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FirstEnergy and AEP Flame Out in Ohio; Seek to Strap Ratepayers in Other States

5/3/2016

Well, that was completely unsurprising. FERC said the Power Purchase Agreements requiring captive Ohio distribution company customers to purchase generation from AEP and FE merchant generators don't pass the sniff test.

Even though the Public Utilities Commission of Ohio (PUCO) approved the deals, FERC rules about affiliate transactions cannot be bypassed (or politically influenced).

FERC rescinded previously granted waivers to allow AEP & FE to engage in affiliate transactions without review. The waivers were granted when the companies spun off their regulated generators into merchant companies because the generation companies no longer had captive customers. In that case, any deals between regulated distribution affiliates and unregulated generation affiliates would have been subject to market forces. If the deals were too expensive, then customers could bypass the charges and switch to another, cheaper, generator. But AEP & FE made the mistake of placing the cost burden of these PPAs on captive distribution customers, and not free choice generation customers. Because then the customers would choose a cheaper generator.

Contrary to some of the articles I've read, the FERC decision does not reverse the PUCO's decision to allow the cost of the PPAs to become the responsibility of captive distribution customers. It simply rescinds its prior waiver of review of the PPA itself. The companies are now free to submit the PPAs to FERC for review. If FERC approves them, then everything can proceed as planned. However, it is unlikely that FERC will approve the PPAs because they allow AEP & FE to charge their captive customers to subsidize their shareholders profits.

So, what's a greedy and poorly managed utility to do? FE initially wanted to pretend that its PPA will be found just and reasonable by FERC. How much money and political influence would THAT require? Remember, the cost of civic and political activities is the financial responsibility of shareholders, not ratepayers. The cost of buying FERC is likely to obviate any temporary profits that may come from an 8-year PPA. They're not a cheap date like state utility commissions. However the company has apparently crunched the numbers and come to its senses. FE is now attempting to bypass FERC review by doing away with the PPA, while still collecting the charge it would levy on Ohio consumers. AEP is being a little more realistic, if not downright arrogant. AEP's CEO soothed investor agitation by claiming it will make the Ohio legislature re-regulate generation so that it may collect the cost of service, plus a return, for its Ohio generators. This would effectively end retail generation choice in Ohio. Is legislation that will cost Ohio electric ratepayers more money really that easy for AEP that it simply needs to want it and wave its magic wand? Time will tell.

Meanwhile, FirstEnergy wants to make its regulated Mon Power and Potomac Edison affiliates in West Virginia purchase another non-competitive generator from its competitive generation affiliate. It's just like re-regulating generation in Ohio, but the legislative work is already done. And FirstEnergy has already successfully pulled off a similar affiliate transaction a couple years ago when its competitive generation affiliate "sold" the Harrison Power Station to regulated Mon Power and Potomac Edison. West Virginia electric consumers have already bailed out one of FirstEnergy's uncompetitive generators, what's one more? This time, FE wants to "sell" its Pleasants Power Station to Mon Power and Potomac Edison. But Mon Power already owned an 8% share of Pleasants, which it "sold" to FE Generation as part of the Harrison deal. Now FE Generation wants to sell the same power station back to Mon Power. Pleasants is like the FE hot potato, bought and sold among affiliates as necessary to generate cash. The only fly in the ointment this time is that FE put a price on Pleasants when it "sold" it last time. I'm sure the cost to Mon Power can't be more than what FE Generation paid them for the plant a couple years ago. It's not like the price of antique coal generation stations has shot up in the past few years. But, never fear, I'm sure FE can pay the right people to convince the WV PSC that the plant is as valuable as the amount of cash FE needs to raise from its sale.

And don't forget... all this stashing of competitive generators into regulated companies is only temporary. If power prices recover and these generators once again become competitive, AEP & FE will find a way to "sell" these plants back to their competitive generation companies. It's all about shareholder return and making as much money as possible.... and ratepayers are the source of investor owned utility profits. The idea that regulation protects consumers in the absence of competition is nothing more than a fig leaf. Utilities that operate in both a competitive and regulated environment will continue to shift assets around to generate the most profit for their shareholders.

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Utilities Always Win In Current Regulatory System

4/9/2016

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Odd little bit of filler in a NW Arkansas newspaper this week. Bloomberg's In East, power costs fall, bills rise, tells Arkansans about utility hijinks in another part of the country. But these hijinks aren't local only to the east, they're as old as the utility business itself.

When regulation or markets find savings for ratepayers, utilities raise rates elsewhere to make up for it. Utilities, for the most part, are afraid of change. They refuse to make themselves relevant in a brave, new consumer-driven world. Instead of offering products and services that consumers actually want, utilities continue to force consumers to accept the products and services the utility wants to provide. At some point, utilities are going to make themselves irrelevant, because a consumer-driven world is here and it's not going away.

Ohio's utility tedious twins, American Electric Power and FirstEnergy, epitomize utility hijinks to ward off this brave, new world. While being all for deregulation of generation in Ohio when it was profitable, FirstEnergy has changed its tune and wants its generation to be regulated again. In West Virginia, FirstEnergy "sold" generators owned by its competitive affiliate to its distribution affiliate. The problem?

Spot power traded in the market run by PJM Interconnection LLC has averaged about $31 a megawatt-hour this year. That's less than half the $84.55 average in 2008.

Suddenly, competitive plants that were making a profit for the utility were not longer profitable. PJM's "market" had worked so well that older plants that are more expensive to run (such as antique coal plants) were no longer profitable. In a market situation, these plants would close and be replaced by cheaper alternatives, such as natural gas plants. Instead of changing though, the tedious twins sought out ways to make consumers pick up the costs of their plants so they could remain open and "competitive" in PJM's "markets."

