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Illinois Commerce Commission Fights FERC Illegal Cost Plan

May 3, 2012

Last week, the Illinois Commerce Commission, IL’s PSC, filed a petition for rehearing at FERC challenging almost every element of FERC’s March order confirming the way FERC forces rate payers to pay for new high voltage transmission lines.  Here is a link to the petition.  It is well worth the read.

The petition gives a good simple summary of the history of the case, including the 2009 ruling of the US 7th Circuit Court of Appeals’ rejection of FERC’s “postage stamp” rate plan.  The postage stamp jargon refers to charging rate payer in a regional transmission organization, in this case PJM Interconnection, the same amount of money to pay for big new transmission projects.

The ICC filed this petition at FERC as the first step in fighting FERC’s plan to ignore the 7th Circuit ruling.  The 7th Circuit remanded the issue to FERC in 2009 to clean up its act.  Instead of rewriting its policies to conform with federal law, FERC held a sham “paper hearing” and concluded that its cost recovery process was just hunky dory.

The ICC along with IL utility Commonwealth Edison, filed their original case in federal court because they received no benefit from PJM’s Project Mountaineer power lines, yet their rate payers were being forced to cough up hundreds of millions of dollars in “postage stamps” to pay for them.

The ICC’s petition contains clearly laid out arguments that readers of The Power Line have been hearing for years.  The ICC demonstrates that these are clear violations of long established federal law that only entities that benefit from electrical projects can be forced to pay for them.  Period.

The ICC makes a number of important points, among them:

  • PJM’s RTEP plans (and this is obvious to anyone who has read through them) state in specific detail where “reliability violations” occur.  They specify the exact locations of those violations.  Then the RTEP proposes transmission projects to eliminate those violations.  So it is a simple matter to identify exactly which rate payers will benefit from which transmission projects.  It is easy to identify which rate payers should pay for which projects, because PJM’s own RTEP shows us.
  • FERC, in its sham order, stated the exact numbers of miles from transmission improvements that are affected by those improvements.  ICC points out that its rate payers in IL are far beyond those distances according to FERC’s own designations.
  • ICC states that there are two types of entities that benefit from new high voltage transmission:  the generators whose power can now reach more consumers, as well as the consumers whose problems are eliminated.  Thus, FERCs postage stamps, which are paid for only by consumers give generators (like First Energy and AEP, who benefit from Project Mountaineer) a free ride.
  • FERC tried to do a snow job on the ICC by claiming that IL needs PATH and TrAIL so that IL wind farms can sell their power into NJ and MD.  The ICC didn’t take the bait.  In fact, ICC pointed to exactly the point we have made for years.  The existence of wind farms near IL consumers brings them lower rates.  If that power is then exported to high priced markets hundreds of miles away, IL rates will rise.  IL consumers will thus bear the double burden of exporting power and the postage stamps that pay for the lines that export that power.

If you want a good quick summary of the arguments that may doom the Cheney/Obama/Wellinghoff plan to force unreliable long distance transmission lines on us, the ICC petition is a good place to get it.

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One Comment leave one →
  1. May 3, 2012 8:28 am

    My favorite zinger: “Clearly, the Commission’s re-definition of “western PJM” is nonsense and the
    purpose of that re-definition is to obscure and mislead regarding the extent that true Midwestern
    utilities benefit from the 500 kV and above transmission lines planned and built in eastern PJM.” Wow… even I’m not that bitchy (thanks, Ali!) Don’t skip the footnotes, lots of goodies to be had there ;-)

    ICC isn’t fooled by Comm. Moeller’s “strawberry farm” argument either. When transmission constraints are removed by the building of new lines, prices will rise upstream of the bottleneck, without a corresponding “benefit” because PJM flows west – east. That’s never going to change in our lifetime, yet we will pay dearly for these new transmission lines. Any “benefit” of increased transmission capacity flows to the generators (AEP – John Amos – PATH Project) and not to the consumers who actually end up paying for the project.

    FERC made a big mistake with this one. I hope they can “man up” and admit it. Otherwise, transmission will continue to remain a contentious mess and nothing will get built.

    Go ICC!!

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