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FERC To Announce New Transmission Rules May 13

4/21/2024

The Federal Energy Regulatory Commission (FERC) has announced an open meeting where it will present its new rules for transmission planning AND its new rules for transmission permitting in a National Interest Electric Transmission Corridor (NIETC).

Both of these rulemakings have taken years to get to this point. As you may know, rulemakings are public participation proceedings where the agency proposes a new rule, accepts comments from the public, and then issues a final rule. The transmission planning rulemaking began in 2019 -- 5 years ago! Five years to get a new rule in place isn't uncommon... things move at a glacial pace at FERC. In addition, FERC's commissioners have come and gone over that time period, making FERC flip-flop on several different new rule proposals. The transmission permitting rulemaking hasn't been in the works for as long, but it is going to have a profound impact on landowners so unlucky as to be targeted for new transmission projects.

First, the transmission planning rulemaking. This is all the media has been talking about. Fans of doubling or tripling transmission lines to ostensibly connect remote wind and solar generators are chomping at the bit, convinced that it will finally make intermittent renewables viable. That proposed rule contains, among other provisions, a plan to prospectively build new transmission to remote "zones" where some unnamed authority believes new wind and solar can be built. This would shift the cost of transmission to connect renewables from the owner of the generator to ratepayers across the regions connected. As it has been for years, the owner of a new generator must pay the costs of connecting its new generator. These companies want to shift this cost burden to ratepayers. If a generator has to pay for its own connection, it makes economic choices about where to site new generation in order to build at the most economic sites. If we're paying, generators can build stuff anywhere, even if it doesn't make economic sense, and stick electric consumers with the bill.

Another thing the transmission planning rule is going to do is create some hypothetical list of "benefits" from new transmission in order to spread the cost allocation as wide as possible. Even if you don't "need" transmission for reliability or economic reasons, if the transmission owner makes up some hypothetical "benefits" for you, then you're going to be charged for it. The idea is to spread the trillions of dollars needed for new transmission as wide as possible in the hope that if everyone pays a little that nobody will notice how their money is being wasted building transmission that they don't need.

Finally, the transmission rule will require planning authorities, like PJM or MISO, to plan transmission on a rolling 20-year timeline. What are you going to need 20 years from now? You have no idea, and neither does the planner. By planning so far into the future, the idea is to drive generation choices through transmission planning, and not to plan the transmission system based on need. It will also attempt to roll state and federal "public policies" into transmission planning so that we all pay a share of other state energy policy choices. Is Maryland shutting down all its gas-fired generation? You're going to pay for new transmission to replace it, even though you don't live in Maryland and had no say in the creation of their energy policies.

The transmission planning rule will be prospective only and will not affect any transmission already included in regional plans. After this rule is issued, planners will have to submit what are known as compliance filings, which detail how the planner will adjust its rules to carry out the new transmission planning process FERC orders. In addition, I fully expect that this rule will be litigated for several more years, which is going to hold the whole thing up.

Now onto the Transmission Permitting rule, which is something that is going to impact anyone currently battling unwanted transmission, and anyone doing so in the future. As you probably know, the U.S. Department of Energy is poised to release its preliminary list of potential NIETCs at any time. That's a whole battle unto itself that I'm not going to cover here, but if a corridor is designated in your area, it means that one or more proposed transmission projects may be built in that corridor. A transmission project sited in a NIETC is subject to "backstop" permitting by FERC. If a state has no authority to permit transmission, or denies a permit to a project in a NIETC, then it can be bumped to FERC for permitting. FERC will require the transmission company to file an application and then will hold a full-blown permitting process very similar to the state process. If FERC permits the project, then FERC has authority to say where it goes and to grant the utility building it federal eminent domain authority to take property for it.

In FERC's rulemaking on transmission permitting, it proposed that a utility could begin the FERC process as soon as an application is filed at the state level. This would mean that there will be TWO simultaneous permitting processes going on at the same time. Two permitting cases, two interventions, two sets of lawyers, double your time and double your money. The drawback here is that the FERC process may not even be necessary if the state approves the project in its own permitting process. If a state approves, FERC doesn't have jurisdiction to get involved. FERC said that it needed to speed up this process by running its own permitting process at the same time as the state process. It's foolish and a waste of our time and money. Let's see what FERC does with this as it was widely panned by those who commented on this rulemaking.

Another horrible idea in FERC's proposal is an "Applicant Code of Conduct" to meet the statutory requirement for "...good faith efforts to engage with landowners and other stakeholders early in the applicable permitting process." FERC proposes a voluntary, generalized, unenforceable "Code" that does little to protect landowners. The "Code" is merely an idea of how a company should behave, not how it will behave. FERC does not plan to enforce it, or intervene when landowners report violations. The landowner should report violations to the company! Don't laugh... they're serious! FERC's proposed "Code" advises that the company should "avoid" coercive tactics, but it doesn't prohibit them. That does NOTHING to meet the statutory requirement. It's a big joke!

The new transmission permitting rule will become operational once it is issued. Many readers will be subject to this government-sponsored landowner abuse immediately. This is one you should not ignore!

Over the years, I have worked with a large group of transmission opponents from across the country to file extensive comments on both of these rulemakings on behalf of impacted landowners. In particular, you should read our comments about the transmission permitting rule to familiarize yourself with what's about to happen to landowners.

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Please plan to (virtually) attend FERC's May 13 Open Meeting where they will release these two new rules and make comment and explanation. The meeting is "listen only". There is no opportunity to make comment or interact with the Commissioners. This is an informational presentation, not a participatory event. FERC's meeting begins at 11:00 a.m. and is expected to last about an hour. You can watch it live on YouTube using a link that will appear on FERC's website the week before. Later on that day (or the next day, remember FERC works at a snail's pace) the text of the rules will be released and then discussed over and over by lawyers and the media. If you're impacted by a new transmission proposal, you can't miss this presentation!

You don't need to sign up in advance... simply click the link to view when the meeting starts. You can find that link and minimal information about this special meeting at FERC's website.

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Washington Post Says The Quiet Part Outloud

4/20/2024

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Our power appetite is bigger than our power supply. The "renewable transition" isn't working. We are losing large baseload power generators and not replacing them and we're adding too much load. Our electric system is not sustainable. It's a simple math equation.

Back in January I was contacted by a reporter from the Washington Post who had been writing about the proliferation of data centers in Northern Virginia and wanted to investigate how Virginia's out-of-control building was impacting people in surrounding states. Virginia's data center problem is no longer just Virginia's problem. It has now spread to the entire 14 state PJM Interconnection region.

Here's his story that began back in January.

For us, the story began last summer when we found out about PJM's transmission plan for multiple new high-voltage transmission lines to import more power to data center alley. We followed it through PJM's planning process and though we protested and asked for other solutions, PJM approved three new 500kV transmission lines and a whole bunch of smaller segments and substations. During PJM's TEAC meetings, I remarked several times that the new transmission was feeding from existing legacy coal plants in West Virginia and was actually increasing emissions and in no way helping the "renewable transition." Every time I mentioned it, PJM was quick to claim that the new electric supply would come from "all resources, including renewables." PJM seemed rather sensitive about the reality of its plan and vehemently denied it. Deny this article, PJM. It's all there in living color.

Virginia has renewable energy laws that prohibit the building of new fossil fuel generation (gas, coal). But yet Virginia is building an incredible amount of new data centers that use outrageous amounts of power that is simply not available on the current system. Virginia's renewable energy plan is a virtue signaling lie. Instead of building the electric generation it needs, Virginia intends to IMPORT electricity from surrounding states, even coal-fired power from West Virginia. ESPECIALLY coal-fired power from West Virginia. How is Virginia's "renewable energy" law cleaning up the environment? It's not. It's making the situation worse.

