Category:

FirstEnergy Failure

2/14/2018

FirstEnergy's attempt to transfer its risky, money-losing coal generating plant to West Virginia ratepayers has failed. Finally. It's just too bad all that time and money got wasted on an idea that had no real chance of succeeding. Only a corrupt regulatory system and galling arrogance made it seem like a good idea.

Because the WV Public Service Commission had approved a similar deal for a different company transfer several years ago, FirstEnergy thought it didn't have to try so hard. Its idea to transfer the Pleasants Power Station from its competitive generation company to its WV distribution affiliate was a bold joke, flimsily wrapped in "need" and bad economic projections, submitted with a wink and a nod. FirstEnergy knows that the WV PSC is more interested in the needs of the company than the needs of the ratepayers it was created to protect. Oh, sure, the WV PSC pretends its mission is to "balance" the needs of ratepayers with the needs of the community at large and the needs of the utility. However the utility is perfectly capable of advocating for its own needs, and the communities are so bought out by corporate profits that they act like yappy lap dogs, barking at corporate direction. It is the ratepayers who rely on the regulatory system to protect their interests. Indeed it is the very nature of a monopoly situation that requires regulation to protect ratepayer interests. FirstEnergy's WV affiliate has been granted a monopoly franchise to serve West Virginians. Because FirstEnergy has a monopoly, regulation serves to provide competition where none exists naturally. It is regulation that controls utility actions to ensure a monopoly does not exert market power over captive ratepayers. Therefore, the WV PSC exists first and foremost to protect the needs of WV ratepayers captive in a monopoly system. Perish the thought that FirstEnergy would have to perform and earn its right to own a monopoly franchise. That thought has probably never even crossed the minds of WV's PSC Commissioners. They seem to think they exist to make sure the utility is treated fairly. And that's what they did in the recent Pleasants transfer case.

Knowing that the WV PSC is a captured agency who dances at corporate will, it was much more productive for ratepayers to look beyond the first string of regulators who are supposed to protect them. The Federal Energy Regulatory Commission isn't as wrapped up in the needs of West Virginia's economy or corporate profits, and is not captured in the same way as the WV PSC, whose commissioners are appointed as lobbied by state franchised utilities. The chances were better that an impartial decision would be made at the federal level. And it was. The FERC rejected FirstEnergy's proposal to transfer the plant between affiliates, finding that the transfer resulted in improper cross-subsidization. In plain speak, that means that it was not a fair arm's length transaction. But FirstEnergy, in its sheer arrogance, attempted to apply its West Virginia bag of tricks to influence the federal agency. That's right, FirstEnergy had its attorney call up a FERC Commissioner to try to influence the agency's decision. Somehow, FirstEnergy was aware "that the Commission would shortly issue an order adverse to the interests of Monongahela Power." How was it that a party to a FERC proceeding was aware of a decision of the agency before it was issued? Because FERC is as much a revolving door regulatory agency as any. It's a great landing spot for attorneys fresh out of law school with a mountain of student debt. With just a few years of effort at marginal pay, a FERC staff attorney can make himself marketable to private industry as an "insider." The regulated entities prize these FERC insiders and pay them handsomely. FERC is just a springboard to fat paychecks for some attorneys. That's not to say that all FERC attorneys are using the agency to pad their resumes, I found that there are plenty of staff who take their charge to protect public interests seriously and make a career out of it. Those public employees are treasures, but as you can see, it only takes a handful of bad ones to trash FERC's public service mission. I'm happy to realize, though, that one of FERC's Commissioners put a stop to this underhanded effort and reported the illegal contact from FirstEnergy's attorney. Bravo! But what happens to the attorney who attempted this improper influence? I'm thinking that FirstEnergy's attorney knew calling up the Commissioner like that was against the rules. But he did it anyhow. Why isn't he barred from practice before the agency in the future? The only thing he seems to have received is some exposure. No harm, no foul, he's free to repeat this behavior in the future, perhaps with a Commissioner who may not blow the whistle on him. It is only when improper behavior comes with significant consequences that it will end.

And why did FirstEnergy think improper influence on FERC would save their bacon? Probably because it works in other jurisdictions. I believe that if the same situation played itself out in West Virginia, for instance, that ending the contact and reporting the encounter would not occur. FirstEnergy only does this because it works.

So here we are again at regulation acting as safeguard in a monopoly situation. It's a lesson the WV PSC never seems to learn.

