Category:

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

8/26/2013

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!

West Virginia Citizens Action Group Files Objection to FirstEnergy Harrison Settlement

8/23/2013

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.

PJM Capacity Market Dead, Resurrection Not Likely

8/20/2013

Fitch Ratings issued a report* today that says PJM's recent capacity auction results "indicate that a strong rebound in regional power prices appears unlikely."

Despite a whole lot of big talk by investor owned utility CEOs over the past several years that demand is going to explosively rebound at any second, the analysts aren't buying it. And furthermore, prospects for PJM merchant generators will remain "dim" for the foreseeable future.

What has killed prices on PJM's capacity market?

1.    Demand management (users who are paid to reduce usage at peak demand periods)

2.    Energy efficiency (users who are using less electricity overall through energy saving improvements to their home or business)

3.    Distributed Generation (users who are now producing their own electricity on site)

This isn't really a big surprise. We've been talking about this here on the blog for quite a while. What is news is that now the credit rating agencies are also acknowledging it.

"Fitch expects demand response (DR), energy efficiency (EE), and distributed generation (DG) will play a large and growing role in PJM, either reducing total demand or displacing existing traditional generation thereby exerting a restraining, secular influence on future power prices."

This is bad news for companies like FirstEnergy.

"Capacity auction prices under the reliability pricing model (RPM) signal ongoing pressure on electricity margins and credit metrics of merchant generation companies operating in PJM. Fitch expects these companies to continue to rationalize operations to mitigate revenue and margin pressure, and sustain creditworthiness. Utilities most at risk are investment-grade-rated affiliated generators with high debt burdens relative to cash flows and earnings."

Even FirstEnergy's plan to "sell" one of their merchant baseload coal plants into West Virginia's regulated environment can't save them now. It looks like FirstEnergy will continue to flounder financially while it attempts to rip off its customers, and consumers in general, in order to try to fool investors and stay a float just a little while longer.

This is good news for consumers!

*Registration required (but it's free and worth it!)

Grain Belt Express Clean Line Bullies Opposition

8/19/2013

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.")

PJM's 2013 Stakeholder Survey

8/13/2013

The PJM cartel likes to pat the stray consumer who ventures into its lair on the head and pretend that they are "stakeholders" who matter. Go ahead, pull up a chair, little consumer, our cartel is transparently open to all... except when its not.

The PJM cartel is a private club meant for the MWM (Members Who Matter - thanks, Bill!). The rest of you "stakeholders" only have a role in ensuring that PJM's annual budget of $32M is adequately funded. Other than that, PJM really doesn't care what you think.

Now, imagine the shock and horror of one bourgeois "stakeholder" who received the following email invitation to participate in PJM's Stakeholder Survey yesterday.

PJM aims to provide you and your organization with the best possible service. To achieve that goal, PJM surveys the organizations with which they work to ask you what they are doing right and – more importantly – what could be done better. The survey is very important and takes approximately 20-30 minutes.

To take the confidential survey, click on the link below:
https://www.metrus2.com/snapwebhost/surveylogin.asp?k=*REDACTED*

If the link does not work please copy and paste it into the address bar in your browser, or simply go to the websitewww.metrus2.com/pjmstakeholder and enter your survey access code: *REDACTED*. You can also go to http://www.pjm.com/about-pjm/who-we-are/stakeholder-satisfaction-survey.aspx

Metrus Group is the survey research firm selected to administer the survey. Metrus Group will not ask for or collect any personal information. Your responses will be completely confidential. The survey access code lets Metrus Group know which stakeholder organization you are from.

Thanks in advance for your help. Your responses will enable PJM to maintain the high service levels you deserve and they desire. If you have questions or need assistance you may contact the PJM Hotline at (866)-400-8980, or Metrus Group via email [email protected] or (908) 231-1900 and ask for the PJM support team.

Sincerely,

Jerry Seibert
Vice President
Metrus Group

The funny part here is that the recipient of this email hasn't paid PJM one whit of attention for several years, has no clue what "organization" he is supposed to be representing, or how PJM even got his name and email address. That's right, PJM, you managed to send your survey invitation to a common ratepayer!

