Newsweek is just now buying a clue that utilities have been ripping us off.

A penny here, a penny there.  You don't even notice, but the utilities end up with a really big pile of pennies!

Taking some blame in Newsweek's article is "a little-known electric market regulator, PJM."  If you're reading my blog, you probably think this is as funny as I do, but reality is that most of the folks donating their pennies for PIGS really have never heard of PJM.

This article's description of the capacity market is not exactly accurate, but it does a better job of describing the FERC tax scam:

Remember, these regulators exist for your protection, little ratepayers.

This has been a long time in coming, but FirstEnergy was ordered on Friday to "submit a detailed plan for implementing audit staff’s recommendations and correcting journal entries reflecting an approximate $1.2 million refund to affected customers from its transmission-only subsidiaries with formula rate recovery mechanisms, including Trans-Allegheny Interstate Line Company, Potomac-Appalachian Transmission Highline, LLC, and American Transmission System, Incorporated."

The first time this problem reared its ugly head was during the July 2011 PATH Open Meeting to review its 2010 actual transmission revenue requirement.  At this phone "meeting" I notified PATH that I had found expenses of the Allegheny Energy/FirstEnergy merger in its PATH rates.

In September, FirstEnergy subsidiaries PATH and TrAILCo made entries to their quarterly FERC financial filings to effect a credit for amounts wrongly charged to ratepayers in violation of the company's "hold harmless" guarantee to the Commission that it would not charge merger expenses to ratepayers except under certain circumstances.  Over a million dollars was credited, but because PATH and TrAILCo made the correction in the normal course of business, it did not credit ratepayers for interest on the amounts wrongly recovered.

Throughout the fall of 2011, PATH counsel continued to argue with me in discovery about recovery of merger expenses, refusing to own up to the fact that other merger expenses had been recovered.  In October, PATH filed a motion to dismiss the first formal challenge, claiming that the involvement of Ali Haverty and myself in its annual update review was costly to ratepayers.  In response, I pointed FERC to the more than $1M savings ratepayers had realized due to my identification of merger costs wrongly included in PATH's revenue requirement that were subsequently reclassed on the company's Form No. 1 filings.

Shortly thereafter, FERC notified FirstEnergy that it was commencing an audit to determine if the company had complied with the Commission's order in the merger case. 

In December, TrAILCo filed a revision to its revenue requirements to correct merger costs "inadvertently" recovered.  It claimed this error had been noticed during an "internal staff review."  Right....

If you take time to read FERC's FirstEnergy merger order, you will see that parties to that case had argued that adequate safeguards did not exist at FERC to prevent FirstEnergy from ignoring the hold harmless stipulation and recovering merger costs.  FERC poo-poo'd this idea, insisting that their processes would be adequate to catch any wrongful recovery.

And then FirstEnergy went ahead and recovered the merger costs anyhow!  Did FERC's processes identify this wrongful recovery?  No, I did.  How embarrassing!

FirstEnergy made a whole bunch of promises it never intended to keep in order to get its merger with Allegheny Energy approved.  In addition to wrongly recovering merger costs in FERC jurisdictional rates, the company has saddled its West Virginia ratepayers with "acquisition adjustment" premiums flowing from its merger, as well as causing hardship to a whole bunch of distribution customers by cutting its meter reading services that resulted in huge erroneous bills and service shut offs.

FirstEnergy's past bad deeds seem to be catching up with them lately, and the group of people and entities enjoying the show keeps growing.

Time is quickly running out to send in your RSVP for PATH's upcoming "Open Meeting."  Follow the instructions here to send your RSVP for the meeting to PATH's lawyer on or before Oct. 28.

This isn't a real "meeting."  An overconfident and arrogant PATH wasted your money for several years holding actual in-person meetings, complete with coffee & donuts, at its fancy DC counsel's office.  However, the whimpering remains of PATH now holds this "meeting" over the phone via conference call.