And what happened in West Virginia after FERC disapproved the transaction? The WV PSC approved the transfer, saying that the unfairness of affiliate transactions didn't matter. The WV PSC was totally unconcerned about the fairness of the transaction and whether it violated the concept of competition in an open market where a utility did not have a monopoly. The WV PSC tried to pretend it actually listened to public comment and considered it in its decision. That's a first, but it was contrived nonsense. The WV PSC's decision to approve the transfer was nothing short of a display of disgusting arrogance. Someone's fee-fees seemed pretty bruised that the company did not accept their offer to approve the transaction with a delay. Everyone got some backlash. The Consumer Advocate gets chastised for protecting consumers:

The CAD takes no prisoners in its attempt to “advise” the Commission of its responsibilities. In its Reply Brief, the CAD emphasizes the gravity of the situation by stating that, if this Transaction is approved, “the harm that redounds to West Virginia captive ratepayers will be a legacy of this Commission.”

Seriously? The CAD exists to protect ratepayer interests. Why shouldn't it be direct about the harm to ratepayers? Its job IS to advise the Commission, no quotation marks needed. If the CAD can place a little nugget of guilt into the mind of a compromised Commissioner, it's still not a fair trade for years of increased electric rates. And a Commissioner who resents this effort obviously doesn't have the best interests of ratepayers in mind. If he did, then the CAD's attempt to inspire guilt would have no effect. Think about that.

The WV PSC treats "risk" as a non-starter. The PSC thinks risk exists everywhere and assumption of risk should not be a primary concern in their decision. Except the company failed to accept the PSC's conditions on approval, stating:

Additionally,the Companies will not accept the conditions included in the Commission Order that would result in Mon Power assuming exposure and significant commodity risk, which is inconsistent with FirstEnergy’s announced corporate strategy.

So it is about the risk after all? While the ratepayers are supposed to be unconcerned about taking on additional risk from the transaction, the company can base its decision to abandon the transaction on its aversion to risk? FirstEnergy was trying to transfer its risk to WV consumers, but it was unsuccessful. And that's the bottom line.

FirstEnergy failed. Although it was a rough ride with some hairy, scary moments, ultimately the company ends up stuck with their own mess. We just get the bill.

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No Thanks, FirstEnergy!

11/8/2017

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You can keep your power plant.

That was the conclusion of the West Virginia Consumer Advocate in its reply brief in the matter of the sale of the Pleasants power station to regulated West Virginia affiliates Mon Power and Potomac Edison.

FirstEnergy has been engaged in a scheme to liquidate its failing competitive generation business. In states where generation is competitive, FirstEnergy is all about selling its money-losing assets. But in states where generation is regulated, FirstEnergy has been pursuing profitable "sales" of its failing assets into the regulated system, where it is guaranteed to recover all its costs to run the plant, plus a regulated profit. Several years ago, FirstEnergy was successful in selling one of its failing assets into the West Virginia regulatory system. Ratepayers have paid higher rates to operate "their" power station at a loss. ITYS. Now FirstEnergy has another failing asset for sale and it wants to double down on increased rates for West Virginia electric consumers. This hotly contested issue has been going on for the past year and is finally facing a decision by the West Virginia Public Service Commission.

Our Consumer Advocate, who represents the interests of West Virginia electric consumers, has done the math:

First, the rate benefit to residential ratepayers is a one year benefit of $11.52. The Companies provided no evidence of rate impacts beyond December 2018. The absence of this information is intentional.

As originally proposed by the Companies, if the acquisition of Pleasants is approved, there will be a $31,486,971 net decrease in rates for the 16-month period of September 1, 2017 through December 31, 2018, which is a 1.6% overall decrease. Residential customers would experience a decrease of about 0.9%. The decrease for a residential customer using 1,000 kilowatt-hours per month would be $0.96 per month, which would result in a decrease to $111.52 from 112.48 per month. It is important to note that the decrease in customer rates is guaranteed only through December 2018.

And that "decrease" is an estimate subject to true up with actual costs. Realized "benefit" may be less. In fact, any "decrease" could disappear entirely and turn into an increase.

As well, all risk from the sale of energy from the plant into energy markets will transfer from FirstEnergy shareholders to West Virginia electric consumers. In addition, the risk of owning and operating the plant itself (and its filthy ash pond) will also transfer to ratepayers. On your behalf, the Consumer Advocate says, "No thank you."

West Virginia captive ratepayers are not hedge managers or virtual traders in the PJM markets. If the Commission approves this transaction that is what they will become: buyers of significant surplus capacity that Companies are betting (on their behalf) will provide benefits for years into the future. Pleasants was rejected by FirstEnergy as too risky. The overwhelming evidence in this case contradicts all Companies’ claims that there will be any benefits to captive ratepayers. Now FirstEnergy wants Companies to manage that risk for 500,000 ratepayers. As the legal representative of ratepayers, no thank you. The Pleasants acquisition should not be approved.

