Yesterday, the Commission granted rehearing on its previous order denying PATH the continued benefit of a .5% return on equity incentive for membership in PJM during the amortization period for recovery of abandoned plant.

So, what does this mean?  Not much.  It simply means PATH is hog-tied and can't proceed on appeal to the D.C. Circuit and waste even more of our money having a legal tantrum over .5% interest that it's not entitled to.

The Commission will take another look at its previous decision and decide whether or not to change its mind.  There's no time limit on how long the Commission can take to make its decision.  It could be years.  Meanwhile, PATH can shut up and sit down.

If the Commission had denied the request for rehearing, PATH would have been given the green light to appeal FERC's decision in federal court.  Now PATH can't proceed until the Commission reconsiders and issues another order on the issue.  The Commission can change its mind, or simply confirm its original decision.

Here's the issue:  In the Energy Policy Act of 2005, Congress instituted certain financial incentives to encourage investment in transmission for the purposes of benefiting consumers.  Congress tasked FERC with coming up with policy and awarding incentives.  One of the incentives Congress specifically mentioned was financial reward for a transmission builder who joined a regional transmission organization and turned control of its facilities over to the organization.  FERC put this into practice in the form of an additional .5% interest on each project that applied for it, if the owner joined or continued an existing membership in an RTO.  Therefore, a company with membership in an RTO could be awarded this incentive on each project it owned as long as it maintained its membership.

AEP and Allegheny (now FirstEnergy) set PATH up as a joint venture and created a bunch of single-purpose shell companies.  The parent companies did this because a "new" company produced tax and financial benefit and it could be awarded a higher incentive return on equity because this independent "start-up" company was taking a greater risk than it would if each established parent company owned its own portion of the project.  PATH tried to pretend it was an independent company whose stock just happened to be owned by its parents.  PATH chose this corporate structure because it benefited the parent companies.  Nobody forced PATH to do it.

Now that PATH's one and only project has been abandoned without being built, the Commission determined that the company will never have anything to turn over to an RTO, and there is no benefit to consumers from PATH's continued membership in PJM, and therefore denied continuation of this incentive.

PATH is arguing that the Commission is punishing it for its choice of business construct.  PATH says that its parent companies have other transmission projects that have been turned over to PJM, so therefore the parent company actions entitle PATH to the same benefit.  All of a sudden, PATH wants to be a part of its parent companies.  But wait... PATH separated itself from its parent companies when it benefited financially.  Now PATH wants to be included with its parent companies when it can financially benefit from that construct.  Can you smell the desperation?

PATH also complains that the Commission is being inconsistent because other transmission projects that have been abandoned managed to keep the RTO membership incentive, therefore PATH is entitled to do so as well.  PATH feels it should have been put on notice that it would lose this incentive if it abandoned the project.  *sniff, sniffle, whine*

Other transmission projects have kept this incentive because they aren't single-purpose entities and their companies will continue to exist and maintain membership in an RTO.  There is no point to PATH's continued membership in PJM because it doesn't own any transmission and will cease to exist as soon as the abandoned plant debt is paid off.

Despite a rule prohibiting answers to requests for rehearing, the Joint Consumer Advocates filed an answer supporting the Commission's original decision and arguing against continuation of this incentive.

The Commission's granting of rehearing won't affect the scheduled settlement conference coming up at the end of February, since that issue was never set for hearing but decided in the original Order.  However, parties will be aware that a reversal of the Order could grant PATH an additional .5% return at any time in the future and may keep that in mind while negotiating a settlement.  Happy now, PATH? :-)

In exchange for approving a permit allowing utilities PSEG and PPL to destroy the Delaware Water Gap National Recreation Area with their proposed Susquehanna Roseland transmission line, Department of the Interior Secretary Ken Salazar and the National Park Service extorted $66 million from the utilities.  The $66 million is to be placed in a fund administered by a private conservation organization, who is supposed to use the money to buy and preserve inferior land on the fringes of the park.

