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Maryland Sues States for Providing Cheaper Power for Marylanders

10/6/2017

No, that's not a riddle. Maryland really is suing neighboring "upwind" states who foul its air with their fossil fuel burning electric generators. According to The Baltimore Sun:

The lawsuit seeks to require 36 generating units at 19 plants in upwind states to install the same scrubbers and other air-cleaning technology that Maryland requires plants within its borders to install.

Maryland produces little of the electric energy it consumes. How little?

Maryland's electricity consumption exceeds its net generation. Almost half of the power consumed in the state comes from the PJM Interconnection, the Mid-Atlantic regional electricity transmission grid.

...according to the U.S. Energy Administration. Maryland is an energy leech, sucking "dirty" fossil fuel electricity from neighboring states. And now Maryland is suing those states to demand they clean up their cheap, dirty generators.

Also in the works is the Independence Energy Connection, a set of new transmission lines intended to funnel more dirty Pennsylvania electricity to Maryland. Grid planner PJM Interconnection says that the project will produce lower electric costs for Marylanders, especially in the Baltimore metro area.

But what if Maryland's lawsuit is successful and those cheap and dirty Pennsylvania generators PJM is counting on are required by court order to install new scrubbers and air cleaners? The cost of that equipment is going to increase the cost to produce that dirty power to be shipped to Maryland by IEC in the future. I'm going to make a wild guess here that the increased cost of power produced in Pennsylvania is going to change the projected economics of the IEC significantly, negating any benefit at all. No benefits, no need to construct IEC.

Maryland has also recently outlawed shale gas fracking. Maryland doesn't want to compromise its own environment to produce cheap shale gas, but yet it has no problem helping itself to cheap shale gas electricity produced in the fracking state of Pennsylvania.

Maryland, you're a big, fat hypocrite. How about you stop depending on dirty fossil fuel generators in other states and step up to produce your own clean electricity? You've got an ocean of offshore wind opportunities just off your shore. Offshore wind is so clean it produces no emissions at all. Start walking your talk, Maryland!

But wait, clean electricity is more expensive! And Maryland doesn't want to pay more for electricity. It wants to pay less by supporting the construction of new transmission lines from dirty Pennsylvania generators.

You can't have both, Maryland. What's it going to be? Cheap electricity? Or clean air? Or you could just shut off the lights.

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Ut-Oh, Transource!

8/27/2017

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Ut-oh, Transource! Or, let's be real here... Ut-oh, AEP! Your Transource shell company is in big, big trouble!

I traveled to York County, Pennsylvania, last week to attend an informational meeting about AEP's "Independence Energy Connection" put on by the York County Farm Bureau. The meeting was held at 1:00 p.m. on a Thursday afternoon, and it was packed. Two hundred people took time out of the middle of their day and reserved a spot to attend this meeting. And only pre-registered attendees were allowed in, it wasn't an open meeting for Transource and its advocates to undertake "opposition research." Attendance required forethought and determination.

The York Dispatch sent a videographer, who created a couple of excellent videos of the event here and here. The speakers were knowledgeable and interesting and provided excellent information for landowners and others interested in participating in the case (or forced to participate after finding themselves in Transource's siting bulls eye).

The land is beautiful, the area bucolic, the citizens informed, determined, and forthright. These are not people who are going to meekly accept this transmission line plowing its way through their community in order to make power cheaper for people in Washington, DC. It's not like these landowners don't already make a sacrifice to serve the needs of large cities to the south. They've been feeding the urban areas for generations, as well as living with large power generation stations that produce more power than the local area uses. Independence Energy Connection is just one transmission line, one sacrifice, too far.

PJM Interconnection and AEP made a grave error in evaluating the "constructibility" of this project. It's not sited on "undeveloped land" that no one cares about. This land is fully developed to its highest and best use and its owners, and the community surrounding them, are completely committed to keeping the land in its current "undeveloped" state. In its current state, the land is highly productive as a food factory for urban areas, where patio tomato plants are considered "farming."

We're talking 15 miles of new greenfield transmission rights of way for this section in York County. But yet the number of people opposed to this project numbers in the hundreds or thousands, only two months after being announced to the public. It's a run away freight train of vocal, organized opposition that cannot be turned around, no matter how much money AEP spends on big city public relations firms with "crisis communications" and "grassroots organizing" capabilities.

Stop wasting time and money on this project, AEP. You just can't win this one. Remember, there is no such thing as "undeveloped land" in the eastern interconnect. All land is used and useful to its owner and its development density is not an indicator of whether or not a transmission project may succeed.

Ut-oh, AEP! You're done for this time!

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PATH's Long Run Costs Consumers Millions

8/22/2017

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Stop, hey, what's that sound
Everybody look what's going down

That's the sound of electric ratepayers taking a $7.4M kick in the shorts.

This afternoon, PATH auctioned off its last remaining properties in the tri-state area that it senselessly purchased for a high-voltage transmission line that was never built and never even needed.

PATH paid $8,714,553 for the seven parcels of land that were auctioned today. The total auction sales today amounted to $1,240,100. This leaves a delta of $7,474,453. And who pays for that? You do. I do. Every one of PJM's 65 million ratepayers pays a share.

But that's not all. We've also paid PATH a return (interest) on these properties ever since they were purchased. We continued to pay a return on these properties even after PATH was abandoned in 2012. While PATH marketed and sold some of the properties it owned during the last 5 years, it never marketed the very expensive substation properties. Instead, PATH told federal regulators it was going to transfer these properties to its affiliates "in the future."

Well, the future finally arrived today, and the Kemptown substation site was sold to the highest bidder. PATH was so anxious to have the site that it paid $6,830,553 for it back in 2008. Wanna know what it fetched at auction? You're a glutton for punishment, aren't you? The proposed Kemptown substation site sold for only $960,000. That's a difference of $5,870,553. I think perhaps PATH overpaid, and then failed to get a good price for it by complete and utter failure to market the property. But why should they? You picked up the tab, and the more PATH spent, the more it made.

PATH also sold a couple of lots on Big Woods Road. It purchased the lots for $860,000. The lots sold for $105,000. That's a loss of $755,000.

PATH sold the last two of several lots it spent $4.5M purchasing at Rivers Edge Subdivision in Loudoun County for the purpose of trying to force the release of a conservation easement held by the county. Lot 5, containing 17 acres, with a 500kV transmission line cutting it right in half, fetched a whopping $64,000. PATH paid $285,000 for the same lot back in 2009. That's a loss of $221,000.

Lot 12 in Rivers Edge, an irregularly shaped lot consisting of 43 acres chopped all to hell and back by the same 500 kV transmission line went for $111,000. PATH paid $689,000 for it. That's a loss of $578,000.

