"First they ignore you, then they ridicule you,
then they fight you, then you win."
-- Mohandas Gandhi
S-R “Mitigation” = Bribery of NPS, Let Them Know You Think It Stinks
For decades here in WV, the US Army Corps of Engineers, the government agency that issues permits for valley fills in mountaintop removal mining, has issued permits based on “stream mitigation” conducted by mining companies. This “mitigation” is supposed to, in some way, compensate US citizens for the destruction of miles and miles of headwater streams. While mining operations bury entire stream ecosystems, mining companies are allowed to throw some riprap along stream banks miles away, and that is supposed to “mitigate” the destruction caused by mountaintop removal in the permitted area.
Now this bogus “mitigation” is coming to NJ in the form of a deal engineered by US Dept. of Energy Secretary Chu at the direction of President Obama. Last fall, we saw here the fast tracking of a number of high voltage transmission projects by the Obama Administration, over the objections of National Park Service professionals. The Susquehanna-Roseland line, a Project Mountaineer sister project to PATH and TrAIL, was one of those fast tracked projects.
The S-R line was moving through the normal Environmental Impact Statement process, but things weren’t moving fast enough for Sec. Chu and his power company friends. We, as well as the NPS employees, knew that a backroom deal was coming, and now we know what it is.
In November 2011, despite pressure coming from the White House, the National Park Service recommended that the S-R line not be built through the Delaware Water Gap National Recreation Area as the best way to protect the park from the many negative impacts of the route preferred by power company PSEG, owner of the NJ section of the S-R line.
After the first of the year, PSEG revealed by the “mitigation” deal. The power company first offered to spend $60 million buying new land to add to the DWGNRA. When that made the bribe a little to obvious, PSEG reduced the deal to $30 million. The S-R line would remain on its current route through the middle of the NRA, but some extra land would be tacked on to the edge of the existing park. How this is supposed to “mitigate” (PSEG’s word) the impacts of the transmission line, or to conform with the NPS “no build” recommendation is a mystery to me.
Most galling of all, we rate payers in PJM Interconnection will actually be paying the $30 million “mitigation” bribe through the FERC/PJM cost recovery process. Because this bribe will be considered a cost of construction of the S-R line, FERC also lets PSEG collect “incentive” return on equity of more than 12% (that’s about $4 million) every year from now on.
NPS was shamed by this bribe offer into re-opening is still accepting public comment in their EIS process, so you and I can tell them what we think of this outrageous deal. The deadline for comments is January 31. You can comment directly on the NPS Web site at this link.
Keryn has more information on the StopPATH Web site here and here.
More PATH Kremlinology
There is no news coming out of the PJM puzzle palace about PATH, so we have to rely on little bits of information that come our way.
I spent the day at the WV Legislature today and spoke with a very prominent legislative leader. He told me that he recently met with FirstEnergy officials, and he asked them pointblank if they had any plans to proceed with PATH.
The answer? PATH is not even on FirstEnergy’s radar screen anymore.
This is complete hearsay, but it is pretty reliable. Yet FERC continues to allow FirstEnergy and AEP to collect our money for their zombie project. There needs to be an open and transparent end to PATH as soon as possible.
There is no “abeyance” when a project is dead. Citizens should not have to rely on rumor and secondhand information to find out the truth.
PJM 2012 Load Forecast Now Out — Same Old Story
Here is a link to the new 2012 PJM Interconnection load forecast. This report is an attempt to predict winter and summer peak load for the next fifteen years.
This year’s load forecast repeats the pattern we have become used to with each passing year:
- Each year’s actual load number fall below the previous years’ predictions
- Each year the previous year’s projections for the next 15 year period are revised downward
- PJM continues to base its load projections on unrealistic economic forecasts resulting in inaccurate load projections for the future.
Each year, PJM identifies key projections in important years of its planning process compared with the previous year’s projection. Here is the table from last year’s load projection:
Compared to the 2010 Load Report, the new PJM RTO summer peak forecast shows
the following changes for three years of interest:
o The next delivery year – 2011 -2,585 MW (-1.9%)
o The next RPM auction year – 2014 -2,797 MW (-1.9%)
3,090 MW (1.9%) – with ATSI, DEOK
o The next RTEP study year – 2016 -3,925 MW (-2.5%)
1,796 MW (1.1%) – with ATSI, DEOK
Here is that exact same table from this year’s executive summary:
Compared to the 2011 Load Report, the new PJM RTO summer peak forecast shows
the following changes for three years of interest:
o The next delivery year – 2012 -4,821 MW (-3.0%)
o The next RPM auction year – 2015 -3,338 MW (-2.0%)
o The next RTEP study year – 2017 -2,000 MW (-1.2%)
At every key year of PJM’s RTEP process, this year’s projections are lower than the previous year’s projections. In the 2010 Load Report, PJM had added two new power companies to the cartel, so they broke out the loads for those companies separately. Those companies have now been integrated fully into the 2012 load report.