During the call, you can ask PATH any questions about its plan to collect another $39.8M from you in 2014.  If you are a party to the abandonment case, you cannot ask about that case, but only about the information contained in the 2014 Projected Transmission Revenue Requirement filing linked above.  Silly, yes, but when has PATH ever been logical?

A lot of you have been asking me what's going on with the abandonment case and why PATH continues to collect money from you.  Until that case settles or is heard, PATH is permitted to continue to collect the reimbursement it requested when it filed for abandonment.  If, after the case is over, it is determined that PATH has collected more than it is allowed, PATH will have to refund the difference to you.

So, send in your RSVP for the November 1 @10:00 a.m. phone meeting and belly up to the farcical ratepayer question bar.  If you don't come, PATH will think you don't love them anymore.

FERC Chairman Jon Wellinghoff recently told folks at an energy forum:

"So we need to do what we can to minimize those vulnerabilities by ensuring that we can isolate portions of each one of those interconnects," he said, adding that "there are physical security issues that certainly have to be dealt with. I think the biggest risk is potentially attacks on the system at those critical nodes."

What Wellinghoff describes is already being accomplished on a smaller scale with distributed generation and microgrids that can be islanded in the event of an emergency.

Smaller systems increase reliability because their flexibility allows them to continue to function when separated from the larger system.  This is because a microgrid is a complete and functional electric generation and distribution system that can stand alone.  It's a "mini-grid."

Microgrids can be connected to each other, as well as to the larger, centralized grid, however they may also be disconnected in event of emergency to prevent centralized problems from affecting their operation.

Our traditional centralized generation system for electricity relies entirely on the transmission/distribution system to function.  Any faults in the T&D system cause blackouts for end users because the fault causes this system to lose its generation component and become incapable of generating electricity for the end users.

Increased reliance on long haul transmission lines to distribute renewable energy thousands of miles from point of generation to point of use increases the risk of failure for end users.  The most reliable system is one where generation of electricity occurs as close to the point of use as possible.  Less wire, less risk of failure.

So while Wellinghoff's reasoning is sound, his application is short-sighted because it doesn't look beyond the traditional centralized generation grid.

FirstEnergy's union workers have sent a letter to Federal Energy Regulatory Commissioners asking that the agency's Office of Enforcement initiate an investigation into FirstEnergy's gaming of coal plant closures.

The union states that "...the retirements may also have a detrimental effect on energy, capacity and ancillary prices in the PJM Regional Transmission Organization (PJM)."

The union further reasons: 

"We are concerned that prematurely retiring such a large amount of apparently economic generating
capacity could lead to an increase in energy, capacity and ancillary service prices, to the benefit of FE's remaining facilities."

"This concern is heightened by FE's failure to explain adequately the bases for its plans.  With nearly two years remaining before the MATS closure deadline, FE's decision not to invest in MATS compliance fails to justify its evident rush to deactivate the plants. The decision is
likewise not explainable as the consequence of  "continued low market price(s] for electricity."  While the 2013 PJM capacity auction resulted in relatively lower prices (and a decline in the amount of coal-fired  generation clearing the auction), those results apply to the period 2016-2017, which is after the April 2015 MATS compliance deadline. FE has not shown that
either plant is losing money, nor are we aware of any efforts to sell the plants.  In these circumstances, a premature closing of the units may constitute a form of physical withholding and an improper effort to affect market prices."

In addition to being concerned about its own members, the union says, "...consumers deserve assurance that FE's action will not harm reliability or artificially inflate energy and capacity prices in PJM."

They wrap up:

"We urge the Commission to investigate FE's actions. In particular, the Commission should investigate FE's internally-stated reasons for the proposed closure date and any related business studies and cost-benefit analyses. Such an investigation would be in the public interest, consistent with the Commission's anti-market manipulation and rate regulatory authority, and in
the interest of the communities affected by FE's action."

Why, sure, I'd love to see those studies and analyses, too.  How about it FE, want to share?