After stashing their West Virginia plants in the state's regulated system, the twins came up with an idea to thwart Ohio's supposedly "competitive" generation system by selling the plants' generation into the state's regulated distribution system. The companies concocted power purchase agreements, whereby all regulated distribution system customers would make up any market shortfalls by purchasing the "competitive" generation at the company's cost. In turn, the company would sell the generation into PJM's "market" and leave consumers with any balance the "market" didn't cover. That's the definition of anti-competitive. No other generators in Ohio have the option of having regulated distribution customers pick up the cost of anti-competitive plants. If other plants aren't profitable, they close. That's how the "market" works.

But these utility schemes aren't long term commitments, no matter what the utility promises to score regulatory approval. The minute these schemes aren't profitable, the utility will propose a new scheme to make sure the profits continue. Does anyone actually believe that AEP and FirstEnergy will honor these PPAs in later years if they actually do begin to pay consumer returns at the expense of the company? Hell no. If that ever happens, the utility will find a way to get out of them and return them to a "competitive" business model. The utility never loses in our current regulatory system. The consumers are the perpetual losers.

Another utility scheme is to make up for losses on the competitive generation side by increasing profits on the regulated business side. Regulated transmission pays great returns and can earn additional financial incentives through federally regulated rates. It's not like we "need" a whole bunch of new transmission, it's that utilities need a way to make money. All of a sudden the transmission system, long neglected, has become rickety and failing and must be replaced. Serendipity! If a utility can earn double-digit returns building or rebuilding its transmission, then that's what they do. Utilities with stated rates are paid a set amount for maintenance of their transmission assets. But what happens if they don't spend all that money? It's added to share holder dividends. So, if a utility is hurting and looking for ways to increase share holder returns, the first thing they may do is cut maintenance spending. A look at any utility's quarterly calls with investors demonstrates that cuts to maintenance happen all the time in order to boost share holder dividends. But what happens to the transmission assets that aren't maintained? They become rickety and begin to fail. Serendipity! At that time, the utility determines that the transmission line needs to be completely rebuilt and earns a double-digit return on its "investment."

The transmission investment smorgasbord is why rates have increased, despite falling generation prices:

As the price of electricity in the region fell by half over the past decade, utilities raised monthly bills for residential customers by 26 percent, according to government data. Consumer advocates say the power companies are using falling electricity costs as cover to raise other charges. Utilities counter that they are passing on billions of dollars' worth of government-mandated improvements to long-neglected infrastructure.

Consumer advocates say this scheme isn't "fair" to consumers. But no end to the transmission feeding frenzy is in sight. While utilities spend their cash on profitable transmission investments, less profitable investments in the distribution system suffer. When state-regulated distribution investments pay an equal or better return than federally-regulated transmission investments, perhaps we'd see some attention paid to our rickety and failing distribution system.

Here's the lesson: The utility always wins because regulators have been conditioned to care about the utility's well-being over that of the consumer. After all, the utility is a constant in the regulatory realm, while consumers rarely show up. Only when regulators force better solutions will consumers benefit. Perhaps that's when utilities will realize they need to make themselves relevant to consumers by offering products and services consumers want, instead of force-feeding them the products and services the utility wants to offer.

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FirstEnergy's Switch is Off in West Virginia

3/1/2016

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Have you heard or seen one of FirstEnergy's vomitrocious "The Switch is On" ads recently? I heard one on the radio the other night, although it could have been directed at other FirstEnergy distribution customers in surrounding states.

At any rate, FirstEnergy is launching its first major advertising campaign in 19 years! And you're the beneficiary (also the financier -- every time you see or hear an ad, someone adds money to your electric bill, and maybe kills a puppy, but I'm not sure about that last part).

What's this campaign about? It's about FirstEnergy's environmental stewardship. FirstEnergy wants you to know what it has done to protect the environment:

They invested $10B in environmental protection efforts. Of course, the cost of that, plus a healthy double digit return for FirstEnergy, gets added to your electric bill. Who invested $10B?
They have reduced the amount of water used to produce electricity in their power plants (because they were forced to do so by regulation, kicking and screaming all the way -- you also paid for that).
Eleven percent of their energy resources are renewable (again, regulated against FirstEnergy's wishes, and at your expense). Who cares how many hours of wind generation FirstEnergy supported. It still only totals 11% of their generation portfolio, right?

Here's what FirstEnergy promises to do in the future, now that their switch is on:

Have a "goal" to reduce CO2 emissions by 90% (of their 2005 levels) by 2045. But this only happens if the Public Utilities Commission of Ohio approves their plan to make Oho ratepayers subsidize their dirty generation plants for the next 8 years. What's 90% of an unspecified number? Is there an algebraic equation for that? X = 90% of Y. Anyone who can answer this homework question receives a gold star! Oh, and did I mention you'll pay for this further CO2 reduction, too? You will.

That's it! Now don't you feel much more educated about FirstEnergy's environmental stewardship than you did 10 minutes ago? No? Not much of a plan, is it? It is worth the millions of dollars this campaign is costing you? And why would you care about what's going on with FirstEnergy's Ohio rate case? My radio gets some funky stations from time-to-time, but none from Ohio. So I'll assume there are some other benefits West Virginians are getting for their advertising dollar.

Maybe this video of CEO Chatty Chuck Jones explaining his company's environmental stewardship will do it?

WAKE UP!!!

Did Chatty Chuck put you to sleep, too? Sorry about that. Engaging TV personality he's not.

Wait? Did Chatty Chuck say, "We've supported energy efficiency throughout our 5-state region?" What five states would those be... let's see... Ohio, New Jersey, Pennsylvania, Maryland and... not West Virginia? He can't mean to include West Virginia in that, can he?