As you can see, the difference between 2011 and 2012 projections is actually higher than the difference between the 2010 and 2011 projections. The load projections appear to actually get worse and worse as time goes on.
As in last year’s load report PJM stated that their rosy economic projections have been wrong:
The combination of the new economic driver and a downward revision to the economic outlook for the PJM area has resulted in lower peak and energy forecasts in this year’s report, compared to the same year in last year’s report.
In my post on the 2010 load forecast report, I provided one of the graphs for PJM’s projection of summer peak in a power company service area for a company identified by the initials DPL which stands for Delmarva Power & Light, a subsidiary of Pepco Holdings, on the Delmarva Peninsula. Here is the DPL graph from the 2012 report:
You will note that there is an uptick in 2011, but normalized summer peak was still below the 2007 level. Also note that the actual normalized summer peak was significantly below what PJM predicted it would be just last year. If PJM’s one year prediction was off by that much, how far off will their 15 year projection be?
And the DPL load zone is actually one of the better looking graphs. Many load zones did not show an increase in 2011 normalized summer peak.
The 2011 summer peak also gives you a good picture of what “normalized” means. Statisticians “normalize” data to remove impacts of extreme variations in factors influencing the numbers they are studying so that they can compare numbers from one year to the next on a more or less uniform scale. In this case, PJM normalizes for variations in weather, particularly temperature. You can see that the black line, the actual summer peak, was much higher than the normalized red line in 2011. That was because we had a very hot July this summer compared with normal July temperatures. In 2010, summer must have been about average in temperature, because normalized and actual peaks were about the same. In 2009, the summer was cooler than normal and normalized peak was actually higher than the actual peak. In these graphs, the red normalized lines are what you should compare with the green normalized projections.
You can also see the new 2012 map of PJM in the report. On that map, below, you can see that with the addition of FirstEnergy and Duke Energy, the PJM cartel now controls all of Ohio.
A Good Picture of AEP’s Transco Octopus
Keryn has a great post this morning over at StopPATH WV about AEP/Allegheny’s concerns about the cost of shakedowns by WV politicians.
To document her descriptions, Keryn posted a link to a Morgan Stanley investor slide show that give us a very good picture of the arms of the AEP Transco octopus. This includes a joint venture with Warren Buffet’s MidAmerican Energy Company. The slide show is a little out of date, because it still describes AEP’s PATH partner as Allegheny Energy, instead of FirstEnergy, but the other information is still operative.
Note that the MidAmerican joint ventures overtly involve wind power connections.
Our friends in the Frederick area should also note the squiggly dotted line that represents a mysterious future project that connects AEP’s 765 kv transmission network in the Ohio Valley to the also future “Kemptown substation” that has been blocked by local zoning ordinances. This AEP pipe dream probably will not happen, because Allegheny Energy has now been bought by FirstEnergy, a major competitor in PJM that now controls most of the transmission system in PA.
I used the term “octopus” in my title for a very good reason. Back in the early 20th century, muckraker Frank Norris wrote a great book called The Octopus about the grain trusts and the railroads that controlled the US market for wheat and corn. The octopus in the title was his metaphor for the tentacles of this middle man/transportation system that set prices and exploited both producers and end consumers of US grains. Transportation has always been the high profit/low risk choke point in US markets, mainly because distances are so great in North America.
Why does AEP want to go into the transmission business?
Here’s why:
- AEP is stuck with huge long term bets on coal-fired generation. It is now costing the company millions of dollars in payoffs to politicians and right wing think tanks to keep these power plants in business. These obsolete power plants are killing thousands of Americans every year, and it is very expensive fighting off attempts to shut them down.
- AEP has made some new investments in wind generation in Texas (see transmission plans in Texas and Kansas), but new land based wind generation is constantly undercut by heavily subsidized coal plants and a Congress that is hostile to renewable energy.
- Selling electricity to consumers is a nice steady gig, but all consumer electric rates, even in “deregulated” states is subject to rate setting by state PSCs.
But with interstate transmission -
- Power lines are not subject to pollution restrictions, now or in the future. And maintenance costs are relatively low.
- Now that Cheney and FERC have “put in place” a federalized process for stripping states of their power to regulate transmission, you only have to buy off one set of regulators and politicians in Washington, the famous “one stop shopping” that corporations are always trying to set up.
- And you have those wonderful federalized guaranteed returns on equity. Look at the slide show chart.
- The operation of your transmission lines is mostly controlled by regional transmission organizations like PJM and MISO, which are cartels controlled by power companies with only incidental participation by state regulators.
