Remember last month when a PJM member challenged the benefit cost ratio for its troubled Transource IEC project?  Apparently that scared PJM so badly that it hauled out its magic math calculator to once again massage the numbers to make Transource economically "needed."

A new PJM whitepaper claims the benefit cost ratio for IEC, combined with the rebuilds of the  BGE Bagley-Graceton line and the MetEd Hunterstown-Lincoln line results in a benefit cost ratio of 2.25, well above the 1.25 limit.  That is, for every dollar spent on these three projects, it will return $2.25 in benefit to consumers.

But that's an aggregate, where the more beneficial rebuild projects bolster the low numbers of the IEC.  And then it goes into a whole big, scary scenario of what could happen if the IEC is cancelled entirely:

Oh, what a complicated web we weave when first we practice to deceive!  There's a whole lot to unpack here.
1.  IEC would relieve looming (but vague) "reliability" issues that may crop up later, so let's go ahead and build it anyhow.  You'll never be able to specifically identify the "reliability" issue that was solved, because it will never occur.
2.  PJM has identified "conductor overloads" on some 500-kV lines that can only be solved by new greenfield transmission.  Oh, baloney!  PJM has used this excuse before as a reason to build the PATH 765kV transmission line 10 years ago.  Turns out PJM was all wet... a rebuild of an existing 500kV transmission line was accomplished that increased the capacity of the line enough to obviate PATH.  It's just not true that 500kV lines cannot be taken out of service for rebuilds.  It happened, despite PJM's claims to the contrary.
3.  It's going to take too long to come up with an alternative using PJM's competitive transmission process.  Seems like this is YOUR fault, PJM!  Meanwhile...
4.  Consumers would suffer, horribly SUFFER, from extreme congestion while PJM's long-winded transmission competition process takes place.  Except we learned recently that congestion in PJM is at a record low.

Now, why did PJM think it was necessary to include a paragraph of fluff arguing against cancelling IEC?  Dr. Freud... paging Dr. Freud...  PJM sure spent a lot of time defending against cancellation.  Must mean it's a real possibility!

Nowhere in this white paper did PJM evaluate what may happen to congestion or benefit cost ratios if it only undertook the rebuilds by themselves.  This is the six hundred million dollar question...  Would the two rebuilds accomplish enough on their own?  How much does IEC drag down the economic benefit of the rebuilds?  PJM chose not to examine the elephant in the room.

Meanwhile, back at the ranch, one of the "beneficiaries" of the IEC project doesn't want to pay for it.  The DC Office of People's Counsel recently filed a petition to intervene in the Maryland PSC case considering the IEC.  The DC OPC has done the math (apparently using a calculator as defective as PJM's that came up with a cost of $170,915,03) and decided that maybe the cost is too great for DC's ratepayers.  The OPC seems rather stuck on the cost of the western segment of the project, which it dubs "ICE West."  I'm guessing OPC objects to paying $55M for a project located in Franklin County, Pennsylvania, located in the outer reaches of lower Slobovia, where no ratepayer from DC would dare to tread.  Franklin County is nowhere near DC, so maybe they can't see any benefit from building a transmission line there.

So, maybe this petition is sort of clueless, but Transource went apoplectic in its response to the MD PSC, cuing up the spurious excuses (nobody served them with the petition!) and avoiding the obvious blunders in the OPC petition.  Again... where's Dr. Freud?

At any rate, this petition from one of the supposed "beneficiaries" of the IEC definitely complicates things at the MD PSC.  Just when Transource thought it had slayed all the dragons in Maryland by paying people off with ratepayer cash...  Maybe the smell of free money was so pervasive that they even got a whiff of it in DC?  The ratepayer-funded jackpot line forms to the left... who's next in line?

Let's face it... the IEC project has outlived its usefulness.  Opposition is a snowball, and it's rolling down hill.  If PJM doesn't get out of the way, it's going to be crushed.  It's time to abandon Transource IEC.

Sadly, nobody listens to the Market Monitor.  His job is to monitor PJM's electricity market to ensure its fairness and that it results in the lowest electric costs for consumers in the region.  Why does PJM need a Market Monitor?  Because, obviously, PJM cannot administer a fair market that benefits consumers on its own.  PJM (100% funded by consumers) doesn't have to implement the Monitor's recommendations.  The Monitor has no real power to enforce its recommendations.  Only FERC can order PJM to take action, and it mostly just sits there and pats its Frankenstein regional transmission operator monster on the head. 

So, what's the point of the Market Monitor?  Right now, there is no point!!  The Market Monitor doesn't care about utility profits or politics, it only cares about the electricity market, and it does so in completely mind-boggling ways most of us can never understand.  Perhaps PJM and FERC should start paying more attention to the Market Monitor's recommendations so that they are implemented.