The utilities and the Park Service have been quite secretive about the private conservation organization, how the money will be used, and what properties are being scoped for purchase.

The Pocono Record has been investigating this secret, unholy alliance to come up with some answers for the public.

Conservationists try to short-circuit power line project in Del. Water Gap park

Conservation fund eyes 4 properties near Delaware Water Gap National Recreation Area

The private conservation organization who will administer this fund, while scooping off a hefty percentage for themselves, is corporate greenwasher The Conservation Fund, whose Director is compensated at the rate of nearly half a million dollars a year.

The Pocono Record has identified five parcels of land, out of many, to be purchased.  Why the secrecy?

The "mitigation fund" extorted from the utilities will be reimbursed to them by all electric consumers in the 13-state PJM region, plus a 12.93% yearly return on equity on the unpaid balance.  The utilities are using YOUR money to pay their "blood money" bribes needed for permission to destroy YOUR park, and earning interest on it.

Johnson said the rate of return is in fact 12.93 percent and said it is true PSE&G would earn a rate of return on the land purchase.
"The current rules say the cost of a project such as this will be shared by electric customers who will benefit," she said.

This $66M "secret" mitigation fund is YOUR money.  Where's the required transparency in electric rates you are charged when amounts spent are mired in secrecy?  Why is no one holding the utility feet to the fire and utilizing existing transparency processes to dispel all this secrecy?

Continued secrecy will only build on public suspicion and contempt.  It's time for PSEG and PPL to come clean, before the public is forced to use due process to uncover these juicy secrets.

What are you trying to hide, PSEG & PPL?

The Atlantic Wind Connection announced the other day that it will proceed with the first stage of its plan for an undersea transmission backbone located 12 miles off the Atlantic Coast.  In addition to providing a super highway for offshore wind generation to reach the east coast population centers, AWC also offers additional transmission capacity to import cheaper generation into northern New Jersey, where rates are higher.  Addition of transmission capacity to import cheaper generation is the basis for this first leg of a project that is proposed to extend from northern New Jersey to southern Virginia.  Once completed in whole, AWC is intended to connect up to 7,000 MW of offshore wind, enough power to serve approximately 1.9 million households.

However, AWC has faced, and will continue to face, the caterwauling of incumbent generators and transmission owners and the stone face of the PJM cartel, who have been doing their best to kill the project.

AWC directly competed with PATH and MAPP and spent years sitting on the sidelines while the incumbent transmission owners behind these misguided attempts to increase transmission capacity to New Jersey wasted around a half billion dollars of electric ratepayer funding on their loser projects.

Now AWC is ready to roll up its sleeves and get started.  However, the PJM cartel is still behaving badly and doing its best to sideline the project.  In addition to having to face the hurdle of having AWC designated a required transmission upgrade in PJM's expansion plans, there's a whole lot of nonsense underway about who is going to pay for the project.  For years, PJM's incumbent transmission owners thought nothing of having their projects intended to import cheaper coal-fired generation to the east coast socialized throughout PJM's 13-state region.  Now that a company who's not a part of the incumbent club wants to socialize the cost of its project, the incumbents are making fools of themselves at FERC arguing about cost allocation.

Although it's really not that complicated, clueless blogger Matt Wald at the NY Times can't grasp transmission cost allocation issues.  He screws it up in this article, and then follows with a more confused "explanation" in this one.

Here's what Matt doesn't understand.  Historically there have been only two drivers that necessitated transmission expansion within PJM:  1)  Reliability, where a project is necessary for continued reliable operation of the grid; and 2) Economic, where a project is necessary to import cheaper generation to an area with high generation prices in order to lower prices.  Any projects meeting either (or both) criteria were included in the regional plan and the costs were socialized among all consumers in the region.  A new driver has now emerged -- individual state renewable power policy goals.  PJM has, so far, stood firm behind the states' insistence that renewable drivers become the financial responsibility of the state or states whose policies trigger them.  However, there's a proposal in the works that would define a multi-driver project cost allocation method to equitably assign costs.