After Tony started working on this story for the Washington Post, FirstEnergy made an announcement that bolstered what I had been saying... PJM's transmission plan is increasing the production of coal-fired electricity in West Virginia. FirstEnergy announced it was abandoning its goal to decrease its carbon emissions by 2030 by throttling back its Ft. Martin and Harrison coal-fired power plants near Morgantown. FirstEnergy said it was necessary to abandon that goal because those resources were necessary to provide reliability in PJM. In other words, FirstEnergy will throttle up its electricity production at those plants in order to provide supply to PJM's new transmission line that begins at the nearby 502 Junction substation and ends at No. Va.'s data center alley in Loudoun County. Ft. Martin and Harrison directly connect to 502 Junction via dedicated 500kV transmission lines. Also connecting directly to 502 Junction is the Longview coal-fired power plant in Morgantown and AEP's Mitchell coal-fired power plant in West Virginia's northern panhandle. It's more than 5,000 MW of hot and dirty coal-fired electricity and if the line is constructed it's heading right for Northern Virginia, along with some smog and air pollution. Data Centers are filthy! And PJM is a filthy liar.

Along the way to No. Va., PJM's new coal-by-wire extension cord will expand existing transmission rights-of-way closer to homes, schools, parks and businesses. Expanding existing easements makes it impossible for the utility to avoid sensitive things like they could if they were siting a new corridor. Anyone living along the existing corridor, like the Gee family, is going to be steamrolled right over.

The "using existing rights-of-way" propaganda is another huge PJM lie I brought up over and over during TEAC meetings. It's a new easement all the way because it cannot be constructed within the existing corridor.

And guess what? Along with new pollution and new land acquisition using eminent domain, West Virginians will PAY for this destruction/construction in higher electric bills, along with every other ratepayer in the PJM region.

And we get NOTHING for our trouble. Virginia gets new tax revenue building things they can't power while crowing about how "clean" Virginia is, and the rest of us get the impacts and the bill. We're NOT your sacrifice zone.

Washington Post reporter Tony Olivo did a fantastic job investigating and reporting on this story. He spent a day with us here in Jefferson County and drove from one end of the county to the other meeting people, and Washington Post photographer Sal got lots of photos and drone footage along the way. Then these two guys drove all the way out to 502 Junction and Morgantown to do the same there. They spent an enormous amount of time on this story and it shows.

One of my favorite images in the story is the new solar "farm" near Charles Town taken from the drone. It shows how the company building it scraped off all the vegetation and top soil and left nothing but bare earth and erosion that is killing the Shenandoah River. Clean energy ain't so clean, is it?

And let's talk about that "clean energy", shall we? Wind and solar cannot create the amount of electricity needed for new data centers, even if they cover Virginia with turbines and panels from end to end. The data centers need a plentiful and reliable supply they can only get from fossil fuels. A few solar panels on the roof of the data center won't do a thing to cure this problem. It may only keep the lights on in the restroom... during the day. Renewables cannot power our energy intensive society. We're not replacing the generation we're shutting down in the name of carbon reduction, and there's no chance that we can ever catch up at this point. Data centers are too big a drain and Virginia can't stop building them.

If you have any doubts, check out the Generation Fuel Mix pie chart on PJM's website at any time. Renewables provide only a tiny slice of PJM's power supply and it will never change as long as we keep increasing power load with new data centers.

Bravo to Washington Post for exposing Virginia's dirty data center reality!

And let's get to work, Jefferson County. We've got a power line to stop!

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What's an NIETC and what can I do?

4/7/2024

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The U.S. Department of Energy (DOE) is due to release its preliminary list of National Interest Electric Transmission Corridors (NIETC) that it is considering any day now. In order to understand what an NIETC is and how you can participate in the process of designation, let's take a look back at the history of NIETCs.

In the Energy Policy Act of 2005, Congress passed legislation to give the DOE authority to study electric transmission congestion and designate NIETCs that would give the Federal Energy Regulatory Commission (FERC) jurisdiction to site and permit an electric transmission line in the event that a state either did not have the authority to approve a transmission line or failed to act on an application for a transmission line for one year. This became known as "Backstop Permitting." States traditionally have authority and jurisdiction to regulate the siting and permitting of new transmission lines within their borders. This hasn't changed, but now there was a backstop measure to prevent a state from holding up a needed transmission project.

The legislation tasked FERC with developing rules for its backstop permitting process and FERC did so. FERC interpreted the statute to mean if a state denied an application for a transmission project then it bumped permitting to FERC. But that's not what the statute said! Piedmont Environmental Council and several states appealed FERC's rulemaking in the Fourth Circuit Court of Appeals. The Court found that state denial did not activate backstop permitting in PEC v. FERC. This allowed states to deny a permit to build transmission and end the matter.

Meanwhile, DOE had performed its congestion study and designated two huge corridors, one in the southwest, and one along the east coast stretching from New York to Virginia. The designation of those corridors was also appealed in the Ninth Circuit and the Court vacated the corridors due to DOE's failure to consult with states and its failure to perform an environmental assessment on the huge corridors it had designated. That decision is California Wilderness Coalition v. DOE.

These two court decisions made DOE's NIETC program effectively worthless and the entire thing was put on a shelf and forgotten about. But, in 2021, Congress passed the Infrastructure Investment and Jobs Act that contained a section that is meant to cure the problems with NIETCs, reviving the program. In addition to broadening the reasons for designating a corridor, the new statute allows FERC to site and permit a transmission project in an NIETC that is denied by a state. The law tells states -- either approve it or FERC will do it for you. It does not take the place of state permitting, the states still have authority to site and permit, as long as they don't say "no." Transmission projects cannot go directly to FERC without first applying at the state and going through the state permitting process.

DOE has been busy trying to revive its NIETC program ever since. In May of 2023, DOE issued a Notice of Intent and Request for Information proposing a new procedure for designating transmission corridors. DOE proposed that it accept applications from transmission builders to designate a NIETC that corresponded with transmission they wanted to build. That's not what the statute says... it says

Not less frequently than once every 3 years, the Secretary, after considering alternatives and recommendations from interested parties (including an opportunity for comment from affected States and Indian Tribes), shall issue a report, based on the study under paragraph (1) or other information relating to electric transmission capacity constraints and congestion, which may designate as a national interest electric transmission corridor any geographic area ...

It says DOE must study and designate corridors, not farm it out for suggestions from for-profit transmission builders to come up projects that provide profits. The DOE is supposed to be studying and designating corridors that accomplish the criteria in the study and benefit consumers. There can be a huge difference between a project proposed simply for profit and one that is actually needed by consumers. Designating corridors is supposed to be a government tool to incentivize the building of the right kind of beneficial projects. If DOE thinks (all by itself) that a project is needed, then it designates a corridor that will attract transmission builders to propose a new project in the corridor. Instead, DOE is, as I mentioned in my comments to the DOE, allowing the inmates to run the asylum. And I wasn't the only one, DOE received more than 100 comments on its proposal for designating NIETCs. Many commenters also thought allowing transmission builders to apply for NIETCs was a bad idea. Some thought DOE should perform a legal rulemaking to set parameters for its new program.

Meanwhile, DOE had been working on a National Transmission Needs Study required by the statute as the first step to designating NIETCs. That study was published in October 2023. The study found transmission congestion everywhere, meaning that NIETCs were needed everywhere. Many comments were also submitted panning that study. Mine are posted here.

In December 2023, DOE released a "Guidance" document on NIETCs, in lieu of the requested Rulemaking. The Guidance says that it changed DOE's approach to allowing transmission builders to apply for NIETC corridors. Instead, DOE opened a 60-day window for any person to submit a request for a corridor. Supposedly this cured the DOE's problem with allowing transmission builders to control the process. But it really doesn't. Who else would submit a request for a corridor but a transmission builder? It's a legal sleight of hand that is due a day of reckoning.

Many blog readers got involved in NIETC at this point and attended DOE's webinar explaining its process in early January. DOE was not really forthcoming about all the process that came before that webinar, but hopefully this blog will help you to understand that this didn't just drop out of the sky, but had been in process for more than a year.

DOE's 60-day window for submission of "information and recommendations" for corridors ended on February 2. Many thought this was the one and only comment period for NIETCs, but it was actually designed for transmission builders to submit requests for DOE to study corridors to correspond with the projects they want to build. After DOE's window closed, it began to take a preliminary look at the corridor recommendations it has received and promised to release a list of corridors it was considering within 60 days (which would be April 2). DOE hasn't released anything yet, we are still waiting.

