Read Pam Kasey's article about the PSC's investigation of Potomac Edison.
Methinks Todd doth protest too much! :-)
Methinks Todd doth protest too much! :-)
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Regulatory capture is the theory that regulators are often captured and controlled by the very industry they are charged with regulating in the public interest. When a regulatory agency acts as a revolving door for utility industry executives, familiarity and arrogance proliferates and leaves the public under served and holding the door. Sadly, it looks like FirstEnergy is keeping its PSC Chairman Michael Albert on a very short leash. The Commissioner has been openly disparaging the members of the public who dared express their thoughts on FirstEnergy's unwise plant transfer proposal that will raise their electric rates 6% and lock them into paying for the company's cast-off, aging, power generator for the next 30 years. But in lengthy opening remarks, Albert, a former utility company lawyer whose firm represents FirstEnergy, criticized what he said were inaccurate comments submitted to the PSC and reported by the media about the case. Albert did not provide any specific examples. And he continues his assault on the public by ridiculing the citizens who went to great trouble and expense to show up for the hearing and plead their case in person. Later, he said, "There was an awful lot of testimony (this morning, in the public portion), everybody said we can save the world by energy efficiency and demand response." What an arrogant and thoughtless comment! I really don't believe anyone actually mentioned "saving the world." The public simply wants to save itself from further unnecessary and poorly planned FirstEnergy rate increases. Obviously, Commissioner Albert isn't even capable of putting on his pleasant poker face and pretending to listen to the public he is sworn to serve. Commissioner Albert's decision appears to already be made. As for Chairman Albert: Not to place too much meaning on a small word choice, he spoke of the effect of the proposed transaction at the beginning of the hearing using "will" rather than "would." Thankfully, his 6-year term as Chairman of the Public Service Commission will be expiring next month and Governor Tomblin will be free to appoint someone who is interested in serving the public, instead of serving his former colleagues and possible future employers at FirstEnergy.
Remember Mr. Haney, the swindling neighborhood peddler from the 1960s TV show Green Acres? Haney, portrayed by veteran character actor and longtime Western film sidekick Pat Buttram with the distinctive, warbling voice, sold his family's ancient, dilapidated farm to Oliver when he and Lisa Douglas left New York City for rural Hooterville and their new life as farmers. In the process of the sale, Haney stripped the farm of everything of value down to the plumbing. Well, deja vu, dear readers. A new age Mr. Haney was peddling his wares to reporters at a "media event" in Fairmont yesterday. The media event was staged to draw attention away from all FirstEnergy's other problems and hopefully convince the public to support the company's flaccid proposal to sell the Harrison power station to itself for ONE BILLION DOLLARS! However, FirstEnergy's Mr. Haney is, shall we say, less than convincing? It looks like Mr. Haney doesn't even believe himself when he tells the few reporters in the audience that he can "control the future." Is that sort of like Todd's Magic Math? And speaking of our friend Todd... he's so boring and inconsequential that the reporter talks right over him. Even Mr. Haney smirks and makes faces when Todd talks. And the camera man found film of a reporter's digital recorder the most interesting thing at FirstEnergy's media event. Right. And in other news... a big rat named Tony tried to eat Morgantown this morning.  Great news today at FirstEnergy's quarterly earnings call! Eternal optimist Tony Alexander (who is still waiting in vain for the economy to improve and power prices to increase) has stated that FirstEnergy's proposed West Virginia Harrison coal plant transfer is no longer critical! "Our success with the actions we have already taken, particularly the bond deal at FirstEnergy Corp. means the Harrison transaction while still important to both West Virginia and FirstEnergy Solutions is no longer critical to the successful completion of our financial plan." FirstEnergy management has finally admitted what I've been saying from the very beginning: The proposed plant transfer is all about raising cash to pay down debt at FES to improve FirstEnergy's balance sheet and maintain its credit position. It was never really "...expected to help insure reliable power for our West Virginia utility customers for many years to come," or to be "...very positive for the West Virginia economy and our customers of our utilities in West Virginia." Obviously, FirstEnergy now realizes that the West Virginia PSC is not going to approve this transaction, so it has taken other measures necessary to patch up its balance sheet, such as selling bonds and