In it's most recent State of the Market Report (issued in multiple volumes quarterly, and then compiled yearly into a breathtaking volume that rivals War and Peace) the Market Monitor made this new recommendation:

That's something everyone can understand.  Eliminate PJM's market efficiency process.

Just eliminate it.  Get rid of it.  Stop it!  No more planning for new transmission projects for the purpose of "market efficiency."  Coming from the Market Monitor, whose business is market efficiency, it's a stunning proposal.  PJM's "market efficiency" transmission planning process is completely failing the consumers it's supposed to help.

Perhaps if PJM and/or FERC had been paying attention to the Market Monitor's recommendations regarding this PJM process over the past several years, elimination wouldn't be necessary.  But PJM and FERC have completely ignored the Market Monitor and continued to support awful cost drains like the Transource Independence Energy Connection, and FERC even awarded incentives to the project that allows the company to recover every cent it's dumping down the IEC toilet, plus profit, even if it is cancelled.  We're going to pay for this boondoggle, even when no shovel gets put in the ground.  How's that for efficiency, folks?

The Market Monitor has a bunch of issues with PJM's Market Efficiency process.  One recommendation that's been dragging along for years is that there is no process to compare new transmission to new generation to find the most efficient method to eliminate transmission congestion.  Transmission congestion is a economic concept that occurs when the cheapest energy generated in a region cannot reach all the customers in the region.  When that happens, the customers on the other side of the congestion point have to buy their electricity from other, more expensive, generators that can avoid the congestion point.  Often, these generators are located closer to the customers who need the power.  PJM's market efficiency process attempts to build new transmission to eliminate the congestion point, making any electron generated in PJM available to any customer in PJM.  It's utterly ridiculous!  Why use a tack hammer when a pile driver gets the job done?  Building new generation on the other side of the congestion point also gets the job done.  New generation may lower costs to these customers by increasing supply available.  This is how PJM's markets are supposed to work!  PJM can only order the building of new transmission, not new generation.  The market (high prices) is supposed to provide the market impetus that spurs new generation builds.  But if PJM orders and builds new transmission to eliminate the market effects of generation costs, that signal to build new generation never occurs.  PJM short-circuits it with the only "solution" it has in its tool box.  The Market Monitor wants PJM to develop a process to compare the cost of new transmission to the cost of new generation before ordering new transmission.  Building new generation can be the cheaper solution.  It also avoids burdening other customers with new transmission.

PJM has even gone so far as to have FERC okay a method that eliminates potential new generation from its market efficiency planning process.  PJM likes to pretend no new generation will be built, ever, therefore it "needs" to build new transmission to solve congestion issues.

The Market Monitor also takes issue with PJM's benefit to cost ratio determination.

There's a lot more to it, but I'll cut to the chase.  PJM's current process only counts the "benefits" of reduced electric prices for the set of customers on the other side of the congestion point when determining "benefit."  Unfortunately, eliminating congestion with transmission has certain side effects, like increasing prices to other customers who weren't experiencing congestion.  Congestion can never be entirely eliminated, it can only be shifted around.  Opening new pathways for electricity to flow changes supply/demand scenarios elsewhere, such as the Transource project, which will increase costs for Pennsylvania customers by hundreds of millions of dollars by draining electricity out of their well-supplied market.  PJM should subtract the costs to other customers from the "benefits" to the customers who "need" the transmission project before comparing benefits to the cost of the transmission project.  PJM's current process of ignoring cost increases in other parts of its region is skewing its cost/benefit calculations.

There's lots more in the report, but it's kind of hard to swallow for regular folks.  Enter at your own risk!  Even I can only process certain parts, but they are a refreshing voyage  compared the the mountain of hubris and waste PJM produces in any given year.  The Market Monitor is different.  He's your watchdog for the PJM shenanigans that go on routinely. 

In another section, the Market Monitor reports that transmission congestion has been reduced to its lowest level in 10 years.  But we haven't built the Transource IEC yet!  Is IEC really needed to relieve congestion?  Numbers don't lie.

When is PJM going to listen to the Market Monitor?

More importantly, when is FERC going to pay attention?

Why are we spending all this money on the Market Monitor's expertise and advice, when nobody listens to it?  Maybe the ratepayers should take up their own collection to buy the Market Monitor a uniform, some handcuffs, and a studded billy club and encourage him to enforce his recommendations?  I'm in for $5.

It was bound to happen.  The Transource IEC has tanked and fallen below the benefit to cost threshold allowed by PJM.  The sooner PJM admits this and abandons this project, the cheaper it's going to be for ratepayers.  We're all on the hook for the cost of the project, so the sooner they quit spending money on it, the better off we'll be.