The problem is that nobody can agree on an equitable split and many parties continue to build on previously flawed cost allocation practices known as "postage stamp."  Postage stamp cost allocation socializes the cost of a big transmission project to all consumers in the region under the premise that they all benefit equally from the project.  This is never true, but transmission owners, PJM and FERC have pretended it is by making up regional benefits that can't quite be calculated.

When applied to reliability projects, region-wide benefits are slippery simply because PJM is so large.  A reliability problem necessitating upgrades in Baltimore or Newark wouldn't really provide a benefit to consumers in Chicago, except that without it, if the PJM grid massively fails, cascading outages could possibly affect them.

However, when postage stamp is applied to economic projects, it completely fails.  An economic project lowers prices for a subset of regional customers, however all customers in the region pay to construct and operate it.  Adding insult to injury, when prices are lowered via new transmission lines it also increases electric prices at the other end of the line.  Solving economic problems with transmission simply levelizes prices so that all consumers pay a relatively similar price.  Now how is that just and reasonable for a larger region to pay for the privilege of increasing their prices to benefit only a smaller subset of the region?  It's not, and this argument has been dragging on in the courts and at FERC for years.

Now throw in renewable drivers.  Would it be just and reasonable for the larger region to pay to meet the renewable policies of a smaller subset of the region such as one state?  Of course not.  Policy in one state cannot legally become the financial responsibility of citizens of a different state.

The more broadly the cost of billion dollar transmission projects can be socialized, the better their chance of success.  While most consumers are so blissfully unaware of the steady increase in their electric rates caused by new transmission because it only amounts to a couple bucks, if the real beneficiaries of a transmission project had to pay for it by themselves, they would certainly notice because the cost would be astronomical.  In fact, the cost of the project would obviate any savings and perhaps cause state policy revisions prohibiting imported renewables that come with expensive transmission project price tags.  Therefore, those who stand to profit from exporting renewables are trying to hide the huge costs of their projects by socializing them among consumers who do not benefit.  This has led to ridiculous claims that projects driven solely by a need for imported renewables provide additional reliability and economic benefits for the entire region and therefore should be widely socialized.  But for the renewable driver, these projects would not exist, therefore any "benefits" are unnecessary, sort of like getting a bill for a Christmas fruitcake.  You didn't ask for it, you didn't want it, and now they're asking you to pay for it?

This is the cost allocation problem that Matt Wald doesn't understand.  AWC understands, and while testimony submitted with a recent FERC filing explains how the project will provide more than renewable energy benefits, it toes the line of believability.  This testimony was attached to a rather painful, long winded brief written mostly in FERCenese (thanks, Scott!) so I have spared you that part of it.  Just read the testimony -- same facts, less words... and even some pictures.

While a lot of what's in the testimony has validity, AWC just can't resist trying to sweeten the pot and make crap up.  I wish they'd just stick to the easy truth.  They almost had me, until I found this quote on their website: 

"The AWC project not only reduces the need to build many lower-capacity transmission lines, but relieves grid congestion in one of two National Interest Electric Transmission Corridors which were deemed to have significant transmission network congestion and need speedy creation of transmission capacity."

Psst... AWC, the National Interest Electric Transmission Corridors were vacated back in 2011.  Fix your stuff!

If AWC manages to get a seat at the big-boys' table at PJM and overcome the cost allocation issues, the U.S. may finally move ahead with offshore wind and create a vibrant renewable energy economy in nearby east cost states.  However, acceptance of AWC's cost socialization schemes could also provide a doorway for other renewable transmission projects proposing to build thousands of miles of new transmission lines coast-to-coast to export inferior wind resources from the midwest.  That proposal makes no sense, economically or physically.  And we simply cannot afford both.

