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Consumers are realizing "they don’t need the power industry at all"

3/25/2013

Therefore, consumers also don't need $300B of new transmission to serve the dying centralized generation status quo either. Transmission is a 50 - 70 year asset we're not going to need.

NRG seems to be one of only a few energy companies that doesn't have a death wish:

"NRG is the first operator of traditional, large-scale power plants to branch into running mini-generation systems that run a single building. The endeavor strikes at the core business of utilities that have earned money from making and delivering electricity ever since Thomas Edison flipped the switch on the first investor-owned power plant in Manhattan in 1882."

Read the complete article here.

The future of energy is coming and there's nothing our current energy dinosaurs can do to stop it. Change or die.

Potomac Edison, Mon Power, and West Penn Power Billing and Meter Reading Practices - Incompetence or Corruption?

3/25/2013

It's been almost nine months since FirstEnergy subsidiary "Potomac Edison" wrote a nine page fairy tale to the Maryland Public Service Commission about its failure to read electric meters in Maryland, and it's been at least a year since customers began openly complaining about the company's meter reading and billing practices. However, FirstEnergy subsidiaries Potomac Edison, Mon Power and West Penn Power still haven't gotten it right.

In fact, a new wave of unhappy customers is about to crash upon FirstEnergy's affiliate shores.

West Penn Power customers in Pennsylvania are unhappy with the company's failure to read meters in a timely fashion in accordance with state law.

"David Kline from FirstEnergy talked to the Waynesboro Borough Council on Wednesday about complaints about power bills having estimated meter readings several months in a row.

When Allegheny Energy merged with FirstEnergy two years ago, there were not many immediate changes, Kline said. However, computer systems and meter-reading policies started changing about a year ago, he said."

Right... those "policies" are just some of the "merger synergies" customers are receiving from the ill-advised Allegheny Energy/FirstEnergy merger in 2011. The "policies" save this poorly managed company the operations cost of paying a meter reading staff a living wage, and as the company has stated many times, attempts to reduce its operating costs continue as it struggles to stay afloat.

Recently, a new scheme has emerged -- failure to bill Potomac Edison customers in a timely fashion.

"I, as I expect most of you, budget as closely as possible to the money coming in. It is the only way to function in this day of continuing rising costs and non-rising paychecks. When I saw that the bill had not come, I called the friendly customer service line and was told Potomac Edison was changing their billing cycle and I should receive my statement in about three weeks.

Not once did Potomac Edison inform me ahead of time that there was a change coming in billing cycles. Now I have received the statement which includes a month and about three-quarters of another month because the statements went out later than they used to. That has jumped my bill by a significant amount and we pay on the monthly budget plan!"

Without warning, customers are facing electric bills nearly double usual amounts, even customers who signed up for the company's "budget" plan which is supposed to average yearly usage and bill monthly so that your bill remains constant year round, no matter how much electricity you use. Even though you are receiving two months worth of billing, Potomac Edison isn't giving you two months to pay. Oh no, the entire balance is due right now.

The giggly "look at how incompetent we are" excuses from Potomac Edison, Mon Power and West Penn Power are wearing paper thin by now. It's been a year since the problems started. Instead of remedies, customers are being further injured by unjust and unreasonable billing practices. Is it really corporate incompetence, or is it a sign of corruption? You decide.

FirstEnergy Getting Desperate - Tries to Kill Energy Efficiency in Ohio

3/19/2013

FirstEnergy is up to no good in the state of Ohio, where the company is telling large businesses that they will save money on their electric bills if they sign FirstEnergy's pre-written form letter asking legislators to kill Ohio's energy efficiency standards.

Why? Perhaps this picture from the folks at Ohio Beyond Coal explains things:

Scary, huh? Evil personified up there is just begging for you to draw some horns and a tail on him to complete the picture.

"The Akron power company tried but failed to get the standards scuttled or frozen just before Christmas by asking legislators to slip an amendment into unrelated legislation. But lawmakers scattered when the tactic was publicly revealed.

This time, FirstEnergy is sending a form letter written by its lobbyists to some of its larger commercial and industrial customers, asking them to fill in their company's name and send it by Friday to the Ohio Senate, which is trying to decide whether to tinker with the efficiency rules.

The company defended its tactic to gin up support for its position.

"FirstEnergy remains concerned that meeting the state's energy efficiency goals will continue to place burdensome costs on our customers, particularly Ohio businesses," the company said in a prepared statement."