However, NextEra notified Piedmont Environmental Council that it had applied for a corridor in Western Loudoun for its MARL project. I'm pretty sure that is not the extent of NextEra's corridor proposal... the corridor will cover the entire MARL transmission line, from 502 Junction substation in Pennsylvania to Data Center Alley. It makes no sense to request a corridor for only part of a transmission project. However, we will have to wait and see what DOE's list looks like before we proceed with our own response.

Our own response? Oh yes, anyone can make comment on DOE's list for 45-days after it is released due to the way DOE expanded who may submit "recommendations." I urge you to read DOE's Guidance, that separates the designation process into four phases. Phase 1 began in December, when anyone (like NextEra) could submit recommendations for corridors. Phase 2 begins when DOE releases its list of preliminary corridors to be studied. In the 45-day Phase 2 window, any person may submit information and recommendations. DOE is asking for specific information about each preliminary corridor. It seems to be intended for transmission builders who submitted recommendations for corridors in Phase 1 to supplement their applications, err... "recommendations." It does not seem to be intended for people concerned about the designation of an NIETC to submit their own information and recommendations, but we're going to crash this party and give DOE an earful about corridors that concern us. More information about how to participate will be forthcoming after I see DOE's list. After the 45-day Phase 2 process, DOE will decide which corridors will proceed to Phase 3. Phase 3 opens the federal environmental study process required by NEPA. DOE will also evaluate historical resources and endangered species. During Phase 3, DOE will create a draft designation report and open it to public comment. Phase 3 requires "robust" public engagement and notification. This is where DOE wants you to join its NIETC party and make comment, and comes very late in the process, after DOE has already made up its mind in the draft designation report. When all the studies and comment periods are complete, DOE will move onto Phase 4. Phase 4 publishes a completed environmental study and DOE's Record of Decision and final Designation Report. That's the end of the process.

However, a designation may be appealed, first through a Request for Rehearing at DOE, and afterwards through a formal appeal in the D.C. Circuit Court of Appeals (or other circuit where the transmission builder is headquartered).

Is it worth engaging in the NIETC process? Absolutely! Unfortunately it is just one more thing to deal with and will play out during the state permitting process for MARL. If you do nothing on NIETC, you risk all your hard work opposing MARL at your state utility commission being for naught. If your work in the state process causes the state to deny a permit, NIETC can bump it to FERC and start the permitting process all over again.

And speaking of FERC, it also needs to update its process for permitting transmission projects in a designated NIETC. Back in 2005, FERC engaged in a rulemaking for a permitting process. That rulemaking has to be updated for the new process. FERC opened a rulemaking proceeding for siting and permitting transmission in a NIETC back in 2022. The comment window closed way back in May of 2023. However, FERC has not yet issued an order or taken any further action. FERC cannot accept any applications for NIETC projects until it completes its rulemaking. A group of nationwide transmission opponents submitted timely comments on FERC's rulemaking. You can read their initial comments here, and their reply comments here. This group was the only one to speak up for impacted landowners at FERC. You can read other comments on the docket and monitor its progress by going to FERC's eLibrary and searching for Docket No. RM22-7.

As you can tell from the length of this blog post, NIETCs have been quietly in the works for a long time and there are a lot of moving parts. I know it's a lot to understand all at once, that's why I will be publishing some guidelines for landowners who want to kick NIETCs to the curb just as soon as DOE releases its Phase 2 list.

Stay tuned!

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Dirty No.Va. Data Centers Cause Failure to Reach Climate Goals

2/12/2024

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Regional utility FirstEnergy announced on Friday that it was abandoning its interim 2030 climate goal.

After careful consideration and evaluation, in late 2023 we made the decision to remove our interim target to achieve a 30% reduction in GHG emissions by 2030 from a 2019 baseline since achieving it is not entirely within our control.

And why is that, exactly? Well, here's as close to the truth as FirstEnergy wants to get:

Achieving the 2030 interim goal was predicated on meaningful emissions reductions at our Fort Martin and Harrison power plants in West Virginia, which account for approximately 99% of our greenhouse gas emissions.
We've identified several challenges to our ability to meet that interim goal, including resource adequacy concerns in the PJM region and state energy policy initiatives. Given these challenges, we have decided to remove our 2030 interim goal. Through regulatory filings in West Virginia, we have forecast the end of the useful life of Fort Martin in 2035 and for Harrison in 2040.

The climate goal has been eliminated because FirstEnergy cannot reduce emissions at its Fort Martin and Harrison coal-fired power plants in West Virginia. And why did FirstEnergy think it could reduce emissions in 2020, only to backpedal less than 4 years later and abandon its interim goal? What changed in late 2023? What are the PJM "resource adequacy" and "state energy policy initiatives" that made FirstEnergy abandon its 2030 goal?

This!

PJM's new transmission project designed to help import 7,500 MW of energy to Loudoun County Virginia's "Data Center Alley." Virginia keeps approving new data centers and local utilities do not have enough electricity available to power them. PJM designed a new long-distance extension cord that plugs the data centers into new sources of power beginning at the 502 Junction substation in southwestern Pennsylvania.

Of course, substations do not generate electricity. They serve as traffic circles to direct energy in different directions via high-voltage transmission lines. PJM's new transmission snarl, err I meant to say MARL (MidAtlantic Resiliency Link), begins at 502 Junction substation and ends at the new Aspen substation in Data Center Alley. But what generation sources are connected to 502 Junction that can be directed to Data Center Alley? I'll give you two guesses...

Fort Martin and Harrison

That's right... the two generators at which FirstEnergy can no longer reduce emissions are directly connected to 502 Junction.

The red lines on the map are existing 500kV transmission lines that connect Harrison and Ft. Martin directly to 502 Junction. The new MARL project will take it from there, right to data centers in Loudoun County.

This is the reason FirstEnergy has abandoned its 2030 interim greenhouse gas goal. In late 2023, PJM approved MARL. PJM approved the project due to 7500 MW of new data center load and the retirement of 11,000 MW of fossil fuel generation in its eastern region. Resource adequacy and state energy policy initiatives at work.

So, what does this mean? It means that instead of reducing the greenhouse gas spewed into the West Virginia air from FirstEnergy's Ft. Martin and Harrison power stations, FirstEnergy is going to be increasing their carbon emissions. All for benefit of No. Va.'s data centers and the selfish and destructive state energy policies of Virginia and its neighbors.

Northern Virginians who keep approving data centers despite knowing there is no way to power them without imports from West Virginia are directly responsible *COMPLICIT* in increased air pollution, health and environmental impacts caused by continued mining and burning of coal in West Virginia.

Why is this okay?

Don't turn away from this. OWN IT. Don't blame your elected officials or throw up your hands in despair. Make your elected officials OWN IT. Make them publicly say that it's okay to increase carbon emissions to power the data centers they approve. Of course they won't. FirstEnergy has just handed you a sledgehammer to stop data center sprawl. Use it.

Every time you turn on a light switch in Northern Virginia, you are increasing carbon emissions. That's right... the coal-fired power from West Virginia won't just power the data centers... it will power all of Northern Virginia. Give your climate guilt a great big hug, it's going to be your constant companion for years.

PJM's new transmission plans to power data centers in Northern Virginia are going to increase carbon emissions. End of story.

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PJM Charges Ratepayers in Other States for Data Center Extension Cords

2/11/2024

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Virginia has a problem with data centers. It created tax exemptions to draw them in. Northern Virginia is situated near a bloated federal government that needs a place to store all its data. And "data center alley" was born. It has since reached outlandish proportions, and more data centers are being approved every day. Data center sprawl is a serious problem.

Perhaps the biggest problem for the largest concentration of data centers in the world is powering them all. Data centers use huge amounts of electricity, and as new technology created more ways for data centers to burn electricity, it soon became impossible to power them with the electricity available. Couple this with state "clean energy" policy that prohibits the building of any new fossil fuel generation, and you've created a recipe for disaster.