I came across an editorial the other day with some thoughtful ideas about reforming an out-of-control federal regulatory system that often forgets that it is supposed to serve the consumers.  Reforming FERC is the work of Tyson Slocum, who the publication fails to inform you is with Public Citizen.

Slocum is just the latest to criticize the Regional Transmission Organization structure that FERC has created that, as Slocum puts it, "delegated sweeping Federal Power Act authority to [RTOs], creating private organizations on the front lines of federal law enforcement with little accountability to the public."

Indeed, there is no public accountability at regional transmission organizations, despite their claims of transparency and "stakeholder participation."  In fact, the vast majority of electric consumers do not even know these organizations exist. 

"Governance is also a problem. The RTOs assign voting shares to different stakeholders. PJM, NYISO and the others tilt the voting rights heavily in favor of generators, power marketers and utilities. End users always have a tiny minority of the voting shares, and therefore no influence. Sure, the RTOs have dozens of working groups that meet hundreds of times on an array of market topics, but at the end of the day, the RTO votes on policies, and the outcome of the election is rigged against the consumer's interest." 

As a friend recently observed, "The only way these organizations will ever be "stakeholder-driven" is when they get stakes driven through them by the holders!"  Must we gather our torches and pitchforks and storm the castle?

FERC's little experiment with allowing the industry to regulate itself through the formation of self-interested cartels is about an inch from failure and must be reformed.

Because they have been free to operate and "answer to no one" for years, it's been a very slippery slope.  Just as an unsupervised child toes the line to see what he can get away with, the RTOs are getting bolder and bolder.  One doesn't have to spend much time riffling through FERC dockets to find numerous examples of RTOs behaving badly.

For instance, PJM's recent revisions to the Minimum Offer Price Rule (Docket ER13-535) were concocted during secret meetings that purposely excluded state consumer representatives.  The new rule is intended to prevent the construction of new gas-fired generation ordered by two east coast states.  It doesn't take much imagination to determine that new generation will cut into incumbent generator profits, and incumbent generators and their affiliated investor-owned utilities hold huge "stakeholder" voting blocks.

In another example, one utility has filed a request for rehearing (Docket ER12-1178) of FERC's approval of recent planning scenario changes that allow for "PJM’s engineering expertise and experience as the transmission planner and operator for the PJM region" to be a mysterious surprise factor when selecting transmission upgrades through a "transparent" planning process.

And lest you think I'm just picking on poor, persecuted PJM, this "engineering judgment" black box decision making is also going on in other RTOs.  There's a dispute going on between a Wisconsin generator and MISO (ER12-1928) wherein MISO has "used its engineering judgment" to decide three years after the generator went into service that it is now responsible for new transmission builds as part of its interconnection agreement.  If MISO gets its way, no generator is safe from being assigned millions of dollars of transmission upgrades in order to continue to operate.  The generator actually pondered whether it would ultimately be cheaper to just retire its brand new wind farm than continue to operate and risk being ordered to pay for future upgrades that come out of MISO's "engineering judgment" black box.

This kind of railroading of the "stakeholder" process and black box decision making is plainly ridiculous and should serve as a wake-up call for FERC to re-examine its RTO construct.

Another suggestion Slocum makes is to establish a consumer advocate office at FERC.  There is currently nobody looking out for consumer interests in the federal regulatory world.  It's pointed out that state consumer advocates are underfunded and overworked and rarely get involved at FERC.  This does not mean that consumers cannot protect their own interests at FERC, however. 

Personally, I have no complaints about the way FERC treats consumers, however, it is extremely rare that a common end user dares to penetrate the barrier presented by a complicated regulatory process with an extremely steep learning curve.  Despite PATH's dire warnings to FERC that if it found consumers to have standing under Sec. 206 of the Federal Power Act that millions of consumers would storm the agency and file complaints, it just isn't going to happen.  Nobody else is lining up to put in the hundreds of hours of volunteer labor required to examine transmission rates, even though their learning curve would be substantially less steep than the one Ali and I faced.  Other transmission owners who may fudge their revenue requirements are probably quite safe from consumer intervention for the time being.