Why, just this morning I read an article about how FirstEnergy is blocking an important energy efficiency bill at the West Virginia Legislature! SB 370 has been sent to "purgatory" in the Rules Committee because FirstEnergy has "come forward with a potential problem" with the bill. In other words, FirstEnergy does not support energy efficiency in West Virginia. The bill would "allow local governments to adopt energy efficiency partnerships with commercial building owners to help finance energy efficiency improvements on the property." Isn't that energy efficiency, Chuck? It doesn't sound like you're supporting it. In fact, your corporate motormouth, Toad Meyers, says:

“FirstEnergy already offers low-income customer and commercial lighting programs in West Virginia, and we are on track to achieve our 0.5 percent energy savings target by the end of 2016,” Todd Meyers, a First Energy spokesman, said in a statement. “We strongly believe that these and any future energy-efficiency programs are best managed by the utilities as overseen by the Public Service Commission of West Virginia, which balances the needs of both customers and the utilities.

“Local governments are better positioned to provide their residents with necessary core services such as police and fire protection, road maintenance, and the like,” he added.

FirstEnergy’s West Virginia utilities have gotten a reputation of offering fewer energy efficiency programs for Mountain State residents than the company offers for other states, such as neighboring Ohio and Maryland. But the utility argues it's a matter of cost in West Virginia.

"The reason is simple enough: surrounding states such as Pennsylvania and Maryland have state laws that mandate energy efficiency programs. At the same time, utilities operating in those states also recover all costs from their customers associated with operating these programs," Meyers said. "In Maryland, for instance, residential customers pay about $7 per month, each and every month, as part of their electric bill to support these programs, whether or not they ever participate or redeem a rebate.

"There is definitely a general misconception that these programs are free… they’re not," he added. "And there has been significant pushback over the years from businesses and residents in states with mandatory programs who don’t like paying the costs every month to subsidize other customers’ appliance purchases and other rebates."

Meyers also said Mon Power and Potomac Edison plan to file plans for Phase II Energy Efficiency Programs "to help customers achieve additional energy savings in the near future, with rollout occurring in mid-2017, contingent on PSC approval.”

What is up with that? What is up, Chuck? (My lunch, after watching your video, but I digress). You'd better grab Toad by his power cord and reprogram him, Chuck! He's turning you into a liar! Worse than that, Toad has managed to contradict himself in just a few short paragraphs. After stating that "FirstEnergy already offers low-income customer and commercial lighting programs in West Virginia," Toad also says, "there has been significant pushback over the years from businesses and residents in states with mandatory programs who don’t like paying the costs every month to subsidize other customers’ appliance purchases and other rebates." But isn't that exactly what the majority of West Virginia's ratepayers do? Residential ratepayers pay monthly energy efficiency fees to support programs that are only available to low-income and commercial lighting programs! Like, duh, Toad!

So, FirstEnergy is not supporting energy efficiency in West Virginia. They're also belittling West Virginia's local governments, presuming them too stupid to govern anything to do with energy. Because that's best handled by utilities (so they can make sure nothing a local government does harms their greedy bottom line). Ain't that right, Chuck?

And what's that you say about being most proud about your employees? I will agree that your front line employees are your ONLY redeeming asset. But why is it that you want to harm them with "Right to Work" legislation, cutting benefits, and union-busting? The way you treat your employees is shameful. Proud my ass. Just remember, without them, you are nothing. When's the last time you hiked your bulk up a utility pole, Chuck? I fear you're not contributing to keeping my lights on!

And how come there were no little video clips of your corporate employees, like Toad mouthing off to reporters and contradicting himself? Aren't you proud of him, too? I didn't see one corporate stuffed suit in that whole video, except for yours, Chuck.

Maybe it's because that snooze-fest was "Produced by the Communications and Marketing Department?" While I'm thrilled you didn't waste any of my money hiring a real advertising firm to create an engaging and entertaining campaign, tell your Communications and Marketing Department not to quit their day jobs. Even Charles Ryan could have done a better job than that. Like maybe they could have given you a banana phone for a prop, Chuck, or perhaps even a clown hat? Everybody loves a clown! And wouldn't it have been fun to subject a cute puppy to your filthy environmental practices, and then show him still alive (but a bit dirty and singed around the edges) after 30 days? Doesn't that just tug on the heart strings?

The switch is on.... but nobody's home!

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WV Legislature to "Fix" Public Service Commission with Investor Owned Utility Money

1/23/2016

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Well, bless their little hearts. Some WV legislators still believe elections aren't controlled by corporate money.
As if WV's current governor-appointed PSC Commissioners aren't bad enough (completely clueless political favors or biased industry plants), a handful of legislators have set their sights on guaranteeing that future Commissioners are on the utility payroll.

A couple of bills intended to "fix" our awful public service Commission could end up making matters worse.

First up, HB2238 attempts to fix the PSC by geographically spreading out the commissioners to have one from each congressional district. Whatever. This one is harmless.

But HB2483 wants to elect commissioners. And where do these legislators think PSC candidates will get their campaign money?

They will get it from the investor owned utilities they would "regulate" if elected. And how do you suppose these "elected" commissioners would vote on proposals by their campaign funders?

In other states that elect PSC commissioners, the vast majority of PSC campaign money comes from the utilities the PSC regulates.

Alabama PSC funded by coal.
Georgia PSC funded by utilities.
Louisiana PSC funded by utilities.
Accusations of utility influence fly in Montana PSC race.
76% of Nebraska PSC campaign donations from utilities.
South Dakota PSC candidates accept unlimited donations from utilities they regulate.

Other problems:

PSC Commissioners moonlighting as industry lobbyists.
PSC Candidates funded by utility contractors when law prohibits direct utility contributions.
Candidates for New Mexico's Public Regulation Commission receive public funding for campaigns since 2003.
Oklahoma regulator accepts congressional campaign contributions from utilities she regulates.

And because PSC Commissioners would be elected from three different districts, that would remove the current requirement that at least one of them be an attorney. It would also toss out the window the current requirement that only two of them can be from the same political party.

Considering a huge majority of the voters electing utility-financed PSC candidates have never heard of the PSC and have no idea what they do, is it a good idea to let these clowns elect commissioners based on TV ads or party affiliation?