If it's too risky for FirstEnergy shareholders, it's too risky for me. This should be a non-starter.

But yet the PSC Chairman is toying with the idea of a
"conditional sale." I guess he must be feeling the pressure from coal companies who don't want to see one of their buyers disappear, plant workers who don't want to see their jobs disappear, and the community around Pleasants who don't want to see one of their employers and tax payers disappear. Why is it up to West Virginia electric customers to suddenly provide these benefits to suppliers, workers and the community? When Pleasants was profitable, FirstEnergy took all the profits, setting nothing aside to compensate these parties at the inevitable time that the plant was no longer profitable. Perhaps it is FirstEnergy who should be saddled with the costs of its own failure. Ordering West Virginians to pick up the burden of FirstEnergy's failure is a losing proposition. How long should we do this? At what point will closure of this old power station release West Virginians from this burden? Will we be forced to pay extra to support coal companies, workers and communities in perpetuity because no one has the foresight to plan for the inevitable? This has to end, and responsibility for the failure should be placed on the party who caused it... FirstEnergy.

A "conditional sale" won't work out any better than FirstEnergy's last "conditional sale" of Harrison. Despite the PSC attaching "conditions" to protect ratepayers from that disaster, we've paid millions in increased rates. A "conditional sale" is a coward's solution to try to please everyone. And guess where the blame is going to go if a "conditional sale" ends up costing ratepayers more money?

The CAD must begin by emphasizing that if this transaction is approved the harm that redounds to West Virginia captive ratepayers will be a legacy of this Commission.

Why does the WV PSC Chairman want to accept blame for FirstEnergy's failure? Probably because he doesn't have to pay for it. You do.

No thanks, FirstEnergy.

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FirstEnergy's Cornucopia Runneth Over

10/4/2017

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What happens when a company plants too many greed seeds and they all ripen at the same time? Dilemma!

FirstEnergy has been experiencing a serious issue with low market prices in PJM making its merchant coal-fired generators unprofitable over the past few years. FirstEnergy's merchant generation company is in serious trouble, with the word "bankruptcy" being mentioned more than once. These generators operate on a market basis -- that the cost to produce power (plus a profit) is recovered in the sales they make. If it costs more to produce power than can be recovered through sales, then these generators create a loss, not a profit.

Instead of simply selling these money-losers at a loss and shedding the liability though, FirstEnergy got greedy and has tried to turn them into a profit for the company. FirstEnergy has been busy trying to stash these plants into its affiliates' regulated rate base in fully regulated states like West Virginia. Once successful, the plant can earn "cost of service" rates at the state level, where FirstEnergy is fully compensated for the cost of operating the plant, plus a regulated profit, by captive ratepayers. Any excess generation produced not needed by affiliate load is sold in the unprofitable regional energy market. And affiliates don't need the generation from these plants when they can purchase cheap power in regional markets instead. Any loss from selling excess power at rates that don't cover the cost to produce it are covered by the affiliates' captive ratepayers. Such a scheme! Why it's positively brilliant to generate a profit from an asset that has been producing a loss!

And so that's what FirstEnergy did. It sold its money-losing Harrison Power Station to Mon Power and Potomac Edison, which has produced a $160M loss to ratepayers in just a few short years. And it is currently deep into the process of selling its Pleasants Power Station to Mon Power and Potomac Edison as well, which will produce additional losses for ratepayers in the future.

But then what happens if the energy markets recover and coal-fired plants are once again made profitable through new revenue streams meant to compensate them for "resilience" and other currently uncompensated benefits provided by baseload generators with on-site fuel supplies? Will new market rules make merchant generators profitable again? Will FirstEnergy suddenly want to own merchant baseload plants again? And, more importantly, will Mon Power and Potomac Edison suddenly want to "sell" these formerly merchant plants back to its merchant generation affiliate because they make more money as merchants than they can in a state regulated system?

What's a greedy company to do?

FirstEnergy, along with other merchant generators, has been pumping the political well for years trying to find some mechanism to make merchant plants profitable again by raising market prices. When that didn't happen quickly enough, FirstEnergy charted a course to dump its unprofitable merchant generators in the state regulated system.

But suddenly, the political seed has sprouted! Last week, Secretary of Energy Rick Perry lobbed a curve ball at FirstEnergy. Perry issued a Notice of Proposed Rulemaking at FERC that requires:

Each Commission-approved independent system operator or regional transmission organization shall establish a tariff that provides a just and reasonable rate for the (A) purchase of electric energy from an eligible reliability and resiliency resource and (B) recovery of costs and a return on equity for such resource dispatched during grid operations. The just and reasonable rate shall include pricing to ensure that each eligible resource is fully compensated for the benefits and services it provides to grid operations, including reliability, resiliency, and on-site fuel assurance, and that each eligible resource recovers its fully allocated costs and a fair return on equity.