Slocum says, "Congress never expressly authorized the private organizations that run power markets; rather, FERC created them as voluntary organizations under Orders 888/889/2000."

Perhaps it's time for Congress to act, because it's highly unlikely that FERC will initiate Slocum's suggestion to "open an investigation into whether or not RTOs are producing just and reasonable rates."  Sometimes the truth is a bitter pill to swallow.

If you haven't been keeping an eye on PJM's Order No. 1000 compliance filing at FERC, you've been missing out on a remarkable display of overreaching greed and self-importance. 

The main issue of contention appears to be PJM's state agreement approach to cost allocation for "public policy" transmission projects driven by individual state renewable portfolio goals.  PJM's approach is to have these type of projects proposed by the states whose RPS requires them, and who agree to pay for them in their entirety.  Entities who stand to profit from building this type of transmission believe they should be free to develop these projects without input from the beneficiary states and that these projects provide some hard to identify regional benefit and therefore should be allocated to all consumers in the PJM region, either in whole or in part.

Since "public policy" is a state matter, decided by state legislators on behalf of their constituents, who the heck do these for-profit transmission builders and Pollyanna environmental organizations think they are to take over administration of individual state policies and direct how they will be fulfilled and paid for?

The transmission builders are representing their own interests to profit from new transmission to meet "public policy" goals, and the environmental organizations are representing their own ivory tower, academic, environmental goals.  Neither of these groups represents the consumers who will pay for new transmission.  The only entities here representing the most important "stakeholder" of all (YOU!) are the states.  The Organization of PJM States makes it quite plain that transmission owners and environmental organizations simply don't have the authority to propose and force "public policy" projects.

"Absent an explicit legislative directive for a project’s construction, turning a “public policy” into a “transmission need” for a project that is not economic or needed for reliability will likely require the interpretation and/or extrapolation of laws or regulations. Such policy decisions and pronouncements are appropriately made by governmental entities and not by private interests or regional transmission planners. OPSI agrees with FERC that the regional transmission planning simply is not the forum for making policy decisions as “[i]t is not the function of the transmission planning process to reconcile state policies.” No employee in the PJM chain of command is appointed or elected by the citizenry to interpret, implement, or reconcile state laws and regulations. The State Agreement Approach appropriately identifies that only authorized policymakers should make the policy decisions and pronouncements that will be required to convert “public policies” into “transmission needs.”

PJM knows that allowing self-interested entities to dictate how individual state energy policy is implemented is a recipe for disaster and has wisely chosen to allow the states to direct and allocate costs of these projects.  It's the only way anything is going to get built, ever.  However, these gung-ho entities refuse to see how their rabid attempts to force the issue are going to tie "public policy" transmission up in the courts forever.  Whatever, fellas, the lights aren't going to go out if these projects don't get built, and the delay will only serve to prove that the most reliable and economic deployment of renewables is through distributed generation, not centralized utility-scale generation.  So, keep on holding your breath until you turn blue, it's quite amusing!

I do, however, have to hand out an Audacity Award to the glad-handing shysters at Clean Line Energy Partners for their suggestion that merchant "public policy" projects should also be partially allocated on a regional basis.

A merchant project is paid for entirely by the entity who builds it.  All risk is assumed by the transmission owner, who may recover their costs of building the line from the generators and customers who subscribe the line.  No costs are allocated to captive customers.  Costs are voluntarily assumed by entities who buy the "renewable" transmission.