As long as the governor appoints commissioners, we stand a chance of getting decent commissioners from a decent governor. Once utilities can influence PSC elections, there is absolutely no chance of getting a decent commissioner. None.

Kick this legislation to the curb. Uninspired and thoughtless "fixes" may just cause further damage.

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Clean Power Plan Does Not Require "A Tangled Mess of Hulking, Long-range Transmission Lines"

1/12/2016

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The Pittsburg Post-Gazette's "Power Source" energy news believes the Clean Power Plan will require "a tangled mess of hulking, long-range transmission lines." Not true, and the report's "facts" are fallible.

The reporter seems to rely on energy platitudes, pasted together with quotes from people who should have been asked about the conclusions the reporter made.

Such as:

Opponents used some of those arguments to successfully derail the Potomac-Appalachian Transmission Highline, a 290-mile line from Putnam County, W.Va., to Frederick County, Md., proposed by Allegheny Energy in 2008. The Greensburg company, acquired by FirstEnergy in 2011, suspended the project after it could not convince regulators the line was necessary.

This guy calls up Steve Herling, but doesn't bother to ask him why PJM terminated the PATH project. It's not that "opponents" proved there was no need in any state regulatory process. It's that PJM first suspended, and later terminated the PATH project because

PJM staff reviewed results of analyses showing reliability drivers no longer exist for the project throughout the 15-year planning cycle. The analyses incorporated the continued trends of decreasing customer load growth, increasing participation in demand response programs and the recent commitment of new generating capacity in eastern PJM.

This reporter also seems to be under the impression that all transmission opposition comes from "citizens groups" who oppose transmission due to environmental reasons.

While citizen groups have fought transmission projects — often successfully — by attacking the developer’s need to build them, the environmental regulations could usher in more projects and complicate opposition.

Changing drivers of transmission

In the past, environmental groups have glommed onto transmission battles and used citizen group opposition to fuel the push on environmental grounds. Those days are over. This reporter seems to be the last to find out, but environmental groups are the newest and biggest fans of transmission lines. Numerous environmental groups have intervened in favor of big, new transmission lines that the wrongly believe are "for wind." Transmission lines are open access and it's not possible to segregate "clean" electrons from "dirty" ones. The citizens are on their own here and that's just fine... nobody needs or wants a hypocritical environmental NGO championing eminent domain for "clean" transmission lines while simultaneously using the same issue as a reason not to build "dirty" pipelines. Nobody takes these fools seriously anymore. Without an army, the environmental groups are simply Don Quixote. Tilting at their beloved windmill fantasy, but getting nothing accomplished.

It's still about need though. And the transmission poster child the reporter chose to use is not part of any regional transmission plan and therefore has not been designated "needed."

Transmission companies see big potential for new projects, particularly from sparsely populated areas that generate wind energy to urban areas. “Just as trains carried cattle and other goods from the rural areas to urban centers, the Plains & Eastern Clean Line will carry renewable energy from the Plains of the Southwest,” states the website of one developer, Clean Line Energy of Houston, Texas.

Clean Line expects federal approval for its 700-mile Plains & Eastern Clean Line, designed to carry 4,000 megawatts of power from wind farms in the panhandle of Oklahoma. The line will terminate near Memphis, Tenn. Clean Line has four other projects in the pipeline.

“We anticipate a very busy 2016,” said company president Michael Skelly.

And that's why Clean Line is attempting to use an untested part of the 2005 Energy Policy Act to usurp the siting and permitting authority of states and ram its project through using the federal eminent domain authority of federal power marketers. Except that statute requires a need for the transmission in the first place. And there is none. Clean Line elected not to participate in the regional transmission planning processes that determine need for transmission projects. Clean Line is nothing but a gamble -- the investors are gambling that a need for the project will develop if they can build it... but Clean Line hasn't been successful in signing up any potential customers... because they can't get their project built... because there is no need for it. That's the real chicken/egg the reporter should be examining.

I do hope Mr. Skelly is very busy in 2016... polishing up his resume and looking for new investors for his next get rich quick scheme.

The reporter longs for

...some wind mills and solar farms in areas with constant breeze and abundant sunshine

But he's looking in the wrong place. Even though he had a conversation with Scott Hempling about non-transmission alternatives, none of that seemed to sink in.

There's an area with "a constant breeze" located much closer to Pittsburgh than the Great Plains. It's called the Atlantic Ocean, where wind potential is much greater. Best of all, very little "tangled mess of hulking, long-range transmission lines" would be "necessary to bring that renewable power from the point of generation to utilities for local distribution."

Why can't eastern states boost their own economies by harvesting renewables close to load? The days of centralized generation are over. Also, sunshine is abundant anywhere -- no transmission lines needed to slap some solar panels on your own roof.

This reporter needs some education.

1. Transmission opposition by "citizens groups" won't change because of the Clean Power Plan.

2. Speculative transmission projects for which there is no need shall not be granted state eminent domain authority to take property for rights of way.

3. Clean Line is a merchant transmission project, not part of any transmission plan and completely unlike most other transmission projects. Therefore, it should not be lumped in with them or used as an example of anything transmission-related. If the CPP requires transmission, it will be planned and ordered by regional transmission organizations so that there is some surety that it will actually be built. Clean Line is not needed, may never be built, and is driven by anticipated profits selling energy into more expensive markets, not by the Clean Power Plan.

And stop drinking the big wind koolaid. There are no facts in it.

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Would My Purchase of Voluntary RECS Through "Green Power Programs" Like Arcadia Power Save the Planet?

11/23/2015

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Lately, I've been bombarded with advertisements from a company named Arcadia Power that claims I can power my home with 100% clean energy, reduce my environmental impact and change the way America consumes its energy. Those are some pretty big claims! Can stock photos of children running through a field of golden grain showing (either real or photoshopped) wind turbines really save the planet? Is this really a "community wind" program? I was intrigued, so I peeled back the wrapper to see what was inside.