The Rulemaking also defined just which resources would not be subject to the new rule, such as those generators "subject to cost of service rate regulation by any state or local regulatory authority."

So, if FirstEnergy is successful in "selling" Pleasants to state regulated Mon Power and Potomac Edison, it cannot take advantage of any new rule to make its merchant plants profitable again.

FirstEnergy must now consider a gamble. Will the new rule happen, and if it does, will it make Pleasants more profitable than it might be in the state regulated system? Or should it continue on with its plans to sell Pleasants into the state regulated system and possibly lose future profits? Or might FirstEnergy have the best of both worlds by selling Pleasants into the state regulated system now, with the intent of buying it back at a later date if the new rule happens and it proves more profitable to operate the plant as a merchant generator? After all, the West Virginia Public Service Commission is just a patsy, standing by to assist while FirstEnergy buys and sells generators into and out of the state regulated system in order to squeak the most profit out of them.

Will West Virginia ratepayers be left holding the bag on FirstEnergy's losses from Pleasants forever more, unable to take advantage of any new rule? Or will FirstEnergy change its mind and decide to gamble that Pleasants will once again be profitable for them under any new rule and withdraw its request to sell Pleasants to Mon Power and Potomac Edison? Or will the WV PSC actually grow a set and deny FirstEnergy's request to sell Pleasants, forcing the company to rely on other new alternatives to bail itself out of bankruptcy, such as new rules?

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FirstEnergy's Dog and Pony Show Tours Martinsburg

9/12/2017

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FirstEnergy's dog showed up to listen to the local ponies whinny and chomp at the bit last night in Martinsburg. It was all so predictable. How many times have we done this in recent memory?

Utility proposes some scheme that will increase its profits. Regulators schedule the required public hearings and maybe one will show up in your locale. The regulator sits at the front of the room and "listens" to the public comments while trying not to look bored. Earnest public ponies put forth time and effort to attend and speak from the heart, hoping they can say something that gets through to the regulator. A court reporter transcribes the comments into a written record that can be read by the other commissioners, or perhaps used as evidence when a decision is issued. I seriously doubt that anyone at the WV PSC even reads the public hearing record, and I've never once seen anything from a West Virginia public hearing used as the basis for any decision. Why? Because the WV PSC is the utility's dog, captive and controlled like any good pet on a leash.

The WV PSC is a captured, reactive regulator who prefers to follow a utility's lead to set policy. The WV PSC isn't a leader, it's a follower. Without a clear vision of its own regarding how utility policy should work in the best interests of the state, the WV PSC allows utilities to chart our course by merely reacting to utility proposals. While other regulators have clear policy goals and demonstrate leadership to utilities by setting the standards that shape utility proposals, West Virginia prefers to let utilities shape the regulatory landscape.

It shouldn't come as any surprise, considering WV's regulatory leadership. C'mon, the WV PSC is lead by a former utility lawyer who took direction from utilities for his entire career. Why would anyone think he'd become a utility leader when sliding through the revolving door from regulated to regulator?

The WV PSC believes its mission is to "balance the interests of all parties." It shouldn't be. As a fully regulated state, the WV PSC should be a utility leader. Regulation is the price utilities pay for the privilege of operating a monopoly for a necessary public service. Regulation is supposed to serve as a substitute for competition where none exists. If a utility cannot perform in the public interest, then it should lose its franchise privilege, allowing others to compete for the privilege of serving the captive customer base.

Instead, the WV PSC behaves as if we must keep the utility happy and healthy, and puts the utility's interests first in any proposal before them. The captive customers the PSC is supposed to protect become nothing more than chattel, used to support utility profits. The WV PSC doesn't care what the customers want, nor what is truly best for the customers. The WV PSC has become completely detached from the public interest, only serving political interests that the utility purchases.

Commissioner Brooks McCabe presided over last night's public hearing in Martinsburg, looking like a brave little puppy, absorbing public scorn over FirstEnergy's proposal to sell a failing asset into West Virginia's regulated system in order to bail out the company. He began the meeting reading a description of the case and giving an overview of the proceedings thus far. He mentioned over 900 comments in opposition to the proposal, balanced by something like 35 comments in support. The audience laughed. If it were all about balancing the interests of all parties, this case would be over.

The few brave souls who made comments in support of FirstEnergy's proposal were all motivated by money, whether it was as a contractor whose income depended upon future operation of a failing power plant, or some political creature dependent on campaign contributions and quid pro quo. And then there were the unions, rightfully concerned about the future of the plant employees, however misguided they were in where funding for power plant jobs would come from in the future.