Applied Kremlinology and the New PATH EIS Delay Request
If you read the previous post, did you notice something very odd? Did you see the reference to “the May 2012 forward capacity auction results”?
This is an entirely new development in AEP/FE’s push for PATH. In the past, all of AEP/FE’s claims in support of PATH have revolved around PJM Interconnection’s flawed Regional Transmission Expansion Plan, which PJM creates every year. The power companies’ problem in 2010 was that PJM announced that they were dumping the PATH project in their 2011 RTEP, the final version of which will be published in February 2012, next month.
Remember when the Soviet Union still existed and Kremlinologists would try to figure out what was going on there by who stood where on the parade platform on May Day? Or how the media try to figure out what is going on in the Vatican by the smoke signals the cardinals put out there? Well, those of us who report on PATH developments have to rely on the skimpy smoke signals that come out of state PSCs, federal agencies and the power companies to figure out what is going on behind those closed doors. “Professional” media outlets are too busy covering important stories about the Kardashian family to bother with minor issues like who is raising your electric rates or trying to steal your land.
So we have this odd reference to the May 2012 capacity auction results as being some kind of PJM decision point on PATH. We have never seen a reference like this from either PJM or AEP/FE. We know that the purpose of PJM’s capacity auctions is to allow the large generators in the RTO to prevent new power plants from being built on the East Coast, so they can maintain their monopoly position in PJM’s electricity markets. The MD PSC has been filing complaints at FERC for years, and the NJ BPU has just published a detailed report on how this market manipulation works in the PJM cartel.
Back in 2006, AEP and its PATH lil’ buddy Allegheny Energy (now swallowed by power giant FirstEnergy), cited the low capacity auction prices in Western PJM (where AEP and Allegheny have huge obsolete coal-fired power plants) and high capacity prices in Eastern PJM (where PJM and AEP/Allegheny had been suppressing new generating plants using the very same capacity auctions) as a sign of “congestion” and the need for the PATH and TrAIL power lines.
Why have we not heard this argument recently? Because despite the 2006 propaganda claims, the capacity price gap between eastern and western PJM has been falling, not rising, in recent years. That is not because PJM has stopped suppressing new power plants on the East Coast. In fact, PJM has sued NJ to prevent the state from providing incentives for the construction of three new gas fired power plants to reduce electric rates for NJ citizens. No, I’ll let PJM tell you. Here is PJM’s press release following the May 2011 capacity auction:
Renewable resources, including demand response and energy efficiency, made up nearly 68 percent of the new capacity available and about 10 percent of the resources clearing PJM Interconnection’s recently completed capacity auction.
PJM today announced the results of its Reliability Pricing Model (RPM) capacity auction for resources to meet customers’ electric power demand in the June 1, 2014 to May 31, 2015 delivery year. RPM commits resources three years in advance to be made available to preserve reliability.
“The increase in demand resources follows the introduction of two new demand resource products in addition to the existing product — one available throughout the year and another available for an extended summer period,” said Andrew Ott, PJM senior vice president-Markets. “There was more than a 50 percent increase in the amount of demand resources that cleared this year over last year.
And:
The resources clearing price for all resources except for limited demand response in PJM will be $125.99 per megawatt-day (MW-day). In the northern New Jersey area, which is transmission-constrained, the price will be $225 per MW-day, a decrease of about $20, over last year.
In PJM’s MAAC area the price of capacity will be $136.50 MW-day, a decrease of about $100 from last year. (The MAAC price applies to the transmission zones of Baltimore Gas and Electric Company, Metropolitan Edison Company, Pennsylvania Electric Company, and PPL Electric Utilities, Atlantic City Electric, Delmarva Power, Jersey Central Power and Light Company, PECO, Public Service Electric and Gas Company, and Rockland Electric Company.) The non-MAAC region, will pay the RTO price of $125.99, an increase of about $100. This region includes western Pennsylvania, western Maryland, Ohio, Indiana, Michigan, Kentucky and Virginia.
“The convergence of prices between the eastern and western regions of the market is primarily driven by the significant reduction in forecasted load growth through 2014/2015,” Ott said.
So, what can we deduce from the smoke signals coming out of AEP/FirstEnergy high dollar law firm that you and I are paying for in the EIS delay? Why are they suddenly claiming that the May 2012 PJM capacity auction is a big deal for PATH?
Here are my best Kremlinology speculations:
- PJM engineers like Steve Herling have told AEP/FirstEnergy that the 2012 RTEP, which PJM has already started compiling although it won’t be published until February 2013, will repeat the 2011 RTEP’s decision that PATH isn’t needed.
- PJM and AEP/FE are looking for some excuse to drop the PATH boondoggle, but they just can’t bring themselves to tell us honestly “we give up,” so they want some number that they can use as cover for their surrender.