PJM is still trying to pretend that the IEC maintains an acceptable benefit/cost ratio, but it got the stink eye from someone who sees through all the baloney at a recent Transmission Expansion Advisory Committee meeting.  Who would you rather believe?  An independent member with no stake in the project, or PJM's assurances that we should blindly trust their magic math?

RTO Insider reports that PJM's analysis of the reconfigured Transource project was challenged by Sharon Segner, vice president of LS Power, at last week's TEAC.

PJM pretends the IEC project has a 1.6 to 1 benefit/cost ratio.  But Segner says that a different project, a rebuild of the Hunterstown-Lincoln 115-kV, will eliminate a lot of the congestion that Transource is proposed to solve.  Now that PJM will be seeking approval for Hunterstown from its Board, the congestion solved by the Hunterstown project needs to be subtracted from the IEC's benefits.  Once that is done, the IEC no longer meets the 1.25 to 1 minimum ratio.

Both of these projects cannot relieve the same congestion, it's one or the other.  How much cheaper would it be for ratepayers to only pay for the Hunterstown rebuild?  The IEC is a dead dog that PJM just won't bury!

We no longer need the eastern leg of the IEC.  Without it, do we really need the western leg of the IEC?  Since PJM has refused to separate these two geographically diverse segments into stand-alone projects, chances are that the western leg cannot stand on its own.  It was always an "add on" to fulfill a transmission operator's eager dream to be able to connect the parallel west to east transmission lines by running a north-south line between them.  Now that the congestion issues in the east can be solved by a simple re-build, the western segment has no basis.  We're spending an awful lot of money trying to make this connection, including rebuilds of other lines that would support this north-south connection.

It's all a house of cards!  So, PJM will be presenting both the reconfigured IEC AND the Hunterstown-Lincoln rebuild to its board at an upcoming meeting and seeking approval for both.

Ya know, I seriously doubt that PJM will give its Board "the complete picture" when it makes it presentation in December. It wants to double count congestion relief benefits on each project.  C'mon... it's one or the other, but not both.  The PJM Board of Managers needs to start acting in the best interests of the ratepayers it works for, instead of its utility members.

PJM is all over the map about the value of the Transource Independence Energy Connection.  Based on PJM's last testimony to the Maryland PSC, the recent re-route of the eastern segment would result in increased costs and decreased benefits.  PJM said this when it was trying to avoid the eastern re-route.

The net benefit PJM calculated for the re-route at that time was $790M.  It barely squeaked by the 1.25 to 1 required benefit cost ratio.

Now PJM says the re-route has a cost benefit of 1.66, or maybe it's 2.10?

Was PJM lying then, or are they lying now?

PJM is using a huge assortment of mismatched numbers to re-evaluate the benefit to cost ratio.

In Transource's settlement agreement with eastern route parties, it uses these numbers.

These new numbers are supposedly based on a PJM analysis from September 25, 2019.  What happened to the $790M estimate?  How did it get to $844?  Isn't that convenient?  Suddenly, the eastern re-route provides more value now that PJM is desperate to get this project approved by hook or by crook.  And it looks like the new costs of the project are more than PJM estimated.  It went from a high estimate of $466M to an actual estimate of $478M.

But we're not done yet.  PJM recently made a presentation at a meeting that claimed the cost of IEC, with the re-route, was $383.63M as of September 2019.  And the benefits number has blossomed as the costs fell.  The benefit number now is $855.19M.  This now brings the benefit-cost ratio to 2.10.  PJM claims these numbers are from a September 2019 re-evaluation. 

Is this the same September re-evaluation where Transource got the numbers it plugged into its settlement agreement?  How did the benefit magically go up $10M if PJM and Transource were using the same set of numbers?  And why is Transource using a different cost figure (nearly $100M more) than PJM is using in its calculations?

What are the real numbers?  We may never know because PJM seems to be using magic math to justify whatever it wants to do on any given day.  Because PJM wants this project so badly, the re-route is suddenly cost effective, when it wasn't before.  The benefit has ballooned to provide a new cushion for increased costs.  Isn't that convenient?

Who believes PJM?  Not me.  They've contradicted themselves too many times over the life of this project.  Either they were lying when they said the re-route couldn't work, or they are lying now when they say it could.  I'm going to go with PJM was lying both times.  This project can no longer be economic.

It was inevitable.  FERC slapped down another one of Public Citizen's frivolous complaints on Thursday.  What a complete waste of time and money.  And I'm not talking about Public Citizen's time and money, I'm talking about YOUR money wasted both by FERC evaluating the complaint, and PJM having to spend time responding to it.  YOU paid for that.