And, finally, just over half an acre of West Virginia property bisected by a subdivision road fetched a whopping $100. Yup, that's right. A piece of property PATH wanted so badly that it paid $50,000 for it has pretty much no value whatsoever. Not only does the new owner get to pay taxes on their purchase, but also subdivision road fees. What a bargain! This property is a loss of $49,900, but I think we should be thankful that we didn't have to pay anyone to take it.

So, who bought these properties? I don't know. The bidders were identified only by numbers. What will the new owners do with the properties? Who knows... but I think one of them is still zoned agricultural...

Nice touch holding the auction in the same hotel where PATH held its "Open House" meeting for landowners back in the fall of 2008. Hey, remember when PATH made the Holiday Inn staff go outside and take away the table borrowed by the opposition to display literature? Good times, good times. Getting the stink eye from the two old farts in AEP logo polo shirts was just like old times, too bad they ran for their lives before we could stop and say "hi."

Is this what PJM means when they say, "PJM is charged with planning for the future so that consumers have the most cost-efficient power when they need it. This solution is the most reliable and cost effective and will save consumers million in the long run."? I'm pretty sure PJM said those same things about PATH. And PJM was wrong. And that's cost consumers millions in the long run. And what a long, long, loooooong run it's been.

3 Comments

Todd Burns: Liar? Or Just Stupid?

8/10/2017

5 Comments

It's one or the other. Let's contemplate this...

When I asked Todd Burns what his company's return on equity was, he appeared confused. He didn't know what a return on equity was. It was only after I explained what it was that he finally remembered that Transource's return on equity for this project is "10 to 11 percent" something like that. FACT: Transource has applied to the Federal Energy Regulatory Commission for a 10.9% ROE. The matter is currently in settlement discussions, with an administrative hearing possible if a settlement is not reached.

I met a handful of the Transource guys and gals the other night. Most attempted to be personable and avoid direct lies while trying to answer my increasingly hard questions. And then I worked my way up to Todd Burns.

He also had trouble admitting that Transource has received an incentive from the Federal Energy Regulatory Commission that allows the company to file to recover all its sunk costs from ratepayers in the event that PJM decides to abandon this project.

So, do the lawyers and bean counters at "Transource" (really utility giant AEP, because Transource has no employees of its own) not share basic information, such as return on equity and who pays if the project is abandoned, with Todd Burns? Todd needs to hustle home to Columbus with great alacrity and find out about all this stuff! Otherwise, he looks rather stupid to a public who does know about it. Or maybe he looks like a liar who was pretending to be uninformed so he could avoid the question? As if that could happen.

Todd Burns also seemed to be confused about a lot of other facts during an interview with the Waynesboro Herald Record. Despite that, the reporter managed to write a great, balanced article. The Herald Record has the best coverage of this issue that I've seen (other media take note!) What was it that Burns said?

Burns said some of the negative feedback is based on misinformation about the project. “There’s a lot of confusion and a lot of things being said that aren’t accurate,” Burns said.

I blame you, Todd. I think most of the "misinformation" is coming from you. Please, allow me to demonstrate...

“Burying lines causes problems,” Burns said. “If a line fails and it’s underground, it can’t be located and fixed immediately. That’s what happened recently on the Outer Banks.
“The environmental disturbance is greater to trench and bury a line than to run it overhead. And it’s ten-times more costly to do it underground.”

It is NOT "ten times more costly" to underground lines. In fact, it's only twice as costly, roughly. AEP has been claiming undergrounding is "ten times more costly" for years, along with a whole bunch of other excuses for taking the cheaper and easier option of aerial lines. And the technology does exist to determine where a fault is on an underground line. And you probably can mark an underground line to prevent all by the biggest idiots from pile driving onto it. I'm not buying the environmental disturbance thing, either. I've seen what transmission companies do to rights of way when building overhead lines. So, let's update these excuses, because they sort of sound like a lie to me.

As well, who cares how much it costs to underground lines? If the landowners require undergrounding, then that is the cost of fixing this "bottleneck." Are you saying that unless you can build this cheaply that all the savings for the DC-Baltimore elite will evaporate? A more expensive project doesn't clear a cost-benefit analysis? Then, obviously, this project isn't worth doing. It is not incumbent upon Pennsylvania and Maryland landowners to sacrifice by allowing the cheapest project you can build in order to move cheaper power to the city. If you want them to sacrifice for the cities, then the landowners need to have input into how the final project looks on their property. And by having input, I mean actually making the determination -- I don't mean having an opportunity to toss comments down a black hole at Transource where they are completely ignored. The only way a landowner can have effective input is when eminent domain is not an option. Anything else is coercion, not negotiation. Which brings us to...

“I’ve heard people are concerned about land use and whether they will be able to use their properties,” Burns said. “People will still be able to work under the power lines, although obviously there would be a limit on building underneath them. The land is still useable.”
Burns said property owners would be compensated for the easements through their land. “We’re going to be acquiring easements from the landowners and compensate them for it. They will retain the rights to certain activities,” Burns said.
He said property-owners shouldn’t be worried about the threat of eminent domain. “Our approach is we negotiate fair market value for anything that has to be acquired,” he explained. “We use eminent domain less than three percent of the time.”

If you want to see how landowners can still work under high voltage transmission lines, carefully watch the AEP videos on this page. Nuisance shocks, EMF, and big brother monitoring your activities on your own land? What's not to like? But wait, there's more... like aerial spraying of the right of way with chemicals to keep growth down, or power line workers coming on your property for maintenance or repairs and leaving gates open, driving large equipment through your fields, and disturbing the soil. The truth is that you will have picked up a parasitic tenant on your land... in perpetuity.

"Compensation" for property taken may be less than you'd expect. After all it is a value created by an out of state company, that will never even lay eyes on your place, from market studies of similar land sales of property in your county. It is Transource's idea of the value of your property, not yours. As well, you may only be paid for the property in the right of way, when the right of way itself devalues the rest of the parcel. Payments for damages will be argued over in court for years... at your expense, if you don't accept what the company wants to give you.

I'm pretty sure Transource land agents will use the threat of eminent domain 100% of the time in order to coerce the landowner to sign on the dotted line. That isn't negotiation, that's coercion.

Burns said he is confident the Independence Energy Connection will save customers money not just in the greater metropolitan areas south of here, but locally. “The driver is to give customers in this area access to lower costs,” he said. He said it is too early to estimate what the cost savings might be, or whether local, independent energy companies will pass the savings on to customers. “They may have other initiatives that will affect your bill,” Burns said.

Perhaps Burns needs to talk to his underlings, who have readily admitted that the lion's share of the savings is for customers in the DC/Baltimore area. And PJM agrees with that. That's why 80.52% of the cost of this project will be paid for by DC, Baltimore and Northern Virginia Customers.

Those who receive the benefits (in this instance cheaper power) pay the costs. That's how PJM works. Any savings for the project area (benefits) are not commensurate with the cost to the community and the individual landowners. Their costs are much greater than any benefit they may receive.

