"First they ignore you, then they ridicule you,
then they fight you, then you win."
-- Mohandas Gandhi
According to this morning’s story in the Charleston Gazette, APCo and Wheeling Power, WV electric utilities owned by Ohio-based holding company AEP, AEP is asking the WV PSC for a new 4.4% rate increase to cover primarily higher costs for fuel (coal) and other variable costs, in WV PSC-speak Expanded Net Energy Costs (ENEC).
This new rate increase comes just months after the new charge to cover AEP’s 2008 coal costs hit APCo and Wheeling Power electric bills. This new charge was dubbed by AEP and the WV Legislature the “Consumer Rate Relief Charge” is nothing more than a subsidy of AEP’s obsolete coal fired power plants. AEP’s heavy dependence on coal trapped the company in a 2008 coal price bubble. By law, AEP can pass all fuel costs on to WV customers, but in order to hide the dramatic rate increases required to pay for AEP’s coal, the WV PSC, AEP and the WV Legislature devised a financing scheme which added the burden of $410 million in long term debt to WV electric bills.
WV electric customers have been forced by recent WV PSC decisions to bear the future costs of coal fired electricity. The PSC’s decision to dump the Harrison Power Station on FirstEnergy’s WV customers, at a wildly inflated price, has continued to lock Mon Power and Potomac Edison customers into coal fired power’s death spiral. AEP is attempting to dump its coal burners on its APCo and Wheeling Power customers. That case is not quite over, but will likely result in another rate increase for AEP customers in a future base rate case.
I’ll continue to provide coverage of AEP’s new rate increase in future posts. This new rate increase comes on the heals of the WV Legislature’s killing of a bill to provide incentives to diversify WV’s electric generation mix by restoring tax credits for installation of solar power systems and by creating a solar carve out to WV’s phony ARPS law.
Yet Another PJM Study Shows High Levels of Renewable Power Can Be Easily Integrated Into Regional Grid
PJM has just released a new study it commissioned to analyze the impacts of integrating large amounts of renewable power into its grid management system. This report is somewhat similar to a Synapse study that PJM released last May.
Here is a link to PJM’s 55-page executive summary of the report. Only PJM would release a 55-page “summary.”
Here are the study’s main conclusions:
The study findings indicate that the PJM system, with adequate transmission expansion and additional regulating reserves, will not have any significant issues operating with up to 30% of its energy provided by wind and solar generation. The amount of additional transmission5 and reserves required are briefly defined later in this summary and in much greater detail in the main body of the report.
- Although the values varied based on total penetration and the type of renewable generation added, on average, 36% of the delivered renewable energy displaced PJM coal fired generation, 39% displaced PJM gas fired generation, and the rest displaced PJM imports (or increased exports).
- No insurmountable operating issues were uncovered over the many simulated scenarios of system-wide hourly operation and this was supported by hundreds of hours of sub-hourly operation using actual PJM ramping capability.
- There was minimal curtailment of the renewable generation and this tended to result from localized congestion rather than broader system constraints.
- Every scenario examined resulted in lower PJM fuel and variable Operations and Maintenance (O&M) costs as well as lower average Locational Marginal Prices (LMPs). The lower LMPs, when combined with the reduced capacity factors, resulted in lower gross and net revenues for the conventional generation resources. No examination was made to see if this might result in some of the less viable generation advancing their retirement dates.
- Additional regulation were required to compensate for the increased variability introduced by the renewable generation. The 30% scenarios, which added over 100,000 MW of renewable capacity, required an annual average of only 1,000 to 1,500 MW of additional regulation compared to the roughly 1,200 MW of regulation modeled for load alone. No additional operating (spinning) reserves were required.
- In addition to the reduced capacity factors on the thermal generation, some of the higher penetration scenarios showed new patterns of usage. High penetrations of solar generation significantly reduced the net loads during the day and resulted in economic operation which required the peaking turbines to run for a few hours prior to sun up and after sun set rather than committing larger intermediate and base load generation to run throughout the day.
- The renewable generation increased the amount of cycling (start up, shut down and ramping) on the existing fleet of generators, which imply increased variable O&M costs on these units. These increased costs were small relative to the value of the fuel displacement and did not significantly affect the overall economic impact of the renewable generation.
- While cycling operations will increase a unit’s emissions relative to steady state operations, these increases were small relative to the reductions due to the displacement of the fossil fueled generation.
Keep in mind that this report, prepared by GE Energy Consulting, was prepared for PJM, which is focused on grid scale operations. The study was designed to tell PJM the results of various scenarios of renewable generation on its system. While the PJM cartel definitely shapes trends in generation because the companies that own big generation run the cartel, PJM itself cannot create government policy or policy incentives that encourage different kinds of generation.
The study was not designed to advocate for one kind of generation over another. It was focused on showing the impacts of various levels of renewable generation on PJM’s operations.