This disaster recently manifested as PJM's 2022 Window 3 transmission plan. Regional grid operator and planner PJM Interconnection was tasked with finding a solution to the closing of 11,000 MW of existing fossil fuel generation in Virginia and Maryland combined with 7,500 MW of new data center load in Northern Virginia. PJM did the only thing it knows how to do... create new electric extension cords across the region that will import electricity to data center alley from fossil fuel generators in other states. The only two states in PJM that export electricity are Pennsylvania and West Virginia, where coal is still king. Pennsylvania produces electricity mainly from natural gas and nuclear, with a significant amount of coal still in its mix. West Virginia's electricity mix is over 90% coal.

The new extension cords are 3 new 500kV transmission lines pumping electricity to data center alley from Pennsylvania and West Virginia. It's bad enough that the new extension cords will plow through communities in other states, expanding transmission easements and cutting new ones, but PJM also expects electric customers in other states to pay for a significant share of the cost of these new extension cords. What do Pennsylvania and West Virginia get from this? New transmission lines, property destruction and devaluation. They don't get any electricity... that's all going to Northern Virginia.

When approving this destructive (and unlikely to actually happen) transmission plan, PJM selected the cost allocation scheme that spreads the costs of the projects as widely as possible across its region. The thinking there is that spreading the $6B cost among as many people as possible won't be noticed by individual electric consumers. If PJM allocated the costs solely to the causers of the new transmission lines (the state of Virginia) then the rate increases they cause will be very noticeable. In fact, it may be so noticeable that businesses and residents may begin to leave Virginia for neighboring states where electricity is more affordable.

PJM is complicit with the State of Virginia to cover up its data center disaster by inflicting new transmission on other states instead of the state that caused it. Sure, Virginia is being allocated a huge chunk, but not all. Another huge chunk is still being spread among all PJM consumers as far away as Illinois, Indiana, Ohio, New Jersey, Kentucky, Tennessee, North Carolina, Maryland, Pennsylvania and West Virginia. This is because PJM selected the cost allocation scheme that allocates 50% of the cost of the new projects to everyone in the region based on their peak load percentage from the prior year. An area that uses a lot of electricity gets a bigger share, for instance electric customers in Northern Illinois are paying a larger share of this 50% than electric customers in Virginia that will actually use the electricity piped in on the new extension cords. Why is anyone in any state other than Virginia paying for this new data center transmission?

The other 50% of the costs are allocated based on cost causation, with load areas at or near the data centers paying a higher percentage. However, the load areas near the data center are enormous. The Dominion zone where the data centers are being built also consists of customers in all parts of Virginia, plus some in North Carolina. The Allegheny Power zone contains customers at/near the data centers, but it also spreads to cover a huge chunk of West Virginia and Pennsylvania. Why are consumers hundreds of miles from the data centers paying so much money to build extension cords for Virginia's new data centers? This isn't fair.

PJM's cost allocation schemes are part of its FERC-approved tariff. However, PJM must receive FERC approval for each individual collection of transmission projects to ensure they have chosen the correct cost allocation scheme for the projects. PJM filed to spread the costs across the region back in January, which opened a 30-day comment period.

While lots of entities intervened in the FERC docket for this cost allocation, only 3 comments were received. That's right... only 3 entities thought this was unfair. Two of them are residential ratepayers, and the other is the Maryland Office of People's Counsel.

I filed these comments. I asked FERC to open an investigation into the justness and reasonableness of PJM's cost allocation and took the position that the "clean energy" policies of Virginia and Maryland caused the retirement of 11,000 MW of baseload generation in their states. Also, only Virginia is responsible for the 7,500 MW of new data center load. West Virginians should not be paying for these new transmission lines. Being the "power house" for the electric supply for Virginia's data centers ties West Virginia into many more years of coal-fired electricity production. Even if West Virginia wanted to close those old, dirty plants, they cannot because Virginia needs the power for their data centers.

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Pennsylvania electric consumer Barron Shaw filed these comments. Barron's comments are similar and underscore the way Pennsylvania and West Virginia are being used to power some of the wealthiest companies in the world. People in Pennsylvania and West Virginia get little to no benefit from these companies or their new extension cords and will actually end up paying higher power prices in their own states as all the "cheap" electricity is sucked out of their own states to power a wealthier economy in Northern Virginia. It's basic supply/demand. Plenty of power makes cheap electricity prices. When so much power is exported that electricity becomes scarce, prices rise.

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Those two comments are probably understandable to the average reader. However, the Maryland Office of People's Counsel also filed comments and expert testimony purporting that PJM picked the wrong allocation scheme and should have used the one that allocates all the costs to the state responsible. PJM's other cost allocation scheme is called the "State Agreement Approach" and is used when a state agrees to shoulder the entire cost of transmission made necessary by its public policies. SAA has been used for New Jersey's offshore wind planning. PJM planned new transmission to support NJ offshore wind, and NJ agreed to pay for it. Maryland OPC believes PJM must break down the suite of transmission projects to determine which ones are for other reasons, and which ones are for the data centers. Once this breakdown is made, Virginia should be charged for the entirety of the data center portion. Maryland's filing is probably a hard read if you don't speak FERC though, so read at your own risk. It may seem like you're reading a foreign language.

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Now it's up to FERC to decide... should electric consumers in other states be charged for Virginia's data center extension cords? Maybe if Virginia had to shoulder the entire cost of its data center debacle it would have to realize that approving a whole bunch of new data centers comes at a cost. Outrageous electricity prices in Virginia are the consequence of out-of-control development. PJM is helping Virginia avoid the true cost of its policies and shuffling costs off onto other states that had no part in approving the data centers and certainly will not see any benefit from them. PJM also selected new transmission projects that put most of the burden on other states. PJM could have selected the proposal that kept new transmission lines in Virginia by connecting to AEP's 765kV transmission system west of Richmond. But it did not. PJM is complicit in Virginia's irresponsible energy policies and therefore responsible for the energy crisis that is the logical result of continued data center development. Why, PJM, why?

PJM won't be successful in getting all these new transmission lines built in other states, and certainly not by their projected "need" dates in 2027. What then? Will the lights go out? PJM made the wrong choice and we're all going to have to pay.

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The Big Transmission Lie

1/16/2024

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As part of the "energy transition" big green, big government, and the electric industry have been promoting an overwhelming need for new high-voltage electric transmission. The message goes like this: we need more transmission to move electricity from new renewable energy generators (solar and wind) to big cities that "demand" more renewable energy.

That message is pure propaganda.

The "energy transition" is squeezing existing fossil fuel generators financially and many are shutting down. This phenomenon is caused by federal taxpayer-funded subsidies for renewable generators and state/local energy policy that requires your electric company to cut its carbon to zero by a certain date. Government policy has finally been successful in forcing the closure of fossil fuel electric generators. Perhaps this is a good idea, environmentally, but it absolutely doesn't work to keep the lights on.

One of the biggest problems is that new renewable generators are not coming online in time to replace closing fossil fuel generators. Instead, we just have less generation. The liars point to regional interconnection queues to demonstrate that thousands of megawatts of wind and solar are waiting patiently to connect to the grid, and blame grid operators and utilities for holding up their connection. Except this is just another lie. Generators in the queue have not yet been built and may never be. Vast numbers of generators drop out of the queue before constructing anything, even more now that the government has completely hosed up the supply chain.

When big, baseload fossil fuel generators close, there is often nothing in the state or locality to replace them. Regional grid operator PJM Interconnection is struggling to replace over 11,000 MW of closing generation. The continuing closures keep pushing our electric grid further and further to the edge. Closure of the last of Maryland's coal-fired electric generators causes widespread grid impacts that can destabilize the grid and cause power outages. But does Maryland care? Not really. Maryland leaves replacing the retiring generation to PJM and other states. Maryland is an energy parasite. Maryland's energy policies are causing unreliable electricity for everyone in the region.