And I hate to let Burns know, but one of his underlings actually confirmed that market efficiency projects perform a leveling of costs across the region. If power is cheaper in the cities, the cost of it must rise somewhere else. All that cheap power "bottlenecked" in PA and MD and unable to reach the cities? Those are the prices that are going to go up once the "bottleneck" is removed.

And then Burns admits he has no hard evidence of how (or even if) this project will lower local electric bills. Then he supposes that local electric companies may keep any savings that develop for themselves. Of course... always thinking ahead, that Todd, to explain now why bills will never go down after this project is built.

Todd is not telling the truth about project benefit. But he may not be the only one with a penchant for prevarication. Transource spokeswoman Abby Foster made up a whole bunch of satisfied and happy landowners out of thin air.

Despite the many negative comments exchanged from person to person around the packed community center, Transource officials said there was also positive feedback.
“We found in this area, people understand the greater need for infrastructure,” said Abby Foster, community affairs representative for Transource Energy. “Everyone here benefits from something being on someone’s property.”
Foster said the positive comments she heard came from residents who see the financial benefits of easements on their properties as well as the benefits of costs savings on energy bills.
She said some residents don’t like the exact location of the proposed line across their properties but are willing to have it shifted to a different location on their properties.
“There’s a lot that has shifted because of public input,” Foster said.

Why are there no quotes from these people? Why didn't the reporter talk to any of them? Is that because they don't exist? These must be the mysterious folks who have requested monopoles, because those people are just as elusive. What it seems more like is that Transource is making up a mythical landowner who is pleased because Transource is altering its plans to suit Mr. Mythical. A company that presented its public image as "take it or leave it" would be seen as unfavorable by the public. One that pretends it is bending to the will of the people may curry more favor. But when there are no happy people in reality, it's all an illusion. Nobody wants this transmission line on their property.

And as far as that “everyone here benefits from something being on someone’s property” line, puh-leeze. I heard that from one of the Transource people at the open house. It was the tagline of the night. And it sucks. It doesn't work on the public, just so you know, Transource. Other companies have tried it before you. It is met with anger and confusion. It has no relevance for affected landowners. Just because we use eminent domain and rights of way to take property for public use does not mean that everyone should gladly sacrifice for the selfish needs of others. And that's what this is... rural sacrifice for urban benefit. This project isn't needed to keep the lights on. It's only "need," according to PJM, is to make power cheaper in the cities to the south. Those cities like to keep their pretty skylines lit up all night long. There's no reason at all to keep an office tower lit inside all night. Maybe if the cities quit wasting so much electricity, they wouldn't need to call older, more expensive plants to generate during peak load a few days out of the year. And then we wouldn't "need" gigantic transmission towers in Pennsylvania.

Let's wrap up with this...

“We’ll look at a route that strikes the best balance,” Burns said, mentioning recreational activities, historic value and land use concerns. “You rarely come up with one that’s gonna satisfy all those things. Ultimately, it will be at the state level to decide where it goes.”

It is up to the state to decide WHETHER it goes, not just where. Opposition to this project is huge and gathering mass every minute. Loud, forthright opposition kills transmission projects. Todd Burns is going to need to get himself educated quickly! Or else quit lying. He's not very good at it.

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Tick Tock, Transource!

6/23/2017

3 Comments

PJM Interconnection has set the project alarm clock for transmission company Transource to get its Independence Energy Connection built. Can the company really get this project permitted and built amidst formidable opposition and beat the clock?

The DESIGNATED ENTITY AGREEMENT Between PJM Interconnection, L.L.C. And Transource Energy, LLC, for itself and on behalf of Transource Maryland, LLC and Transource Pennsylvania, LLC sets certain milestones the company must meet:

On or before June 1, 2018, Designated Entity must demonstrate that any applications for any
required state or local certificate(s) of convenience and necessity have been submitted or such certificates have been ruled as not required by the applicable states or local governmental authorities.
On or before December 1, 2019, Designated Entity must demonstrate that all required federal,
state, county and local site permits have been acquired.
On or before December 1, 2019, Designated
Entity must demonstrate that all major electrical equipment has been delivered to the project site.
On or before January 31, 2020, Designated Entity must demonstrate that at least 20% of Project site construction is completed.
On or before June 1, 2020, Designated Entity must: (i) demonstrate that the Project is completed in accordance with the Scope of Work in Schedules B of this Agreement; (ii) meets the criteria outlined in Schedule D of this Agreement; and (iii) is under Transmission Provider operational dispatch.

Getting applications filed with state utility commissions is no big deal. Any transmission monkey can do that. But acquiring the permits is a different story. It can take years to successfully acquire permits, in fact, Transource parent company AEP likes to whine about how it took sixteen (16) long years to get one of its multi-state transmission projects approved (when it's convenient to whine about such, of course). PJM's schedule says the project must be fully permitted a mere two and a half years from now. If there's anything certain about a regulatory permitting process, it's delay. Any opposition to a company's application for a permit mucks up the process and causes delay, and it would be rare indeed if Transource's regulatory applications were unopposed.

And here's another goodie -- Transource must purchase and have all major electrical components on site by the permit deadline. This means that the company must spend money engineering the project and purchasing very expensive components, even before it receives a permit. What happens if the company spends millions purchasing components for a project that is eventually denied by a public utility commission? No worries, the company has received a guarantee from the federal government that it may recover the cost of those components from you in your electric bill, even if the project is later abandoned and the components are never used! Now that's some pretty arrogant assuming -- assuming a permit must be issued because the ratepayers are on the hook to pay for the project, might as well construct it. And a mere month after receiving its permit, the company must have at least 20% of the project constructed. And then a mere 6 months later, the project must be completed and delivering energy. Obviously there's a timing issue here and PJM expects the company to secure its permits well before the December 1, 2019 deadline in the agreement. If Transource doesn't get its permits until December of 2019 (and remember, it can't build anything or condemn any right of way until it has its permits), there's just no way it can meet the construction deadlines. Tick tock!

So, what happens if Transource can't meet these milestones?

Designated Entity shall meet the milestone dates set forth in the Development Schedule in Schedule C of this Agreement. Milestone dates set forth in Schedule C only may be extended by Transmission Provider in writing. Failure to meet any of the milestone dates specified in Schedule C, or as extended as described in this Section 4.1.0 or Section 4.3 .0 of this Agreement, shall constitute a Breach of this Agreement. Transmission Provider reasonably may extend any such milestone date, in the event of delays not caused by the Designated Entity that could not be remedied by the Designated Entity through the exercise of due diligence, or if an extension will not delay the Required Project In-Service Date specified in Schedule C of this Agreement;
provided that a corporate officer of the Designated Entity submits a revised Development Schedule containing revised milestones and showing the Project in full operation no later than the Required Project In-Service Date specified in Schedule C of this Agreement.