- Or PJM and AEP/FE will try to claim some little increase in the difference between eastern and western PJM capacity prices will show some miraculous new reason that PATH is “needed.”
Unfortunately, we have to wait for more smoke signals. Our electricity regulators and the corporations they supposedly regulate don’t have much interest in allowing us peons to see what is really going on.
AEP/FE Want Delay of PATH EIS Process Until 60 Days After Whenever
Keryn took the initiative and dug out this information from the National Park Service. Go to her post at StopPATHWV for the details.
We reported a couple of weeks ago that the National Park Service December 31, 2011 deadline for the federal PATH EIS process had passed without any activity by either AEP/FE or the Park Service. Well, the NPS has now posted a letter from AEP/FE dated December 16, 2011 on its Web site.
It appears that the power companies are now asking for an indefinite delay in the EIS process. They say that PJM might consider the final plight of PATH in May 2012, but they really don’t know when a final decision will be made. But AEP/FE are requesting a delay of the EIS process again until 60 days after PJM makes its decision.
What? So you don’t know when PJM will make its decision but you want a delay until 60 days after that date, whenever that may be? Really? Translation: We want a delay until 60 days after whenever.
Here’s the statement directly from the AEP/FE letter:
In light of this most recent PJM report, and in particular, the further analysis that PJM intends to undertake in 2012, the PATH Project remains in suspension as previously directed by the P JM Board at least through the period required for PJM Staff to report the results of the additional analysis described above, and for the PJM Board to take further action. Accordingly, the PATH Companies respectfully request that the NPS continue to hold its review of the pending applications for right-of-way authorizations in abeyance. As indicated by the PJM Staff report, additional analysis will be undertaken after completion of the May 2012 forward capacity auction results. The time required by P JM Staff to perform such analysis thereafter is not yet known. [emphasis added]
In order to accommodate the PJM study process, while providing a measure of certainty [Since when does "whenever" create "certainty"? That's a pretty small "measure."] for both the PATH Companies and the NPS, the PATH Companies respectfully request that the NPS continue to hold its application review in abeyance until 60-days after the PJM Board issues a further decision on the status of the PATH Project. Promptly after being advised of such further decision by the PJM Board, the PATH Companies will notify the NPS of that decision and, within such 60-day period, submit a further request to the NPS with regard to the pending applications.
So now AEP/FE are performing a kind of striptease with NPS, USFS and the public. They throw out the date May 2012, but then they say, but we really don’t know when the decision will be made. After they say they have no idea when PJM will make a decision about PATH, they say they will let NPS know 60 days after that date, but that date doesn’t exist. They hope by flashing some numbers and dates they can fool the feds into thinking there is something solid there.
Here is a link to the power company fan dance. I must say, it is quite a remarkable performance. I’ll ask it again — Do they really think we are stupid enough to fall for this? AEP/FE’s fancy DC lawyers seem to think so.
We’ll see what NPS does with the 60 days after whenever request.
Thank you, Keryn, for digging out this information.
“Highly Orchestrated and Vocal Opposition” — That’s Not Us
AEP and FirstEnergy have filed their answer to the formal challenge that Keryn and Ali filed contesting $2.5 million of charges for bogus “public education” costs that the power companies want to charge rate payers through the PATH cost recovery process at FERC.
Keryn has a post about the answer, and a link to it, over at StopPATHWV. I have not read the answer yet, but Keryn reports that AEP/FE provide no real rebuttal of claims that PATH’s “public education” costs were really public relations and lobbying designed to benefit only their companies’ shareholders.
Keryn plucked the following gem out from the answer, as the excuse AEP/FE claim for having to spend so much on their “public education”:
In the wake of highly orchestrated and vocal opposition to the Project, PATH had a responsibility as the Project’s developer to educate government officials, civic, community and business leaders, and the public at large, about the reliability benefits of improved transmission infrastructure in general, and the PATH Project in particular. [emphasis mine]
The word “orchestrated” implies that some nefarious behind-the-scenes manipulators were controlling the behavior of opponents of the project. That would be news to the thousands of property owners and rate payers who stood up to fight the PATH project in three states over the last three years.
As for AEP/FE having a “responsibility” to “educate” anyone, I will put the information on The Power Line up against any propaganda coming out of Columbus, OH and Greensburg, PA, headquarters of PATH’s owners over the last three years. I have been told countless times by “government officials, civic, community and business leaders, and the public at large” that information here on The Power Line is the most accurate and complete information about the PATH project and reliability issues that they could find anywhere.
“Highly orchestrated” we definitely aren’t. I would not even characterize us as “opposition.” We know what real electric system reliability is and we are all for that. The only opposition to reliability we have seen is AEP/FE and PJM Interconnection clinging desperately to their obsolete PATH project.
I do have to admit that we are pretty vocal.
