before with little sleep because of my concern over these lines and seeing this farce being perpetrated on my fellow townspeople didn't put me in a very good mood. I only wanted to know where I could protest. Since these slick Grain Belt con artists are trained to detect dissonance, my husband and I were immediately pulled aside to have our feathers unruffled.

I handed one of my sheets of articles about the health and safety hazards of HVDC power lines to our "helper" and with only a cursory glance at my papers, he immediately began to start telling us the wonders of this line and that there are no risks, blah, blah, blah...  Understanding that I would get NOWHERE with this talking mannequin, I left his little group in his mid-sentence and began handing out my printed literature to the other small groups in the room, and asking them to ask their facilitators about the information within the studies.

When I got to the back of the room, an armed man, wearing Grain Belt clothes, identified himself to my husband as a Cameron police officer. He grabbed my arm HARD and asked me what I was doing. I told him that he was holding me too hard and that he was hurting me. He released his grip slightly and asked me again what I was doing, to which I responded that I was sharing information with others about HVDC lines and their health effects. He told me that I was to stop doing that, to which I told him that I would not and that I was exercising my right to free speech. He then explained to me that that was not allowed here and I needed to leave immediately. When I argued with him he began dragging me out of the meeting. As he was doing this I shouted, "My free speech rights are being violated and if you want to know about the hazards of HVDC towers then READ THIS!" and I threw the papers across the room and onto the floor. (You should have seen the people scramble to read them.)

When this Grain Belt rent-a-cop got me outside he began verbally abusing me and telling me that I had NO FREE SPEECH RIGHTS HERE, and that if I did not leave by the time he counted to 5, then he would take me to the station for disorderly conduct. I left on his count of 4, but several people in the group came out of the meeting to argue with the cop. Free speech is supposed to be protected by our Constitution, according to folks here in the Midwest. Besides, I thought this was an informational meeting between landowners and Grain Belt Express. Not a Grain Belt infomercial.
Is this the kind of company that should be welcomed to local communities?  One that physically and verbally abuses local citizens that resist its propaganda tactics and eminent domain taking of their private property? 

Is this really about "clean" energy, or is it about financial profit?  Only money could cause a company to stoop to this kind of bullying of a community that refuses to cheerfully accept its own demise.

Clean Line is spinning out of control in its desperation to regain control over a project that's not going as planned.  These arrogant Clean Line fools actually thought they were so much smarter than "a bunch of farmers" that community acceptance would be a snap.  Reality has been a cruel master and now the company is resorting to physical violence and threats of jail to get its way.  Give up, Clean Line, you've already lost.

Check back soon to read more of Amy's story (or as she's more commonly known in "Clean" circles by her mark of the beast, "Number 95735.")


10 Comments

Potomac Edison Meter Reader Imposters?

8/19/2013

0 Comments

 
Here's why contract meter readers without uniforms or company vehicles are a bad idea:

Imposter

Imposter

Imposter

Imposter
(this one is especially fun because the imposter offered to alter the electric meter to reduce the customer's bill)

Imposter

So, how do you know when a meter reader is the real thing?

This story says a real meter reader will be sporting a:

Shirt and vest with company logo
ID badge

And they come once a month.

Or maybe imposters just work for FirstEnergy, who is too cheap to buy uniforms or company vehicles for its meter readers.  In fact, FirstEnergy is too cheap to even hire enough meter readers to come as required every other month.

For this, you each pay $5.00 per month.


0 Comments

A Visit From the Potomac Edison Meter Reader As Told By My Dog

8/15/2013

1 Comment

 
"Woof, woof," said Ms. Lindy.
"An intruder has been spotted in the driveway!  He looks like this..."
But when I looked outside, it was just an
wearing a
and driving a pick up truck that had orange and blue stripes, like this, but also a confusing logo that said "Potomac Edison"
To add to our confusion he wasn't wearing a
So we couldn't be sure whether he really was a Potomac Edison meter reader or a ninja burglar.