Public Citizen was complaining that PJM was making political contributions and lobbying on the ratepayer dime.  Sounds awful, right?  However, it was nothing but a trumped up cloud of innuendo completely disengaged from FERC accounting policy and precedent.  Like much of Public Citizen's FERC work, it was just crap on a self-aggrandizing bun of politics, liberally smeared with ignorance sauce.  But, FERC is hard, you say,  impossible to figure out, and therefore Public Citizen's effort was honest.  No, it's not.  I'm not even a lawyer, and I managed to figure out FERC.  Sure, it took a lot of effort and time, something Public Citizen doesn't seem to want to invest, preferring its drive-by and dump strategy of being a persistent pain in FERC's ass.  Fabulous.  Whatever.  But it's costing ratepayers a bunch of money responding to this unfounded crap.

So, why was Public Citizen's complaint denied?  It claimed that PJM had made payments to both the Republican Governors Association and the Democratic Governors Association.  Said associations being political associations therefore made the payments campaign contributions, according to Public Citizen.  PJM answered that the payments were for membership in the associations so that PJM could attend association functions and interact with state officials to educate same.  It's pretty cut and dried and rooted in precedent that's at least 15-years old.  This particular argument has been done and overdone in ISO New England, 117 FERC ¶ 61,070 (2006).  Regional transmission organizations may recover their informational and educational costs, even when it enters the realm of politics.  A court has found such expenditures reasonable given the “potential impingement of government action on all stakeholders” and the need for legislative access to information regarding RTO activity.  RTOs enjoy this status due to their lack of a profit motive.  RTOs are profit neutral.  There's no way an RTO can put extra money in its pocket through political activity.  In FERCenese, "...because an RTO lacks a profit motive, it is easier to see that the ISO/RTO is pursuing activities that benefit its ratepayers, when the RTO seeks recovery of costs associated with state policy monitoring." Agree with it or not, it's set in stone.  A lightweight like Public Citizen has no chance in hell of overturning it.

Public Citizen also whined about money paid to lobbying companies.  FERC found the expenditures were related to educational and informational activities and therefore recoverable.

The only request Public Citizen made that could hold a tiny bit of merit was asking that PJM's political activities be publicly posted so that they may be monitored by stakeholders.  Sunshine is a lovely thing!  However, the Commission slapped that down too, saying that PJM's finance committee already combed through these expenses to make sure they were recoverable and that we should trust them.  I'm not so sure about that, but it may have been more about Public Citizen's approach that caused FERC to shoot the messenger.

Another federal energy legal gaffe by Public Citizen comes to a close.  Public Citizen published a whiny press release full of drama that no news outlets bothered to pick up, although a couple had run earlier articles touting Public Citizen's complaint.  Blah, blah, blah... and then there's this:

Oh, for goodness sake!  No utilities think that.  They know better (much better than Public Citizen, apparently).  Public Citizen acts like their actions here set some sort of precedent prohibiting the recovery of political expenditures.  That precedent has been in place for more than 50 years!  It was most recently enforced in Opinion No. 554 issued in 2017.

Public Citizen fails to understand the distinction between RTOs and utilities that FERC made in its order denying its complaint.  Although an RTO may technically fall under some definitions of "utility," they're not actually a utility.  They don't own any utility infrastructure, they merely operate the infrastructure of real utilities.  Real utilities have profit motives that can be satisfied through political activities.  RTOs do not.  All RTO money comes from ratepayers.  They have no other source of funds.  There's no place to put any profits.

Utilities are already prohibited from recovering the costs of their political activities and rejection of Public Citizen's frivolous complaint didn't change that one bit.  It's been tried before by much better lawyers than Public Citizen, based on the same precedent, and it failed.  Spectacularly failed.  No utility is going to use that decision as precedent to say that they believed FERC gave them permission to collect political activity costs from ratepayers.  Honestly, Public Citizen's hubris is stunning.

Why does this matter?  Because Public Citizen has also been engaged in a continual whine that FERC establish an office of the public advocate and provide taxpayer funding to "public interest organizations" like Public Citizen.  They want to be funded by someone else to do even more of this worthless, costly filing of frivolous complaints.  I object.  I spent my own time and money on a successful FERC complaint.  Nobody gave me one thin dime for what I did, however PJM ratepayers received more than $20M in refunds.  I never asked for money.  I did what I did because it was the right thing to do.   And I found that utilities (not RTOs) actually DO wrongly recover the costs of their RGA and DGA memberships and lobbying expenditures.  PATH was ordered to refund those to ratepayers, however even though utilities should be on notice as a result of that decision, I'm pretty sure they still do it.  They do it because nobody is minding the store.  FERC does not normally audit utility rate informational filings, and other utilities and state agencies don't have the expertise or funding to do it.  Utilities get away with it all the time because no one investigates and challenges them.  If, perchance, they do get the hairy eyeball from FERC, a customer, or ratepayer advocate, the utility simply claims it was a mistake and makes a refund.  This game works because the chance of anyone actually discovering the utility "mistake" is slim to none and definitely worth the risk to the utility, who fattens its own bottom line the majority of the time.