Why does FirstEnergy want to do away with energy efficiency programs in Ohio? It's hurting their bottom line and working as intended to save consumers money. More money in consumer pockets through energy efficiency, less money in FirstEnergy's pocket. Investments in energy efficiency cost much less than investments in new power plants. The cheapest resource is the one you never have to build.

"FirstEnergy CEO Anthony Alexander [aka "Satan"] has said in public meetings that the rules have interfered with normal market growth, already made tough by the recession."

Right... and FirstEnergy thinks its customers are dumb enough to hurt their own bottom line by signing form letters opposing energy efficiency programs. Good luck with that, FirstEnergy, your arrogance is stunning. Some things just can't be fixed by lying to your customers, legislators, regulators and the media.

Cut the Fat -- Give Private Utilities the Boot

3/16/2013

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!

New Report: RTO Markets Don't Save Electric Consumers Money

3/10/2013

"The evidence is clear that generators are profiting excessively from RTO power markets, and that sellers’ rates are not ‘just and reasonable’ as the law requires. Consumers are paying the price, to their detriment and that of the overall economy."

That's the conclusion of a report on FERC's restructured regional electricity markets published in December by Elise Caplan of American Public Power Association and Stephen Bobeck of the Consumer Federation of America.

The report takes a look at how FERC has restructured regulation of wholesale power to rely on market based rates and regional transmission organizations. "FERC has chosen to rely on supposed market “competition” to ensure that prices are “just and reasonable,” as required under the Federal Power Act."

Do these markets work to protect consumers? No. The report opines that, "Instead, evidence is mounting that customers have been harmed by the markets."

Despite repeated attempts to get FERC to do some sorely needed analysis and adjustment to its competitive market experiment, "FERC has still not undertaken such an analysis. But there is a wealth of data available to support the conclusion that consumers actually have been harmed by the restructuring of wholesale electricity markets and that access to alternative retail suppliers does not solve the fundamental problems of the wholesale market from which those suppliers must purchase power."

In the report, "...we discuss specific RTO rules and structure that have provided opportunities for excess generator earnings at the expense of consumers."

In uncompetitive RTO cartel electricity markets, "Offers into the energy market need not reflect the sellers’ actual costs of generation, as FERC would have required under a traditional cost-of-service ratemaking regime. Rather, the sellers set their own price offers, regardless of their actual costs, subject only to review and possible adjustment by the RTOs’ market monitors. In PJM, the market monitor typically mitigates less than one percent of the energy offers in both the real-time and day-ahead markets."

Thanks, Market Monitor! Always looking out for my interests, aren't you? It's just too bad that PJM's attempt to replace the Market Monitor isn't intended to provide more protection for consumers, but LESS.

And here's another problem we've written about before that pops up in the report: "The conceptual basis for LMP is that these differential prices will send “price signals” to indicate where there is a need for new generation or additional transmission capacity, or to reduce load through conservation or shifting the times when energy is consumed. As discussed below, this theory has not borne fruit in practice."

In PJM, new transmission is always proposed before new generation has a chance to happen, and demand side resources aren't given serious consideration. This is why consumers are now paying half a billion dollars for two failed transmission projects -- transmission projects that were approved and intended to be quickly rammed through before demand side resources and new generation could be recognized. Ultimately, PJM's Project Mountaineer scheme failed, along with the transmission projects, when demand side resources and generation developed despite PJM's best efforts to squelch them.

"The theory behind locational pricing is to provide price signals indicating where new transmission and generation is most needed. But in reality, new resources have not developed to respond to higher prices in these markets. Instead of inducing new resource development, the higher prices provide a financial incentive for incumbent generation owners to keep supplies constrained, or at least to ensure that prices bid by new market entrants remain high.

The financial benefits of constrained supplies can be seen in the candid presentations by merchant generation owners to the financial community wherein the potential closure of coal plants is touted as a benefit to their earnings."

You know... like how FirstEnergy's wave of coal plant closures last year provided the company with jacked up capacity prices in ATSI and a whole bunch of new transmission projects in which to invest its "transmission spend" to increase the company's earnings. Remember that?