PJM is also struggling with a 40% increase in electric demand caused by Virginia's out-of-control approval of new data centers. Data centers use incredible amounts of electricity that cannot be satisfied with variable forms of renewable energy like wind and solar. Data centers need 24/7 on-demand electricity, even after dark and on calm days. The capacity factors for renewables are much lower than fossil fuels. While fossil fuel generators can stockpile fuel and be prepared to run when needed, renewable generators only run when nature makes their fuel available. Therefore, you'd need many more renewables than fossil fuel generators to maintain reliable power. The big lie pretends that if we only build transmission to connect everything then some renewable generator, somewhere, will be producing electricity. But it won't be producing enough to replace everything else that isn't producing. Pretending that is so is an unproven fantasy, and one we engage in at our own peril. The cost of new generation and new transmission to connect it all is also going to make electric bills skyrocket. The liars say that renewable generation is cheaper than fossil fuel generation, but they don't tell you that's because of government subsidies, and they also don't add in the cost of all that new transmission needed to connect all the renewables. Unsubsidized remote renewables plus transmission is more expensive than existing fossil fuel generation that relies on existing transmission. Fact.

This whole lie has been spoon fed to a trusting public for years. But what happens when the largest grid planner in the country approves a new transmission expansion plan? Is it connecting renewables to load using new transmission?

NO.

PJM's recently approved transmission plan replaces closing fossil fuel generators, and increases electric supply for new data centers, by connecting these areas with existing fossil fuel generators in other states. This isn't about the "energy transition"; it's going backwards to increase the use of coal and other fossil fuels from states without impossible clean energy goals.

PJM's MidAtlantic Resiliency Link, or MARL, directly connects the data centers in Northern Virginia to over 10,000 MW of coal-fired generation. The MARL will enable the export of electricity produced at Ft. Martin (1,100MW), Harrison (2,000MW), Long View (860 MW), Mitchell (1,600 MW), Cardinal (1,800 MW), Sammis (1,700 MW) and Mt. Storm (1,700 MW). Wind, solar, biomass and hydro in this area add up to less than 10 MW. It is indisputable that the electricity carried by MARL will be overwhelmingly created by burning coal.

When will the environmental groups and people who will use this new supply of dirty power wake up and object? Transmission divorced from its source of power is a giant lie.

While Maryland sits around playing "victim" of its dwindling power supply, Virginia is planning a slew of new legislation supposed to make its data center problem "better." However, none of Virginia's legislation addresses the REAL problem -- the generation of electricity. Virginia's legislators try to pretend that electricity comes from new transmission lines.

It would also require the SCC to evaluate current rate structures to see if transmission project costs linked to data centers are being fairly applied or are being spread too widely among the broader customer base.
“One of the benefits of data centers is how much money it brings to a locality,” Subramanyam said. “And we like that, but I also want to make sure that the infrastructure needed to power those data centers, that those costs are reasonable to ratepayers and are not essentially defeating that purpose of the data centers, which is to be an economic boon for a locality.”

Transmission lines are nothing but giant extension cords that are not plugged in. It is only when the transmission line is connected to the generator that it supplies electricity. Looking at transmission while ignoring where the line plugs in is also a giant lie based on denial. Of course, it is a convenient lie for Virginians who want it all... they want the tax money data centers bring, but they don't want to host the infrastructure necessary for those data centers to operate. Attempting to shift the cost of new interstate transmission is a tricky puzzle because interstate transmission rates are a federal issue. While Virginia could direct its electric companies to allocate more costs of Virginia's portion of new transmission to certain rate classes, it cannot do a thing about all the transmission costs being allocated to the 13 other states in the PJM region. As well, data centers most likely don't have their own rate class, so any shifting of costs would also impact other industries in Virginia. This whole cost shifting thing is not solvable at the state level. Virginia needs to stop lying to everyone and trying to have it all.

If Virginia really wanted to take responsibility for its data center problem, it would deny any new data centers that did not have a firm power supply from a Virginia generator. Building new generation near the data center load is not only more reliable, but it's also cheaper than building hundreds of miles of new transmission to existing coal-fired power plants. Does Virginia think those coal plants in other states are going to operate forever? At some point, those aging plants are also going to close, and then what good is Virginia's extension cord when it's not plugged into anything? Are we all being forced to sacrifice for a new transmission line that may only be useful for 10 years or so? It's going to take more than 10 years to get it permitted and built!

Solution: Require Virginia localities that want to approve new data centers to also approve new power generation to support that load in the same locality. If that happened, data center building in Virginia would come to a screeching halt. Virginia doesn't want to shoulder the burden of providing electricity to the data centers that are increasing its tax base. Citizens of other states, such as West Virginia, want to carry your burdens even less. Stop being a parasite, Virginia!

When you hear the word "transmission" remember that it is NOT for the "energy transition" and that it cannot be divorced from the power it transmits. Virginia needs to own the fact that is is profiting off the misery of other states and increasing carbon emissions. And it's not just the data centers that will be using coal power... everyone in Virginia will now be using a lot more coal power from West Virginia, courtesy of the new MARL transmission line. Own it!

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Maryland Clean Energy Plan Relies on Dirty Imports

1/7/2024

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Maryland has ambitious climate goals for 60% reduction of greenhouse gas emissions by 2031 relative to 2006 levels, and to attain a net-zero economy by 2045. Maryland’s plan, just like Virginia’s, can only apply to power generation within the state. Maryland is poised to eliminate coal generation within its borders with the upcoming shutdown of the last three remaining plants, Brandon Shores, Wagner and Warrior Run, already announced to happen in 2025.

But does that eliminate Maryland’s reliance on coal to keep the lights on? No, it doesn’t. Maryland already imports more than 40% of the energy is uses from surrounding states. Maryland’s plan calls for significant new imports after all coal-fired generation in the state retires.

Imported electricity from surrounding PJM states makes up over half of the electricity demand in Maryland in 2031 and contributes to over 95% of the remaining emissions in the power sector. In this pathway, although Maryland achieves its renewable and clean energy targets for in-state generation, the rapid expansion of solar and wind from current levels in this scenario is not sufficient to meet the growth in electricity demand from end-use sectors and to make up for reductions in natural gas generation. This means that Maryland must also increase imports from other states.”

That’s right... in order to keep the lights on in Maryland, it must import staggering amounts of electricity from other states in the region, including West Virginia (91% coal) and Pennsylvania (predominately natural gas and nuclear). There’s no invisible barrier that prevents downwind emissions from Pennsylvania and West Virginia from fouling Maryland’s air. Maryland is a filthy parasite.
Maryland has historically dealt with its failure to build enough of the clean energy it loves by filing lawsuits to force the shut down of dirty generation in other states.

“The petition asks the EPA to issue a finding that 36 electric generating units located in Indiana, Kentucky, Ohio, Pennsylvania, and West Virginia are in violation of the prohibition of 42 U.S.C. § 7410(a)(2)(D)(i), commonly referred to as the “good neighbor provision.” The petition alleges that nitrogen oxides emitted by these units significantly contribute to Maryland’s nonattainment, or interfere with its maintenance of certain National Ambient Air Quality Standards (“NAAQS”)”.

Maryland admits that it has no hope of building enough clean energy generators to power its own state. Why, then, does it continue to shut down power generators without a viable plan to replace them?

The generators are shutting down because of a settlement between Sierra Club and Talen Energy that was the result of a lawsuit. Neither Maryland, nor regional grid operator PJM Interconnection was party to the lawsuit. They just got left picking up the pieces to make sure the lights stay on. Maryland seems to be doing nothing except hoping for more solar, storage and offshore wind to offset a portion of Maryland’s energy deficiency. This is not realistic. Offshore wind has taken a beating recently. Maryland’s big project has recently been paused and is in danger of being cancelled.

But Maryland chooses to bury its head in the sand and push its responsibility to keep the lights on to regional grid planner PJM Interconnection. It’s up to PJM to keep the lights on despite Maryland’s electric suicide plans. PJM employs the only tool it has... new transmission to Maryland from surrounding states with excess fossil fuel generation. PJM seems quite pissed about it too, judging from its recent letter defending against Maryland’s attacks on who will pay for the new transmission.