After all, the ad encourages me to "learn more," doesn't it? The first place I started "learning more" was by clicking the ad to end up at Arcadia Power's Facebook page. I asked them where they sourced their renewable energy certificates (or RECs) and how much they paid. After all, I'd like to know what renewable energy projects I'm supporting, and what the mark-up is on the product Arcadia buys and re-sells to consumers. In answer to my question, Arcadia told me I could find the answers to my questions on my "dashboard." But, I don't have a dashboard. In order to get one, I'd have to sign up as a customer of Arcadia. That sort of defeats the idea of caveat emptor, right? So, I asked more questions. And what did I get for my trouble? Arcadia not only refused to respond to my questions, they also removed or hid them from view and banned me from any further postings on its Facebook page. I guess they have decided they don't want me as a customer. Go ahead, check Arcadia's Facebook page out. Be sure to click to see all the comments on its postings -- you can't see them! The vast majority are hidden from public view. I'm guessing I'm not the only one who asked questions Arcadia would rather remain unasked. And, right there, I lost all faith in this company and its promises. But, never fear, I'm quite capable of educating myself to get the answers Arcadia refused to give me. And Arcadia's rudeness and evasiveness gave me the warm fuzzies that further fueled my curiosity!

So, what does Arcadia propose to sell me?

Arcadia Power will buy renewable energy to match your usage, ensuring that an equal amount of clean energy is getting on the power grid.

Arcadia Power buys renewable energy? Or do they merely buy renewable energy certificates?

...we buy Renewable Energy Certificates (RECs) on behalf of residential and business customers, and sometimes we source our own RECs from projects we directly invest in.

Oh, so Arcadia doesn't really buy renewable energy. It's not an electric company. It buys RECs and resells them to consumers as a way to feel good about offsetting my carbon footprint.

But, does it work?

First, I needed to understand what RECs are. A REC represents the social and environmental benefits of a megawatt hour (MWh) of clean electricity generated. It does not represent the actual energy generated. A clean energy generator has two income streams derived from production of clean energy. One income stream comes from the actual energy produced, which is sold to users on the grid. A second income stream is derived from the sale of RECs. RECs can be sold either bundled with the actual electricity produced, or unbundled from the electricity and sold separately. So, if a company like Arcadia tells me that I'm using the clean energy represented by the unbundled REC, am I really? Didn't someone else purchase and use the actual clean energy produced, without spending additional money to buy the associated REC? I learned that RECs aren't really energy at all.

Why is there any market for created products like RECs? Because utilities are required by law in many states to make sure a certain percentage of the power they purchase for their customers comes from alternative sources. These individual state laws are called Renewable Portfolio Standards, and every state has its own unique version. A utility can meet its state RPS requirement by purchasing RECs. Ahh.... so now I've found the purpose of RECs! So a utility doesn't really have to purchase alternative energy to meet state RPS requirements, it can simply purchase the "social and environmental benefits" of alternative energy? Well, sort of. Many states put some sort of qualifiers on what RECs count towards RPS compliance. Certain types of generators, certain locations for generation. Many states contain a requirement that some or all RECs purchased for compliance must come from sources in the state, in the region, or physically able to be used by the utility taking the credit. Apparently this is what causes unbundling of RECs from the actual energy produced. A utility is only going to buy those RECs it needs for compliance. Therefore, the RECs necessary for compliance in any given state or region are the most valuable. After that, the value of the REC can decrease sharply, because nobody needs to purchase it.

Not all RECs are created equal. In a state with substantial renewable/alternative energy supply, there will be many more RECs created than needed for RPS compliance. There's no real market for these RECs after utilities purchase what they need for compliance. Therefore, they end up in the "voluntary" REC market, where entities purchase them for the right to say they "use 100% clean energy." The intent is that one KWh of dirty electricity used is offset by one KWh of clean electricity generated somewhere else in the world. Some experts contend that this is just wishful thinking and that voluntary REC purchases are nothing but "green washing."

RECs are not offsets and the voluntary green power market does not reduce emissions from electricity generation.

The problem is that green power markets, as currently structured, cannot achieve this goal. They were created on a fundamentally flawed foundation—that buying a virtual attribute can substitute for physically consuming a specific good or service. Further, the incentives of the participants in green power markets—power companies selling RECs, intermediaries marketing them, organizations certifying them, and companies buying them—are aligned, leaving no one with a strong interest in questioning the claims being made.

With these concerns in mind, we are challenging everyone to question their own assumptions about voluntary green power markets.

That also seems to be the conclusion reached by this expert:

Nonetheless, claims that voluntary RECs reduce carbon emissions are highly suspect. Their direct effect is not to reduce net emissions, but to shift responsibility for emissions between parties. They only reduce net emissions, if at all, indirectly, by demonstrating demand for clean energy and by providing a modest boost in revenue to the clean electricity industry.

It's weak tea. Buy voluntary RECs if you like, they're cheap as hell, but have no illusions that by doing so you are offsetting your emissions. It's like tossing your supermarket change into a Unicef jar. Whatever, it's better than not doing so, but you're not "curing poverty."

This article talks about "additionality," which is roughly described as the income stream flowing to the generator from the sale of RECs. If the RECs are good quality RECs needed by utilities for compliance, or bundled with the electricity as part of a PPA, then the RECs provide some real value that could help that particular generator be financed and built. However, if the RECs produced by a generator are unbundled voluntary junk RECs that are now selling as low as a buck or two, then the sale of RECs doesn't add the "additionality" that provides a significant income stream to the generator. If you're buying cheap RECs in the voluntary market, you're buying junk that doesn't do a thing to offset your carbon footprint or increase the use of renewables.

So, voluntary junk RECs in oversupplied markets are selling for a buck? Some Texas utilities are giving away free electricity, too, in order to deal with the glut of wind energy produced in the state that peaks at night, when electricity use is lowest.

If an unbundled REC can be purchased for a buck, how much is a company like Arcadia charging to resell it to consumers like me?