The significance of the GE report is what it says about the impacts of expanding renewable power in PJM:
- Expanded renewable generation would put more pressure on fossil generators to be able to ramp production up and down much more quickly than the current system.
- Expanded renewable generation would drive down the price of electricity.
- Expanded renewable generation would raise costs for fossil generators, because they have to vary their output more than they do now.
- The concept of base load generation would disappear with expanded renewable generation.
- Expanded renewable generation would not cause any operational problems for PJM as the grid operator.
The GE study does not do a very good job modeling or presenting useful information about new transmission investment that would be required by expanded grid scale renewable development. First, footnote 5 in the executive summary, which appears on the same page as the conclusions quoted above states: “This study did not examine the cost allocation for the transmission expansion required to deliver the renewable energy in the study scenarios.” Cost allocation is at the heart of the transmission issue. It appears that GE Energy Consulting is playing the old PJM game of hiding the all important questions of who benefits and who pays for transmission projects.
The one conclusion that our friends in the Midwest can draw from this study is that PJM Interconnection doesn’t need to import wind-generated electricity from the Great Plains. Zero. None.
FirstEnergy hired the Electric Power Research Institute to analyze the effectiveness of the company’s bill estimating system. I’m pretty sure the cost of this “study” will be passed on to us rate payers. Take a look for yourself, we didn’t get much for our money.
Last night, I got through the executive summary and tried to wade through the body of the report. What a disaster. As Keryn notes over at StopPATH WV:
…it seems that FirstEnergy also ran it through the Gibberish translator before approving its final content. This thing is chock-a-block full of typographical errors, missing words, extraneous words, incorrect words, and incomplete sentences, to that point that the reader is constantly stopping to reach for their secret Gibberish decoder ring. Here’s just one of the hundreds of sentences that gave me pause. What does this mean?
When the values are designated as actual, then BSE assumes that they are actual meter reads and treats when according to the
protocols employees in levelization.
Does this mean that EPRI is recommending that FirstEnergy perform surgery on its employees to make them all the same height?
The report just goes on and on like this, for pages and pages.
What is the report’s basic conclusion?
The mean R-value for scenario 1b indicates that on average, across the diverse customer circumstances and load in the test set, the BE Ratio-value estimates are only 14% higher the actual usage.
“Are only” 14% higher than actual usage? And that’s OK? Apparently, it’s OK with EPRI because the report states:
Overall, the BE protocols performed well when simulated in a non-production environment.
Those of us out here in the “production environment,” the experience is a little different. On average, we are being billed for 14% more for electricity than we are actually using. I doubt many of us out here would say FirstEnergy’s “BE protocols” perform well.
The report also points out a basic fact of FE’s the practice of reading meters every other month, which is currently allowed by the WV PSC: no customer billings will ever be a direct result of an actual meter reading. The estimated months are not based on actual readings, so they will always have to be adjusted in the following month, when a meter is actually read. So the next month’s electric bill will by necessity have to be for the electricity actually metered PLUS an adjustment for the previous month’s estimate. So customers never get a monthly bill for the actual billing period stated on the electric bill.
But Keryn also found a real gem in the power point slides at the end of the report. For some reason, FE chose to respond to the EPRI report with a power point show, dated February 6 and February 10. On page 96 of the overall .pdf file linked above, FirstEnergy states the following:
As such we recognize the need to mitigate any unintended impact to customers in the interim and will as proposed in the settlement: [emphasis mine]
As Keryn said,
Settlement? What settlement?
Now, FirstEnergy is clearly going to make an offer for some kind of agreed settlement to end the agony of the PSC General Investigation. We can assume that. But were there actual settlement discussions in the works with PSC staff and the CAD that we don’t know about?
It has been clear throughout the investigation that FE wants to turn this case into a discussion of what stupid equation it uses to estimate bills. That discussion is needed, but it is only about 10% of what has gone wrong with FirstEnergy’s merger fiasco. The problem is not whether some hypothetical equations “perform well.” The problem is that when FirstEnergy bought out Allegheny Energy it systematically destroyed a billing system that was working OK. FirstEnergy’s management chaos and meter reading cuts caused the problem, not “R values” and “scenarios.”
That said, I think an estimation system that overbills customers by 14% is “performing well” for FirstEnergy’s shareholders, but not for the rest of us.
If you want to see how a city creates a microgrid, take a look at this site put together by Ft. Collins, CO. The project is called FortZED. FortZED, or Zero Energy District, is a plan to make significant parts of Ft. Collins Net Zero in terms of energy consumption by reducing electricity use, developing distributed generation and producing power through expanded renewable resources.
If you want to see the technologies involved with microgrid development, watch the video on the site -
Remember WV’s puny microgrid project that received US Dept. of Energy but never went beyond the boundaries of WVU’s campus in Morgantown? Compare that pathetic FirstEnergy controlled project to the dynamic and community-wide Ft. Collins project, which is built around the city’s municipally owned electric company.