Perhaps Public Citizen should spend more time investigating the political expenditures of utilities, instead of taking the easy road of making off the cuff complaints on rate matters it doesn't understand in order to grandstand for the media?  They could actually save ratepayers buckets of money and do something useful for a change.  In no instance should the public, or ratepayers, financially reward Public Citizen for this counterproductive, wasteful behavior.

I haven't written about the Transource Independence Energy Connection transmission project in quite a while, but now news articles are being cranked out about a possible settlement with Maryland state agencies and some landowner parties (including Harford County, Maryland, which technically isn't an affected landowner, but a stakeholder none-the-less).

A settlement may indicate that all parties have negotiated to come to a reasonable agreement on all issues.  A partial settlement indicates that all (or some) parties have negotiated to come to a reasonable agreement on some of the issues presented.  The talked-about settlement seems to fall into the latter category.  There seems to be one Maryland party missing from the proposed settlement, the Maryland Office of People's Counsel.  The OPC represents the interests of electric ratepayers in Maryland as a collective group.  The OPC has opposed the project because of its cost to ratepayers compared to its benefit.  The OPC has not agreed that the Transource project is a good deal for ratepayers.  I agree, it's not.  Not at all.

Early this summer, I watched much of the Maryland PSC Transource hearings (thank you, archived video!).  It became clear to me (and I'm sure to Transource as well) that the Maryland PSC Commissioners were set to deny the project Transource had applied for.  The big stumbling block appeared to be a Maryland law that requires existing assets to be considered before taking new right-of-way for a transmission line.  Commissioners appeared to be considering opposition arguments that the project could be successfully constructed using existing transmission lines and rights-of-way.  The problem with Transource in Maryland became crystal clear.  The project was on the fast track to denial.  The only way Transource was going to ever get this project approved was to fall on its sword and change the route to use existing transmission assets as much as possible.  It was either that or denial.  Take your pick, Transource.

Transource sucked it up and walked back all its baloney about how such a use of existing assets couldn't work.  PJM went along for the ride.  And the next thing you know, Transource and PJM had worked out the alternative suggested by state agencies and landowners to route the project on existing infrastructure.  Next, Transource worked a cloak and dagger settlement process with individual parties that were concerned about routing.  Routing was a huge issue, but it wasn't the only issue.  Keep that in mind as the future unfolds.

Who could fault targeted landowners from accepting a guarantee that Transource would amend its application to prefer a new route that used existing rights-of-way that did not cross their properties?  This is a victory for them, although not a victory for everyone.  These landowners worked hard to highlight the fact that there was a better route for the project that spared their properties, and nobody, even Transource, can deny that fact.  The landowners got part of what they worked for... a better route!  They also set a very important precedent that will affect all PJM transmission projects in Maryland in the future!  PJM had been ignoring Maryland's law about using existing infrastructure, paying it bare lip service in transmission applications.  That is over for good now.  A solid opposition strategy for any future transmission plans emerges from the rubble -- find an alternative that uses existing infrastructure.   Because there's always an alternative.  PJM has moaned and complained that the routing alternative could cost up to $100M more than the original route, and also reduce the savings for ratepayers by hundreds of millions of dollars.  But, in the end, PJM seems to want this project so badly that cost and benefit don't matter all that much.  Price and benefit are no obstacle.  Will PJM be more mindful to give preference to use of existing assets before approving new greenfield projects in the future?  It would be foolish not to, now that opposition has a new tool in their toolbox.

But routing wasn't the only concern of affected landowners on the eastern segment.  They also objected to the economic reasoning for the project, doing much work to expose PJM's self-serving analysis and magic math supporting the project, and once exposed, these factors cannot evaporate.  The routing change, being more expensive and less economically effective, hurts rather than helps PJM's continued support of this project.  The routing change also does nothing for the OPC's position.  The OPC doesn't represent landowner interests, it represents ratepayer issues, and those issues have only been magnified by the proposed settlement.

Another factor here is that no landowner parties from the western segment opposed the project at the Maryland PSC.  Transource's route through western Maryland was very short, and snaked artfully through properties owned by individuals who would or could not oppose the project due to religious reasons.  Transource thinks it has landowner opposition in Maryland tackled.  The OPC is the one remaining wild card.  What does Transource have to offer OPC in settlement?  Even more costs for ratepayers with less benefit?  The settlement isn't a good deal for Maryland ratepayers.  If and how OPC will oppose the settlement remains to be seen. 