“We’re Not in Kansas Anymore, Toto”
If you still think WV’s over-dependence on coal gives us “cheap” electricity, you need to think again.
Consumer Advocate Division Director Byron Harris says electricity rates in the state have increased by 41.9 percent since 2008.
Cheney/Wellinghoff Vision
In my last post, and in many other posts on The Power Line, I discussed the 2001 Cheney secret energy task force and its continued impacts. In the right hand column, I have a link to Chapter 7 of the report that the secret task force published. This chapter, titled “America’s Energy Infrastructure: A Comprehensive Delivery System,” includes many recommendations that inspired the attempt to federalize high voltage transmission control in the 2005 Energy Policy Act.
It is important to read the words in this chapter, but I also think the pictures provide a clearer understanding of the Cheney/AEP/Enron vision behind Chapter 7.
Here is one of several artsy, romanticized pictures of high voltage transmission lines you will find in Chapter 7. This one appears to be through wild mountainous terrain, perhaps in the Cascades or the Sierra Nevada. It is a chilling vision.
One more note — This kind of stacked right of way, with multiple transmission lines is exactly what has happened with the TrAIL line in eastern WV as TrAIL was put alongside existing transmission lines coming from Dominion’s Mt. Storm plant. This is also what much of the PATH right of way would have looked like, as it was planned to share a right of way with TrAIL as well. Plans for the Susquehanna-Roseland line also involve turning most of the right of way into this kind of multi-line mess, including the section through the Delaware Water Gap National Recreation Area. This is the Cheney/Wellinghoff vision for your future.
Pulling Together Some Threads in the Wellinghoff/Cheney Mess
Let’s pull together some of the threads connected to Keryn’s and Ali’s adventure at FERC. The web is complicated and the threads are many, but I think it will be very productive.
First, why Wellinghoff/Cheney in my title? All of the current attempt by FERC Chairman Jon Wellinghoff to socialize the construction of a national network of high voltage transmission lines is derived from the National Power Act, also called the Energy Policy Act, which was passed by the Republican controlled 2005 Congress. This law was the culmination of all of the plans that VP Dick Cheney had “put in place” (in Mike Morris’ immortal phrase).
The 2005 Energy Policy Act (often shortened to EPAct to distinguish it from the coal/electrical industry’s arch enemy, EPA) created an entirely new system to take control of high voltage transmission lines (referred to in the Act by the innocuous word “siting”) away from state regulatory agencies and state legislatures and place it in the hands of the federal Department of Energy (DoE) and the Federal Energy Regulatory Commission (FERC). This effort grew directly out of the secret energy task force convened by Cheney in 2001 which was chaired by disgraced Enron CEO Kenny Lay.
The 2005 Act couldn’t impose the new federal control directly, because state control of these kinds of decisions is firmly in place and is supported by all legal precedents in federal courts. As FERC and DoE found out in the Federal 4th Circuit with the PEC case, and DoE found out in the Ninth Circuit case throwing out DoE’s “congestion studies” mandated by the 2005 EPAct, federal courts continue to stand behind state control of power line decisions.
Cheney and FERC propaganda surrounding their power grab included a lot of hot air about “safeguards” and “accountability” that would protect rate payers from being “overcharged” in an enterprise that was attempting to pass on an estimated $100 billion price tag for a brave new world of transmission lines to US rate payers. This new “regulatory” regime would not longer take place in state capitals around the US. It would all happen in Washington, DC, in complicated new procedures designed to shut out US citizens.
But these new cases, like the high voltage transmission “formula rate cases” (What does that mean?), are too much even for the so-called consumer advocates who are being paid to “protect” consumers. Here is what the Maryland Office of People’s Counsel told FERC when AEP/FE tried (unsuccessfully) to shut Keryn and Ali out of the FERC process:
Second and finally, consumer advocate offices (“CAOs”) (including MPC) and other load entities have long voiced concerns about the substitution of the formula rate process for actual rate cases. Because regulated utility companies generally file rate cases only once every 3 to 5 years, CAOs can target their limited staffing resources and budgets when regulated companies present a rate case. With formula rate annual updates being filed every year by each utility, however, CAOs simply do not have the in-house technical expertise, and do not have sufficient funds for retaining outside technical expertise, to review these financially complex formula rate update documents in anywhere near the depth that can be accomplished in occasional rate cases. While industrial and commercial load often do have in-house expertise, as for-profit businesses they also are constrained from spending money and reassigning staff to reviews of rates whose impact on any single industrial or commercial customer is deemed insufficient to justify the cost. [emphasis mine]
The last phrase in this quote tells the whole story — the purpose of removing real rate cases and creating arcane procedures is to make the cost of fighting these rate increases much more than the individual impact of each rate increase. In other words, FERC and the federal government are creating a dripping water torture system that literally gives power companies uncontrolled license to nickel-and-dime rate payers with hundreds of billions of dollars in new rate increases.
