About That $60 Million … Is It Really About Jobs?

In yesterday’s post on the Obama administration’s circumvention of federal law and its own National Park Service employees, I included the following description of the deal on the Susquehanna-Roseland line, as quoted in PEER’s press release:

As part of the deal, the draft EIS will NOT consider at least two alternatives that would lessen impacts to the park’s scenery (#6 and #7) but will include at least one alternative (#2B) demanded by the companies that is untenable from a safety perspective.   The Secretary and the Director have unofficially committed to the companies that the NPS will select Alternative 2, the alternative preferred by the companies but which is the most damaging to the resources and scenery of the parks.  In return, the companies have reportedly agreed to pay $60 million for land acquisition and administration inside and near the NRA. [emphasis mine]

OK, this is a stab in the back to the NPS’s approval process for the Delaware Water Gap National Recreation Area and the federally controlled Appalachian Trail, but shouldn’t the NJ power company PSEG pay for the deal?

Well, that might be true, if PSEG was really paying the $60 million.

Remember that the Federal Energy Regulatory Commission has awarded PSEG full cost recovery plus 12.8% return on equity for all capital costs, including land acquisition, for the useful life of the project.  Keep in mind that FERC allows PSEG to collect their 12.8% incentive return only on the equity portion of their investment, based on a theoretical assumption that half of the investment in the line will come from debt financing and half will come from the company’s own equity.  This effectively means that PSEG will be allowed to collect this 12.8% from rate payers on “only” half of the capital costs of the S-R line.  While they won’t get this wonderful incentive on the other half of these costs, they will still get to charge rate payers for all of the costs they incur.

So who will pay the $60 million that PSEG pays the Interior Department?  You, kind PJM rate payer.  FERC and PJM allocate the costs for FERC-approved high voltage transmission lines to all rate payers in PJM’s member power companies.  Here is the percentage allocation for the S-R line which I took from the 2008 PJM Tariff Agreement:

AEC (1.89%) / AEP(17.30%) / APS (6.02%) /BGE (4.95%) / ComEd(14.97%) / Dayton (2.50%) /DL (2.02%) / DPL (2.85%) /Dominion (13.61%) / JCPL(4.50%) / ME (2.18%) /NEPTUNE* (0.49%) /PECO (6.31%) / PENELEC(2.06%) / PEPCO (4.82%) /PPL (5.37%) / PSEG(7.61%) / RE (0.31%) /ECP** (0.24%)

Here is the percentage allocation for the S-R line taken from the 2011 PJM Open Transmission Tariff Agreement:

AEC (1.89%) / AEP (17.30%) / APS (6.02%) / BGE (4.95%) / ComEd (14.97%) / Dayton (2.50%) / DL (2.02%) / DPL (2.85%) / Dominion (13.61%) / JCPL (4.50%) / ME (2.18%) / NEPTUNE* (0.49%) / PECO (6.31%) / PENELEC (2.06%) / PEPCO (4.82%) / PPL (5.37%) / PSEG (7.61%) / RE (0.31%) / ECP** (0.24%)

I won’t bother giving you all the names of the power company abbreviations here or with looking up the most recent PJM Tariff Agreement.  Here is a link to a map of PJM’s power company service zones, which includes a legend providing the names of companies listed only by their acronyms.  My point is that all rate payers in PJM will pay PSEG’s hush money to the federal government.

You can see that rate payers of Commonwealth Edison (ComEd) in northern Illinois, and customers of AEP in Tennessee all be paying for $60 million that PSEG pays the federal government in the little side deal that Sec. of the Interior Ken Salazar cut with them, not to mention all rate payers in my native WV.  APS is the Allegheny Power zone in PJM, which is now owned by FirstEnergy.  These allocations will have changed somewhat in the 2011 PJM Tariff Agreement, because FirstEnergy has now joined PJM.

So let’s get to the real down and dirty business of this deal.

If you read the White House press release, you will see that the Obama administration is making a big deal about all the jobs these 7 chosen transmission projects will create.  Leaving aside the fact that local power line “congestion” can be resolved with much more job and business growth, and more quickly, and cheaper, by building new, mostly renewable, distributed generation in the regions that need power, and by managing demand in those areas, as PJM has already demonstrated in NJ itself, let’s look at the “jobs” issue itself.

Democrats have been stymied by Republicans in Congress over financing economic expansion.  There are lots of ways that the federal government can stimulate the US economy to create new jobs.  Let us be clear, the problem in the US right now is not overtaxation or overregulation.  The problem is that the big corporations that dominate our economy are sitting on mountains of cash that they are not investing in the US economy.  A side problem is that US government policies of maintaining a “strong” dollar and allowing China to undervalue its own currency, have created a huge balance of trade deficit and have destroyed US manufacturing.

Some Democrats want to address the real problems, but President Obama has joined the Republican Party in calling for government austerity and cuts in domestic government spending, instead of policies designed to increase direct government investment and create jobs.  Because the President and his economic advisers refuse to expand direct government investment in our economy, they have forced themselves to make average people pay for what they can portray as “jobs” initiatives.

The new RRTT “pilot program” is an Obama administration “jobs” program financed directly by electric rate payers with an additional subsidy created by the federal government (FERC), again paid directly by rate payers.  As with all of the “new” “jobs” initiatives proposed by both the Republicans and the Obama administration, this is a shell game financed by lower and middle income Americans.

And there is nothing “pilot” about this federal power line shakedown.  These are all transmission projects that have been in the works for years.  Even the “new” strong arm techniques are old recycled Cheney policies and propaganda.

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