Chances of FERC acting on this?  Slim to none.  FE's plant closure market manipulation must be perfectly legal because those minding the store continue to allow it to happen unfettered.   Of course it's going to artificially inflate energy and capacity prices that consumers must pay and create profits for the flailing FirstEnegy financials.  That's what this game is all about!

Even rats know when to abandon a sinking ship.  These guys should start looking for other jobs.  I'd like to see Tony the Trickster keep just one plant running with the help of his million dollar henchmen and a couple of cute cocktail waitresses.  Got candles?

Transmission's biggest cheerleaders met last month in San Diego to talk about a subject near and dear to their wallets.  During his presentation to his fellow speculators, Ray Wood, head of U.S. power and renewables at Bank of America Merrill Lynch said:

Wood wasn't just bragging, however, but trying to convince everyone that transmission needs big, double-digit rates of return in order to attract capital.

According to Wood, funds for transmission are readily available, however transmission is so risky that no one wants to invest in it until a project has been awarded a "notice to proceed."

This is a lie.  There is no risk involved in building transmission.  Transmission incentives awarded by FERC routinely place all risk on consumers.  One incentive awarded by FERC to all who ask is guaranteed recovery of 100% of prudently-incurred project cost.  Another is the ability to collect a return on investment during  the construction period (CWIP in rate base).  The investor cannot lose if he is guaranteed to receive his entire investment back, plus a generous return, even before the project is constructed.

What Wood is whining about is that brief period of time between the day some transmission owner rolls out of bed with the idea to build a transmission goldmine, and the day incentives and a formula rate are approved by FERC.  This is the only time when investment isn't earning a great big return.  After that, it's all $$$$$!

Wood pretends that there's some further risk during other necessary approvals, such as a state CPCN or an environmental review.  The investor is still earning during this time -- where's the risk?  The only "risk" is that a project may be abandoned if it cannot buy necessary approvals, therefore the "sky's the limit" amount of investment that it was possible to make actually constructing the project is curtailed, and the investor is left with a smaller investment that is still earning around 12%.  Oh, boo hoo.

And what about projects sponsored by transco spinoffs of gigantic investor owned utilities?  These companies often self-finance the early cost of a project by borrowing at the parent company level at extremely low rates, and then earning a 14.3% return on that investment.  In the case of the PATH project, the company never borrowed any money, however they still collected a 14.3 or 12.4 percent return on money they probably borrowed at 3 or 4%.

So, how do we fix this to make both Wood and electric consumers happy?  How about setting limits on incentive rate of return periods to coincide with the "risky" periods of a transmission project?  Transmission is only competing with other investments at the beginning.  Once the investment is made and the project constructed, all risk disappears.  So, what if incentive ROEs were gradually lowered over the life of the asset?  As well, incentive ROEs should not kick in until an actual investment in the project has been made by an entity other than the company or its parent.  Transmission owners are scamming us big time!

WIRES, the voice of the electric transmission industry, has been as busy as a nasty, venomous, little bee trying to preserve its members’ ability to harvest buckets of ratepayer cash building new transmission of dubious necessity.

On another prong of its diabolical pitchfork, WIRES takes on the problem of recent FERC return on equity complaints alleging that transmission ROEs based on market conditions prior to the big crash are set too high.  One such complaint was ruled on yesterday, when a FERC administrative law judge found that the 11.14% base ROE for New England transmission owners was unjust and unreasonable and recommended that it be reduced to 9.7%.  The ALJ found that FERC’s ROE “zone of reasonableness” determined by the prior DCF analyses was inappropriate because there has been so much economic change.

With that in mind, we can approach WIRES’ petition to FERC requesting that it revamp or replace its current DCF process for setting returns, deny any future rate of return complaints under sec. 206 of the FPA as long as the ROE still falls safely within the zone of reasonableness, and that the “benefits” of a transmission project be considered as a factor worthy of a higher ROE than would ordinarily be found to be just and reasonable.   