So not only have two West Virginia housewives, with their completely volunteer effort, shamed state financed “consumer advocates” all across PJM Interconnection, they have now shamed FERC into conducting its own audit of FirstEnergy’s TrAIL transmission project.
And yet FERC continues its crusade to impose its federal transmission line regime through its new Order 1000. Until FERC cleans up the mess it has already made of its existing transmission line policies, there is no way it can claim that it can police even more complex and deceptive Order 1000 rules and procedures, which themselves remove the “regulatory” process even further from citizens.
FERC Auditing TrAIL Rate Payer Charges
Keryn and Ali have done it! They have turned up so much dirt that AEP and FirstEnergy were trying to get away with that FERC decided to take a look at FirstEnergy’s TrAIL charges to rate payers.
FirstEnergy attorney Randy Palmer is not starting off the New Year on a very good note. Here’s the beginning of the letter he got from FERC’s Office of Enforcement dated January 3:
Trans-Allegheny Interstate Line Company
Attention: Randall B. Palmer
Senior General Counsel
FirstEnergy Corp.
800 Cabin Hill Dr.
Greensburg, PA 15601Dear Mr. Palmer:
The Division of Audits in the Office of Enforcement (OE) of the Federal Energy Regulatory Commission (Commission) is commencing an audit of Trans-Allegheny Interstate Line Company (TrAILCo). The audit will evaluate whether TrAILCo has complied with the conditions and requirements upon which the Commission approved its incentive rate treatments.1 The audit will also evaluate TrAILCo’s compliance with: FERC-730 reporting regulations under 18 C.F.R. Part 35 (2011); its transmission cost of service formula rate schedule included in Attachment H-18 to the Open Access Transmission Tariff (OATT) of PJM Interconnection, L.L.C.; various accounts incorporated into its cost of service formula rate; and accounting regulations in the Uniform System of Accounts for public utilities under 18 C.F.R. Part 101 (2011). The audit will cover the period from July 20, 2006 through December 31, 2011.
So all rate payers in PJM owe a big thank you to Keryn and Ali, not only for their great work exposing AEP/FE’s PATH overcharges, but for lighting a fire under FERC to go after FirstEnergy’s TrAIL overcharges as well.
Park Service Deadline Passes on PATH EIS
There is nothing new on the National Park Service Web site for the PATH Environmental Impact Statement. The December 31, 2011 deadline for the Park Service’s delay of the EIS process has passed.
So, what’s the deal? Is the PATH EIS process dead? That is the meaning of the phrase deadline.
Press Release on FERC Challenge
FOR IMMEDIATE RELEASE
January 3, 2012
FERC Complaint Alleges PATH Transmission Project Improperly Recovered an Additional $2.5M From Ratepayers in 2010
Two West Virginia citizens have filed a new complaint with the Federal Energy Regulatory Commission (FERC), alleging that the PATH Transmission Company subsidiaries of FirstEnergy (formerly Allegheny Energy) and American Electric Power have continued to improperly charge millions of dollars in promotional expenditures to ratepayers in 13 states and the District of Columbia. With this complaint, PATH’s overcharges total nearly $5.8 million over the past two years, when combined with the first complaint filed in January 2011.
Keryn Newman, a Shepherdstown resident, and Alison Haverty, of Chloe, filed their second Formal Challenge to the Potomac-Appalachian Transmission Highline, LLC 2010 Annual Transmission Revenue Requirement, on December 23 with FERC. Their review of 2010 project costs reveals a propaganda pattern, using funds inappropriately recovered from ratepayers, to influence state regulators, as well as a large number of simple accounting errors. The complaint asks that FERC reject PATH’s Annual Update filing and begin a broader investigation of more overcharges by the power companies.
“We contend that the Commission never intended to hand PATH a blank check signed by electric ratepayers in 13 states to use as they see fit to promote their for-profit endeavor,” said Newman.
The PATH Companies recovered expenses of nearly $1 million for an advertising campaign utilizing recognized propaganda techniques and more than $1 million to create and manage fraudulent “grassroots” groups and an advocacy program carried out with private groups and inappropriately billed as “public education.” The recovery of these costs from electric ratepayers violates FERC regulations.
Bill Howley, of The Power Line (http://calhounpowerline.com) blog, has been covering PATH for the last three years. “The fact that ratepayers in PJM Interconnection are being charged for a dead PATH project is bad enough. The PATH companies should not be allowed to get away with sloppy accounting and dishonest representation of their promotional costs as ‘public education,’” Howley said.
The citizen complainants discovered improperly recovered expenses related to lobbying by West Virginia Democratic Party Chairman Larry Puccio, and attempts to exert influence on the Loudoun County, Va., Board of Supervisors to release a conservation easement along PATH’s proposed route – by creating a more destructive route around the easement and pitting neighbor against neighbor.