What do you think?
1 Comment

Knock, Knock, Is it a Potomac Edison Meter Reader or a Criminal?

8/9/2013

3 Comments

 
FirstEnergy's continued cuts to operating expenses (more were announced just the other day) have now opened the door for scammers to take advantage of the company's customers.

Read this report by Potomac Edison Customer Danny Lutz:
At about 0840 hours this morning, I observed a white SUV with a Virginia Vanity plate OHAPY DZ in my front yard. The vehicle had a portable orange flashing light affixed to the right front rain gutter.
       Upon checking, the individual, clad in a black pullover shirt, and black knee top Speedo type shorts, waived an electronic device at me. He stated he was from the power company and was there to read the meters. (This is the "uniform" of street thugs, burglars, muggers, MS 13.... keep picking them.)
       The gentleman showed nothing to confirm his position with Potomac Edison, nor did he identify himself.
        I allowed him to complete his errand. Then I asked him if Potomac Edison is requiring meter readers to use their personal vehicles when making their rounds.
        He stated that "Since the merger, everything is all screwed up, and I have to use my vehicle."
        Imagine the scams that could be perpetrated upon the unknowing of all ages by people posing as meter readers. I do not know if my premises were cased for a later visit for less than legal purposes.
        I very much should like to know what explanation Potomac Edison has for this modus operandi. Could not Potomac Edison hire someone from West Virginia to read West Virginia meters?
        I politely suggest that in addition to being more vigilant over your own properties, you should watch for and warn your neighbors, especially those living alone, elderly, or incapacitated.
       
Danny later reports:
After an interminable number of attempts, I finally breached FORTRESS FIRST ENERGY and reached TODD MEYERS, in house apologist.
       I gave him the same description of the events of 0840 hours yesterday morning.
       He offered the explanation that some meter reading personnel hired since 1 April 2013 may not have Potomac Edison Vehicles.
       Meyers stated that those using personal vehicles "should" have a magnetic door sign identifying the vehicle as representing Potomac Edison. (This vehicle had no such signage.) He further asked if any ID BADGE was displayed. (None was) Meyers stated that the reader should have been wearing a lime green safety vest.(He was not.)
       He kept repeating "You've given me good enough information. I can investigate this. I will call the meter reader and find out what is going on."
      It took me eight calls plus a boat load of web searches to finally get to Meyers.
      The last two individuals who came here to read the meter, months ago, drove pick ups and wore white helmets and lime green safety vests.
    I will be curious to see what comes from this belated effort.
       If Potomac Edison would use local people from the areas to be served, some of these issues might need never arise. Though local people cannot know everyone, they are able to be more easily identified.
And finally, Danny got tired of waiting for a reply from Meyers:
    Just had an enlightening conversation with Todd Meyers "Public Relations Specialist with FIRST ENERGY." (That is how Mr. Meyers described his capacity with FIRST ENERGY in our conversation a few minutes ago.)
        I was able to contact the gentleman on the first call, and he doubtless saw who I am from the caller ID. He clearly did not want to talk to me.
        I had to give him another synopsis of the issues of 7 August 2013.
        In a stumbling, hesitating voice, Mr. Meyer stated that he had checked with the Supervisor of the meter reading and found that, indeed, the vehicle and the person are engaged in reading meters for Potomac Edison. He stated that this was determined by conversing with that supervisor from "the information which you supplied, that is the white vehicle with the O HAPPY DAYS (sic) Virginia plate." (Actual plate is OHAPY DZ.).
        Meyers further stated that he had learned that the individual in question had displayed an ID, was wearing a green vest, and had  magnetic signs on the door of the vehicle.
        I asked who was the source of his information, and he was reluctant to tell me, giving a rambling and convoluted answer which I shall not try to duplicate here.
       Meyers went on "That's what I was told happened."
       I asked "Might I ask who is the supervisor of the meter reading for this area?"
       Meyers replied "That is Charity Emmert in the Williamsport office."
       I said "Could you provide me with an email for you and Ms. Emmert that I may inform you, Ms. Emmert, and Potomac Edison that that person is not welcome on my property again for any reason? It appears that person has been less than truthful in this matter."
       MEYERS "You can send the email to me at tmeyer1energy.com, I will see that she gets it. I will forward it to where it needs to go,"
       I suspect that TOADIE MEYERS did not do anything with my complaint, and was surprised to have his bluff called in this manner.
Nice going, Todd!  The fake email address adds just the right touch to your bumbling attempts to satisfy this customer.