We offer a flat-price premium of $0.015 per kWh for 100% Wind Energy in all states except for Oregon and Washington state.

One REC equals 1 MWh of electricity. It takes 1,000 kWhs to equal 1 MWh. Therefore, Arcadia is charging a flat rate of $15 per REC. If Arcadia is buying voluntary RECs for one dollar each, then the company is adding a huge markup by reselling them to you and me. Since Arcadia couldn't or wouldn't answer questions about where it sources its RECs and how much it pays, then I have to assume they are buying the cheapest unbundled RECs they can find from places very far from my east coast home.

I can come to no other conclusion than to think that this scheme sounds like something P.T. Barnum would sell at a trashy carnival. Somebody's getting rich somewhere, and it's not the generator. I don't want to increase my electric bill by any unnecessary amount, so I won't be signing up for Arcadia Power. They can quit bombarding me with advertisements now. Decision's made.

But here's the part that really, really concerns me:

Arcadia Power pays your local utility directly and provides you with a consolidated statement each month that combines your local utility charges with your clean energy from them.

Arcadia Power simplifies your life by providing every customer with automatic billing – either with a credit card or direct debit from your checking account. We provide you with an easy-to-read e-statement every month and you never have to worry about missing a payment!

Arcadia will somehow take over your regulated electric bill and you will no longer receive a bill from your electric provider (don't worry though, I'm sure you'll continue to receive those exciting offers for Exterior Electrical Wiring Protection Plans from HomeServe.) So you will no longer know how much electricity you use, when your meter was read, how many days are in your billing cycle, or receive notification about rate increases and other information from your provider. Instead you'll get a "consolidated" monthly bill from an unregulated company. If you have a billing dispute with Arcadia, your public service commission can't help you. What happens when you have a dispute with the amount your electric company bills you, such as when they neglect to read your electric meter for years on end and then send you a "catch-up" bill totaling thousands of dollars? Arcadia pays your bill for you each month and then automatically deducts that amount from your credit or debit card, without your authorization. While you could dispute an outrageous bill directly with the power company and set up a payment plan, you lose that privilege once you sign up for Arcadia Power. Your electric company bills. Arcadia pays. Then you pay. Is Arcadia marking up your local electric bill, too? This loss of control of a regulated service makes me very, very nervous. We'll have to see what happens when unregulated companies insert themselves between regulated entities and the consumers they are required to serve by law. I'm sure there are plenty of unique state electricity tariff provisions related to billing that can be violated by an unregulated entity like Arcadia Power.

Do educate yourself before allowing your carbon footprint guilt to toss spare change in the climate change Unicef jar each month in order to save your soul. Make sure your clean energy dollars aren't going to buy P.T.
Barnum a yacht and his own, private island in the Caribbean.

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What You Need to Know About Utility Eminent Domain Takings

11/17/2015

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Well, it's finally happened. An electric transmission owner sited its line in the backyard of the wrong person. Those transmission siting etch-a-sketch toys can be so risky!

And now the way society thinks about the use of eminent domain for energy transmission easements is about to change.

Andrew P. Morriss, Dean & Anthony G. Buzbee Dean’s Endowed Chairholder, Texas A&M School of Law; Senior Fellow, Property & Environment Research Center; Senior Fellow, Reason Foundation; and Research Scholar, Regulatory Studies Center, George Washington University. A.B. Princeton University; J.D., M.Pub.Aff. The University of Texas at Austin; Ph.D. (Economics) M.I.T., lately found himself in the bullseye of an electric transmission project. And he hired counsel. And then Morris and his lawyers wrote a paper published in the LSU Journal of Energy Law and Resources.

In the interests of full disclosure, we should note that we are not neutral observers of
eminent domain abuse in this area. Morriss’s wife’s parents, wife, brother-inlaw, and sister-in-law are involved in proceedings contesting the valuation of a power transmission easement across property held by a family limited partnership in Kimble County, Texas, in which they are represented by Barron & Adler. As a result, none of us feels particularly charitable toward utilities that make use of eminent domain for acquisition of power line corridors.

Whoopsy! But, finally, someone with a big enough megaphone to question the utility easement status quo has done the unspeakable -- suggested that the use of eminent domain for "large infrastructure easements" (or LIEs, proving that acronym creation is an art) should end.

We argue that eminent domain laws need to be reformed to address these problems. The simplest reform is to eliminate eminent domain from LIEs entirely, forcing utilities to negotiate easement terms in arm’s length transactions and leveling the playing field between the utilities and landowners. Because the burdened landowners are a dispersed and unorganized interest group, while utilities have considerable political clout, this may be
unobtainable through the political process in many states. Similarly, the even more potent “bootleggers and Baptists” coalition of utilities and environmental pressure groups, which
back expansion of transmission lines for renewable energy, if not natural gas or oil pipelines, mobilize powerful interests behind
maintaining the power.

In Involuntary Cotenants: Eminent Domain and Energy
and Communications Infrastructure Growth, Morriss and his co-author attorneys point out the bald truth about utility LIEs:

Easement agreements are written by utilities in their own interests.
Easement agreements do not adequately compensate landowners.
Courts hearing the eminent domain case simply accept the easement agreement as written and concentrate solely on "fair market value" of the property taken.

Why do we allow ourselves to be treated this way?

Much of the growth is likely to involve the use of eminent domain because utilities and
governments often consider eminent domain to be a cheaper and easier alternative to negotiating with potentially resistant, unhappy landowners for the acquisition of property.

The paper points out that in lieu of doing away with utility eminent domain authority altogether, reform is needed.

For example, providing courts (and other third parties with roles in eminent domain proceedings) with the opportunity to alter the easement terms proposed by utilities for LIEs would serve as an important step toward solving many of the problems we describe. In addition, states and the federal government can take further steps to improve the LIE acquisition process by gathering and disseminating market data to, and providing greater statutory guidance for, valuation
decisions.