PJM, the "transmission provider" can extend the milestones as long as such extension doesn't delay the in-service date of the project (the date the project is operational - June 2020). Failure to meet milestones that are not extended results in breach.

Except as otherwise provided in Article 10, a Breach of this Agreement shall include:

(b) The failure to meet a milestone or milestone date set forth in the Development
Schedule in Schedule C of this Agreement, or as extended in writing as described in Sections
4.1.0 and 4.3.0 of this Agreement;

In the event the breach isn't cured:

In the event that a breaching Party does not cure a Breach in accordance with Section 7.3 of this Agreement, Transmission Provider shall conduct a re-evaluation pursuant to Section 1.5.8(k) of Schedule 6 of the Operating Agreement. If based on such re-evaluation, the Project is retained in the Regional Transmission Expansion Plan and the Designated Entity's designation for the Project also is retained, the Parties shall modify this Agreement, including Schedules, as necessary. In all other events, Designated Entity shall be considered in Default of this Agreement, and this Agreement shall terminate in accordance with Section 8.1 of this Agreement.

So, when Transource fails to meet project milestones, PJM will "re-evaluate" this project and could decide it's no longer needed. No harm, no foul, no skin off their nose, the ratepayers are on the hook to pay for it whether it's constructed or not. Just one, big, expensive "oops" by transmission planners who should be held to higher standards.

In fact, PJM can re-evaluate and cancel this project at any time, milestones or no milestones:

In the event that: (i) pursuant to Section 1.5.8(k) of Schedule 6 of the Operating Agreement, Transmission Provider determines to remove the Project from the Regional Transmission Expansion Plan and/or not to retain Designated Entity's status for the Project; (ii) Transmission Provider otherwise determines pursuant to Regional Transmission Expansion Planning Protocol in Schedule 6 of the Operating Agreement that the Project is no longer required to address the specific need for which the Project was included in the Regional Transmission Expansion Plan; or (iii) an event of force majeure, as defined in section 10.0 of this Attachment KK, or other
event outside of the Designated Entity's control that, with the exercise of Reasonable Efforts, Designated Entity cannot alleviate and which prevents the Designated Entity from satisfying its obligations under this Agreement, Transmission Provider may terminate this Agreement by providing written notice of termination to Designated Entity, which shall become effective the later of sixty calendar days after the Designated Entity receives such notice or other such date the FERC establishes for the termination.

Considering that this is a market efficiency project, chances of it still being needed several years down the road are slim to none. PJM recognizes any "need" for this project has a very short shelf life, judging by its own project schedule.

A market efficiency project is intended merely to increase transmission capacity to a certain area in order to allow cheaper power to reach the area and lower electricity prices for the lucky recipients. The cost of a transmission project is assigned to certain areas that use or receive benefit from the project. More than 80% of the Transource project cost is assigned to electric ratepayers in the Baltimore Gas & Electric, PEPCO, and Dominion service areas. This includes Baltimore, Washington, DC, and its suburbs, and northern Virginia. That's who's going to receive more than 80% of the benefit and the cheaper electricity. This project is nothing more than the idea that cheap gas-fired electric generation in Pennsylvania can be piped to the big eastern cities. Benefits to the citizens in the bullseye of this project who are expected to play host to new high-voltage transmission lines will be minimal.

The concept of electric transmission "congestion" is a constantly shifting problem. While Pennsylvanians can currently get plenty of cheap power generated in their state, it bottle necks before it can flow to the eastern cities. Once the bottle neck is removed, Pennsylvanians must compete with the big cities for the same supply of electricity, which tends to levelize prices between the two areas. While the price of electricity in the expensive cities may fall, the price of electricity in Pennsylvania may rise. It's simple supply and demand. However, electricity generation isn't static -- new generators come online, and old generators go offline. If the Transource project isn't built, perhaps the big cities will build their own new, cheap gas-fired generators. The lights won't go out. How much of PJM's transmission plan is sheer market manipulation that would solve itself without intervention?

The schedule is tight, the stakes are high. Transource has to beat its early milestones in order to meet its later ones. Opposition causes delay. Can Transource beat the clock? Tick tock.

3 Comments

At Liberty To Pick Your Pocket

6/2/2017

10 Comments

Well, here we go again... a transmission company has made an announcement that it will be building 40 miles of new greenfield transmission, but the folks in the bullseye have no idea it's about to happen. Somehow Transource's press release failed to percolate down to the local media in affected areas. The local community has not been consulted, but will have this fait accompli dumped on them during a series of "open house" dog & pony shows next week. See maps of proposed transmission routes at the bottom of this page. A "greenfield" transmission project is one built across land that currently does not have transmission lines. Current routes run from Smithsburg, Maryland to a substation east of Letterkenny in Pennsylvania, and from Harford County, MD to York County, PA.

The inaptly named "Independence Energy Connection" pretends it's "critically" needed to "provide millions of customers throughout the Mid-Atlantic access to more affordable power". This project has been percolating at PJM Interconnection for more than a year, but conveniently waited to get its financial house in order before engaging the community.

How did they get their financial house in order? They developed the mechanism to get paid for developing it, even if it's never built. That's right... Transource has received a federal transmission incentive that allows the company to recover every dollar it spends on this project from electric ratepayers in 13 states, even if it is later abandoned and never built. It also established its rate mechanism, a formula rate, and received other transmission incentives from the Federal Energy Regulatory Commission, including a 50 point increase in its return on equity for being a member of the PJM cartel. FERC said this project was worthy of so many financial incentives because it was so risky (see paragraphs 21-26).

Transource states that it meets the nexus test because its requested incentives are narrowly tailored to the significant risks and challenges the Project presents. Transource states that it will face considerable risks and challenges in developing and constructing the Project, such as: (1) financial challenges; (2) regulatory and site control challenges; and (3) risks related to the Designated Entity Agreement (DEA) with PJM.

Moreover, Transource states that it will need to work with individual landowners to acquire the necessary land and easements to construct the 42-mile combined route of the two new 230 kV lines. Transource notes that the required easements are expected to cross approximately 300 parcels, including state game lands owned by the Pennsylvania Game Commission. In addition, Transource does not expect that it will be able to use any existing rights of way (ROW). Transource states that Transource Maryland cannot obtain electric utility status under applicable Maryland law, because it does not serve retail customers and thus will not have the authority to use eminent domain to acquire ROW along the approved route. Transource states that this lack of eminent domain authority presents significant additional risk to the Project development schedule.

Furthermore, Transource states that there is a risk for economic projects such as this because PJM could later find, based on changing conditions, that the Project is no longer needed to relieve congestion. Transource states that this risk is compounded by the long development lead time for the Project.

Other risk factors include the fact that this is the company's first transmission project and it currently has no revenue, that it has to receive numerous permits from federal and state offices, including two state utility commissions, and that its agreement to construct the project with PJM requires it to meet a development schedule with mandatory dated milestones or risk termination.