They weren't lying about this survey taking 20 - 30 minutes. It's quite extensive and if you've used any of PJM's "services" over the past year, it can expand endlessly like a window, inside a window, inside a window, ad finem. But, it's the best look us plebeians are going to get at what the cartel club considers important. Like royalty everywhere, PJM just doesn't realize how arrogant they come across. Here are a select few survey questions:

PJM wants to know about its "corporate reputation" and how you would rate them on the following:

Being well-managed, trustworthy, innovative, an industry leader, attracting and retaining the best and brightest employees, having efficient processes, having required systems and infrastructure in place AND the most important:

Helping my company succeed and being easy to do business with, because the PJM cartel's first mission is to help its members make money! What? You thought PJM's mission was to keep the lights on? Ha ha ha, you little prole, what a kidder!

PJM also wants to know how well they've done educating stakeholders and helping members work toward consensus of stakeholder issues.

PJM also wants your opinion on their food and "making you feel valued." What is this, a Chuck E. Cheese franchise, or a regional grid operator? Who knew PJM was a vacation destination?

PJM also wants to know where you get your information about them (because propaganda is only useful if it is disseminated correctly):
Inside Lines, committee emails, communication with PJM employees (ultra-secret meetings where unneeded transmission projects are propped up endlessly), communication with committee members, trade media, pjm.com, or a company representative.

PJM asks: Have you read, seen or heard anything in the news media about PJM in the last six months? (In other words, are you Amish?)

What sources do you find useful for providing industry info.? (because PJM needs to make sure their propaganda reaches these markets):

Internet search engines such as Google or Bing, Industry-specific blogs, Internet news sites such as CNN.com, Blogs and/or online discussion groups, Twitter, Facebook, RSS feeds, YouTube or trade media, newsletters or news media. For any you checked, be sure to now check them off your list of reliable sources in the future.

Perhaps PJM doesn't have the right kind of role model in Mother FERC, but the purpose of an RTO is supposed to be to ensure open access and non-discriminatory transmission services, the continued reliability of the system, and to operate wholesale electricity markets that provide electricity suppliers with more options for meeting consumer needs for power at the lowest possible cost.

It's really not all about providing a smokescreen for investor owned utility transmission building schemes, wining and dining utility executives, or helping investor owned utilities to succeed. It's supposed to be about serving the electric consumer, or "stakeholder."

Here's how PJM might go about doing a real "stakeholder" survey: The following question, and a mechanism for every one of PJM's 60 million "stakeholders" to individually answer it, should be featured on every cable news channel and on the front page of USA Today:

Have you ever heard of PJM Interconnection and how it serves consumers?

Transmission Assets are a Goldmine, Says Bankster

8/12/2013

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:

“Transmission assets, when they're already built, are goldmines,” he said. “They've got a long life, they're stable, and generally not as subject to tariff reductions as other asset classes because the percentage of the bill that ultimately goes to the end user that revolves around transmission is relatively light.”

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!

Powering America for Tomorrow Act, HR 2762 -- Will the Third Time be the Charm?

8/11/2013

The piggish Rep. James Sensenbrenner (R-WI) has once again resurrected his twice-trounced "Powering America for Tomorrow Act." We caught this piece of scary legislation the last time he introduced it. It hasn't gotten any better this time around.

This legislation would establish regional transmission planners that would take over CPCN permitting and siting for interstate transmission projects.