its hydro assets (which are much more marketable than an antique coal plant). FirstEnergy has decisively removed all its precious balance sheet eggs from the precarious Harrison plant transfer basket. If the company had any faith left at all in the WV PSC approving the transaction, don't doubt that it would still be considered "critical." Instead, the transfer idea has simply been tossed onto the ever-growing waste heap of FirstEnergy's bad ideas. FirstEnergy also stated that transfer at a price lower than its jacked-up merger plant cost (which magically doubled the value of the plant overnight), as suggested by several intervenors in the case, was "a non-starter." FirstEnergy would apparently rather give up entirely than sell the plant at a reduced rate. I think we're all in agreement here then, and Tony can keep his "great asset" because it really isn't "more important to West Virginia and Mon Power than is it to FirstEnergy." I think FirstEnergy's answer to this question pretty much clears things up all around: Dan Eggers - Credit Suisse: Just following up on Tony's comments and Leila's comments about Harrison. Can you just maybe help us understand how important it is you think at this point in time to move that asset over from a balance sheet perspective relative to a customer benefit perspective? And then given kind of the wide or the low bid made in the intervenor testimony, how important it is to take a lower price or accept a lower price to get this done relative to keep in at FES if the pricing doesn't makes sense? It sounds like the bloom has come off FirstEnergy's plant transfer rose. How refreshing for FirstEnergy to finally admit that they expect to LOSE on the Harrison proposal. So, why not withdraw your application and quit wasting everyone's time and money, FirstEnergy?
It's still not too late to save the State of West Virginia and all the intervenors in the case a whole lot of time and money going forward with a hearing on a case you no longer care about. FirstEnergy should withdraw now and let everyone cut their losses (well except for those shysters at Jackson Kelly, who are most likely counting on all the billable hours continuing this case provides -- because composing nonsensical and ridiculous discovery questions doesn't come cheap, does it?). We're not going to quit until FirstEnergy throws in the towel completely. Keep those petition signatures, letters and postcards opposing the plant sale to the PSC coming! Other news and entertainment to be had during today's call: 1. AMP has pulled out of a MOU with FirstEnergy to build a peaker plant at its Eastlake site. This now puts a whole bunch of new transmission back on the table. But that's okay, transmission is an "investment opportunity" cash cow for FirstEnergy. 2. FirstEnergy has succeeded in persuading the Ohio State Senate to introduce a bill to gut the state's energy efficiency standard. "FirstEnergy is actively involved in this process and is advocating changes that we believe make more sense for our customers and help foster solid economic growth in Ohio, including the development of shale gas." Oh, nonsense! Again, it's not about FirstEnergy's customers or economic growth, it's all about FirstEnergy's bottom line. Utterly revolting. 3. FirstEnergy "took a look at" long term trends in residential sales, which have remained flat since 2007. The FirstEnergy sleuths are getting closer and closer to the truth with every earnings call. Maybe sometime in this decade they'll realize that residential growth is dead and cannot be revived because its all about energy efficiency. However, if you look closely at #2 above, you'll see that it's simply a matter of willful denial at this point. 4. Michael Lapides of Goldman Sachs got Donny Schneider off into a discussion of purchased power, where our hero stated, "We're very comfortable with being able to procure power to serve load. For years, prior to our merger with Allegheny, we served all of the Penelec and Met-Ed load, and I think that in total was about 30 terawatt hours a year, and we did almost of all of that with purchased power." But now, all of a sudden, FirstEnergy is telling the WV PSC that relying on purchased power to serve Mon Power/Potomac Edison load is too risky and too expensive and that purchasing Harrison is a better idea. Giggle break! :-) Was Lapides REALLY asking about "exposure?" 5. FirstEnergy was also grilled about their balance sheet hocus-pocus where the company is simply taking on short term debt at the holdco level to pay down debt at its FirstEnergy Solutions subsidiary, as well as another question about the source of funds for FE's "equity infusion" to either Mon Power or FES. The company avoided both questions. I'm not convinced that the analysts were fooled. In fact, I don't think FirstEnergy is fooling anyone but themselves anymore. Intervenor testimony was filed late last week in FirstEnergy's West Virginia Public Service Commission request to transfer the company's Harrison power station from competitive affiliate Allegheny Energy Generation to regulated affiliates Mon Power & Potomac Edison.