And still, this company has not even contemplated the public's reaction to its project or the likelihood that serious opposition will develop in affected communities? Transource doesn't really think it's going to get this project built, does it? Maybe it's just financially satisfying enough to spend buckets of development cash that can be recovered without ever putting a shovel to the ground? When all the financial risk of a transmission project becomes the risk of electric ratepayers, it's all gravy!

Transource has requested that it receive a 10.4% base return on equity for its project, and a 60% equity hypothetical capital structure until the project goes into service. The 50 additional bonus points would be added to that base, to create a 10.9% yearly return on 60% of its capital costs. The remaining 40% would earn at the cost of debt. With a total project cost of $197M, that's a lot of gravy for the company's investment. And where is a new company with no assets and no revenue going to get 60% of $197M to invest in this project? From its parent companies, that's where. Transource is a partnership between utility holding company giant American Electric Power and Great Plains Energy. Neither of these two companies are local, nor do they provide service to, Maryland or Pennsylvania. Of course, that probably also means they don't have any influence with state and local authorities who must approve their project, so cue the expensive lobbyists and gladhanders.

I certainly hope Transource isn't counting on PJM's "approval" of this project as their golden ticket to getting this thing permitted and built. Without eminent domain authority in Maryland, Transource is at the complete mercy of the community it's about to invade. This just can't end well for Transource. Lots of schmoozing must happen and lots of money is going to have to change hands... and maybe all those costs aren't recoverable from ratepayers.

Keep your eyes on this, it's going to be a scary ride!

10 Comments

Billionaires' Club Looks Out For Its Own Interests First

5/11/2017

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Who's looking out for your interests, little electricity consumer? Is there some government agency taking an interest in ensuring that the rates you pay and the services you receive are fair? Or are privately-funded, self-anointed "consumer interest" groups the ones working in your best interests? And what's the difference, anyhow?

Public Citizen claims to be a public interest consumer organization. Public Citizen's energy program has engaged over the years in a series of protests and interventions that spend more time whining about its lack of public funding that hinders its participation than actually saving real dollars for energy consumers. Public Citizen's most recent whine was highlighted in an article in RTO Insider this week. Public Interest Groups Cry Foul over Technical Conference, RTO Transparency links to a letter sent to RTO/ISOs and FERC complaining about being denied an opportunity to speak at a Technical Conference. Public Citizen also launches into its tired arguments that it should be paid to participate in energy regulatory proceedings and should receive voting rights at RTO/ISOs.

State Consumer Advocates already participate in RTO/ISO processes, and also represent consumer interests before FERC. State advocates are government employees with the sole mission of protecting consumer interests. They don't accept outside funding, and in fact currently operate on shoestring state budgets. These hardworking, underfunded advocates truly have the best interests of consumers in mind. How do I know this? Because I shared a counsel table with them during a 15-day FERC proceeding. I saw and heard a lot. Consumers saved nearly $20M in that case.

Public Citizen, on the other hand, is a private organization funded with grant money. Public Citizen's interests are the interests of their funders. When I looked at who funds Public Citizen, I found a list of individuals and foundations who donated buckets of money to the organization. While Public Citizen claims to represent thousands of consumer members (who remain nameless) and "low-income" citizen interests, regular folks aren't the ones donating obscene sums of money to Public Citizen. Under the category of "Foundations" there's plenty of private interest money to be had, such as the Energy Foundation. The Energy Foundation seems to have an interest in environmentalism. And, wouldn't you know it, Public Citizen's "Climate and Energy" program seems dedicated to clean energy (not necessarily saving consumers money on their energy bills). The Energy Foundation seems to be a conduit for billionaire environmentalists to hide while funneling money to private organizations eager to do their bidding. The Energy Foundation seems to have its fingerprints on a lot of "clean energy" initiatives, such as America's Power Plan (APP). APP was concocted several years ago to blow some smoke over the issue of using eminent domain to site energy facilities on private property. The Energy Foundation's assembled "experts" (including Farmer Jimmy Glotfelty of Clean Line Energy Partners) tried really hard to purport to know what landowners wanted in exchange for hosting energy infrastructure on private property. Except no landowners participated in their project. As a result, APP got things horribly wrong, such as this gem:

I want to site a new transmission line, but I am struggling to find the best way to work with private landowners who will be affected. Any suggestions?

Look to successful examples from around the country—like Montana Dakota Utilities and Clean Line Energy Partners. And consider new options to bring landowners to the table in a positive way—like Special Purpose Development Corporations or annual payments.

The first principle is to engage landowners early and often. Many utilities have found that holding landowner meetings earlier and more often than required can dramatically improve project efficiency. Innovative ideas include compensating private landowners via Special Purpose Development Corporations (which offer equity in the project’s success) or annual payments (which give landowners a stake in the life of the project). For example, Clean Line Energy Partners is now offering annual payments to landowners who will host a new DC transmission line intended to deliver 3.5 GW of power from Iowa to Chicago.

Of course, eminent domain often becomes an option once a transmission developer demonstrates that a new project is needed and the siting authority confirms that the project will serve the public interest. But cross-state transmission lines and third-party (non-utility) developers cannot always count on eminent domain. Regardless of whether eminent domain is an option, it should always be considered a last resort as there are many options to bring private land-owners to the table in a more positive way that can minimize friction in siting new lines. For example, Montana Dakota Utilities has not had to use eminent domain since 1983, mainly because the utilities consider themselves a part of the community, and have formed positive, trusting relationships with landowners.

For a more detailed treatment of these issues and further options for compensating private landowners, see pages 18-21 of Siting: Finding a Home for Renewable Energy and Transmission.

Successful examples from around the country? Clean Line Energy Partners? Hahahahahaa! Clean Line Energy Partners has had no success, and landowner opposition groups continue to fight them every step of the way. If you really want to site a transmission line, Clean Line could only be a realistic example of what not to do.

Well, now, how did I get so off track? "Clean energy" is like peeling an onion... there are so many layers when you drill down into where they get their funding. The Koch brothers would be proud.

So, let's get back on track here. Dueling consumer advocates. The state Consumer Advocates we already have are doing a good job. "Public Interest Organization" consumer advocates are an unnecessary addition to the fray, and may not have the interests of actual consumers in mind. This was demonstrated quite clearly in a recent FERC proceeding that pitted Public Citizen against the West Virginia Consumer Advocate. The subject was a PJM Interconnection rate case. Public Citizen intervened and whined about PJM's costs and said that consumer advocates aren't allowed to participate at PJM. West Virginia Consumer Advocate Jackie Roberts intervened and filed a comment disagreeing with Public Citizen's contentions about Consumer Advocate participation in PJM's budget. In fact, consumer advocates do participate in PJM's budget process, as well as being voting stakeholders in all PJM's processes. Not to be outdone, Public Citizen filed an answer, claiming that state consumer advocates don't represent Public Citizen members, and therefore there was also room at the consumer advocate table for PIOs like Public Citizen. I don't think anyone is stopping Public Citizen from participating in any regulatory or RTO process, just like any other PIO, such as Sierra Club, or NRDC. What Public Citizen likes to whine about is the fact that there is no public funding for its participation.