And then you’ve got Sierra Club, jumping in to shift the blame and telling Maryland what PJM ought to do about the situation Sierra Club has created with its lawsuit against coal-fired generators. Sierra Club thinks PJM should just sit back and indulge in the fantasy that the lights will stay on because Sierra Club thinks they should. Sierra Club doesn’t have a realistic plan, but it doesn’t want to take any blame for what it has done.

Who is running the state of Maryland? Elected representatives or Sierra Club? Meanwhile, electric rates will skyrocket and Maryland will be using more coal-fired electricity than ever. This isn’t an energy transition and it’s not helping the environment. In fact, Maryland seems to be going backwards, put pretending that is is “clean”.
Maryland, just like Virginia, is nothing more than a filthy parasite. But the parasitic “clean energy” policies of Maryland and Virginia aren’t just hurting Maryland and Virginia. The misery caused by their incoherent energy strategies is spreading to other states. West Virginia will mine more coal, burn more coal, and transmit more coal-fired electricity to Maryland and Virginia via new high-voltage electric transmission lines. New transmission lines take property from residents of other states using eminent domain in order to make way for the new lines. And that’s just the physical impacts, residents of other states will also have to pay for the new transmission because Maryland and Virginia’s parasitic energy policies threaten reliability of the entire PJM grid, stretching as far west as Chicago, and as far south as Tennessee.

We cannot continue on this way and package this disaster as a beneficial transition. When the rubber meets the road, state clean energy policies are destroying electric reliability and affordable electricity for everyone.

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Lessons from a Bad Omen

12/20/2023

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The Potomac-Appalachian Transmission Highline, or PATH project died yesterday. It was nobody's friend at the end. I don't think anyone is going to miss it, even PATH itself. It's been an albatross around everyone's neck, including mine, ever since FERC decided to second-guess itself on the matter in 2020.

An uncontested settlement was filed at FERC on November 17 that created a lump sum refund for PJM ratepayers of $9.5M. The refund came as a result of the DC Circuit Opinion back in 2021 that determined PATH's advocacy and advertising costs should not have been collected from ratepayers. Also included in the lump sum was a final accounting for money due under PATH's formula rate. The settlement also provides for the cancellation of PATH's formula rate and cancellation of the companies themselves. In several months, PATH will be nothing but a bad dream and a lightness in your wallet.

Because FERC had failed to act (again) on the DC Circuit remand and a paper hearing FERC opened on PATH's return on equity in 2020, the parties to the long-running formula rate and abandonment cases took it upon themselves to ink out a deal and present it to FERC for approval. FERC allowed PATH to begin collecting money for its project beginning in 2008, and it won't stop collecting until 2024. That's 16 years. Much of that time came courtesy of an overworked and tone-deaf FERC simply ignoring the issues PATH created for years on end. Two years to grant our formal challenges, 3 more years to get them to hearing, 2 more years to issue an order, 3 more years to grant rehearing and do a 180 on FERC's first decision, only a year at the D.C. Circuit Court of Appeals straightening that out, and then 2 more years before the settling parties, including yours truly, finally pulled the plug to short circuit another long period of waiting for FERC to act. To its credit, FERC jumped right on the settlement when it was presented and approved it yesterday, just a mere month after it was filed. But why did it take us doing FERC's job for them to get this resolved?

Yesterday, a public shaming of PATH, utilities, PJM, and FERC itself came courtesy of FERC Commissioner Mark Christie during the monthly Commission meeting. You can watch it here beginning at minute 13:48 and ending at 18:24. Just five minutes of your time to get the satisfaction you've been seeking for 16 years. I love a happy ending like this! PATH was a terrible idea that has caused harm to consumers.

Commissioner Christie also issued a written statement to append to the Commission's Letter Order approving the PATH settlement. You can read it here.

Christie used PATH as a reason to take issue with FERC's overly generous incentives, formula rates, and long-term planning for transmission that is purposed to serve needs that never materialize.

Commissioner Christie has been on the warpath against certain overly-generous FERC incentives, issuing strongly worded statements in 13 cases over the past 2 years (all footnoted in yesterday's statement). He pointed out that FERC has opened several proceedings to investigate and change the Commission's incentive rules since 2019, but still has not managed to conclude those proceedings (PL19-3, RM20-10). Christie also noted that the Commission proposed discontinuing the CWIP incentive in its also pending Rulemaking on Transmission Planning (Docket RM21-17).

A highly politicized FERC means the agency can't get anything done and has found itself at a standoff over many issues over the past 8 years. Commissioner Christie stands alone as the most consumer-focused Commissioner FERC has ever had. He has tirelessly fought for consumers and will continue to do so. Commissioner Christie came to FERC from the Virginia State Corporation Commission in 2021, and will serve until 2025. We need more commissioners like Christie, who have a history of serving at state utility commissions, and less Commissioners from the political and special interest realms that have dominated appointments over the past 8 years. FERC needs to go back to its function as an impartial regulator, not a political vehicle for the policies of the administration in charge. Sadly, I don't see things changing much in 2024.

Commissioner Christie used yesterday's PATH settlement as a lesson and a warning, referring to it as an "omen" of more bad things to come if FERC's policies are not reformed. He used PATH as an example of how these different policies come together to create zombie projects that can pick ratepayer pockets for decades. According to Christie, PATH was originally part of Project Mountaineer, a PJM scheme to import electricity to eastern load centers from the Ohio River Valley's massive fleet of coal-fired generators. Once PJM approved PATH and added the project to its regional plan, that turned on the money spigots. Thanks to FERC's overly-generous award of every incentive possible and its use of formula rates, PATH began collecting its costs from ratepayers in 2008, during its development and permitting stage. The Commission's policies allowed PATH to continue to collect its costs during the long period between PJM's approval and state regulatory approval. Although PATH never received any state approval, and nothing was ever built, its formula rate continued to recover costs from consumers, even after PJM abandoned the project in 2012. PATH is still collecting a cool million (or more) from consumers every year to this day. The Commission's approval of the settlement yesterday shuts off the money spigot... finally.

Commissioner Christie cautioned against making long-term transmission plans based on today's generation choices. PATH demonstrates that those choices can change quickly, although the transmission projects set in motion to achieve them cannot. It was wise advice to a Commission that is poised to pass new long-term transmission planning rules in 2024 based on today's generation choices of wind and solar. The Commission needs to think carefully about saddling consumers with the cost of new transmission that could become obsolete before it is even built, such as PJM's recent slate of projects for the purpose of importing fossil fuel electricity to Virginia's data centers from the Ohio Valley. PJM has acknowledged that new wind and solar additions are not keeping up with fossil fuel generator retirements in its eastern regions, but yet the generators keep closing and the data centers keep being built. Something has to change, or the lights are going to go out. PJM chose to approve a bunch of new PATH projects from the west, including the NextEra/FirstEnergy project from southwest Pennsylvania to Loudoun County.

We should all heed Commissioner Christie's warning, and support needed changes to FERC's incentives and transmission policy choices. A group of consumers filed comments on FERC's transmission planning rulemaking back in 2021. Check out the discussion of the PATH project beginning on page 21.

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This is the same history lesson Commissioner Christie taught yesterday. Christie said the PATH debacle has cost consumers nearly a quarter of a billion dollars over the past 15 years... all for nothing. Christie quoted what Willy Loman’s wife Linda said in Death of a Salesman, "attention must be paid." Let's hope proper attention is paid to the demise of PATH. I, for one, won't miss it. It frees up my time to pay attention to things ahead, such as the new PATH-like projects recently approved by PJM.

Let the funeral dirge play... we beat you, PATH. We beat you BAD.

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How Transmission Lines are Routed

12/18/2023

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New transmission lines are routed by utilities using an extensive process. The actual proposed route is unlikely to resemble preliminary maps created by PJM Interconnection, or Piedmont Environmental Council. PEC simply laid PJM's generalized maps over an interactive map with actual detail. These maps may have shown transmission lines cutting through homes, historic districts, and other valuable assets. That's unlikely to happen when actual proposed routes are released by the utilities building the MidAtlantic Resiliency Link (MARL).

So, how DO utilities develop proposed routes? Here's a look at how they developed the proposed routes for the proposed, but never built, PATH transmission project 15 years ago. Utilities still use the same process today.