Pam Kasey at State Journal has a good summary of the testimony here. "The transaction represents an effort to bail out the companies' unregulated affiliates," said PSC Consumer Advocate Byron Harris flatly in his testimony. Ya think? Bill Howley has been busy tearing into the testimony and summarizing the highlights here. Be sure to file your own comments on case number 12-1571 with the WV Public Service Commission here. Do it now. Potomac Edison is also renumbering work routes; meaning meter-readers will work in close proximity. Well, color me steamed! I invited Todd to come read my meter last year, and he still hasn't "finished his route" and arrived to do his job.
If you haven't seen Todd at your house either, be sure to contact him and let him know you need him to finish his route: Todd Meyers Maryland – Potomac Edison West Virginia – Mon Power, Potomac Edison Pennsylvania – West Penn Power (724) 838-6650 email: [email protected] What does Todd mean "help me finish my route?" I don't have a route! Is Todd insinuating that I should be reading my own meter from now on, aka "my route?" But that's what I'm paying you to do, Todd! I'm also paying you to trim trees and maintain your equipment. That's not news. And sadly, yesterday's little drama was just that -- a play staged for the media. Oh, look at us working today! Big stinkin' deal! This hole is much, much deeper than Potomac Edison thinks. So, what has Todd been doing with the money we've been paying him for years? Todd has a lot to answer for. This is all Todd's fault! Go ahead, give him a call! On March 22, FERC issued an Order on PJM's Order No. 1000 compliance filings. Earlier, we featured some of the posturing and nonsense going on that probably made the Commissioners want to just send everyone to bed without supper. Honestly... every time there's a new rule, the usual suspects are right on top of it trying to figure out a way to twist it to serve their own interests. Order 1000 is no exception. I'm sure you just can't wait to jump right to it and read the entire 215 page order yourself. No? Don't need a sleeping pill? Okay... here are some highlights. Cost Allocation: Despite FERC sticking with 100% postage stamp allocation in its rehearing of the Illinois Commerce Commission 7th Circuit remand, FERC agreed a hybrid cost allocation method going forward. The new method will apply to all lines approved that are at least double-circuited 345kV or higher voltages, which means more lines will qualify to be socialized across the entire PJM region. These lines will be allocated 50% via the postage stamp method, which assigns costs based on regional load share. This is supposed to recognize "benefits" everyone in the region receives from PJM's interconnected transmission system. Right. The other 50% will be allocated via two different DFAX methods, depending on the driver for the line. The other fifty percent of economic projects (those that are "needed" to reduce congestion and prices) will be allocated proportionally among those loads that receive the economic benefit of the lower energy costs. The other fifty percent of reliability projects (those that are "needed" to relieve future reliability violations) will be allocated proportionally among those who use the new facility, and allocations will be updated yearly to account for changes in load flows over time. And I suppose getting kicked in the behind is better than getting kicked in the head. And speaking of getting kicked in the behind... "Clean" Line's proposal to regionally allocate a portion of its merchant transmission projects got soundly punted. In response to Clean Line’s request that the Commission allow partial cost allocation for merchant transmission projects found to meet economic or public policy needs, we note that, while Order No. 1000 requires each public utility transmission provider to have in place a method, or set of methods, for allocating the costs of new transmission facilities selected in the regional transmission plan for purposes of cost allocation, it does not require a public utility transmission provider to establish a cost allocation method that would apply to any portion of the costs of a merchant transmission project not recovered through negotiated rates. Therefore, we deny Clean Line’s request that the Commission require PJM to allow for partial allocation of the costs of a merchant transmission facility through the regional transmission cost allocation method as beyond the scope of Order No. 1000. Clean Line got resoundingly (and satisfyingly) slapped down on all fronts. PJM (and FERC) don't love Clean Line the right way... but who can blame them? Clean Line is suddenly discovering that the four merchant transmission projects it dreamed up aren't a sustainable business plan and now it's desperate for some ratepayer subsidies to continue the farce. Because "Clean" Lines aren't needed, they're not going to be approved in a regional plan, and therefore cannot be regionally allocated. Clean Line tried to tell FERC that if it built these unneeded projects that they would magically provide some regional reliability and economic benefit and therefore should be partially allocated to captive ratepayers who wouldn't use any of the electricity carried by the lines. A merchant transmission project is paid for 100% by generators on one end and load on the other. There's