“Petitioner asks the Commission to explore methodological options that will reduce or eliminate the uncertainties and risks to investors and to customers and avoid potential reductions in investment in needed transmission facilities, higher costs, project delays, and disruption to infrastructure planning and growth.”

WIRES intends to provide electricity consumers with greater stability and predictability regarding regulated rates of return on equity (or “ROE”) for existing and future investments in high voltage electric transmission infrastructure.  Well, gee, thanks, WIRES, I know that dilemma keeps everyone up at night… NOT.  Are you sure you’ve really got the welfare of electricity consumers in mind?  Who designated you as our representative anyhow?  WIRES does NOT speak for electric consumers.

WIRES is simply stamping its gold-plated feet because the usurious ROEs it had gotten used to have come to an end.  Now they want FERC to shore things up for them, and do it in a big hurry and in a way that shuts the consumers who will end up paying for it all out of the process.  WIRES is frightened by all the recent section 206 complaints that are eating into transmission profit margins, and that’s because the complaints are well-founded.

Rah!  Rah!  Rah!  Who loves transmission?  Gimme a W, gimme an I, gimme an R, gimme an E, gimme an S… what does that spell?  An expensive, unneeded transmission line in everyone’s back yard!  Hooooooo-rayyyyyyyy!

WIRES says it’s all FERC’s fault for making the transmission biz just so gosh darn lucrative:

“…a major and substantial impetus for new investment was supplied by federal regulatory initiatives promoting regionally competitive power markets and transmission open access. It is no accident that modernization and expansion of the nation’s transmission system has coincided with implementation of the Energy Policy Act of 2005 and its directive to the Commission to provide “incentive-based rate treatments” for jurisdictional public utility transmission projects, including “a return on equity that attracts new investment in transmission facilities (including related transmission technologies).”

And therefore, it is FERC’s responsibility to continue to champion more transmission because transmission owners now depend on it as a profit center:

“Despite the continuing challenges to its planning and siting, transmission is the “critical link” between generation and customers, and its vitality is key to FERC’s bulk power market policy objectives. The industry’s principal game-changing developments of the last two decades -- open access and comparability requirements, regional wholesale power markets, accelerating network integration, the arrival of non-utility transmission investors as well as utility diversification into commercial transmission, deployment of digital monitoring and control technologies, and new forms of renewable energy -- depend significantly on the adequacy and efficiency of the grid. In recognition of that fact, transmission has emerged as a separate business and profit center, even for many incumbent transmission providers whose transmission investments were historically the by-product of service to native load.”

Well, someone has worked quite punctiliously on a strategy to dig in a foothold for  transmission at a time when the composition of future energy generation and delivery is enormously uncertain, haven’t they?  I don’t think this is a wise strategy for consumers, who may end up holding a gigantic bill for infrastructure that is not useful or economic.  Instead of rushing headlong into $300B of new transmission intended to support more centralized generation and foster larger and costlier deregulated electricity markets, we should first be tackling the question of necessity.  Even WIRES agrees with this point.

“Micro-grids, distributed generation, and energy storage technologies represent new and potentially important competition for investors’ resources.”

WIRES’ petition makes all sorts of spurious claims that all begin with a version of  “once upon a time”:

“WIRES believes there is a binding norm obtained through rulemaking that would do more to ensure consistency than a policy statement. However, the need to address this particular matter within a short period of time and the familiarity of Commission staff and industry parties with the issues argue for a short comment period, followed by a Statement of Policy. Such action would shed light on the Commission’s intentions going forward while preserving its flexibility in the face of changing facts and events.”

Translation:  "Let’s hurry up and get this done before someone notices!"

“Petitioner believes the investment community is, or will soon become, apprehensive about the prospect of declining transmission-related ROEs and other regulatory uncertainties.”

Translation:  “Wah!  You’re impeding our profits!”