However, Clean Line's merchant business model is falling apart before their very eyes and now they want YOU to help them pay for it.  "Renewable" merchant projects like Clean Line's are not economically feasible.  The cost of building the line makes the cost of its product more expensive than competing "renewable" generation.  Clean Line has been relying on subsidization of generation costs through the production tax credit to lower the cost of its product.  Now with the PTC on the chopping block, Clean Line is looking for another sugar-momma to subsidize its uneconomic business model through allocation of costs to captive ratepayers who will not purchase one electron transmitted over the line.  Give up, Clean Line and quit wasting the Zilhkas' money.  Thanks for pointing out how ridiculous the rest of the whiner entities' proposals about regional allocation of "public policy" projects can be when extrapolated out to fill your own pockets.  Every circus needs a clown.  Or is it a monkey on a bicycle? ;-)

As 2012 draws to a close, let's take a look at the decrepit corpse of the PATH project.  Although it's true that PJM officially cancelled the project in August and PATH will never be built, our little zombie continues to shamble about feeding on consumer wallets.

Back in 2008, FERC awarded several financial incentives to the PATH project.  One of the incentives was the ability to apply at FERC to recover 100% of prudently incurred expenses from consumers in the event the project was abandoned (cancelled).  Although you've been paying a yearly revenue requirement for PATH's Operations & Maintenance expenses and return (profit) every year since 2008 (grand total through Dec. 31, 2012 = $95M), PATH has been spending its own money on project capital expenses such as land, engineering, permitting, etc.  These expenses get tucked away in PATH's rate base as "Construction Work in Progress" where they have been earning a return of 12.4% yearly.  The amount PATH has invested in their project totals $121M.

In January and December of 2011, two West Virginia consumers filed formal challenges to PATH's yearly revenue requirements for the years 2009 and 2010 (part of that $95M).  In September of this year, FERC granted the two formal challenges and set them for hearing.  Expenses challenged include PATH's advertising and dishonest public relations activities totaling around $6M.

A week after FERC set the Challenges for hearing, PATH made their abandonment filing with the Commission, seeking to recover their $121M investment without any examination of the actual costs incurred.  Then PATH turned right around and asked the Commission to consolidate the abandonment with the formal challenges for settlement and hearing.

More than 30 parties intervened in PATH's abandonment filing, including a dozen consumers from West Virginia and Maryland.  FERC found that PATH was entitled to collect prudently-incurred project investment, however it set the prudence of the actual expenses for settlement and hearing.  FERC also denied PATH's request to retain part of the incentive return on equity they were granted in 2008. 

In its filing, PATH voluntarily agreed to forfeit 1.5% of the incentive rate of return they were granted in 2008.  However, PATH asked to retain the extra .5% return FERC granted them as an incentive for joining the PJM cartel.  Several parties protested this rather bald money-grab by PATH.  Because the PATH shell companies were created by parent companies AEP and FirstEnergy (Allegheny Energy) as single-purpose entities to construct and own ONLY the PATH project, and the PATH project has now been cancelled, there is no purpose to PATH's continued membership in PJM, except to collect an additional .5%  interest from consumers every year.  PATH will never build, own or turn over any transmission infrastructure to the PJM cartel.  PATH is simply limping along trying to maximize its profit on its failed endeavor.  PATH's proposal was found to be unjust and unreasonable by the Commission, and PATH was denied the extra .5% interest, which reduced its yearly return to 10.4%.

FERC also ordered PATH to provide the cost detail that was missing from its abandonment filing.  PATH asserted that its expenses were prudently-incurred and that no detail of how it spent $121M was necessary.  Ridiculous much?  Other abandonment filings have all included cost detail.  Turns out that PATH had not even sorted its costs before filing for abandonment and needed another 45 day extension to get their act together.  But we were supposed to believe that everything was prudently-incurred ;-)

Today, PATH filed a request for rehearing on the abandonment, claiming that FERC had made legal errors in their Order denying that .5% PJM cartel membership incentive.  *sniff*  *sniffle* *whiiiiiiiiiiiiiiiine*  Pretty revolting, I've seen better tantrums from 3-year olds.