no such thing as a quasi-merchant project. Quit your whining, Clean Line, pull up your big boy pants, and get on with wasting your investors' money. You're not getting any help from PJM ratepayers. Further, while Order No. 1000 established the information requirement discussed above, the Commission also concluded that, because a merchant transmission developer assumes all financial risks for developing its transmission project and constructing the proposed transmission facilities, a merchant transmission developer is not required to participate in a regional transmission planning process for purposes of identifying the beneficiaries of its transmission project that would otherwise be the basis for securing eligibility to use a regional cost allocation method. Thus, a transmission developer is not required to submit a merchant transmission project into the regional transmission planning process, and the regional transmission planning process is not required to evaluate a merchant transmission project for potential selection in the regional transmission plan for purposes of cost allocation. However, nothing prevents a transmission developer from submitting its transmission project into the regional transmission planning process for potential selection in the regional transmission plan for purposes of cost allocation. In that case, the regional transmission planning process would evaluate the proposed transmission project as it would any other proposed project and, if the transmission project is selected in the regional transmission plan for purposes of cost allocation, it would be eligible to use the regional cost allocation method. If the proposed transmission facility is not selected in the regional transmission plan for purposes of cost allocation, then the transmission developer could choose to move forward as a merchant transmission facility. Right of First Refusal: I'm finding it really hard to care about this issue at all. Why don't you all fight about it quietly and let me know when you're done? The only thing I found even remotely interesting was that the Market Monitor was trying to get FERC to make transmission owners stick to the submitted cost of their projects as approved in PJM's RTEP. Good idea! However, FERC slapped that down too. The cost of an approved transmission project -- one of the factors that made it the preferred, cost effective option in the selection process -- is mere suggestion and bears no resemblance to how much such project may cost to build. This allows incumbent transmission owners to undercut every other project developer on price, and then spend twice as much actually building the project. Remember Primary Power?
"Public Policy" and PJM's State Agreement Approach: A handful of "clean" energy companies and their big green Pollyanna sycophants submitted comments whining about PJM's State Agreement approach to "public policy" projects driven by individual state renewable portfolio standards. These cleaniacs think that they can force PJM to turn individual state policies into regional transmission needs, and socialize the cost as broadly as possible. The energy companies, of course, want this because they make money off renewables. The Pollyannas want this because they think they're saving the world, and they don't care how much it costs. Greedy and Clueless got slapped down. FERC determined that PJM's "consideration" of public policy requirements in planning sensitivities is adequate (although frighteningly opaque) and the State Agreement approach to cost allocation is supplemental to O1000. This means that a project "needed" solely to meet "public policy" goals will be driven by the state officials whose policy requires it, and voluntarily paid for by those states whose policies cause it. But, never fear, I'm sure Greedy and Clueless aren't done with their whining yet -- they do it so well -- and will continue attempts to force everyone to consume socialized utility scale renewables when better options such as distributed generation of local renewables are the more viable, sustainable choice. It seems that citizen opposition to its "Clean" Line projects is increasing!
"Clean" Line tried the "I elect transmission lines to public office" strategy by schmoozing and making empty promises to businesses, legislators, local governments and other groups long before the affected landowners who would have to sacrifice their land for this project got wind of it. How effective was "Clean" Line's "community consultation" when the ones most affected by its projects were never consulted? Approaching a community with a front-loaded fait accompli is a big, bad no-no. Tsk, tsk, tsk, "Clean" Line! Also, the political strategy playbook has been outed, studied and neutralized by transmission opponents. How effective is a "playbook" when the other team has a copy, "Clean" Line? Introducing -- Block Grain Belt Express! Now affected communities in Kansas, Missouri and Illinois have their own sister group to the original Block Rock Island Clean Line. Coming soon... even more opposition! Nobody needs or wants your "clean" projects, arrogant Texas and New York entrepreneurs. Go wreck your own backyards in your own states. Fail! Holy plagiarism, Batman! I ended up with a copy of Grain Belt Express Clean Line's "Code of Conduct" for Right-of-Way Agents and Subcontractors in my email today.