‘‘(d) CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY.--
‘‘(1) PROPOSED FINDING OF PUBLIC CONVENIENCE AND NECESSITY BY REGIONAL TRANSMISSION PLANNER.--
‘‘(A) INCLUSION OF PROPOSED FINDING IN REGIONAL TRANSMISSION PLAN.—As part of a regional transmission plan submitted to the Commission under subsection (c)(3), a regional transmission planner may identify a regional transmission project or projects that such regional transmission planner finds, based on the record of the regional transmission planning process, is required by, and consistent with, the public convenience and necessity.
‘‘(B) PUBLIC CONVENIENCE AND NECESSITY CERTIFICATE REQUEST.—A regional transmission planner may submit to the Commission a request to issue a certificate of public convenience and necessity for a regional transmission project identified in a regional transmission plan submitted under subsection (c)(3). Such request shall include a summary of the record developed for such project during the regional transmission planning process. The request shall be based on whether such regional transmission project is or will be--
‘‘(i) necessary to ensure regional compliance with reliability standards or remedy violations of such reliability standards;
‘‘(ii) necessary to provide significant relief from electric transmission congestion as measured by objective criteria, including consideration of the total cost of congestion, hours of congestion, and the lack of feasible economic alternative means to relieve congestion;
‘‘(iii) important to the diversification of energy supply throughout the designated region, including by meeting the goals of applicable renewable portfolio standards; or
‘‘(iv) important to the development of smart grid technology that is consistent with the policy under title XIII of the En-
ergy Independence and Security Act of
2007 (42 U.S.C. 17381 et seq.).
‘‘(2) ISSUANCE OF CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY.—The Commission may, after notice and opportunity for hearing, find that a regional transmission project is in the public convenience and necessity and issue a certificate of public convenience and necessity for the ownership and operation of such regional transmission project and the provision of any related services under the jurisdiction of the Commission if the Commission
finds that—
‘‘(A) a regional transmission planner included a proposed finding of public convenience and necessity for such proposed regional trans- mission project in one or more relevant regional transmission plans submitted to the Commission under subsection (c)(3);
‘‘(B) a regional transmission planner submitted a request for the issuance of such a certificate;
‘‘(C) the proposed regional transmission project will be used for the transmission of electric energy in interstate commerce;
‘‘(D) the proposed regional transmission
project is consistent with the public interest in terms of its engineering, reliability, and other economic characteristics and the purposes of this section; and
‘‘(E) the proposed regional transmission project will maximize, to the extent reasonable and economical, existing rights-of-way and the transmission capabilities of existing towers and structures.
‘‘(3) CONSIDERATIONS.—In issuing a certificate of public convenience and necessity under this subsection, the Commission shall give substantial deference to any proposed finding of public convenience and necessity by a regional transmission planner in a regional transmission plan submitted under subsection (c)(3).

Oh, and environmental reviews? We throw those out the window:

‘‘(6) ENVIRONMENTAL REVIEW.— ‘‘(A) PROPOSED FINDING BY REGIONAL
TRANSMISSION PLANNER.—A proposed finding by a regional transmission planner of public convenience and necessity regarding a regional transmission project is excluded from review under the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.), provided an environmental assessment or environmental impact statement is required to be prepared by the Commission under such Act.

I think Sensenbrenner got a hold of a bad batch of cheese curds, like maybe some from ALEC Farms. Lest you think he's nothing but a mindless corporate flunkie though, Porky gave a speech at a recent WIRES lobbyist meeting that would have removed any doubt.

Just like when the little pig cried wolf (oh, am I mixing my fables again?) we probably shouldn't pay any attention to this. Govtrack gives this bill a 2% chance of getting out of committee, but stranger things have happened. Keep an eye on this piece of pork.

FirstEnergy Fined $43 Million in Ohio

8/7/2013

Don't you just love that headline? Hopefully the first of many well-deserved slaps upside the head for this crooked company.

Yesterday, the Public Utilities Commission of Ohio (PUCO) ordered that FirstEnergy refund $43.3M to its Ohio distribution affiliates' customers within 60 days. The PUCO found that Ohio Edison Company, The Cleveland Electric Illuminating Company, and The Toledo Edison Company had grossly overpaid for renewable energy credits purchased from their own FirstEnergy Solutions affiliate and then recovered these exorbitant costs from consumers. In other words, FirstEnergy bought something from itself that was overpriced.

That's the good news. Now for the bad news.

FirstEnergy has vowed to appeal the decision. Any refunds due to customers will thus be held until the appeals process has exhausted itself. FirstEnergy intends to continue to pour millions into avoiding refunds due to struggling electric consumers, and if they are successful, consumers will end up footing the bill for the cost of that too, adding insult to injury. How long will FirstEnergy deny the consumers their refund? Maybe forever.