So, what protections are built into RTO markets, and do they work? "FERC relies solely on market monitors for each RTO to determine whether the wholesale electricity markets are competitive. These market monitor analyses are based on a limited frame of analysis that ignores evidence, such as the profitability data presented later in the report, which raises questions about the competitive nature of these markets. Moreover, the reports issued by the market monitors do not always support a definitive finding of competition. For example, in the most recent State of the Market Report for PJM, the market monitor found that the local market structure in the energy market and both the local and aggregate market structure in the capacity market were not competitive, as was the structure and the performance in the regulation market."

Go ahead, click through and read this analysis:

"Prior to examining the empirical evidence of the effects of RTO markets on electricity prices paid by utility customers, this section describes the structural flaws in RTO markets – conceptual problems that have led to higher prices than would have occurred absent such markets. These fundamental features of RTO markets, discussed below, provide both incentives and opportunities for merchant generators to earn excess revenues at the expense of consumers".

How does PJM "fix" their markets when things go awry? "When a given market structure does not achieve its goal of providing satisfactory revenue to RTO generators, the response – prompted by generators, many of them the spun-off affiliates of formerly vertically-integrated utilities – has been to induce the RTO to add a new, more complex market or a rule to prop up prices, such as a tightening of the minimum offer price rule in PJM." This kind of "make the rules up as you go" is the basis for the most recent bickering over new MOPR rules secretly concocted by PJM and its incumbent generators. This is the behavior of a cartel, not a competitive market.

If competitive markets save money for consumers, why do "RTO generation owners’ 10-K reports to the Securities and Exchange Commission list restrictions on competition as a potential risk to their earnings?"

The evidence examined in the report "lead[s] to a conclusion that the restructured RTO-operated markets have increased prices above what would be seen in the absence of restructuring."

How much? "...a possible $12 billion excess payment from consumers to generating companies that do not face genuine market competition – demonstrates the scope of restructuring’s negative impact."

And this about sums it up:

"The greatest beneficiaries of restructuring have been not consumers, as was promised, or innovative companies that were expected to emerge, but the “usual suspects” – owners of previously regulated, largely depreciated generating units."

How do we fix this mess? "It is crucial that FERC, as the regulator responsible for ensuring under law that wholesale prices are just and reasonable, determine whether RTO markets are achieving their cost-reducing potential, and, if not, to implement needed reforms."

Don't hold your breath. FERC refuses to even examine the results of their RTO experiment, much less take any action to fix it. Perhaps it's time for Congress to step in.

Au Revoir, Clueless Blogger

3/4/2013

The New York Times has finally done away with Clueless Blogger Matt Wald's soapbox. Now what are the investor-owned energy companies going to do when they need a journalistic patsy to re-package their press releases as "news?"

Here's hoping that Matt has a nice, soft landing on some investor-owned utility's flack couch where he can finally be among his own kind.

Wisconsin Citizens' Groups Ask FERC to Revoke MISO Approval of Transmission Project

3/2/2013

Citizens Energy Task Force and Save Our Unique Lands filed a complaint at FERC yesterday alleging that a transmission line approved by the Midwest Independent Transmission System Operator will cause instability of the electric grid. The complaint asks that FERC:

"...order that the MTEP 08 addition of the Hampton-Rochester-La Crosse transmission line is prohibited because electrical impacts of the addition of this project to the grid were not considered, and that instead of improving the reliability of the system, it contributes to and/or causes electrical system instability, that the Midwest Reliability Organization (MRO) has neglected its duty to preserve the reliability of the system, and that the Commission Order revocation of the Midwest Independent Transmission Service Operator (MISO) approval of the CapX 2020 Hampton-La Crosse transmission project because the addition of the Hampton-Rochester-La Crosse transmission line contributes to and/or causes system instability."

The citizen groups' complaint relies on the segmented approval and construction of the CapX 2020 lines. While the projects are supposedly parts of a larger plan, the utilities have admitted that construction of the subject segment without an additional transmission line to Madison will bring about instability that will cause the system to "reach a tipping point." An additional line to Madison has not yet been applied for or approved.

MISO's piecemeal project portfolio will cause system instability if all parts are not built. Construction has already begun on portions of the project in Minnesota, but without an extension of the line to Madison, it is merely a radial line dumping excess electricity into LaCrosse that has no outlet. Because the second line has not been approved, there is no guarantee it will be built. The complainants also point out that previous arguments by the applicants that the two lines are separate projects have clearly violated the National Environmental Protection Act prohibiting the segmentation of dependent projects.