One of the major participants in FortZED is New Belgium Brewing Company, makers of Fat Tire Ale. Not only has New Belgium covered their roofs with PV panels, they are digesting waste to produce methane to produce electricity.
It looks as if Chairman Facemire of the Senate Energy, Industry and Mining Committee is going to put Senate Bill 471 before the committee for a vote next Tuesday. Here is my explanation of the solar carve out last month on The Power Line.
If you want to do your part right now, you can email Chairman Facemire and ask him to make sure he puts SB 471 on his committee’s agenda at its Tuesday meeting. Chairman Facemire’s email address is email@example.com and his office phone is (304) 357-7845. You can find contact information for other members of the committee at this link.
A little over three years ago, NY Times writer Matt Wald was singing the praises of the Sunrise Powerlink, claiming the now-approved HV transmission line would bring green power from big solar farms in the Mojave Desert to power hungry cities on California’s coast. (Yeah, I know, it all sounds too familiar, resource rich colonies feeding “power hungry” coastal population centers.)
Well, now one of those huge new solar power plants just went on line. What did Mr. Wald have to say about it?
The Ivanpah solar power plant stretches over more than five square miles of the Mojave Desert. Almost 350,000 mirrors the size of garage doors tilt toward the sun with an ability to energize 140,000 homes. The plant, which took almost four years and thousands of workers assembling millions of parts to complete, officially opened on Thursday, the first electric generator of its kind.
It could also be the last.
Since the project began, the price of rival technologies has plummeted, incentives have begun to disappear and the appetite among investors for mammoth solar farms has waned. Although several large, new projects have been coming online in recent months — many in the last quarter of 2013 — experts say fewer are beginning construction and not all of those under development will be completed.
“I don’t think that we’re going to see large-scale solar thermal plants popping up, five at a time, every year in the U.S. in the long-term — it’s just not the way it’s going to work,” said Matthew Feinstein, a senior analyst at Lux Research.
“Companies that are supplying these systems have questionable futures. There’s other prospects for renewables and for solar that look a lot better than this particular solution,” he said, including rooftop solar systems that are being installed one by one on businesses and homes. [emphasis mine]
Oops. Politically connected corporate mouthpieces from BrightSource Energy, NRG Energy and Google convinced the Obama administration to provide $1.6 billion in loan guarantees for the Ivanpah project. It looks like they are going to need it. Like the few big coal plants that have reached completion recently, these kinds of big centralized solar thermal plants are obsolete before they are built.
Too bad Congress refuses to even consider
passing a national renewable portfolio standard new financing programs for thousands of small businesses and homeowners to create massive new investment in decentralized small scale solar power generation. $1.6 billion in that program would have resulted in real sustainable renewable power generation capacity.
As Mr. Wald is wont to do, he continues to wring his hands about intermittent renewable power and the whining of grid operators. What he doesn’t mention in his story is that widely dispersed, small scale solar generators put a lot less stress on the grid, because they are so spread out geographically. Wide dispersal of small solar and wind generators naturally evens out disparities in sun and wind, because they are spread over such large areas.
Centralized renewable systems generate concentrated electricity bumps when they are on, and little or nothing when they are off. In that respect, they replicate all the unreliable, non-resilient aspects of centralized fossil fuel plants.
Phil Kabler has a story in this morning’s Charleston Gazette about a bill (HB4343) that would create more than $90 million in tax credits:
Under the bill, advanced Monday from the House Finance Committee, the governor could designate up to 10 economically distressed areas as launch pads.
Businesses involved in innovative or emerging technologies that locate within the launch pads could qualify for a number of tax credits, including a new jobs credit of $1,250 a year for each new full-time job with benefits created within the zone.
Qualifying businesses would also be exempt from paying sales taxes, personal income taxes, corporate net and business franchise taxes for up to 16 years, and any personal property and real property directed used in the state-of-the-art technology would be appraised at scrap value, or 5 percent of cost, for tax purposes.
Later in the article, Mr. Kabler points out:
Currently, the Tomblin administration is trying to close a $146 million revenue gap in the 2014-15 state budget, a gap caused in part by $360 million in tax cuts for this budget year.
Former Del. John Doyle, now Deputy Revenue Secretary, pointed to the speculative nature of these kinds of tax cuts:
Doyle noted the state has a history of tax credits that didn’t work as intended.
“I’m not saying these won’t work. We just don’t know,” he said.
So the Legislature throws away $90 million in future tax revenue, while they are trying to close a current budget hole that was caused by past tax giveaways, mainly to big corporations.
Why can’t they support the Solar Carve Out bill and small tax credits for emergency solar powered battery backup systems that will support innovation that is already underway across our state?
Likewise, owners of certified businesses who live within the same launch pad zone would be exempt from state personal income taxes.