This whole thing smacks of a badly executed bit of play acting by PUCO and FirstEnergy executives. Everyone knows that FirstEnergy has stacked PUCO with its bought and paid for "yes" men.

This investigation has been going on for years. A decision was expected last week, but PUCO delayed it a week "to allow time to fine tune an order addressing whether the Akron-based utility overpaid for renewable energy credits and passed those excess costs on to customers." Fine tuning my eye, the decision was delayed until AFTER FirstEnergy's 2Q Earnings Call on Tuesday so that FirstEnergy's executives wouldn't have to suffer through questions about it, and so it wouldn't drag down FirstEnergy's already disappointing financial results for the quarter. So, FirstEnergy, where are you going to get the money to pay back this $43.3M that you stole from your customers? Inquiring minds want to know...

PUCO ruled that all the financial information related to its decision must be kept secret. This prevents the public from doing its own independent calculation of just how much they were ripped off. Other parties in the case contend that the theft from consumers actually amounted to more like $130M.

So, if FirstEnergy profited by selling RECs to itself in the amount of $130M, a refund of $43M is a small price to pay. FirstEnergy still comes out ahead by $87M. The company has actually been rewarded for stealing from its customers. What PUCO should really be looking into is FirstEnergy's corporate separation issues. The company is selling things to itself at outrageous prices because ratepayers are paying the bill. "Arm's length negotiation" means nothing when Tony's left arm is shaking hands with Tony's right arm, just before plunging both arms into YOUR pocket.

It's well known that PUCO is stacked with bought and paid for FirstEnergy puppets. This decision and its timing evokes imagination of the negotiations that must have occurred between FirstEnergy and PUCO to set it up to look like FirstEnergy was punished, when it was actually rewarded for stealing from the customers PUCO is sworn to protect.

Read about it here.

Meanwhile, FirstEnergy has attacked Ohio's Renewable Energy and Energy Efficiency standards as "too expensive for consumers." Maybe someone needs to look into all FirstEnergy's programs to find out why they are "too expensive." Is FirstEnergy cheating on EE recovery too?

And the bad juju continues to build...

WIRES Wants to Stop Transmission ROE Complaints Because That Cuts Into Profits

8/7/2013

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!

FirstEnergy Cutting Employee Benefits and Operating Costs - Tony the Trickster Will Still Rake In $23M Compensation in 2013

8/6/2013

FirstEnergy got their quarterly grilling this afternoon, after releasing second quarter financial results that were less than impressive.

FirstEnergy's net profits were a minus 39 cents per share.

FirstEnergy has been slashing operating costs, such as the cost of reading customer meters in West Virginia, Maryland and Pennsylvania, but now even that's not enough. Won't it be interesting to see Potomac Edison try to pull its corporate keister out of the fire while cutting spending on meter services even further? Maybe they ought to leave one of those open positions available... the one titled "Regulatory Magician."

In order to make up for his own poor management, useless figurehead Tony the Trickster has decided to cut employee benefits like health insurance and pensions, in addition to laying off hundreds of employees. I didn't hear him making any personal sacrifices though. Our pal Tony will still rake in $23M in compensation in 2013, to include company-paid financial planning and tax preparation services; personal use of the corporate jet; annual compensation and performance awards. So while you're struggling to make ends meet or pay your badly estimated electric bill, just remember that the Alexander household feels your pain (in a vague, annoying sort of way kind of like the pain you might feel when getting a fish pedicure).

Despite earlier regulatory puffery where FirstEnergy threatened to back out of the Harrison plant sale unless it got everything it wanted at full price, apparently the company is now involved in settlement talks.

"Briefs and reply briefs were filed by the parties in July and with the conclusion of the regulatory proceeding, the commission may issue an order at any time. We are however, currently in active settlement discussions with all parties in this case, and we are very hopeful that we can reach an resolution through this process."

Going back on your word so soon, FirstEnergy? I was really looking forward to watching you struggle with that "great asset" after your proposal was denied by the WV PSC. A settlement would just ruin my fun. :-(

More later...