So, which is it? Are these separate projects or are they integral parts of a single project? MISO cannot have it both ways.

Will FERC take the initiative to administer some sorely needed discipline upon one of its regional transmission organization darlings? Or will it continue to let its unruly children run wild until we're all sitting in the dark?

Read more here, here here and here.

Recycled Expert Opinion - The "Regulatory 'Gotcha'"

2/20/2013

Research for another project turned deja vu this morning when I ran across this phrase:

“Awarding a downward-biased ROE by hewing only to a ‘knee-jerk’ application of recent precedent would result in a regulatory ‘gotcha’.”

Now where have I heard that bumptious phrase lately? Could it be in PATH's "case-in-chief?"

"Now that investors are captive, awarding a downward-biased ROE would result in a regulatory “gotcha” that would violate regulatory standards and undermine the Commission’s own incentive policies."

Yup, same "expert." How many times will AEP pay this guy to theatrically yell "wolf?" As many as necessary, since they're using ratepayer funds to pay this "expert" to say the same thing over and over on different cases.

Quick, someone grab a violin, FERC is single-handedly destroying our economy! *shudders in horror*

I wonder if the Commission's eyes also roll back in their heads every time they read "regulatory 'gotcha"? Maybe they have a sort of office football pool going where they make bets on when Avera will pop up wailing "regulatory 'gotcha'" in a case. If not, they should consider it. Might be fun. At least more fun than reading Avera's billowing opinions over and over again.

Greedy Transmission Developers Putting Consumers in Peril

2/20/2013

It's not rocket science. The longer the distance between generation and load, the more unreliable the "grid" becomes. Long haul transmission lines provide opportunity for all sorts of failure... or mischief.

Apparently the Chinese military is hard at work compromising the security of the U.S. electric grid. No big surprise. Investor-owned utilities don't want to waste precious shareholder pennies on silly stuff like cybersecurity when there are memberships to The Duquesne Club to be purchased instead!

No matter how much the industry insists that it can regulate itself on the honor system, there is no honor among thieves. Looks like Congress is going to have to intervene and bestow authority to FERC to regulate cybersecurity of the grid. Just imagine how much this is going to cost when the obvious solution is so much cheaper and quicker -- stop "expanding" the grid and making it more vulnerable. We don't need a whole bunch of new transmission, and a bigger, more interconnected grid exposes larger and larger geographic areas to one massive failure instigated by the click of a single key somewhere in China.

Thanks, Jimmy!

Update: PATH Lists River's Edge McMansions for Sale, Ratepayers Continue to Pay for PATH's Mistakes

2/12/2013

What was it I said last week? It's going to get worse, much worse?

Tammy "something extra" has now listed all but one of PATH's River's Edge properties in Loudoun County for sale. Here's how much these deals will cost you, assuming PATH receives full list price for the properties (which is never going to happen).

PATH purchased this property in February 2009 for $689,000, 98% of Loudoun County's assessed fair market value at that time. It's on sale today for only $630,000.

PATH purchased this property in April of 2009 for $418,000, 102% of Loudoun County's assessed fair market value at that time. It's on sale today for only $400,000.

PATH purchased this property in April of 2009 for $910,000, 110% of Loudoun County's assessed fair market value at that time. It's on sale today for only $735,900.

And the big, big loser is this property that PATH purchased in March 2009 for $1,175,000, 246% of Loudoun County's assessed fair market value at that time. It's on sale today for only $459,000.

Looks like Loudoun County's assessor was a lot more accurate about fair market values than PATH's appraiser back in 2009. But yet PATH expects ratepayers to pay the difference between purchase and sale price and make the company whole. Right now, the difference between PATH's purchase prices in River's Edge and their current list prices amounts to $1,021,300. That's over a million dollars that ratepayers stand to lose on PATH's unnecessary and premature "investment" in real estate, and there's still one PATH-owned River's Edge property that has yet to hit the market, for which PATH paid 123% of market value in 2009. Ouchies, little ratepayers, ouchies!!!

Let's take a look back at PATH's antics in River's Edge. Now PATH adds insult to injury of these homeowners and dumps a whole bunch of real estate in their neighborhood at bargain basement prices, which is going to have a significant effect on their own home value and equity. PATH -- the gift that just keeps on giving.

And PATH is so not done yet... they've still got to unload those substation properties they purchased for millions more than fair market value. Get out your wallet, little ratepayer...