Also detailed in the complaint are efforts by PATH lobbyists to interfere in the Maryland Public Service Commission’s consideration of PATH’s application through the intervention of the Maryland Chamber of Commerce, which received a $20,000 “platinum sponsorship” from PATH that was charged to ratepayers’ electric bills. The Challenge also details generous payments to former state regulators and prominent local businessmen along PATH’s proposed route in exchange for their support of the project, as well as over $100,000 spent on public opinion surveys and focus groups.
“This Challenge is not about the contemptible acts which PATH performed as they were trying to get approvals for their project. This Challenge is about who should pay for those acts. The electric bill which my family works to pay every month should not include these charges, and neither should yours,” said Haverty.
Newman and Haverty have been examining PATH’s costs for the past two years using rules designed to provide public transparency. Despite PATH’s attempts this year to suppress the release of information, the women have persisted in examining the company’s accounting practices, and support for their efforts was recently expressed in comments filed by regulators from both Illinois and Maryland, and an amicus letter from the Sierra Club, EarthJustice, Piedmont Environmental Council and National Resources Defense Council. On December 30, FERC issued a decision finding that, “…the consumers have demonstrated that they have a direct interest in the PATH Companies’ rates that will be flowed through to them.”
The PATH Companies have 20 days from the filing date to produce their answer to the Commission. Exhibits to the Formal Challenge can be found here.
Background
The Potomac-Appalachian Transmission Highline (PATH) project originally was to run 275 miles from the John Amos coal-fired generation plant in St. Albans, WV, to a new 42-acre substation in Frederick County, Md., passing through Loudoun and Frederick counties in Virginia. After more than two years and multiple hearings in three states, the project was “suspended” in 2011 by regional grid operator PJM Interconnection after opponents demonstrated it was not needed. The utility companies then withdrew their applications before state regulatory agencies.
Despite PATH’s suspension, AEP and FirstEnergy are allowed to recover project costs, collected since 2008 from the 54 million ratepayers in the PJM region – all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia. This cost recovery will continue at a level “necessary to maintain the project in its current state” until the project is officially abandoned at FERC. PATH also was guaranteed the right to apply for 100% recovery of abandoned project costs as part of an incentives package they were granted by FERC in 2008.
A copy of the recent complaint and related filings can be viewed on FERC dockets ER08-386 and ER12-269.
A Teachable Moment on PATH Costs to WV Rate Payers
We welcome the new year with a great opportunity to provide a much clearer picture of how AEP/FE pick rate payer pockets for PATH. You have read for years here on The Power Line that the cost of the PATH zombie project is being passed on to WV rate payers. If you read WV newspapers, watch TV in WV or even read the press releases put out by the WV PSC, you will not learn how this process works.
Here is how the Charleston Gazette described the FE electric rate increase that goes into effect today for Mon Power and Potomac Edison rate payers in WV:
Nearly $20 million of the hikes aim to allow Monongahela Power and Potomac Edison to recoup spending on fuel, transmission and purchased power costs.
No mention of PATH costs here.
Here is the WV PSC press release on the same rate case:
In an ENEC case, customer rates are adjusted to true-up recovery of actual fuel costs, purchased power and net purchased transmission costs and revenue for the previous year and to reflect projected changes in Mon Power and PE’s cost of fuel and purchased power for the year ahead. The ENEC process does not involve the recovery of profit, rate of return on investment, or salaries and wages.
No mention of PATH here. But we do have the mention of “net purchased transmission costs” and the description of this rate case as an “ENEC case.” There are two kinds of rate cases at the WV PSC. One type of rate case is the “base rate case” in which power companies are allowed to charge rate payers for reasonable profit and their basic (hence the word “base”) expenses and overhead costs like salaries, costs of buildings and equipment, etc. “ENEC cases,” as the explanation above points out, are cases in which the PSC allows power companies to recover the costs of additional charges that can change year to year, such as fuel costs and purchased power.
As the statement above notes, ENEC cases also include “net purchased transmission costs.” These are costs, or credits (That’s why the phrase is “net” costs.), that are charged to retail electricity companies like Mon Power and Potomac Edison by PJM Interconnection. In recent years, mainly as a result of the federalization of the national transmission system by the Cheney-inspired 2005 Energy Policy Act, this category of charges has grown dramatically. More and more federalized costs have become hidden from rate payers in the complex new FERC processes.
The paragraph above from the WV PSC press release includes a totally false claim when it states that: “The ENEC process does not involve the recovery of profit, rate of return on investment, or salaries and wages.” All of these costs are included in the transmission costs generated by PATH and passed on to Mon Power and Potomac Edison, and which the power companies have included in their current ENEC case. None of those costs were excluded by the PSC in their final order in this case, so all of these PATH “profit, rate of return on investment, or salaries and wages” are included in the new Mon Power and Potomac Edison rate increase.