Why aren't Potomac Edison's meter readers wearing uniforms and driving company trucks?  Because those things cost money!  FirstEnergy's cost cutting now allows any person to pretend to be a meter reader, even those with ulterior motives.  How easy would it be to buy a lime green vest, a blinking light and a fake magnetic sign in order to go door-to-door to see who's home... or not?

Danny is not a liar.  FirstEnergy needs to provide a staff of professional meter readers, not unidentified people driving anonymous vehicles and waving electronic devices.  If you have a question about an unidentified person trespassing on your property that you suspect may be a Potomac Edison meter reader (or someone posing as one), do not approach.  Call Todd and ask him to identify the person 724 838 6650.
3 Comments

Where Would FirstEnergy Get Its News If It Wasn't For This Blog?

8/6/2013

3 Comments

 
FirstEnergy subsidiary "Potomac Edison" submitted its most recent discovery responses in the General Investigation case before the WV PSC yesterday.  In its response to one of the Consumer Advocate's questions, "Potomac Edison" cites an "article" from this blog.
On April 18, 2013, the Jefferson County NAACP held a public meeting regarding several issues which included customer complaints related to this case. This article was forwarded internally and the attached invitation received.

Of course, the invitation received was the infamous invitation to the Citizens' Public Hearing from George Rutherford that The Friddler lied about to the Jefferson County Commission, telling them that the invitation did not mention the Harrison plant transfer.

I'm so glad this blog could be of service to FirstEnergy, bringing them news that they "forward internally."

It wasn't too long ago, however, when FirstEnergy's PATH companies were complaining about this blog to the WV PSC:
Unfortunately, articles and comments attached to them on this website needlessly address named individuals associated with Applicants in respect of their attire, physical attributes, intelligence, integrity, and “personality.”
(read the highlighted portions of this motion, but I warn you, don't be drinking anything, and shut your office door so your co-workers don't hear you howling with laughter when you do).
Maybe I should start charging them admission?
3 Comments

Transmission Lobbyists Make Up New Transmission “Benefits” for Consumers

8/5/2013

2 Comments

 
The entities that stand to profit from building hundreds of billions of dollars worth of new high voltage electric transmission are at it again.  In the wake of FERC’s Order 1000 requiring cost allocation to be “at least roughly commensurate with estimated benefits,” and that those who receive no benefit shall not be allocated costs involuntarily, the industry has simply redefined the term “benefit” to suit their pecuniary purposes while toeing the line with FERC.  This is exactly what my Magic 8 Ball told me would happen, so we shouldn’t be surprised.

WIRES, which is a group of industry lobbyists and their sycophants, has bought a study prepared by The Brattle Group (proud industry whore since 1990) that supposedly identifies and analyzes a whole bunch of “new” benefits of building transmission that they feel will, when added to current planning evaluations, ensure that transmission wins every time!  *cha-ching $$$$* WIRES pretends that it is only concerned about the good of society.  Baloney.  It’s all about the money!

WIRES and their well-paid former FERC Commissioner counsel have submitted this study to FERC because, “It is our expectation that this new analysis will be helpful to the Commission and to parties filing in compliance with the regional and interregional planning provisions of Order No. 1000.  Although Order No. 1000 compliance involves numerous additional dockets, we believe the report should at least be part of the record in the overarching rulemaking proceeding so that parties are able to access and use its contents.” 