Talk about trying to board the gravy train... since when are any PIOs publicly funded by ratepayers through the federal regulatory process? And if they were, how many PIOs would belly up to the bar? The bottom line is that PIOs do their own thing according to the wishes of the people and foundations that fund them. That is not "public" interest. That's a private interest masquerading as a public servant. Nobody is minding the store to ensure that PIOs truly serve public interests. Therefore, they don't deserve public funding, or special concessions to allow them to have the same rights and privileges as state consumer advocates.

Federal regulators should think twice about opening Pandora's box with a pile of public funding offered to anyone who wants to call themselves a "public interest organization." The queue to score some public funding to advance private interests would probably wrap around the National Mall several times.

Maybe Public Citizen should concentrate on actually delivering some documented savings to electric consumers before whining that it needs public funding to protect consumer interests. The proof is in the pudding.

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Eighteen million six hundred thirty three thousand one hundred twenty four ratepayer bucks

3/21/2017

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Eighteen million six hundred thirty three thousand one hundred twenty four ratepayer bucks in the till...

Eighteen million six hundred thirty three thousand one hundred twenty four ratepayer bucks...

Take one out, refund to ratepayers, eighteen million six hundred thirty three thousand one hundred twenty three ratepayer bucks in the till.

Eighteen million six hundred thirty three thousand one hundred twenty three ratepayer bucks in the till...

Eighteen million six hundred thirty three thousand one hundred twenty three ratepayer bucks...

Take one out, refund to the ratepayers, eighteen million six hundred thirty three thousand one hundred twenty two ratepayer bucks in the till.

PATH made its compliance filing yesterday, as ordered by the Federal Energy Regulatory Commission on January 19th. FERC ordered the company to recalculate the rates it has collected from electric ratepayers since 2008 to correct errors it made and refund amounts collected in error.

Here's the money quote. Literally.

For Rate Year 2008 through Rate Year 2015, PATH has calculated that refunds, with interest, will amount to $18,633,124.

The refund includes errors PATH made in the recording of public relations expenditures, advertising, lobbying, and other expenditures for the purposes of influencing public officials, such as recruiting support for the project at public hearings and signatures on petitions supporting the project. It also includes errors on the effective date of recovery of abandoned plant, and errors in calculating depreciation of assets. The refund includes interest on amounts collected in error, and adjustments to the company's return on equity due to the adjustment of capital account amounts.

Do you think PATH managed to correct its errors without making further errors in its corrections?

Eighteen million six hundred thirty three thousand one hundred twenty two ratepayer bucks in the till...

Eighteen million six hundred thirty three thousand one hundred twenty two ratepayer bucks...

Take one out, refund to ratepayers, eighteen million six hundred thirty three thousand one hundred twenty one ratepayer bucks in the till.

Eighteen million six hundred thirty three thousand one hundred twenty one ratepayer bucks in the till...

Eighteen million six hundred thirty three thousand one hundred twenty one ratepayer bucks...

Take one out, refund to ratepayers, eighteen million six hundred thirty three thousand one hundred twenty ratepayer bucks in the till.

Eighteen million six hundred thirty three thousand one hundred twenty ratepayer bucks in the till...

Eighteen million six hundred thirty three thousand one hundred twenty ratepayer bucks...

Take one out, refund to ratepayers, eighteen million six hundred thirty three thousand one hundred nineteen ratepayer bucks in the till.

Eighteen million six hundred thirty three thousand one hundred nineteen ratepayer bucks in the till...

Eighteen million six hundred thirty three thousand one hundred nineteen ratepayer bucks...

Take one out, refund to ratepayers, eighteen million six hundred thirty three thousand one hundred eighteen ratepayer bucks in the till.

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PJM Doles Out the Punishment

3/17/2017

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Well, isn't that fun? PJM is punishing everyone because it's not getting its way. Well, really Dominion's way, but PJM and its utility members are just different parts of the same animal.

Dominion finds itself mired in controversy over its Surry-Skiffes Creek 500kV transmission project in Virginia's tidewater region. The project as proposed would make an aerial crossing of the James River quite near the historic Jamestown settlement. The people say no. The National Parks Conservation Association says no. The National Trust for Historic Preservation says no. The Army Corps of Engineers, who has to approve the project, isn't saying anything at all. And we have stasis.

So, Dominion called in its trained gorilla, PJM, to terrorize the townsfolk and make them drop their opposition. As if that kind of behavior ever works in a situation like this. The people simply said "meh" to PJM's threats of rolling blackouts.

Now PJM has devised a way to punish them with higher electric rates. And it has upped the ante by punishing everyone else in the PJM region with higher rates as well. PJM has assigned cost responsibility for keeping generation units on the Virginia Peninsula running after they would have shut down not only to the folks on the Peninsula, but to every other zone in the PJM region. That's right, electric customers in Illinois, New Jersey, Pennsylvania, Ohio, Kentucky and other PJM states will pay a percentage of the cost of running the units that wanted to retire. PJM says:

Based on PJM’s assessment of the contribution to the need for, and benefits expected to be derived from, the facilities, the zonal percentage cost allocation for 2017 (January 1, 2017 through April 15, 2017) is...

...followed by a table of allocation percentages. I'm going to be paying 3.5%. Meh.

Trade press RTO Insider says

Opposition to Va. Tx Line May Trigger Unintended Consequences

Sometimes the juice isn’t worth the squeeze.

Protesters of a 500-kV transmission line across the James River might soon learn that the hard way. PJM is responding to the delay in the project’s approval by instituting a multilayered strategy likely to hurt ratepayers in Virginia’s middle peninsula disproportionate to any perceived benefits that could come from blocking construction of the line.

At a series of committee meetings last week, PJM staff detailed several other changes for the area that will have consequences protesters likely haven’t imagined.

Like outrageous electric price spikes.

Really, PJM? Whose interests do you serve again? You think hitting senior citizens, and other folks who may just barely be scraping by, with surprise outrageous electric bills, and then blaming the opponents of a transmission line, is really going to work for you?

I thought PJM's purpose was:

Acting as a neutral, independent party, PJM operates a competitive wholesale electricity market and manages the high-voltage electricity grid to ensure reliability for more than 65 million people.

But it sure seems like PJM's purpose lately is to ram through the projects cooked up by its members without any room for compromise with the people who have to live with them.

Who would be hurt by a change to an underground/underwater project? Oh, too expensive for the ratepayers, you say? Well, what about your scheme to gouge ratepayers as punishment for opposing the project? Won't that be too expensive? Seems like the ratepayers are going to pay more either way, so why don't you just fall on your sword and cap the damages with a buried option? At least that would come with a finite number, over the life of the project, instead of giving Grandma a nasty surprise she can't pay for.