The settlement isn't a guarantee that the Maryland PSC will approve it.  It's just Transource's last hope for success in Maryland.

But wait!  Transource must also receive approval from the Pennsylvania PUC before it may build the project.  There is landowner opposition on the western segment in Pennsylvania, where the route hasn't changed, and Transource has nothing to offer these people, except a handful of grease to make it a little less painful.  Kind of insulting, don't you think?

Transource must also update its preferred route in Pennsylvania, and bluster its way through the claims about reliability it lamely tried to raise as a shield against denial before seizing on the routing change necessitated by Maryland's law.  And here's the huge brick wall staring them in the face... the Transource project will cause hundreds of millions of dollars of increased electric costs for Pennsylvania ratepayers while providing them no benefit at all.  Routing is much less of an issue in Pennsylvania, where the PUC may only be put in the precarious position of choosing whether to toss one group of landowners under the bus in order to favor another group of landowners who are satisfied with a changed route.  Routing is a sideshow in Pennsylvania, mere lipstick on a pig.  Pennsylvania also has a powerful and dedicated consumer advocate representing its state's ratepayers, and those ratepayers aren't getting any benefit from the proposed settlement.  In fact, they're not even getting a handful of grease.  They're getting nothing at all.

Increased costs and decreased economic benefit is going to do a number on PJM's cost/benefit ratio.  PJM's magic math was called into question in the original application and evidence was introduced showing it was unrealistic.  A second look may reveal even more magic math as PJM struggles to absorb the additional costs of the re-routed project and decreased economic benefit.  PJM's math is going to go under the microscope.  How does a project using existing rights-of-way (no new land costs, no major environmental studies, no siting issues) and even existing transmission structures (fewer new towers) end up costing more?  And how much money has Transource wasted, just completely wasted, on trying to route and engineer its original route?  Remember, Transource has spent the past several years harassing landowners along the original routes with surveys, turtle hunts, right-of-entry lawsuits, and easement options.  It wouldn't surprise me to find that Transource's pursuit of its original route has wasted more than $100M.  Why was this money wasted?  Because PJM and Transource imprudently failed to follow Maryland law and thought they could bully their way through approvals.  Ratepayers paying for the Transource project will pay all of Transource's costs for its botched original route, in addition to re-routing and re-application.  How could this project still possibly be economically beneficial?  How far down the tunnel are PJM and Transource, and will they ever come out to take a breath and acknowledge what a colossal waste of time and money this project has become?

There is no benefit from the Transource project.  It should be rejected by both state utility commissions because its entire premise of market efficiency has become a costly joke.  Pretending it's not because Transource fell on its sword regarding a routing issue is nothing more than lipstick on a gigantic, gluttonous pig.

Congratulations to the eastern segment landowners who successfully saved their farms and taught PJM a valuable lesson that will benefit everyone in the future!  And renewed support and encouragement to the western segment landowners who will continue to fight for their own interests (and mine as a ratepayer on the hook for this porcine boondoggle)!

It isn't over until it's over.  Just remember, canceling this project outright benefits EVERYONE.  Fight on!

Addendum:  While I was writing this, the proposed settlement was publicly filed at the MD PSC.  You can read it here.

In case you missed it, Pennsylvania's Governor recently signed an Executive Order leading to the state joining RGGI.  What's RGGI?  The Regional Greenhouse Gas Initiative is a voluntary market-based "cap and trade" program intended to limit carbon emissions.  The initiative sets a regional "carbon budget" and member states auction off a set number of carbon allowances that correspond with the budget.  All carbon emissions must be offset with allowances purchased at state auctions.  The regional carbon budget is incrementally reduced each year, shrinking the amount of carbon released into the atmosphere.  The states auctioning off the carbon allowances use the proceeds for whatever they like, such as energy efficiency programs, low-income energy assistance, or subsidies for new "clean" generators.

Does it work?  Depends on who you ask.  Some say it has reduced carbon emissions and electric prices.  Others say it has had no effect on carbon emissions and has raised electricity prices in member states.  And all opinion on the matter is political.

One thing I found interesting is that RGGI fans claiming reduced emissions and prices are giving RGGI credit for factors it had nothing to do with, namely cheap natural gas and the huge shift from baseload coal to baseload gas electricity generation.  In order to properly evaluate RGGI, you must do it in a vacuum.  Our complicated regional electricity markets don't allow such a vacuum, therefore it is truly impossible to determine whether RGGI works or not.

Another interesting tidbit is that RGGI caused emissions "leakage" to non-participating states.  If it's too expensive to emit carbon generating electricity in a participating state, the same generation can happen cheaper in a neighboring, non-participating state.

