Big Chief Needs to Do Homework

Note to PJM:  The next time you send down a big chief from Norristown to talk to us hillbillies, he needs to do his homework.

In his interview with The State Journal last week, Big Chief Williamson said:

And if lines are built or upgraded for reasons other than reliability, who pays for that transmission, Williamson asked. Only the ultimate beneficiaries of the power? Or everyone in the region, under the assumption that everyone benefits?

As Judge Richard Posner, out in the federal Seventh Circuit Court, made clear in his opinion published in August 2009:

FERC is not authorized to approve a pricing scheme that requires a group of utilities to pay for facilities from which its members derive no benefits, or benefits that are trivial in relation to the costs sought to be shifted to its members.

And:

No doubt there will be some benefit to the midwestern utilities just because the network is a network, and there have been outages in the Midwest. But enough of a benefit to justify the costs that FERC wants shifted to those utilities? Nothing in the Commission’s opinions enables an answer to that question. Although the Commission did say that a 500 kV transmission line has twice the capacity of a 345 kV line, it added that “the reliability of 500 kV and above circuits in terms of momentary and sustained interruptions is 70 percent more reliable than 138 kV circuits and 60 percent more than 230 kV circuits on a per mile basis,” PJM Interconnection, L.L.C., supra, 119 F.E.R.C. ¶ 61,063, p. 23; 122 F.E.R.C. ¶ 61,082, p. 16 (emphasis added)—but did not compare the reliability of a 500 kV line to that of a 345 kV line, even though network reliability is the benefit that the Commission thinks the midwestern utilities will obtain from new 500 kV lines in the East.

Judge Posner, along with a majority of the judges reviewing the case, ruled that FERC and PJM had not demonstrated that utility customers in western PJM would receive any benefit from what Posner referred to as Project Mountaineer (the man calls a spade a spade) that came close to the value of what they would have to pay through the PJM/FERC rate recovery scheme.

So Big Chief Williamson and PJM have had the answers to the Chief’s questions for a year and a half.  There is no need for any “assumption.”  That answer is clear.  Unless you can show clear benefit beyond some vague notion of “reliability” (which PJM and FERC were unable to demonstrate at three levels of federal court), then you can’t make people pay for your power line projects.