This silly document is nothing but window dressing masquerading as "proof" that Clean Line's land sharks are following some sort of moral compass. This document does nothing to stop land shark abuse of landowners. Who's supposed to enforce it? Nobody! What are the penalties or legal remedies for violation? There aren't any! It's your word against theirs. This document has an interesting history. Notice how it's written to supposedly prohibit certain behaviors? Does the specificity of certain tactics seem a bit odd to you? That's because each one of these land agent no-nos was a tactic actually perpetrated on landowners in Pennsylvania by land agents for TrAILCo. This "Code of Conduct" came into existence through a court battle fought by the Pennsylvania Office of the Consumer Advocate, who is tasked with representing the interests of consumers, who had been victim to these very same land agent tactics. In its original form, it was enforceable by the Pennsylvania authorities. In its current incarnation, it's not worth the paper it's printed on. It's mere suggestion that is more for the landowner's benefit as an imaginary security blanket than it is a set of rules for Clean Line's land sharks. The "Code" was re-used by TrAILCo's parent company for their subsequent PATH project. Turned out that the West Virginia PSC wasn't interested in enforcing it, therefore, the document was worthless. PATH land sharks violated it constantly, according to affected landowners. And now Clean Line has plagiarized this document from PATH, thinking it will fool a whole new crop of rubes in the midwest. Not. It's even complete with the same PATH-created typos... what a bunch of idiots you are, Clean Line!! So, what's your best defense? Refuse to speak or interact with Clean Line land sharks without the assistance of your attorney and insist that all conversations be recorded. You'll still have to pursue any "violations" through civil court, but I have a feeling the land sharks won't be so willing to star in your own personal video production and will avoid you and your camera or tape recorder like a.... plague of bolt weevils, perhaps? The City of Boulder, Colorado has been engaged in battle with private, investor-owned utility Xcel for the past several years. In 2011, the City passed a referendum to form its own municipal electric utility and give utility giant Xcel the boot. Since then, the City has been negotiating with Xcel to give the utility one last chance to shape up or get kicked out.
A recent article in the New York Times discusses the pros and cons of municipal utilities. "Roughly 70 percent of the nation’s homes are powered through private, investor-owned utilities, which are allowed to earn a set profit on their investments, normally through the rates they charge customers. But government-owned utilities, most of them formed 50 to 100 years ago, are nonprofit entities that do not answer to shareholders. They have access to tax-exempt financing for their projects, they do not pay federal income tax and they tend to pay their executives salaries that are on par with government levels, rather than higher corporate rates. That financial structure can help municipal utilities supply cheaper electricity. According to data from the federal Energy Information Administration, municipal utilities over all offer cheaper residential electricity than private ones — not including electric cooperatives, federal utilities or power marketers — a difference that holds true in 32 of the 48 states where both exist. In addition, they can plow more of their revenue back into maintenance and prevention, which can result in more reliable service and faster restorations after power failures." Not only have municipal utilities proven themselves more reliable during recent extreme weather events, they're also cheaper. While the private utility mega-corporations have touted their "economies of scale" as more cost effective, that's no longer true. With increasing pressure to turn a profit and pay shareholder dividends every quarter, these corporations are increasingly looking for ways to increase profits and cut expenses. Reliability and service suffers first, instead of cutting exorbitant executive salaries, lobbying budgets, and "corporate stewardship" waste, such as buying naming rights to football stadiums and other ridiculous expenditures. The fundamental problem is that shareholders don't care where the profits come from, as long as they show up every quarter. Company executives are loathe to dip into their ever-increasing perks, so the customers are the ones who take a hit for the team. When the corporate baggage of multi-million dollar salaries and frivolous executive waste are taken out of the picture, a municipal utility may more than make up for any "economies of scale." Check it out in your local area! |
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
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