One thing unavoidable is that requiring generators to purchase carbon allowances creates revenue for a state, and that revenue creates a whole new cost for generating electricity.  Who pays for that?  Electric consumers.  Whether RGGI works to lower prices to offset the new costs gets into a lot of complicated stuff that can be used to bolster claims of success or failure of RGGI.

Pennsylvania is the biggest exporter of electricity.  Generators in the state produce much more than Pennsylvanians use.  Enter Transource.

The Transource transmission project was dreamed up to export cheap energy from Pennsylvania.  Energy in Pennsylvania is cheap because there is a surplus.  Transource will export Pennsylvania electricity to Maryland, Virginia and Washington, DC.  Maryland and Virginia import a lot of electricity, instead of generating their own.

Transource will essentially take from the land of plenty and give to the land of scarcity.  Cheap power into expensive markets.  This lowers prices in Maryland and Virginia, while raising them in Pennsylvania.  This fact was proven during state utility commission hearings on Transource's application to build its project and is no longer debatable.  It's reverse Robin Hood, robbing from the poor to give to the rich.

So, how might RGGI affect Transource's already fragile cost-benefit ratio if it is implemented in Pennsylvania?  Will it lower the amount of electricity Pennsylvania exports?  Will reductions in the amount of electricity produced in Pennsylvania raise its electricity prices?  If the price of electricity in Pennsylvania rises, will Transource actually save money for electric customers in Maryland and Virginia?  What purpose will the transmission line serve if the electric price differential it's based on evaporates?  There's going to be lots of geeks at PJM Interconnection hunched over their abacuses trying desperately to continue the charade that the Transource project serves some purpose other than to provide parent company American Electric Power with a double digit return on its investment.

The answer is a wishy-washy "who knows?"  What is certain is that the Transource project is going to cost regional electric consumers hundreds of millions of dollars in increased electric bills.  Cost = certain.  Benefit = uncertain.

Just one more reason to halt this dated project.

There was a news article many moons ago that quoted PJM Interconnection's government schmoozer as saying "PJM answers to no one."  True in practice, but maybe not on paper.  To whom do the handful of regional transmission organizations and Independent System Operators answer?  On paper, perhaps, it's the Federal Energy Regulatory Commission.  In practice, it might as well be no one.  FERC does little to make RTOs/ISOs answerable to the consumers they're supposed to serve.  As a result, RTOs do whatever they please and answer to no one.

The RTO does whatever it wants and suffers no consequences.  If its planning or data is off, there is no accountability.  Payment of damages is not the solution since RTOs are not-for-profit entities wholly supported financially by electric consumers.  Essentially, consumers harmed by the actions of an RTO would be suing themselves.

Except now the Texas Supreme Court is considering whether the Electric Reliability Council of Texas (ERCOT) should pay damages to a company that built several new power plants based on ERCOT projections that subsequently went under because ERCOT's projections turned out to have been wildly wrong.

Sovereign immunity?  What's that? Sovereign Immunity is a judicial doctrine that prevents the government or its political subdivisions, departments, and agencies from being sued without its consent. The doctrine stems from the ancient English principle that the monarch can do no wrong.

Ahh... here were are again at the question of RTO godliness.  Except RTOs are not governments or government entities.  They are industry cartels, run by a membership of for-profit utility corporations, sanctioned by a federal regulator.  So, who is responsible when an RTO makes a huge mistake that costs another party financial harm?  The consumers who "benefit" from the RTO actions are also responsible for its mistakes.  Is it that RTOs just provide so much benefit that they are allowed to make some mistakes that come off the "benefit" tally?

It seems that way, if you take in the big picture.  RTOs routinely make mistakes in their transmission planning.  Often, an RTO has ordered a new transmission project that is proven to not be needed.  Once an RTO orders a transmission project, consumers pay for it.  But what happens when a transmission project consumers have been paying for is found not to be needed after all?  Consumers still pay for it.  Even when it is not built, the utility "ordered" to build it is held harmless (because it was only doing what it was ordered to do), and is shielded from taking any financial responsibility for the project.  Abandoned transmission ideas are fully recovered from ratepayers, plus interest.  And we're not just talking about minor costs here, we're talking about billions of dollars paid for bad transmission ideas that were cancelled before putting a shovel to the ground.

But what if RTOs found themselves liable for their mistakes?  In the Texas case, it would mean that the company who built the unneeded power plants is made whole, and consumers in Texas would foot the bill for the failed power plants.  How is that any different that what happens every day as a result of failed transmission plans?  A transmission line is fully recoverable, but a generator is not?  Is that because a transmission line is "ordered" and a generator assumes its own risk based on RTO forecasts?  Why are transmission lines more necessary than generators?  They ought all be put in the same basket.