FirstEnergy has owned and operated Pleasants as a source of profit. The hardworking men and women who have kept this financial asset of FirstEnergy performing for many years have done an admirable job. FirstEnergy owes them a huge debt for their faithful service. But FirstEnergy doesn't care about them, FirstEnergy only cares about profits, and Pleasants is no longer profitable. FirstEnergy owes its workers a soft landing and transition into other jobs of equal pay and responsibility. But FirstEnergy wasn't squirreling away a tiny portion of its profits over the years into a soft landing fund for benefit of its workers. FirstEnergy spent every last penny of the profit these workers created on other important things, like naming rights to a football stadium, or a corporate jet and tax planning services for its over-compensated executives. Now that Pleasants is no longer profitable, FirstEnergy and the PSC believe captive ratepayers should pick up the burden of supporting Pleasants employees and the economic contribution it makes to its community. But the ratepayers never shared in the profits from the plant when times were good, it is only after the profits evaporate that FirstEnergy wants to pass the cost burden onto captive ratepayers. There's no "balance" here either.

A regulator who was a true utility leader might put an end to ratepayer-financed corporate welfare. It would make the utility responsible for the failure of its asset, including the economic impact to its workers and the surrounding community. A true utility leader would chart a clear course for a solid energy future in the public interest for our state, and require franchised utilities to adhere to it or forfeit their franchise privilege.

But we don't have a true utility leader. We have a corrupted and captive utility follower.

Thankfully, there are stronger, smarter, policy leaders in other regulatory venues who also have authority over FirstEnergy's proposal, because the WV PSC is a lost cause.

Neigh.

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Abandoned PATH Properties, Get Your Abandoned PATH Properties Here!

8/8/2017

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PATH is holding a fire sale this month on all those abandoned properties it purchased nearly 10 years ago. Need a gigantic farm property that's not zoned for an electric substation?

How about a nice vacation cabin in West Virginia that's been sitting vacant and rotting for years?

Or perhaps you're in the market for a big lot in a very exclusive Loudoun County, Virginia, subdivision and you don't mind having high voltage transmission lines running through the middle of your property?

Then don't miss these PATH absolute auctions on August 22 and August 23!

Finally, 5 years after the PATH 765-kV transmission line project was officially abandoned by PJM Interconnection and the PATH companies, the property PATH bought with your money is being auctioned off. PATH has been marketing some of these properties for years, with no takers. What kind of a property is marketed for 5 years with no offers? What's wrong with these properties? Buyer beware!

While actively seeking to build the project between 2008 and 2011, PATH purchased outright around $30M worth of real estate to be used as future substations and right of way for its transmission project. Each property has some story attached that serves as an excuse for purchasing it way above its market value at that point in time. Need an ending point for your project? Purchase a farm zoned agricultural and then set about battling the county about re-zoning it. Need to have a conservation easement lifted? Purchase a bunch of property near the easement and then hire lobbyists to influence the governmental entity that holds the easement to release it. See an opportunity property where the owners are struggling financially? Purchase it now and worry about how you may use it later. After all, it's not YOUR money, it's coming out of electric ratepayer wallets, and you're earning a big fat return on every dollar you spend.

How much return? Well, initially, 14.3%, later 12.9%, later still 10.9%, even later 10.4%, and finally, 8.11%. As long as you own those properties, you may collect the corresponding return on your investment from ratepayers.

But when you sell the properties, you must credit the sale price to your unpaid balance upon which the return is calculated. For example, if the balance of your investment is $100, and you sell a property that is included in that balance for $5, then your new balance is $95. An 10% return on $100 is $10. A 10% return on $95 is $9.50. So, by holding onto your properties as long as possible, you will collect the maximum amount of return. So it really wouldn't help your profit margin to sell these unneeded properties quickly. You must hold on to them until the rest of the ratepayer debt is paid and a regulator orders you to dispose of them, then auction them off at fire sale prices and make the ratepayers pay all the auction and commission expenses off the top of the credit they will realize from the sale of property. And then you can hope the ratepayers don't find out about it.

Whoopsie!!!

So, for all those PATH opponents who have been living in suspended animation for the past 5 years wondering if PATH was going to dream up another project to use those properties for a transmission line, you're released from your continuing torture. The PATH companies are finally going away and won't be using the properties for a future transmission project. Now you only have to worry about what a new owner may do with the properties. And how much you ultimately paid, of course. Creative accounting, and feigned uncertainty combined with a failure to effectively market vacant property, will squeeze the last possible penny out of your wallet.

PATH... the gift that keeps on taking.