Just remember, all this legal nonsense is being paid for by all 60-some-odd million consumers in PJM's 13-state "region."  No big deal for PATH to continue to stomp its feet and demand more money, it won't cost them a dime.  So, just how much money are we talking about here?  Around $240K in 2013, with lesser amounts in each of the following 4 years PATH has proposed as the amount of time given to ratepayers to pay off project debt.  Wanna bet PATH wastes more of our money on legal fees whining about that .5% interest than it stands to gain overall?

So, here's where PATH stands at the end of this year:

$121M in abandoned project costs + $6M in prior O&M expenses set for settlement and hearing at FERC.  Currently, settlement conferences are scheduled to begin at the end of February, 2013 and will continue as long as negotiations are productive.  If settlement ultimately fails, some or all issues may actually proceed to hearing, adding another couple years and mounting legal fees to consumer misery. 

The PATH zombie -- the gift that keeps on giving!

Connecticut Senators Lieberman and Blumenthal sent a letter to FERC Chairman Jon Wellinghoff the other day complaining about ISO-NE's out-of-control budget.  The senators say ISO-NE's budget "has increased by 34 percent from 2009 to 2013, including a 14.8 percent increase projected for 2013 alone. In the past five years, ISO-NE has increased its employment by 100 positions, at the same time other public entities are reducing staff and cutting expenses."

The senators want FERC to exercise some oversight and control over the little monsters it has created.  According to a press release from Senator Blumenthal:

"The creation of regional transmission operators offered the opportunity for transmission line operators, generators, utilities and others to work cooperatively to develop highly efficient, reliable and cost-effective electricity. Under federal electricity restructuring legislation, RTOs were provided with the authority to develop their budgets and implement electricity distribution and generation policies subject to FERC’s oversight.  Because RTOs are predominantly operated by transmission line operators and electricity generators, the consumer must rely on effective intervention by state public agencies charged with representing the consumer’s interests and FERC’s careful scrutiny of RTOs.  Unfortunately, the experience since establishment of the seven RTOs in the United States has been one of relatively lax oversight, budgets that have grown out of proportion to the economy and policies that have been subject to intense consumer criticism."

Problem?  The regional transmission operators have morphed into industry-controlled cartels who feel they "answer to no one" and cost consumers billions.

It was a nice idea, but it doesn't work.  For-profit entities simply cannot regulate themselves under the guise of a not-for-profit organization.  Change is needed.  Consumers simply cannot afford RTOs any longer.

As mentioned in an earlier post, FirstEnergy may be snared in a probe that Ohio regulators recently announced of the state’s retail electric market.

The Public Utilities Commission of Ohio initiated what it terms "an investigation of Ohio's retail electric service market" by posing a series of questions to be answered by interested parties.  Many of the questions seem to focus on FirstEnergy's gaming of PJM's capacity market earlier this year, such as:

Whether an electric utility should be required to
disclose to the Commission any information
regarding the utility's analysis or the internal
decision matrix involving plant retirements,
capacity auction, and transmission projects,
including correspondence and meetings among
affiliates and their representatives?

Should a utility's transmission affiliate be
precluded from participating in the projects
intended to alleviate the constraint or should
competitive bidding be required?

Are shared services within a 'structural
separation' configuration causing market
manipulation and undue preference?

Should generation and competitive suppliers be
required to completely divest from transmission
and distribution entities, maintain their own
shareholders and, therefore, operate completely
separate from an affiliate structure?

And this one, which is a particular favorite of mine:

As fully separate entities, does a utility's distribution affiliate have a duty to oppose the incentive rate of return at FERC?

This very issue was raised in one of the complaints filed by consumers against FirstEnergy's PATH affiliate at FERC this past summer.  PATH had asserted that a consumer was protected from inaccurate, unjust and unreasonable rates by their load-serving entity.  In the case of the complaint, PATH said that a customer of Potomac Edison, one of its affiliates, would be protected by Potomac Edison from unfair rates for the PATH affiliate set at FERC.  FERC rejected PATH's argument and granted the consumer's complaint, finding that consumers have standing to challenge FERC jurisdictional rates.