This is an interesting case to follow.  Will RTOs finally have to answer to someone?  Will consumers get tossed under the bus again?  And how do we fix the escalating problem of RTO mistakes?  No accountability increases mistakes.  If there is no penalty for a mistake, accuracy goes out the window.

And what about those for-profit utilities that constitute RTO memberships?  When are they going to be held responsible for their own errors?  In reality an RTO rarely comes up with a transmission idea of its own.  A transmission idea is brought to the RTO by the for-profit utility, and since the RTO is membership driven, the RTO is merely a rubber stamp for its members.  The RTO gives the for-profit utilities a mantle of immunity, a sense that it answers to no one, and failure becomes unimportant because someone else will pay for it.

This article perhaps suggests that RTOs should be government entities, not for-profit utility cartels.  Would that cure the error rate?  Doubtful.  It would just grant immunity to a bunch of inept governmental functionaries captured by for-profit utilities.

Perhaps the member utilities should be responsible for the costs of failed RTO planning?  Of course, as the article points out, they would simply pass these costs onto their customers.  However, the costs would become more visible to consumers and the for-profit utility would have to wear the failure in the court of public opinion.

If RTOs do not enjoy sovereign immunity, perhaps it's time to start holding them financially accountable for their mistakes.

Someone shared this with me.  It's PJM's recent Market Efficiency Update with the 2018/19 Market Efficiency Window list of submitted projects.  For the four identified "congestion drivers" (congestion points to be solved), PJM received 34 proposals (including two with no congestion driver at all - everyone into the pool!).  Of those 34 proposals to relieve congestion, 25 of them are greenfield projects.  A "greenfield" project is one that is built in a place where no transmission currently exists (let's turn that green field into an ugly transmission mess!) and needs new siting on new right of way.

Only nine of the projects make use of existing infrastructure that can be upgraded.  Just 9!  Prices for relieving "congestion" range from $0.1M to $291M, with the higher price tags being attached to the greenfield projects.  Of course it costs more to build new than upgrade existing.

Here's the first problem:  MARKET EFFICIENCY PROJECTS SHOULD NEVER BE GREENFIELD PROJECTS!

Greenfield projects need new rights of way, "negotiated" under threat of condemnation through eminent domain.  Nobody's property, and I do mean NOBODY, should be taken through the use of eminent domain just so someone else far, far away can save a few pennies on their electric bill.  The lights won't go out if market efficiency projects aren't built.  Instead, the market will provide its own solution to congestion if PJM allows it.  But PJM never does.

Therefore, with this slate of bad news on its table, here's a little advice for PJM.

Constructability studies:  Make sure you do them properly this time.  Factors that must be included are land use and ownership, to include recognition of historical properties, century farms, conservation land, and residential areas.  These are the kinds of property takings that inspire entrenched opposition.  This kind of opposition is what kills transmission proposals.  Another is "transmission fatigue" -- repeated attempts to site new transmission in a community.  Once a community comes together to oppose transmission, it is better armed for the next battle.  Even waiting a generation to try again doesn't make for success.  It is imperative that any constructability study recognize the possibility of opposition.  But, pretty much ANY greenfield project is going to meet with opposition, and you never know what you're going to get until the community finds out about the project.

How could PJM overcome this?  How about a public community meeting to discuss the finalists that make PJM's finalist list?  Go see what the community thinks about your proposal BEFORE you approve it, PJM.  BEFORE your transmission owner goes crying to FERC about needing the abandonment incentive.  How about BEFORE any consumer money gets spent on another hare-brained greenfield market efficiency project, PJM?  How about that?

PJM still hasn't learned its lesson.  Market efficiency projects aren't compelling enough to build new lines.  Ever.  Better give those upgrades another look.

PJM filed rebuttal testimony in Maryland last week, and in Pennsylvania on Tuesday, admitting that existing infrastructure is a viable alternative to the IEC-East.  In his new testimony, PJM Vice President for Planning Steve Herling stated that two existing lines owned jointly by BGE and PPL present a feasible alternative to the Transource IEC-East.
 
Both of the existing lines were completely rebuilt within the last five years, and stand empty on one side of the towers.  Both lines originate within two miles of the new Transource-proposed substation, and can be reached from the substation via an abandoned transmission right-of-way.  Both lines operate at the same voltage as the IEC, and one of the lines, the Conastone-Otter Creek, terminates in the same substation as the proposed IEC-East. 
 
Addressing the new statements from PJM, Stop Transource spokesman Barron Shaw stated, “Finally PJM has admitted what was clear to the rest of us long ago: those brand new lines owned by other utilities could be used instead of the IEC-East.   It has taken them nearly two years to admit this, and they only did it under immense pressure from the state of Maryland.  Not only is their process flawed, but their defense of this unnecessary project has been dishonest.  PJM has lost all credibility.”