And speaking of outrageous costs, PJM, who did you fool with your recent re-start of your Artificial Island project, after removing certain components to lower the overall cost? I don't think it was ever about the amount... but the fact that the cost was allocated to people who would not benefit. That hasn't changed. Good luck with that!

Stop being stubborn, PJM. You exist to serve the people, not the energy corporations. It's getting harder and harder to build transmission, and do you know why? Because the people aren't as easily fooled in this day and age of readily available, unfiltered information. Badly conceived projects will no longer be tolerated. So, get with the times, PJM, and recognize that compromise gets the job done. Quicker. Faster. Cheaper. Easier. Now is not the time to act like a stubborn mule.

You know, this statement is completely ludicrous.

PJM works closely with stakeholders throughout the development of the RTEP. Stakeholder input is a key part of the PJM planning process. The Skiffes Creek project was reviewed in numerous open meetings of the PJM Transmission Expansion Advisory Committee where public comment was sought prior to approval of the project by the PJM Board. As part of that process, Dominion transmission staff provided PJM its own thorough and comprehensive analysis of system needs as well as potential solutions for PJM consideration. Most importantly however, the Dominion analysis, which itself was based on PJM’s initial determination of reliability criteria violations that needed to be addressed, was then independently validated by PJM and publicly vetted through the PJM stakeholder process prior to PJM recommending Board approval of the Skiffes Creek project.

Public comment was sought? How did that happen, PJM? Did you contact community leaders and ask for their comment? Did you perhaps take out an ad in the local paper soliciting public comment about the project? Did you go door-to-door and take a public poll? Of course you didn't. PJM doesn't interact with the public in any way while considering a transmission project. It doesn't seek public comments... it simply accepts (and ignores) the comments of any "public" that may somehow happen to accidentally find their way into a PJM TEAC meeting. The idea that PJM is a publicly accessible stakeholder-driven process is as bogus as it's ever been. It's time to come out of the shadows, PJM, and interact with the scary public, instead of simply devising ways to punish them for defying you.

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What Happens When a PJM Project Fails to Meet Milestones?

2/26/2017

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Grassroots group Residents Against Giant Electric (RAGE) continues its outstanding work against FirstEnergy's Monmouth County Reliability Project (MCRP) in urban New Jersey.

In a recent article (and video) former NJ Transit vice-chairman Bruce Meisel vehemently opposed the MCRP, calling it "... a money grab project that puts the interests of JCP&L over the residents and ratepayers of Monmouth County.”

The significance of Meisel's opposition stems from MCRP's proposal to use New Jersey Transit's right of way for its project. Without the approval of the NJT board, this project isn't happening.

The article says Meisel was most affected by the number of signs and the people opposing the project across the area when he took a tour of the area late last year. That's directly attributable to the work of RAGE, who have been very effective winning the hearts and minds of the community and local governments.

If FirstEnergy thinks it can shout down this kind of opposition with a few well-paid business or labor advocates, its got another think coming. There's nothing FirstEnergy can do to stem the tide of opposition to its project. It's over. MCRP lost. Projects with this kind of political opposition never get approved. Time for Plan B.

In recent press, FirstEnergy has been turning with increased frequency to what it may feel is its most powerful weapon... PJM Interconnection.

JCP&L has been consistent on the project’s need, which stems from a decision made by PJM Interconnection, a regional grid operator that oversees 13 states and the District of Columbia – New Jersey being one of those 13. PJM has stated that a 2011 review found that Monmouth County’s electrical system violates reliability criteria.

FirstEnergy has quickly gotten to the bottom of its bag of tricks and pulled out what it may feel is its trump card. PJM says it's needed and therefore there is nothing anyone can do about it. FirstEnergy wants its opposition to believe that PJM's approval of the project is the final word and that there are no alternatives. FirstEnergy wants its opposition to believe PJM is an omnipotent authority whose word can never be questioned.

Most people have never heard of PJM. PJM is a mystery to the average electric consumer, and after years of watching the PJM dance, I'd have to conclude that PJM likes it this way. PJM has never seen any value in making itself understandable and accessible to the consumers it serves. While touting itself as "transparent" and open to any "stakeholders," PJM is a hopelessly bureaucratic and technical maze that electric consumers aren't supposed to figure out. Sort of like this guy:

PJM describes itself as:

PJM Interconnection is a regional transmission organization (RTO) that coordinates the movement of wholesale electricity in all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia.

Acting as a neutral, independent party, PJM operates a competitive wholesale electricity market and manages the high-voltage electricity grid to ensure reliability for more than 65 million people.

PJM’s long-term regional planning process provides a broad, interstate perspective that identifies the most effective and cost-efficient improvements to the grid to ensure reliability and economic benefits on a system wide basis.

An independent Board oversees PJM’s activities. Effective governance and a collaborative stakeholder process help PJM achieve its vision: “To be the electric industry leader – today and tomorrow – in reliable operations, efficient wholesale markets, and infrastructure development.”

PJM's planning process uses NERC criteria to define reliability violations that must be remedied. Who is NERC?

The North American Electric Reliability Corporation (NERC) is a not-for-profit international regulatory authority whose mission is to assure the reliability and security of the bulk power system in North America. NERC develops and enforces Reliability Standards; annually assesses seasonal and long‐term reliability; monitors the bulk power system through system awareness; and educates, trains, and certifies industry personnel. NERC’s area of responsibility spans the continental United States, Canada, and the northern portion of Baja California, Mexico. NERC is the electric reliability organization for North America, subject to oversight by the Federal Energy Regulatory Commission and governmental authorities in Canada. NERC’s jurisdiction includes users, owners, and operators of the bulk power system, which serves more than 334 million people.

Had enough acronyms yet? This industry loves acronyms, it's their own special language that you aren't supposed to understand!

So, NERC sets reliability standards, and PJM uses NERC's standards in its planning process. PJM and NERC are membership organizations. Who are their members? Companies with an interest in the work of the organization. The industry sort of regulates itself within these organizations. If the organizations are controlled by their members, and their members are the industry, then PJM and NERC are controlled by the companies they regulate. PJM didn't use NERC violations to design the MCRP. FirstEnergy proposed the MCRP to resolve NERC violations that showed up in PJM's 2011 planning process. PJM simply rubber stamped the incumbent utility's solution to the problem, and nobody proposed any alternatives or spoke against it, therefore it was "ordered" by PJM's Board of Managers.