Right, let’s allow WIRES buy some new FERC policy with our money.  You know how I know this report is made-up crap?  Because it uses sources such as Clean Line Energy Partners’ self-serving analyses and other industry-commissioned “studies,” as well as clueless NYT blogger Matt Wald and other biased media sources.  Any trained monkey can compile a whole bunch of dubious sources to come to pre-determined conclusions.   Congratulations, Brattle Group!  I wonder how much they charged WIRES for something a 3rd grader could have accomplished?

So, how speculative are all these new “benefits” that transmission planners must consider in order to force unneeded transmission?

WIRES says, “An analysis that ignores or rejects benefits that are not measured with precision implicitly assumes that the value of such benefits is zero. This will systematically understate the overall value of transmission investments.  It will also, in turn, lead to the unintended consequence of rejecting valuable transmission projects that offer a broad set of long-term benefits with total values that exceed project costs.”

Or, perhaps there’s a reason these “benefits” have historically been given a value of zero in order to ensure that only cost-effective and needed transmission projects are actually built?

Here are the “benefits” that WIRES insists be calculated, no matter how specious they may be:

1. Production cost savings;
2. Reliability and resource adequacy benefits;
3. Generation capacity cost savings;
4. Market benefits, such as improved competition and market liquidity;
5. Environmental benefits;
6. Public policy benefits; employment and economic development benefits; and
7. Other project-specific benefits such as storm hardening, increased load serving capability, synergies with future transmission projects, increased fuel diversity and resource planning flexibility, increased wheeling revenues, increased transmission rights and customer congestion-hedging value, and HVDC operational benefits.

Production cost savings are one of the traditional ways transmission “benefits” are derived.  However, “As noted earlier, production cost savings only measure the reduction in variable production costs, including fuel, variable O&M costs, and emission costs.  This means that production cost savings, even if the simulations capture the additional factors discussed above, will not capture the benefits associated with reliability, capital costs, increased competition, certain environmental benefits and other public policy benefits, or economic development benefits. These benefits provide additional value to electricity customers and to the economy as a whole.”

WIRES would rather have us concentrate on those hard to quantify “economy-wide benefits” that can be concocted out of whole cloth and come in handy to tip the scales in favor of questionable projects.  In addition, WIRES recommends that regions bundle a whole bunch of such dubious projects into “project portfolios” (as MISO has done).  When “benefits” of many projects are combined into an impossible to separate mega-project for regional transmission organization approval, WIRES believes this sleight-of-hand spread of “benefits” among a wider pool of consumers makes cost allocation easier. 

“We also suggest aggregating beneficial transmission projects into larger portfolios of projects to simplify the necessary cost allocation analyses, reduce misperceptions that benefits appear to accrue only to a limited subset of market participants, and facilitate less contentious cost allocation processes.”

And although the report fails to mention it, this combination of many small projects, owned by many different entities, into one big mega-project also allows for convenient re-separation of each smaller segment in order to sail through state or local approvals while shepherded by incumbent utilities that have developed relationships with communities, legislators and regulators.

Here are a couple of spurious gems from the WIRES “report” that had me snorting with laughter.  Do they actually think that intelligent people will fall for this dreck?

“For example, transmission lines that allow for increased imports of lower-cost generation from a neighboring region can provide benefits to both regions: the importing region through a lower cost of delivered power [to consumers] and the exporting region through increased revenues to the exporting suppliers. The increased export revenue can also be a benefit to electricity customers in the exporting region if these additional revenues are used to offset the cost of regulated generation assets or if wheeling out the revenues paid by exporting merchant generators can be used to offset the exporting region’s transmission revenue requirements.”

That’s right… new transmission simply levelizes electricity prices between regions.  While the importing region gets the benefit of lower electricity prices, the exporting region gets the “benefit” of higher electricity prices PLUS a share of the cost of the transmission project that raised their electric rates.  What a bargain!  All benefits to an exporting region go right into the coffers of generation companies.  And here’s a perfect example from the report:

“The economy-wide benefit of the deferred generation investments was estimated at $320 million, about half of which was estimated to accrue to customers in Texas, with the other half of the benefit to accrue to merchant generators in Louisiana and Arkansas.” 