Don’t believe me? Go to the WV PSC final order in the FE rate case. Click here to go to that order. On page 2 of the Order, you will see the same false statement that was repeated in the press release:
An ENEC case is a type of rate case for electric utilities that deals with the fuel, purchased power, and purchased transmission costs incurred by an electric utility to provide service to customers. An ENEC proceeding does not address other costs such as employee salaries, maintenance of generation, distribution, transmission and other facilities, customer service and administrative costs, real estate expenses, etc., that are the subject of base-rate proceedings before the Commission, nor does an ENEC proceeding address or contain any allowance for profit or rate of return on the items included in the ENEC.
So we won’t find any accurate information about PATH charges to WV rate payers in the PSC order.
For that, we need to go to what is, in effect, the FirstEnergy application for their rate increase. To begin a new rate case, a power company files a letter supported by testimony by its employees detailing why they want to raise rates. In this case, FirstEnergy subsidiaries Monongahela Power and Potomac Edison filed this testimony on September 1, 2011. FirstEnergy Director of Rates and Regulatory Affairs for the two power companies, Kevin Wise, presented a number of spreadsheets detailing the past costs for which FirstEnergy wanted to recover adjustments, as well as projected costs for the calendar year 2012.
Here is a link to the FirstEnergy rate filing from September 1. Mr. Wise’s testimony begins on page 80 of the .pdf document (not the page number of the testimony document). In his testimony, Mr. Wise refers to several appendixes which detail the costs he wants rate payers to pay. These appendixes tell the tale.
Keep in mind that the WV PSC, in its final order in the TrAIL power line case, prevented FirstEnergy from recovering any of the costs charged by PJM for the TrAIL line for a period of seven years starting in 2008. Those costs are shown on the spreadsheets but are specifically excluded from the rate increase request.
However, in the expenses for the “review period” for which FirstEnergy wants adjustments to be counted toward the new rate increase, there is an expense called “Non-TrAIL Project Transmission Enhancement Expense.” If you can get over the “enhancement” propaganda claim, you will note that the total expense for the July 2009 to June 2010 review period in this category is $5,505,193 which FirstEnergy wants to include in the rate calculations for its Mon Power and Potomac Edison customers.
The same non-TrAIL expense line appears in FirstEnergy’s forecast for the full 2012 calendar year. The 2012 forecast expense in this category is $1,426,220. Unlike the other spreadsheets, this expense is listed with an account number 565467. The curious thing about the forecast spreadsheet, which you can see on page 293 of the .pdf document, is that for the first time an expense called “Transmission Enhancement Charges PATH,” account number 565465, appears on the spreadsheets. The projected amount for this item for 2012 is $442,830.
It is not clear, because FirstEnergy’s accounting system is not consistent, and Mr. Wise provides no explanation, whether or not PATH charges were included in the Non-TrAIL Project Transmission Enhancement Expense from July 2009 to June 2011. The power companies may have hidden the expenses that PJM charged them for PATH in this larger account before 2012, but the $442,830 PATH expense is clearly set out in the 2012 projection.
The PJM Interconnection charges for PATH include all costs recoverable under FERC protocols, including profit, return on investment, salaries and other overhead expenses for the PATH project. Because these costs are recovered as part of the recent ENEC case, it is simply false to claim that these kinds of costs are not passed on to rate payers in ENEC cases. That may have been true at some point in the past, but it is certainly not true any more.
Home-Based Solar Power Approaching Cost Parity with Grid Power
As it turns out, most media estimates of the cost of installing solar panels on your home or business are wrong, because they are using out of date figures. Read how in this latest peer-reviewed study.
Falling demand for grid power has paralyzed additions and innovations to the obsolete centralized grid just as reduced prices and increased solar panel efficiency are putting real reliable power within our grasp.
Think grid power will stay cheap? Not in WV (This Charleston Gazette link will die in a week.) Here’s the latest in a long line of WV electric rate increases:
Nearly $20 million of the hikes aim to allow Monongahela Power and Potomac Edison to recoup spending on fuel, transmission and purchased power costs. The two utilities provide electricity in 37 of West Virginia’s 55 counties. The typical monthly residential bill will increase by an estimated $3.36 per 1,000 kilowatt hours consumed.
Rising rates and falling demand have killed investment in the obsolete centralized grid. Now is the time for homeowners and small business owners to take control of their energy destinies. Return on investment for small investors is at its lowest point in decades. If you have some cash to invest, your future returns will be much higher if you invest in a solar power system. If you don’t have money to invest, consider that interest rates for home loans are also at historic lows.
As always, the message for the new year here at The Power Line is — Stop thinking like a consumer.