In its application to the NJ BPU, FirstEnergy says MCRP was the remedy for NERC N-1-1 (or Category C) violations. If you stack up the different types of violations, N-1-1 comes at the bottom of the stack. N-1-1 relies on a reliability comedy of errors to occur -- that one component of the system fails, and then a bunch of other components that were supposed to act as back up for that component also fail. FirstEnergy describes the necessity for MCRP like this:

In the 2011 RTEP, PJM identified reliability criteria violations of NERC Category P7 (previously NERC Category C) contingencies for the outage of the Atlantic-Red Bank (S1033) 230 kV line and the No. 2, 230-34.5 kV transformer with the loss of the Atlantic-Red Bank (T2020) 230 kV line and the No. 8, 230- 34.5 kV transformer due to failure of a common structure containing both circuits. JCP&L confirmed this contingency may result in more than 700 MW of load loss, well above the 300 MW loss of load criterion limit, which violates the JCP&L Planning Criteria as well as PJM planning criteria. The JCP&L-proposed Project was confirmed by PJM that it adequately addresses the reliability criteria violation.

So, one transmission line is out, and then a transformer fails, and then another transmission line goes out, and then another transformer fails.... and then you need the MCRP to provide service. That's 2 transmission lines and 2 transformers, all out of service at the exact same moment. Chances of that happening? Not likely, but it could happen, in theory. However, it's not likely that failure to build the MCRP as proposed is going to make the lights in New Jersey go off in the near future. Because if we want to play the "what-if" game, what if the MCRP also fails after the other 2 transmission lines and the other 2 transformers fail? But NERC doesn't go that far out in its "what if" game, because it starts to get a little ridiculous.... and expensive.

A NERC violation was identified by PJM, FirstEnergy's JCP&L came up with a "back of the envelope" solution, PJM's Board of Managers approved the solution and assigned construction to JCP&L with a June 1, 2016 in-service date. And then JCP&L began trying to implement their proposed solution. The next year, JCP&L notified PJM that they couldn't get it done in time and proposed an extension of the in-service date to June 1, 2017. And then JCP&L notified PJM a second time that the projected in-service date is now June 1, 2019. In its application, FirstEnergy shares

PJM has not changed their required date for the project, but has listed the projected in-service date as June 1, 2019 in the RTEP Transmission Construction Status database... Note the PJM Required Date is the date the violation is initially identified to occur.

Apparently the violation keeps slipping out in time to keep pace with JCP&L's failure to get its proposed project accomplished. How convenient! I guess this "violation" isn't as urgent as FirstEnergy claims. If the two transmission lines and two transformers fail tomorrow, PJM will still be able to keep the lights on using other components of the system. But if the failure happens on June 1, 2017 (or 2019?), the lights will go out unless MCRP is there to pick up the slack. Seems pretty improbable, doesn't it?

Nevertheless, as a member of PJM, FirstEnergy's JCP&L was assigned construction responsibility for the MCRP. Membership comes with responsibilities. Members pledge to follow PJM's operating rules, such as constructing projects which they are assigned. The PJM Operating Agreement obligates the member to build, but it also gives the member an "out" if things go wrong with the project, such as a failure to secure required state or local permits.

1.7 Obligation to Build.
(a) Subject to the requirements of applicable law, government regulations and approvals, including, without limitation, requirements to obtain any necessary state or local siting, construction and operating permits, to the availability of required financing, to the ability to acquire necessary right-of-way, and to the right to recover, pursuant to appropriate financial arrangements and tariffs or contracts, all reasonably incurred costs, plus a reasonable return on investment, Transmission Owners or Designated Entities designated as the appropriate entities to construct, own and/or finance enhancements or expansions specified in the Regional Transmission Expansion Plan shall construct, own and/or finance such facilities or enter into appropriate contracts to fulfill such obligations.

PJM monitors the project's progress to meet certain milestones.

1.5.8 (j) Acceptance of Designation. Within 30 days of receiving notification of its designation as a Designated Entity, the existing Transmission Owner or Nonincumbent Developer shall notify the Office of the Interconnection of its acceptance of such designation and submit to the Office of the Interconnection a development schedule, which shall include, but not be limited to, milestones necessary to develop and construct the project to achieve the required in-service date, including milestone dates for obtaining all necessary authorizations and approvals, including but not limited to, state approvals.

1.5.8 (k) Failure of Designated Entity to Meet Milestones. In the event the Designated Entity fails to comply with one or more of the requirements of Section 1.5.8(j); or fails to meet a milestone in the development schedule set forth in the Designated Entity Agreement that causes a delay of the project’s in-service date, the Office of the Interconnection shall re-evaluate the need for the Short-term Project or Long-lead Project, and based on that re-evaluation may: (i) retain the Short-term Project or Long-lead Project in the Regional Transmission Expansion Plan; (ii) remove the Short-term Project or Long-lead Project from the Regional Transmission Expansion Plan; or (iii) include an alternative solution in the Regional Transmission Expansion Plan.

PJM isn't so much wedded to a certain project as it is compelled to find a solution to impending violations. A project that fails to be permitted goes back to the drawing board, and PJM works with the utility to find an alternative solution that can be permitted. Ill-conceived projects that draw staunch, sustained and wide-spread opposition rarely get permitted. Who's monitoring JCP&L's "milestones" on the MCRP project? Is PJM actively and independently monitoring MCRP's milestones, or are they simply taking FirstEnergy's word for it that its MCRP is on schedule and meeting milestones? JCP&L's poor execution of this project has already cost the consumers three years of reduced reliability. At what point will PJM "re-evaluate" the MCRP instead of simply shifting the milestones JCP&L fails to meet into the future?

While it is true that PJM has identified MCRP as the solution to future violations, that's only part of the story. PJM can act to re-evaluate a failing project to come up with a better solution to prevent reliability violations. PJM's mission is reliability, not adhering to rigid project concepts proposed by its members. In fact, PJM transmission projects are suspended, canceled, or re-evaluated frequently. PJM's approval of a certain project does not set its completion in stone. PJM is subject to the outside forces of state regulators, who hold the ultimate authority to permit a certain project. And state regulators are subject to the outside forces of state citizens who may support or oppose certain projects that are proposed. The NJ BPU must weigh the benefits of the project against its detriments and find that the benefits outweigh the detriments. If it does not find the MCRP beneficial, the NJ BPU may deny the project a permit. And then it would be kicked back to PJM to come up with an alternative solution. This sounds like a very long and expensive road, and ultimately it could cost JCP&L customers their reliable electric service.

When will it be time for PJM to pull the plug on the MCRP? Now, while there's still time to find an alternative solution to looming reliability violations? Or later, when the lights go out?

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Maryland Sues States for Providing Cheaper Power for Marylanders

Ut-Oh, Transource!

PATH's Long Run Costs Consumers Millions

Todd Burns: Liar? Or Just Stupid?

Tick Tock, Transource!

At Liberty To Pick Your Pocket

Billionaires' Club Looks Out For Its Own Interests First

Eighteen million six hundred thirty three thousand one hundred twenty four ratepayer bucks

PJM Doles Out the Punishment

What Happens When a PJM Project Fails to Meet Milestones?

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