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Certain lands and structures are avoided. Here's a list:

The Routing Team developed specific routing criteria in identifying, evaluating, and selecting routes, attempting to minimize:

Route length, circuity, cost, and special design requirements.

The removal or substantial interference with the use of existing residences.

The removal of existing barns, garages, commercial buildings, and other nonresidential structures.

Substantial interference with the use and operation of existing schools, existing and recognized places of worship, existing cemeteries, and existing facilities used for cultural and historical, and recreational purposes.

Substantial interference with economic activities.

Crossing of designated public resource lands such as national and state forests and parks, large camps and other recreation lands, designated battlefields or other designated historic resources and sites, and wildlife management areas.

Crossing large lakes and large wetland complexes, critical habitat, and other scarce, distinct natural resources.

Substantial visual impact on residential areas and public resources.

While trying to avoid those things, the utility must also take these safety and engineering considerations into account:

Avoid double-circuiting or crossing existing 765 kV lines.

Do not parallel existing 765 kV lines for more than 1 mile in any particular location.

Minimize the crossing of 345 kV and 500 kV transmission lines.

Minimize paralleling corridors with more than one existing 345 kV or 500 kV circuit.

Maintain 200 feet of centerline-to-centerline separation when paralleling existing 345 kV, 500 kV, and 765 kV transmission lines.

Maintain 150 feet of centerline-to-centerline separation when paralleling 138 kV or lower voltage transmission lines.

Minimize angles greater than 65 degrees and sloping soils more than 30 degrees (20 degrees at angle points).

Do not triple-circuit lines of 345 kV or greater voltage.

Of course, it's impossible to avoid everything in the first list. The second list consists of engineering and safety standards and cannot be changed. Therefore, while the utility may attempt to avoid your home, it may not be able to avoid your property. Instead of going over top of your home and making it uninhabitable, they may go 200 ft. from your back door. Might as well have taken your entire home, right? I urge you to read this report carefully so you can get a feel for the things that can change transmission line routes so that you are well-armed when MARL holds public meetings in your area to present its initial proposed routes and get your feedback.

Something interesting in this report is the claim that "paralleling" existing transmission lines is somehow preferred... as if the people who live with them won't notice another gigantic transmission line across their property, or simply won't care. Think about it... if you are unlucky enough to have a transmission line routed through your backyard, would you welcome another one? Of course not! A new idea has been formulated since the PATH project called "energy justice." Energy justice means that we cannot keep forcing more and more energy infrastructure on the same people. These unlucky people have already "taken one for the team" by hosting a transmission line (or power plant) nearby. Isn't it someone else's turn? Inherent in this status quo is that objectionable infrastructure projects historically end up in the backyards of populations at a disadvantage. They are not as able as other more fortunate places to fight back and win. Therefore, the disadvantaged communities get the infrastructure thrust upon them time after time. This is not only unfair, it is morally reprehensible. We ALL deserve to live safely and happily on our own property. Nobody is a "throw away" to be ground down under the boot heel of "progress."

Another problem with paralleling is that homes and communities have been built up around old transmission lines that have been in place for decades. In some places, the development is so thick that paralleling causes the taking of improvements made just outside the right of way, whether it is a shed, barn, fence, pool, swing set for the kiddos. It also can include land the homeowner is using for a well and/or septic system. None of these ordinary residential land uses are compatible with transmission easements and will have to be removed. If a home's water and sewage disposal is made unusable, that can make the home uninhabitable. Paralleling is an idea that needs to die.

Also interesting in this report are the routes where the utility proposed tearing down an existing transmission line and rebuilding it on new structures that include both the old circuit and the new one. The unfortunate part of that situation is that the easement must always be expanded to house the bigger structures. This is exactly what FirstEnergy is planning to do with its portion of the MARL -- tear down an existing 138kV line on wooden poles less than 100 ft. tall that is situated on a 75 ft. wide easement, and replace it with a 500kV/138kV 200 ft. tall double circuit on big, new lattice steel towers. The existing easement must be expanded to accommodate this new line.

How much? Well, that seems to be mired in layers of murk. When NextEra originally proposed the MARL, it said it could do this amazing rebuild with only 30 additional feet of right of way. 30 added to the existing 75 equals 105 feet. No way they are putting this double-circuit monstrosity in 105 feet, right next to a parallel existing 500kV line. It doesn't even meet safety code. So, NextEra was either ignorant of the width of the existing ROW, or simply making things up in order to make its project more likely to be selected by PJM. However, PJM decided to give that rebuild section to incumbent line owner FirstEnergy to rebuild its own line to include MARL. FirstEnergy has not yet announced how much it would need to expand the existing ROW. We're in the dark on the rebuild section. However, when routing PATH 15 years ago, FirstEnergy had this to say about expanding that 138kV ROW:

In these cases, the existing transmission corridor already runs through theses areas, and in order to keep the height of the structures lower, the Applicant would work with the holders of these easements to modify them in order to acquire approximately 105 feet of additional ROW.

PATH proposed expanding the existing 138kV easement in Northern Loudoun by 105 feet. 105 plus the existing 75 feet comes to nearly 200 ft. 200 feet is the standard easement required for a 500kV line like MARL. I guess we can expect that FirstEnergy is going to ask landowners for another 105 feet of easement for the 36-mile section stretching from Frederick County, VA to the point in Loudoun where the line turns south towards Waterford. This includes the section in Jefferson County, WV. If you live along this stretch, you may want to measure an additional 105 ft. from the edge of the existing ROW to see how much of your property is going to be gobbled up by expanded ROW, and how much closer it is going to be to your home.

It is our job to educate ourselves if we're going to be successful in stopping the MARL. Taking a look at how utilities actually route transmission lines is the next logical step.

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NextEra Files for Transmission Rate Incentives for its MARL Project

12/16/2023

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On November 22, NextEra filed an application at FERC to be granted certain transmission rate incentives for its MidAtlantic Resiliency Link, or MARL transmission project. Of course, we know that the PJM Board of Managers didn't approve the MARL project until December 11. But somehow NextEra was so certain it would receive the assignment that it felt free to apply for incentives for its proposed project ahead of time. And let's just leave that fact on the table to contemplate.

Here's a link to MARL's filing. It's huge, but you may want to only pay attention to the first 17 pages and the supporting testimony... for now. The weird-looking multi-page tables appended at the end of the filing are MARL's formula rate. This is how MARL determines how much to charge ratepayers for the project. The ones attached to this filing are blank, but MARL will be making future filings with the numbers filled in. That's a whole different process that perhaps we'll examine in the future. The request for incentives is enough complicated crap for today's menu.

FERC's transmission incentives -- a long, complicated story. Pull up a chair and get a cup of coffee, you're going to need it.

Back in 2005, Congress decided that not enough electric transmission was being built. They reasoned this was what caused the 2003 Northeast blackout (I beg to differ, but that's a whole different blog for another day). Congress passed Sec. 219 of the Energy Policy Act directing the Federal Energy Regulatory Commission to establish, by rule, incentive-based rate treatments to promote capital investment in electric transmission infrastructure. Over the course of several proceedings, FERC developed a number of incentives to financially reward and protect utilities who undertook new transmission projects. The incentives have been looked at several times since, with the most recent Notice of Proposed Rulemaking issued in 2020. Although hundreds comments were filed by regulators, utilities, special interest groups, and consumers, FERC has not yet acted. That docket, RM20-10, is still sitting around collecting dust. No one seems to find this more frustrating than FERC Commissioner Mark Christie, who finds himself obligated to approve them every time, but issues virtually the same opinion every time that several of them are unjust and unreasonable and need to be reformed. FERC is at an impasse.

FERC's incentives include ROE adders, hypothetical capital structure, pre-commercial cost recovery, accelerated depreciation and advanced technology, and two that MARL has requested, abandonment and CWIP in ratebase. I've explained them ad nauseam in a special section of this blog, here.