How do these guys sleep at night?

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Billionaires' Club Looks Out For Its Own Interests First

5/11/2017

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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FirstEnergy Needs You To Toss Them a Rope

1/12/2017

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Awwww.... FirstEnergy had a bad year in 2016.

"There's blood in the water," Jones said in an October interview.

He added, "We've reduced benefits, we've reduced 401(k) matches, we froze wages. We've done a lot of things to try and offset lost revenue, but couldn't offset it entirely … We're evaluating everything we do as a company to try and find a way to close that gap. Because (what's been done so far) is not enough to get us into the position with the credit rating agencies that we need to be in."

And I'm sure Chatty Chuck took a huge pay cut and stopped wasting the company's profits on football stadium signage, too. Wait! What? That didn't happen?

Well, there always selling another antique coal-fired electric generating station to captive customers in West Virginia! I'm pretty sure they're going to try that next as a way to position themselves properly with the credit rating agencies. Because even though FirstEnergy's money problems were of their own making, they want West Virginians to bail them out. Again.

Pleasants, currently owned by a Mon Power sister company, Allegheny Energy Supply, is an aging, coal-fired plant that hasn’t been generating the returns investors want in Ohio’s deregulated energy marketplace. FirstEnergy CEO Charles E. Jones, on at least two occasions in 2016, told analysts the company wanted to shift plants like Pleasants that weren’t making investors enough money in Ohio into West Virginia’s regulated market, saying, “I think later this year, they’ll start (looking) at it seriously, and it’s up to (the West Virginia Public Service Commission) to decide, would Pleasants be the appropriate solution.”

And so that's what they did, issuing a narrow and completely opague Request for Proposals that could only be fulfilled by the sale of Pleasants to West Virginia regulated FirstEnergy subsidiaries Mon Power and Potomac Edison. Once the transaction is completed, electric customers of the two local utilities will pay all the operational costs of the plant, along with a guaranteed profit. That ought to cheer up the credit rating agencies, right?

Well, only if it happens. Only if you allow it to happen. What can you do? Stay educated. Stay tuned...

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Santa Stuffs FirstEnergy's Stocking Full of Serendipity

12/22/2016

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After a year of telling investment wonks that it was planning to sell another one of its unprofitable coal-fired power plants to one of its regulated affiliates, while telling everyone else it didn't need any new generation capacity, FirstEnergy gifted itself with a big ol' sack of serendipity last Friday.

FirstEnergy's Mon Power subsidiary issued a Request for Proposals to acquire 1,300 MW of generation capacity, and 100 MW of demand respone.

Serendipity! The Pleasants power station that FirstEnergy's competitive generation affiliate wants to "sell" to Mon Power is exactly 1,300 MW! It's like some divine power has spoken!

I'm not sure whose gift that 100 MW of demand response is supposed to be, but maybe it was designed to placate someone? Demand response is an aggregated group of power customers who agree to cut their usage during periods of high demand in exchange for payments. So, why not 1,300 MW of demand response and 100 MW of generation? Why not 100 MW of demand response and a 1,300 MW power purchase agreement from an economical regional generation source? Why must we buy the cow, when the milk is available cheaply at the market?

Anyhow, Mon Power also limited its RFP to resources in a small geographic area. Serendipity! Pleasants is located in that geographic area!

And after talking about this "sale" and the issuance of an RFP for months, Mon Power issues its RFP on December 16 and allows one week for eligible resources to "pre-qualify" to submit a bid later? Be sure to get your pack of pre-qualifying paperwork in by close of business on December 23, or you won't be able to bid later and there will be no Merry Christmas for you! Bah! Humbug!

Seriously? They expect everyone to believe they didn't issue this RFP so close to the holidays, with a ridiculously short lead time, in order to limit any competition with the company's own resources? I'm sure FirstEnergy's Allegheny Energy Supply Company has its paperwork all ready to be submitted... the rest of you? Yeah, you need to start from scratch. Right now.

So, why should you care? Because the last coal-fired power station that FirstEnergy "sold" to Mon Power has cost you more than $130 so far. Each. You've gifted FirstEnergy more than $160M, but they still want more.

FirstEnergy is in big financial trouble, and they want you to bail them out of their bad business decisions.

And they arrogantly thumb their nose at customers, competitors, and regulators alike with their serendipitous RFP. They must think this is a funny game, but uncompetitive RFPs can get companies in lots and lots of trouble.

What can you do in the mean time? Why don't you ask Mon Power a question, such as why their RFP is so ridiculously unfair? Or ask if Scrooge helped them with their response dates?

FirstEnergy doesn't even care how bad they look. I guess they think they have this in the bag. Stay tuned, pitckfork wielders...