Building transmission to import renewables from coast-to-coast is not economic, and when given a choice between high-priced renewables or affordable "dirty power" utility bills, consumers overwhelmingly vote with their wallet.  In spite of also being motivated by its collective wallet, WIRES just doesn’t get it:

“In such cases, despite the fact that both transmission and retail electricity rates may increase, the transmission investment can reduce the overall cost of satisfying public policy goals.”

Sometimes, new transmission has unintended effects.  Perhaps our Pollyanna environmental warrior friends, who are backing transmission expansion that they optimistically believe will result in renewable energy super-highways, should take a lesson:

“Similarly, the CREZ projects in Texas have also provided new opportunities for fossil generation plants to be located away from densely populated load centers where it may be difficult to find suitable sites for new generation facilities, where environmental limitations prevent the development of new plants, or where developing such generation is significantly more costly.”

In addition, new transmission can perpetuate environmental and social injustice whereby the poor and politically under-represented continue to bear a disproportionate share of the burden to supply the needs of the rich and politically connected in their own or other regions.

WIRES tried to give their dubious “report” more credibility by having it peer reviewed.  Despite being able to choose its reviewers and having sole power to approve or disapprove the content of the review, WIRES still couldn’t prevent a little sanity from sneaking in at the end of the report.  The peer reviewers opined: 

“The electric power system is a complex, interconnected whole. While the interconnection may be argued to be the transmission system, the whole incorporates generation (both central and distributed), storage (again central and potentially distributed), distribution in all of its complexity, and the interaction with end users at all levels and at all levels of complexity in use and control.

It is difficult, if not impossible, to fully evaluate the benefits of transmission without reaching into the competing benefits of investments in other sub-systems of the power system. Technology is not standing still in terms of the transmission system or in terms of the other sub-systems of the power system. Two examples of changes whose impacts upon asset growth in transmission have yet to be quantified are:

• The impact of significant investment in distributed generation and potentially storage within the distribution system. These changes are being brought about by public policy decisions combined with a dramatic expansion in communications and controls allowing for the development of distributed energy systems that interact with the larger utility system

• The impact of sensing and control of the transmission system that allows for dynamic reconfiguration of the topology of the transmission system. Often referred
to as “line switching,” the benefits have been known by system operators for decades. It is only with increased monitoring, advances in analytic techniques, and computation speed that these concepts can be brought into the operational time frame.

Technological changes are adding points of pressure to the power system in general and specifically to the transmission sub-system as the interchange network that allows the system to remain balanced.”

While WIRES is trying to hurry along the filling of its members’ pockets, the electric utility industry is undergoing a sea change that’s going to make most of this new transmission obsolete before it becomes used and useful.  But these guys don’t care if a huge investment in unneeded transmission is left for their grandchildren to repay, as long as the money comes rolling in today.

If we’re going to make up a whole bunch of new transmission “benefits” that must be considered in any regional planning cost-benefit analysis, how about if we also now consider the true cost of building new transmission?  WIRES thinks that the true cost of building transmission is contained in the annual transmission revenue requirement of any particular project.  However, that does not consider the true costs to communities, individuals, landowners, ratepayers, or society as a whole.  But where are we going to get the money to hire an industry whore economist to make up a bunch of crap like WIRES did?  Oh, not to worry… the way transmission opposition is expanding lately, it’s only a matter of time before some transmission routing doofus uses his etch-a-sketch to draw a line through the backyard of an economist or two (or maybe that’s already happened, or maybe the opposition leadership is quite capable of preparing their own cost-effective analysis and report -- The Costs of Electric Transmission: Identifying and Analyzing the True Cost of Transmission!)  If you want to be part of our brain trust and help us identify the true cost of new transmission, just let me know!

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    About the Author

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

    About
    StopPATH Blog

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

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


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