MARL begins by telling FERC that it has already requested and been approved for several incentives, along with a formula rate, for an earlier transmission purchase. Those incentives are:

(i) recovery of all pre-commercial costs not capitalized and authorization to establish a regulatory asset that will include all such expenses that are incurred prior to the time costs first flow through to customers, including authorization to accrue carrying charges and amortize the regulatory asset over five years for cost recovery purposes (“Regulatory Asset Incentive”); (ii) use of a hypothetical capital structure of 60% equity and 40% debt until NEET MidAtlantic Indiana’s first project achieved commercial operations (“Hypothetical Capital Structure Incentive”); and (iii) use of a 50-basis point return on equity (“ROE”) adder for Regional Transmission Organization Participation (“RTO Participation Adder”).

Now NextEra wants two additional incentives for MARL, along with the ability to use them for any subsequent projects.

(i) recovery of 100 percent of prudently-incurred transmission-related costs of the Project if it is abandoned or canceled for reasons beyond the control of NEET MidAtlantic Indiana (“Abandoned Plant Incentive”); (ii) authorization to include 100 percent of prudently incurred Construction Work in Progress (“CWIP”) in rate base for the Project (“CWIP Incentive”); and (iii) authorization to assign the requested Abandoned Plant and CWIP Incentives, if approved, to any newly-formed PJM affiliate of NEET MidAtlantic Indiana that is involved in the development and construction of the MidAtlantic Resiliency Link Project.

What are these two incentives, and what do they do?

First, let's look at the abandonment incentive. It guarantees that the transmission owner (MARL) may collect all its prudently incurred costs for the project in the event that it is subsequently cancelled (abandoned) before being built. First of all, the cancellation has to be out of the control of MARL, such as PJM cancelling the project due to an inability to get approvals or meet in-service dates. PJM could also discover in a subsequent analysis that the project is no longer needed. If that happens, MARL would need to make another filing with FERC detailing all the money it has spent on the project and a statement that they were all prudently incurred. If FERC approves that filing, ratepayers would have to reimburse MARL for its costs, even though nothing is ever built.

Abandonment happens all the time. One of the most famous is the PATH project that was abandoned in 2012 before a shovel ever hit the ground. That debacle cost ratepayers around $500M, for a project that never happened.

In deciding whether to grant the abandonment incentive, FERC evaluates project risks. If the project presents financial or other risks to the utility, then FERC grants it. Therefore, MARL has told FERC that its project is extremely risky in order to be granted this incentive. Some of the things MARL told FERC:

In addition, the Project requires construction of approximately 129-line miles of 500 kV transmission lines, 24 miles of which is located in a greenfield corridor that crosses through Loudoun County, Virginia, which is one of the wealthiest counties in America. Project opposition from residents in this County is foreseeable and may result in permitting delays, undergrounding requirements that may increase the costs associated with the Project, and/or litigation over the Project’s scope and construction. The Project also spans across four different states—West Virginia, Virginia, Maryland, and Pennsylvania—which will require NEET MidAtlantic Indiana to obtain necessary permits and approvals from a large number of different state and local regulatory bodies and will subject the Project to numerous different environmental and other regulatory standards and requirements. Finally, the Project is directly reliant on the construction of a 36-mile increment of 500 kV transmission lines being developed by First Energy as the incumbent transmission owner. Delays or cancellation associated with First Energy’s construction of its 36-mile increment may impact NEET MidAtlantic Indiana’s ability to obtain permits, finalize construction, and place into service the MidAtlantic Resiliency Link Project in a timely fashion.

Additionally, the Commission has also recognized that large, new interstate projects can face substantial risks and challenges not presented by more ordinary transmission investments. Like other large interstate projects, the MidAtlantic Resiliency Link Project will span across four different states and many more localities, each with its own regulatory permitting requirements. The Project also traverses across regions of Virginia, such as Loudon County, that have traditionally been litigious when it comes to new, significant transmission build, and similar opposition is expected here. This opposition could result in Project delays or the inability to obtain certain required permits, such as a certificate of public convenience and necessity, ultimately resulting in cancellation of the Project for reasons outside of NEET MidAtlantic Indiana’s reasonable control.

Could those things happen? Of course, but consider that MARL is making more of them for FERC's benefit. Perhaps it's more useful as a list of vulnerable spots for opponents to attack.

The second incentive MARL requested is CWIP in ratebase. CWIP stands for "Construction Work in Progress." CWIP (pronounced "quip") is the financial account where all the project's capital costs are recorded until it is completed and enters service. It can be treated two different ways.

The first is for the company to add interest to the account each year as it slowly builds during construction, and to begin collecting the costs (plus interest) once the project goes into service. Utilities find this difficult because they have to handle their debt until the project is finished. It hurts their financial health to have huge amounts of unreimbursed debt on their books. It can also hurt ratepayers because when collection begins, it can create huge, lumpy rate increases.

The second is for the company to include CWIP balances in their ratebase and earn a return (interest) on them right away, while the project is being constructed. With this incentive, MARL will begin earning a profit on the money it spends as it spends it. This allows MARL to pump this profit back into the project, instead of investing more of its own money or borrowing. It helps their finances. It can also help ratepayers because they begin paying for the project during construction, little by little, as the costs of the project add up. Instead of a huge rate increase all at once, ratepayers pay increasing costs over time.

What's a ratebase? Now we're going down the rabbit hole of transmission rates. It's extremely complicated, but I'll try to give you the Cliff's Notes version. FERC uses formula rates for transmission. A formula rate is a formula that determines the utility's rate each year so that rates can change without a full rate process each year. Instead of a dollar amount, the utility's rate is the formula itself. The formula is that set of schedules, tables, and attachments that is stuck onto the end of MARL's filing. That's MARL's formula rate. Each year, the formula is populated with amounts from MARL's financial records and calculated using the formula to come up with an actual dollar figure. Ratebase is the sum of all the accounts that earn a return (interest). Ratebase, plus return, is added to the utility's Operations and Maintenance, Administrative and General costs, plus taxes, to come up with the yearly revenue requirement. We pay the revenue requirement each year. It is filtered through PJM's billing system and then the billing systems of the local utilities who send us our bills. The utility must hold public rate meetings each year to present the result of their formula rate calculations. Interested parties, described as those that pay the rates, can ask questions and submit discovery requests to see how the rate was calculated. Yes, that includes people like us who pay an electric bill that includes some portion of these costs. But that's all information for later...

A very simple explanation for how ratepayers pay for transmission is to liken it to the home mortgage that we're all familiar with. The utility pays to construct the project (like the bank pays for your home) and then we pay the utility back over time, plus interest, just like we pay our home mortgage.

Because MARL made this filing so early, before its project was even approved by PJM, the window to intervene and file comments on its request for incentives has already closed. We cannot act on it. However, I can pretty much tell you how it's going to end... FERC will approve it and Commissioner Christie will file a statement saying that those incentives need to be re-examined and possibly cancelled. Therefore, I can't feel too bad about not having to write another FERC filing that does no good. Comm. Christie has got our backs.

And, in closing, I'm going to make one more observation. As we all saw during PJM's planning process, these utilities are falling all over themselves to be selected to build new projects. It is a COMPETITIVE process, and that only happens when participants WANT to be selected. FERC's incentives are meant to encourage utilities to build transmission even though they may not want to, or if it is financially risky for them to do so. Are incentives really necessary in a competitive planning process? Without them, would these utilities still be competing to be selected? Transmission is still incredibly profitable, even without incentives. Transmission owners earn hefty returns on the money they invest building them. Transmission returns on equity are set much higher than other market returns, so that building transmission is the most profitable place the utility can invest its money. They have been as high as 16% when interest rates are up, and as low as 9% when the markets are down. Even then, they are still much higher than anything you can find to invest your own money. FERC returns are loosely tied to markets, so they fluctuate, but once FERC sets the ROE for a transmission project, it is set in stone until another proceeding is opened to re-examine it. Begin a project when the market is up, and you get a high return that can persist for years, even when the markets change. Transmission is a long-lived asset, and it is paid for by ratepayers over its useful life. The expected life of many transmission projects is 40 years. It's like a 40-year mortgage that we're going to have to pay.

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