What Are They Smoking at the MD PSC?

Back in January, the staff attorneys at the MD PSC filed a very strange “petition” urging the MD PSC to approve PATH because it would save MD rate payers so much money.  The PSC attorneys used a PJM analysis covering 2013/14 to calculate some hare-brained claim that PATH would eliminate billions of dollars of “congestion costs.”  Except that PJM and AEP/Allegheny(FirstEnergy) have said that PATH won’t even be needed until 2015.

The PSC lawyers didn’t do any other assessment of overall transfer capacity on the PJM system over the projected life of PATH, nor did they calculate the effect of alternatives such as PJM’s growing demand management or Mt. Storm to Doubs.  They didn’t calculate the irreparable loss of land by MD property owners.  They didn’t even consider that MD law requires PSC decisions to be made on the need for the project, not how much money it would save consumers.

In short, the whole filing was more than a little wacky.

Yesterday, the MD Sierra Club brought a little sanity to the proceedings by filing this response.  Be sure to read the affidavit submitted by expert Robert Fagan of Synapse Energy Economics at the end of the response.

Here is a sample of what they said:

While the economic impacts of PATH must be considered in these proceedings (most importantly to determine whether there may be more cost-effective alternatives available to ensure electric reliability), the Staff’s stated basis for requiring further economic analysis is not credible. The Staff contends that, with PATH in service, “the estimated electricity cost savings to electric customers in Maryland would be almost half a billion per year in 2013/14, due to lower capacity costs alone.” Pet. at 7 (emphasis omitted). In support of this dramatic claim, the Staff offers a back-of-the-envelope calculation based on the results of a single PJM sensitivity analysis of the 2013/14 Base Residual Auction results. See Pet. Attachments 1 & 2.1 As set forth in the attached affidavit of Robert M. Fagan, this calculation cannot withstand even casual scrutiny.
At the outset, the Staff attempts to project alleged cost savings from PATH in 2013/14 even though the line would not be in service until 2015 at the earliest. Because capacity costs change significantly from year to year, it is not possible to extrapolate from 2013/14 modeling results to predict PATH’s impact on capacity costs in 2015, much less in subsequent years.

And:

[T]he Staff appears to assume that an economic justification, standing alone, may be sufficient to support issuance of a Certificate of Public Convenience and Necessity (“CPCN”). On the contrary, conferring the extraordinary power of eminent domain to construct a transmission line across private property is proper only when a project is genuinely needed to meet demands for electric service.