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Jim Justice's Rocket Ride to Higher Electric Rates

12/7/2016

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Transition teams... landing teams... 24 clowns in a VW Beetle who are subject matter experts, who hasn't heard enough of this nonsense yet?

Sorry. I'm really sorry I feel compelled to actually write about a "transition team." But I guess that's what happens when we elect buffoons to public office. Well, let me revise that... when YOU elect buffoons to public office. My hands are clean.

Yesterday, West Virginia Governor-elect Jim Justice announced his "transition team." It's a list filled with corporate interests. You voters are not on Jim's team.

"This is about getting the best and brightest in the same room to share their ideas for taking West Virginia on a rocket ride to the top."

I'll assume that's a rocket ride to the top of all the bad lists, such as the cost of electricity. Thanks a bunch, Jim!

Jim surely likes his rocket rides. Google "Jim Justice + Rocket Ride" and you'll find that he's been riding his rocket all over the place in the past few months. Must be one hell of a rocket, carrying a big guy like Jim all over like that.

But it doesn't take a rocket scientist to figure out why Jim named former FirstEnergy CEO Tony Alexander to his scheme team. Mr. and Mrs. Tony Alexander of Akron, Ohio, have historically been very, very concerned about the state of political affairs in West Virginia. Do you think that someday, hopefully, we may be good enough for them to actually live here and be buffeted by the consequences of their own political dabbling?

Oh, my, look who contributed to Big Jim's gubernatorial campaign!

Aug 17, 2016
Becky S. Alexander
2936 Ironwood Dr
Akron OH 44312-5809
Contributor's job: homemaker
Where contributor works: self
$1,000.00

Aug 17, 2016
Anthony J Alexander, Sr
2936 Ironwood Dr
Akron OH 44312-5809
Contributor's job: Executive Chairman
Where contributor works: First Energy
$1,000.00

Wow, you're a pretty cheap date for a rich guy, Jim. In fact, I could almost afford you myself. But you're a fashion accessory I don't need. I don't think you'd go with my outfit... ever.

So, Tony the Trickster (and here I thought I'd have to give up that rather delicious nickname when he retired) listed his job as "Executive Chairman" of FirstEnergy. Except FirstEnergy's list of its Board of Directors no longer includes his grimacing mug.

Whose interests does Tony represent as part of Jim's rocket team? Does he still represent FirstEnergy's interests? Or does he simply represent his own interests? I'm pretty sure he still owns a sack full of FirstEnergy stock that he was awarded in compensation for his piloting of FirstEnergy's rocket down the highway to hell for a number of years. Is FirstEnergy paying him for his time spent advising Big Jim? Or is he a free agent, simply volunteering his time as a community service to a community in which he would never deign to reside?

But I'm sure our rocket will get some great polish from Tony the Trickster! He's the one who bought up Allegheny Energy's antique coal fleet, then tried to be a merchant generator and dabble in customer choice markets until his FirstEnergy Solutions subsidiary nearly went broke. I'm certain FirstEnergy was terribly sorry to see him retire before he reached age 65, and never would have considered jettisoning him due to fears that he would bankrupt the entire company before he left.

He's Tony the Trickster! He's everyone's best pal!

This is like a classic horror flick... just when you think the monster has been vanquished he pops out of the closet and

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WV PSC Follows Utility Lead

10/28/2016

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It's really not surprising that our West Virginia Public Service Commissioners continue to fail at leading utilities to act in the best interest of the state's consumers. In a state where Public Service Commission appointments are looked at as political favors, an ill-informed and uninspired regulator continues to march to the beat of utility profits.

Recently, the WV PSC dismissed a petition filed by its own staff and the WV Consumer Advocate to require electric utilities Mon Power and Potomac Edison to issue a Request for Proposals before buying another generator from its parent company in an intimate and opaque non-arm's-length transaction.

The WV PSC found the petition "premature" because the companies have not yet filed an action to purchase more generation.

The PSC previously rejected a motion by the same parties to require the companies to issue an RFP for new generation it claimed would be needed in its Integrated Resource Plan last year.

The PSC contends that the requirement to file an Integrated Resource Plan does not allow the PSC to approve or reject a utility's plan, therefore it must powerlessly follow a utility's lead. The PSC also contends that the companies' promise to issue an RFP for new generation that was part of its settlement in the case that allowed its last inter-company purchase of generation has not been triggered. The WV PSC sits trussed up on the floor like a prisoner, unable and unwilling to act in the best interests of West Virginia's electric consumers, completely useless.