The five reforms recommended in the paper include:

Limiting eminent domain power of utilities.
Empowering neutral decision makers to structure easements.
Create exit rights. (Utilities should not be able to take perpetual easements).
Create better data on LIE costs and provisions.
Establish standards to guide determination of value. (Not all costs to landowners are immediate or quantifiable).

The paper is also a great guide to things you should consider adding to any proposed easement agreement presented to you by a utility during the "good faith" negotiation period required by law before the utility resorts to eminent domain. Of course, the utility will most likely bat your efforts away, but in that case, how much "good faith" is the utility actually displaying? It's all about the money to them, although money is usually at the bottom of the landowner's list of concerns about involuntarily hosting a utility LIE.

And this paper makes you think. Ever since I saw my first purchase option agreement and easement agreement presented to landowners by the PATH transmission company more than five years ago, I've wondered how anyone thinks this playing field is fair. The agreements contained many clauses that I would never agree to, however these agreements are often presented to landowners lacking legal knowledge of any kind, and without the benefit of counsel. When real estate changes hands in a market-based arm's length transaction, both parties are represented by their own counsel. It's the way we do things. Have you ever sold your real property sitting alone at your kitchen table with a fast-talking stranger who's just come knocking on your door, checkbook in hand? Of course not, unless you've been a victim of a utility LIE. Why is it okay for utilities to prey on landowners this way? This needs to stop! The landowner should have the right to independent counsel, at the utility's expense, before signing any agreements. In fact, it should be required.

Any why should eminent domain for utility LIES continue? If you've never been affected by a LIE, you may think eminent domain is a necessary evil to providing a public necessity, like electricity, highways, and other public infrastructure. Arrogant eminent domain proponents believe that because the power you use required an easement across someone else's land at some point, that you should be eager to provide that same easement for someone else's electric need. It's been many, many years since America was electrified. During electrification, eminent domain was accepted because everyone was getting the benefit of the infrastructure. Today, some greedy transmission companies are proposing eminent domain be used for LIES that aren't needed to provide anyone with basic service. Transmission lines have been proposed that are intended to make the electricity cities waste keeping their skylines lit up all night "greener." This isn't public necessity. It's keeping you stupid believing that utilities shall have the right of eminent domain for whatever they propose. It's time to rethink this because America is rebelling against this kind of thinking in a big, big way.

Start your thought journey by reading the Morriss paper. And think, really think, what if this happened to me? Because if we let this continue unabated, it will.

This post wouldn't be complete without thanks to Janna Swanson in Iowa for digging up this thought-provoking paper. Janna moonlights as an energy activist and researcher, when not producing food to feed ungrateful utility executive pieholes.

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Meet FELEC

11/10/2015

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The American Legislative Exchange Council describes itself as a "partnership of America's state legislators and members of the private sector." Why would your legislators need a "partnership" with corporations? Corporations can't vote!

But corporations need elected officials to make laws favorable to them. And most politicians are extremely cheap dates. Buy them a drink and whisper in their ear and they'll toss their constituents under the bus in a heartbeat.

ALEC makes it even more fun by providing "scholarships" for your legislators to enjoy a fun-filled vacation, expensive dinners, golf outings, and beach time in exchange for a few hours listening to corporate agendas and carrying corporate-written bills back to their state legislatures.

It's no different here in the Eastern Panhandle, where the FirstEnergy Legislative Exchange Council will be in full swing wining and dining your legislators during a fancy dinner at The Purple Iris this evening.

We would like to invite you and a guest to please join your legislative colleagues and the management of FirstEnergy in West Virginia for one of our legislative dinners. Company management will be discussing what is happening with the company in your area, and discuss FirstEnergy's legislative priorities.

All events begin with a reception at 6:30 PM and dinner at 7:00 PM.

November 10, 2015 - The Purple Iris, 1956 Winchester Ave., Martinsburg.

Please RSVP to Sammy Gray, Director, State Affairs, and let me know if you plan to attend and bring a guest.

We look forward to seeing you at one of our events!

Electric conglomerate FirstEnergy (owner of Potomac Edison and Mon Power) is gathering your legislators for a series of private fancy dinners across the state to tell them first hand about FirstEnergy's legislative agenda for the upcoming year.

When a candidate for public office asked for an invitation to this private event so he, too, could learn about FirstEnergy's legislative priorities, he was told:

Thank you for you interest in meeting with us to discuss legislative issues and to meet our folks.
I would be pleased to meet with you privately at some time, however, the event tomorrow evening is for incumbents only.
Please check your calendar and suggest a few dates that you have available.

Oh, so regular folks can't partake of the private Purple Iris sumptuous buffet UNLESS they are in an immediate position to do FirstEnergy's bidding? This is nonsense, and any legislators who attend should be embarrassed.

...because we will find out who you are, what was said, and any campaign contributions that change hands.

Hey, remember when a lowly reporter crashed a Wall Street secret society dinner and came out with recordings and pictures of the event? Fun times!

The legislators would do better showing up at the McDonalds right up the street to hear the legislative priorities of their constituents who have been plagued with inaccurate and outrageous electric bills, and incessant rate increases. Who knows, someone might even buy them some french fries!!!

The eyes.... the eyes.... The eyes are everywhere! I hope this evening's goodie bag contains Rolaids. You're probably going to need them.

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Get Information About Potomac Edison Rate Increase at Jefferson Forum

10/13/2015

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Are you perturbed about Potomac Edison's constant rate increases? Do you want to have your questions answered?

Come to the Jefferson Forum this Saturday, October 17, at 8:30 am at the Mountain View Diner in Charles Town!

The JEFFERSON FORUM will hold its monthly meeting on

17 October 2015    0830 AM to   1100 A M
Mountain View Diner
901 East Washington Street
Charles Town, WV 25414

Our primary topic will be to discuss the proposed rate increase as filed 14 August 2015 before the WEST VIRGINIA PUBLIC SERVICE COMMISSION by POTOMAC EDISON and MONONGAHELA POWER. The issues to discuss involve the impact of this rate increase since it follows closely upon the rate increase which took effect in April 2015. The primary reason given for this increase appears to be increased fuel costs.