It's nice to see that even if PJM's Market Monitor chooses to ignore FirstEnergy's obvious manipulation of the capacity market in favor of secret schemes to frustrate the development of new, badly needed generation in New Jersey and Maryland, at least the state of Ohio is interested in protecting its consumers.

Back in June, I pondered, "whether FE will get away with pushing the legal envelope, or whether evidence of possible misdeeds will begin to float to the surface like untethered bodies..."  Looks like there's been a couple of floaters found... ;-)

A coalition of citizen groups has filed an injunction in federal court asking that construction of the unneeded Susquehanna Roseland 500kV transmission line be halted within 20 miles of the Delaware Water Gap National Recreation Area.

The groups earlier filed a lawsuit against the National Park Service for its issuance of a permit to the power companies to destroy the park in contravention of the NPS's mission to preserve our irreplaceable natural resources.

Project owners PSEG and PPL have begun construction of the project in an all-fired big hurry, trying to get it built before legal remedies have been exhausted.  Looks like they're very afraid that the lack of need for their project and the underhanded way they went about securing permits will be exposed.  And it will, but the companies are hoping the power line will be built before anyone really notices or cares.  Too late!

The petition asks for an expedited hearing.  Will justice finally be done?

In its Order on PATH's abandonment filing last week, FERC tossed thousands of opponents of the Project Mountaineer transmission line projects a bone.  It won't reimburse you for all the time and money you've invested fighting transmission projects that were never needed in the first place, and it won't unbuild the TrAIL Project or make affected landowners and consumers whole, and it won't stop the unneeded Susquehanna-Roseland Project from continuing to proceed with stunning haste.  But if a little validation and personal satisfaction makes a tasty snack for you, here's your bone:

"The PATH Project concept was originally introduced by PJM in May 2005 at a Commission technical conference as Project Mountaineer- a major east-to-west transmission corridor.  In early 2006, AEP and Allegheny separately filed petitions for declaratory order with the Commission requesting transmission incentives to build this multi-corridor concept in their respective zones in Docket Nos. EL06-50-000 and EL06-54-000,  respectively. The Commission affirmed abandoned plant recovery for the proposals subject to approval in the PJM Regional Transmission Expansion Plan (RTEP) and requiring a future section 205 filing, among other things. On June 27, 2007, PJM’s Board of Directors approved the projects for inclusion in PJM’s RTEP, changing the route and scope from those originally conceived, combining portions of both AEP and Allegheny’s projects into a single project (the PATH Project) with a requested completion date of June 2012."

That's right... FERC says that the PATH Project (and TrAIL, MAPP and Susquehanna-Roseland) originated as a concept in 2005.  The Commission technical conference referred to is what we've been calling "The Coal Love Fest."  Its goal was to increase the use of coal-fired resources.  It wasn't about increased demand, congested transmission lines or reliability.  It wasn't until 2007 that PJM created the reliability violations that caused a "need" for the PATH Project under the guise of reliability and "ordered" AEP & Allegheny (now FirstEnergy) to build PATH.

1.    Project Mountaineer.
2.    Creation of PATH Project concept.
3.    Creation of "need" for PATH Project.

Nibble slowly, PATH opponents.  It's all you're going to get.

Of course, this isn't news to any of you.  We've been telling you this for the past 4 years.  But now FERC agrees with us.

The PATH Project is a bit of ugly and expensive history now.  However, the lesson could live on.

PJM, FERC and the midwest wind industry are busy concocting a new Project Mountaineer right now but instead of coal, this time it's about moving "midwest wind" to both coasts via $300B of new transmission lines.  We don't need that anymore than we needed Project Mountaineer in 2005.  Those who fail to learn from history are doomed to repeat it.  Consumers can't afford another expensive mistake.