“Petitioner believes that, even the most substantial increases in regulated transmission investment would rarely, if ever, result in transmission being more than one-fifth of retail rates regionally. Of course, the rate impact of regulated transmission investment on individual customers is reduced, perhaps dramatically, in relation to how broadly costs are shared. Moreover, adequate transmission enables more efficient use of generation resources; those savings will tend to offset, at least in part, any increases in transmission rates.”

Translation:  “Those pesky consumers won’t notice the disgustingly high profits we’re making if we can socialize the costs broadly enough.”  Again… who appointed WIRES to speak for consumers?

“Petitioner believes that the subjective judgments and evolving standards associated with application of DCF in litigated cases will significantly affect investor behavior and, if left to evolve solely through litigation, will add greater regulatory risk and uncertainty to the recognizable barriers that transmission development already faces.”

Translation:  “If FERC doesn’t put a stop to  ROE complaints, the investors are going to find other investments that pay higher returns, well, if they can find any that pay more than 12 – 14%, which they can’t.”

“In WIRES’ view, one key to sustaining transmission investment is rational application of the DCF methodology or such other methodologies as may appropriately fit the financial environment and Commission objectives.”

Translation:  “And only high ROEs are rational, so therefore, show us the money!”

“Petitioner contends that challenges to existing or proposed rates of return need not be resolved simply on the basis of a mechanical application of the DCF model. Regulation should maintain a reasonable relationship between a project’s (or group of projects’) long-term benefits, including those that planners and regulators expect and those that flow from evolving grid operations, and the costs customers pay for securing those benefits through new transmission facilities or upgrades.  Transmission benefits should therefore be part of any consideration of whether customers have been, or are likely to be, harmed by an existing allowed return.”

Translation:  “We’ll make up new “benefits” for consumers if you just let us keep robbing them!”

“We are not suggesting a performance-based regulatory regime, as that is necessarily beyond the scope of the brief generic reassessment that this Petition recommends.”

Translation:  “But let’s not be hasty here!  Even though Congress expressly ordered that transmission incentives be subject to performance standards, FERC has failed to hold us to any standards, and that’s the way we like it!”

FERC simply cannot continue to reward failure and poor planning with unjust and unreasonable rates.  If you’d like to read responses to this ridiculous and dangerous petition and/or follow this docket, you may find it here by searching for Docket No. RM13-18.

All this smoke and thunder signifies the wrath of a dying industry.  Change or die, fellas, the future is here!

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!

A friend sent me a link to this article on Grist yesterday.  The five most important names in renewable energy that you’ve never heard of not only improperly ends a sentence with a preposition, but the author just plain, old makes crap up.  While waxing poetic kissing the rear ends of FERC Commissioners current and future, Bill White,  manager of the National Clean Energy Transmission Initiative for the Energy Future Coalition, contends that only Big Wind can save us:

This, of course, is incorrect, but still an arguable opinion (and it is, read the comments).  However, next Bill demonstrates his mastery of FERC finance:

What an idiot (and you will notice he gets called on his misunderstanding of ROE in the comments as well)!  ROE = Return on Equity = the percentage of yearly return (interest) investors earn on their equity (investment) in transmission projects.  It has nothing to do with how long it would take to recoup the costs of a project.  That's called depreciation, Bill.  The two have only a cursory connection in that depreciation pays back a portion of the investment every year, plus interest (ROE) on the outstanding balance.  The length of time it takes to recoup an investment is directly tied to its depreciable life.  Investments should be paid for during their used and useful life.  I'll do Bill a favor and stop there without even mentioning salvage value.

Now, don't you feel stupid, Bill?  You should.  You should also feel stupid about all those other brainless things you said in your Grist rant, like the fact that state regulators, who are complaining about FERC returns, are "misguided." What makes a financial genius like you qualified to judge the actions of professional regulators?

Yup, ol' Bill just doesn't know what he's talking about.  Crash and burn.