Since the consuming public is given no voice before the WV Public Service Commission, save for an overworked, under funded, understaffed Consumer Advocate Office, it is not unreasonable to request that the Utility Companies offer reasonable explanations for such demands.

We require civility and courtesy at THE JEFFERSON FORUM, and every effort is made to assure that every person is allowed to be heard.

Danny Lutz
MODERATOR
THE JEFFERSON FORUM

And Mountain View Diner serves a mean breakfast. It might be almost as tasty as the rest of the event!

Potomac Edison and the WV PSC have been invited, but have declined the invitation, stating:

Thank you for the opportunity to speak to the Jefferson County Forum on Oct. 17. Unfortunately, since the issues you wish to discuss are pending before the WV Public Service Commission, I cordially decline your invitation.

Testimony regarding the recovery of our fuel costs will be accepted by the Commission on Nov. 19th & 20th at their office in Charleston. Please feel free to attend those hearings.

No date has been set for the hearing on the Vegetation Management filing.

Just an FYI -- the food in Charleston isn't nearly as good. Neither is the show.

I wouldn't miss this for the world! I'm betting Potomac Edison won't either. They'd best find some really inconspicuous spies.... anyone acting suspiciously will be hauled to the front of the room and made to address the crowd while speed eating a Gyro, Feta & Tomato Omelette and juggling a trio of Belgian Waffles.

See you there ;-)

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Why are Potomac Edison's West Virginia Electric Rates So Confusing?

10/6/2015

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Potomac Edison sends out confusing electric bills and rate information that nobody can understand. The West Virginia PSC allows it.

Did you get one of those hand-dandy Potomac Edison "Electric Rates for West Virginia Customers" pamphlets in your recent bill? Did you try to use the pamphlet to check Potomac Edison's math or to figure out what the different line items on your bill mean? Don't. Don't try to figure it out. You're going to drive yourself crazy!

If you're one of those folks who just go with the flow and pay whatever the company charges you without even looking at your bill, then don't read any further. However, if you're one of those folks who scrutinizes things and speaks up when they're not right, this is for you.

There are two, possibly three lines items on your bill. Your "base charge," your "environmental control charge," and if you live in a municipality that imposes taxes on your electric consumption, there will be a line item for "taxes."

What goes into your "base charge?" If you use your rate pamphlet that Potomac Edison just sent you, the W.Va. Rate Schedule R - Residential rate is detailed as a flat $5.00/month customer charge, plus an Energy Charge of $0.08747 per kWh used. So, if you multiply your kWh used by the Energy Charge rate and then add the $5 Customer Charge, it will add up to the base charge line item on your bill, right?

WRONG! It doesn't add up.

Try calling the company for an explanation. They give you some complicated explanation that there are additional charges for things you can't find on your rate pamphlet under the Schedule R section. If you push them to explain it to you so you actually understand, they get their panties in a bunch. Try calling the WV Public Service Commission to see if they can explain it to you. They'll send you a bunch of schedules and a list of charges that went into your bill, but again, you can't find these charges on your rate pamphlet.

Turn your rate pamphlet over to the back cover. Under the heading of "Lighting Fixture - Customer Owned Pole" you will find some additional charges entitled "Environmental Control Charge," "Environmental Control Charge Normalization," "EEC Program Cost Recovery Rate," and "Temporary Transaction Surcharge."

Hey, Environmental Control Charge -- that's a separate line item on your residential bill, isn't it! And if you multiply your kWh used by the Rate Schedule R rate, you will get the same number!

But what about those other three charges? They're not separate line items on your residential bill. But they're in there. They've been added to your "base charge," along with your Customer Charge and Energy Charge.

Go ahead, try it. Multiply your kWh by each of the three remaining charges (taking note that the Environmental Control Charge Normalization is a credit, or subtraction from your bill for residential customers). Then add that to your Energy Charge and Customer Charge and see if you don't get the same subtotal that Potomac Edison got on your bill. Add in your Environmental Control Charge and Tax line items and you get the amount of your current bill! Amazing! Doesn't that sound easy?

No? You're not alone. It shouldn't take an intelligent guy a week and countless phone calls and numerous emails to become utterly frustrated with this confusion. You know what the ratepayers think, Potomac Edison? They think you make your bills confusing on purpose so that you can find new and interesting ways to gouge them without them noticing. So, I explained the rate pamphlet, the actual rate, and the correspondence, tariff sheets and other "explanations" he was sent by the company and the PSC. Just one more service I provide. I won't say he's thrilled, but he understands now. Why did you waste his time (and yours) like this Potomac Edison and WV PSC?

Why can't you include the ENTIRE Residential rate scheme on the front of your rate pamphlet, Potomac Edison? Why did you put those mystery riders on the back page under the Lighting Fixture Schedule? You're a special kind of stupid, aren't you? There's no reason calculating and understanding your residential electric bill needs to be this hard. Maybe you should ask a customer now and again about how you can improve their understanding of their electric bill and the rates they pay. Because I'm not going to be here to clean up after you forever.

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FirstEnergy and AEP Flame Out in Ohio; Seek to Strap Ratepayers in Other States

Utilities Always Win In Current Regulatory System

FirstEnergy's Switch is Off in West Virginia

WV Legislature to "Fix" Public Service Commission with Investor Owned Utility Money

Clean Power Plan Does Not Require "A Tangled Mess of Hulking, Long-range Transmission Lines"

Would My Purchase of Voluntary RECS Through "Green Power Programs" Like Arcadia Power Save the Planet?

What You Need to Know About Utility Eminent Domain Takings

Meet FELEC

Get Information About Potomac Edison Rate Increase at Jefferson Forum

Why are Potomac Edison's West Virginia Electric Rates So Confusing?

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