It's word soup and double standards that has the PSC ineffectually sitting on their hands. The last time the companies needed to purchase generation in an internal transaction (Harrison), they claimed there just wasn't time to issue an RFP because the need was way too urgent. If that was the case, then the utilities had not planned correctly. The settlement that allowed the purchase of Harrison required:

If the Companies determine in any annual PJM Base Residual Auction (“BRA”) that their combined capacity obligations for the delivery year covered by the BRA (“Delivery Year”) exceed the Companies’ owned or contracted-for capacity resources for the Delivery Year by 100 MW or more (“Capacity Shortfall”), then not later than the end of the calendar year following the BRA, the Companies will develop an RFP for capacity resources to address the Capacity Shortfall and submit the RFP to the Commission and the Parties for their review and comment. The RFP will allow proposals from both supply-side and demand-side resources.

Everyone hoped that the companies would honor this commitment.

However, the companies turned around and filed an Integrated Resource Plan contending a generation shortfall. In that filing, the companies used a different method to calculate the shortfall that did not depend on PJM's Base Residual Auction.

Mon Power’s Long Term Load Forecast indicates a capacity shortfall starting in 2016, with the shortfall exceeding 700 MW by 2020 and extending to over 850 MW by 2027.

While PJM's auction may not require the companies to acquire more generation, the companies used a different method to calculate a shortfall, and then claimed that it was not required to issue an RFP because PJM's auction didn't indicate the same shortfall.

And the WV PSC let them get away with it! If the PSC wants to use the companies' method to calculate generation needs, then it should never have approved the settlement stipulation that used PJM's method. Conversely, if the PSC approved the stipulation that used PJM's method for calculating generation needs, then it should never have allowed the companies to use a different method in its Integrated Resource Plan. They simply can't have it both ways! Either they have a generation shortfall, or they don't. The WV PSC needs to quit dithering and sitting on its hands.

FirstEnergy has made it perfectly clear that it intends to make Mon Power and Potomac Edison purchase the Pleasants power station.

We will continue to seek opportunities both within the competitive realm and the states to further de-risk the business and convert megawatts from competitive markets to a regulated or regulated-like construct.

We also plan to work with the West Virginia Public Service Commission when they are ready to address the generation shortfall included in Mon Power's integrated resource plan.

So we previously filed the IRP. It showed a need for generation going out a couple of years from now. But that case right now is concluded. So there is nothing that would, unless we were to file something, initiate something, that would come out of that case. So we would be looking as we go forward and continue to monitor the forecast for that company to see how we might want to present something consistent with the IRP in terms of bringing additional generation to Mon Power.

Michael Lapides - Goldman Sachs & Co.

Got it. So there's no formal like RFP process that's about to kick off or that will be undertaken in 2016 or 2017?

Leila L. Vespoli - Executive Vice President, Markets & Chief Legal Officer

Correct. There's no time line associated with that. We would initiate it when we believe it to be the appropriate time.

FirstEnergy management arrogantly tells its investors that it alone controls the timeline in which the WV PSC may examine its upcoming request to have Mon Power and Potomac Edison purchase more generation from the parent company. Only FirstEnergy will decide when the time is appropriate to create another "urgent need" that the PSC must approve without initiating a fair and transparent competitive process.

The WV PSC needs to stop behaving like FirstEnergy's dog on a leash and start doing its job as a regulator tasked with balancing public and private interests to effectively serve the state's consumers. Maybe the political appointees at the PSC need to find out what their job actually entails? I think they all need to read this book.

The decisive regulator makes decisions (1) required by the public interest, (2) when the public interest requires it, (3) regardless of discomfort felt, (4) using a logical method and an active approach.

As long as the WV PSC continues to behave like a lapdog, FirstEnergy will continue to toss West Virginians under the bus for benefit of its company and investors.

At this time, however, we do not see any short-term solutions to the current challenging market situation. Longer-term, we do not believe competitive generation is a good fit for FirstEnergy and are focused regulated operations. And we cannot put investors and our company at risk as we wait for the country and PJM to address the issues with the current construct.

Our PSC should be refusing to put West Virginians at risk! Let's hope they figure out what it is they're supposed to be doing before we're stuck with another costly, outdated generator.

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FirstEnergy Failure

No Thanks, FirstEnergy!

FirstEnergy's Cornucopia Runneth Over

FirstEnergy's Dog and Pony Show Tours Martinsburg

Abandoned PATH Properties, Get Your Abandoned PATH Properties Here!

Billionaires' Club Looks Out For Its Own Interests First

FirstEnergy Needs You To Toss Them a Rope

Santa Stuffs FirstEnergy's Stocking Full of Serendipity

Jim Justice's Rocket Ride to Higher Electric Rates

WV PSC Follows Utility Lead

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