On July 3, the Federal Energy Regulatory Commission dismissed a complaint brought by Wisconsin-based citizen/consumer groups Citizens' Energy Task Force and Save Our Unique Lands against MISO, the Midwest Reliability Organization, and a long list of utilities.  You can read FERC's Order here.  The complaint alleged that a transmission line included in MISO's MTEP plan in 2008 violated reliability standards and would make the bulk electricity system unstable.

The Commission did not launch an investigation into the reliability of the MISO transmission system, and no testimony by an expert alleging reliability violations was submitted with the complaint.  Instead, FERC treated the complaint as an unsubstantiated allegation, upon which it is not required to act. 

FERC's dismissal was also based on the premise that the citizens are RTO/ISO stakeholders, and should have been participating in MISO's transmission planning process that approved the subject transmission line all the way back in 2008.  FERC gives great deference to the decisions of its regional transmission organizations.  If FERC started second guessing RTO/ISO decisions, it would be a never-ending spiral into micro-managing approval and siting of transmission projects, something FERC has no authority to do.

FERC's authority extends to ensuring that the regional transmission planning process is open and transparent. MISO (and other RTOs/ISOs) are complying with the spirit of FERC's Order No. 890 by theoretically making their planning process open to citizen participation.  If the citizens choose not to participate, they cannot complain about the process later.  Let's make an analogy here:  It's not okay to violate a law and then claim you were unaware of the law, so therefore you are innocent of breaking the law.

However, citizen "stakeholder" participation in the regional transmission planning process only works on paper (or in theory).  It doesn't translate to real life.  Regional transmission organizations are not consumer friendly.

An RTO/ISO is an association of manufacturers or suppliers (of electricity) with the purpose of maintaining prices at a high level and restricting competition in order to promote their own self-interest.  Coincidentally, this is also the defined construct of a cartel.  Only members of the regional planning cartels are permitted to vote on inclusion of transmission projects in the regional plan.  Consumers can never legally be members entitled to vote.  Consumer participation is limited to attempts to convince the voting membership to see things differently and in what may not be the company's financial best interests (which is the functional equivalent of screaming into a pillow).  A consumer can never be a stakeholder with footing equal to that of an investor owned utility with a planned for-profit transmission project.

Here's why the "stakeholder" premise does not work for consumers:

1.    Most consumers are unaware that regional transmission organizations exist.  The RTO/ISO does nothing to foster understanding or recruit the interest and participation of consumers.

2.    The regional planning process is highly technical and incomprehensible to nearly every consumer.

3.    The regional planning process is time consuming and getting more so every day.  As recently reported in the former PJM Insider, PJM is hav­ing trou­ble pro­vid­ing enough facil­i­ta­tors to run meet­ings on the prob­lem state­ments (because there are too many of them).  Consumers don't have the kind of time necessary to participate as a fully-engaged stakeholder.

4.    State agencies tasked with protecting residential consumers are too underfunded and understaffed to effect meaningful stakeholder participation (see #3 above).

Therefore, consumers are not, and can never be, equal stakeholders, except on paper in FERC orders.

What's the solution? 

PJM states have formed The Consumer Advocates of PJM States (CAPS) group and have been recruiting for someone to serve as a PJM monitor/participant on their behalf.  While this is a step in the right direction, it still doesn't solve problems 1, 2 and 3 above.  The same majority of consumers who don't know regional transmission organizations exist also don't know that state consumer advocates exist (which makes their jobs thankless, sort of like wetting your pants in a dark suit -- it gives you a warm feeling, but no one notices).  We'll have to wait to see if this approach is effective.

There is no designated or funded consumer advocate on a federal level.  While consumers have state advocates to participate on their behalf, there is no federal counterpart to help with the regional or federal workload.  Congress has flirted with setting up a consumer advocate at FERC, but nothing has ever been accomplished.

Must the townsfolk storm the regional planning castle in huge numbers?  They'll probably come fully decked out with torches and pitchforks... and stakes, they'll be holding stakes that they intend to pound through the heart of the transmission building cartel beast that taxes, frustrates and confounds them.