AEP and FirstEnergy Just Can’t Do Reliability Unless They Get FERC Incentives

We are now in the middle of WV’s second major blackout in less than three years.  We can see a pattern to AEP’s and FirstEnergy’s responses.

The first thing they do is exaggerate the weather event to bolster their claim that they had no responsibility for the utter collapse of their distribution systems.  Here is what senior PSC engineer Jim Ellars said in his testimony to the PSC on the 2009 blackout:

Generally speaking, the smallest amounts of snowfall occurred in the southern counties such as Mingo, Logan, Lincoln, Wayne, and McDowell (4 to 6 inches) as well as the far western counties of Wood,  Jackson, and Mason (2 to 4 inches).

Snowfall was heavier in central and eastern WV, but AEP, which serves Mingo and Logan Counties, and its PR people, hit the media with claims that southern WV was hit by a disastrously severe storm.  As it turned out, Mingo and Logan Counties, with some of the lightest snowfall of the storm, were exactly the counties where it took AEP the longest to restore power, in some cases over two weeks.  Ellars concluded that the snow storm was severe in some areas, but that AEP and Allegheny Energy (since bought out by FirstEnergy) were not prepared for what was a heavy, but by no means unusual, weather event.

Over at StopPATH WV, Keryn does a great job of taking apart FirstEnergy’s attempts at disaster hyperbole in our current situation.  The fact is that WV’s power companies have been robbing their maintenance budgets for years, shortchanging the reliability of our WV distribution system.

Prompted by Jim Ellars’ testimony in 2010, the WV PSC, for the first time, is in the process of setting reliability standards for AEP’s and FirstEnergy’s utilities in WV.  This is actually very simple.  Most states already use three easy-to-track statistical measurements to require power company performance on reliability.  There is an active case right now at the PSC to determine the exact standards that the PSC will use to push AEP and FirstEnergy toward improvements in their reliability.  Naturally, AEP and FirstEnergy are resisting any system that will force them to improve.  Here is the report filed by PSC engineer Donald Walker.

The WV Consumer Advocate Division also filed comments supporting tougher standards.  CAD attorney Tony Sade states clearly that the problem is not weather disasters, which are going to happen.  The problem is the power companies’ lack of maintenance and preparedness for events we all know are bound to happen.

Of course, the WV PSC bears some responsibility in this matter for failing to encourage investment in widely distributed small generation sources in our state.  Distributed generation has reliability built into its very structure, while distribution of electricity over long distances from massive power plants is always vulnerable to disruption by weather.  But WV’s PSC supports big transmission projects, and FERC provides big rate payer subsidies for interstate transmission lines, while WV’s own electrical system goes to hell in a handbasket.

3 thoughts on “AEP and FirstEnergy Just Can’t Do Reliability Unless They Get FERC Incentives

  1. When recovery from these many outages is complete, the power companies need to look at seriously beefing up maintenance of its transmission and distribution lines and related apparatus. The power companies do some power line right-of-way clearing, but not nearly enough.
    For example, this week here in Jackson County there are many dozens, perhaps hundreds, transmission and/or distribution lines and poles downed by nothing more than fallen trees. 30 and 40 years ago these rights-of-way were mostly clear of such massive numbers of booby-trap “outages ready to happen”. Why are power companies skimping on basic facility maintenance?

  2. Because every dollar saved on O&M [operations and maintenance] is a dollar they can add to profit and quarterly dividends. Who ever thought it was a good idea to let investor-owned corporations supply an essential service in a monopoly setting? Even with a guaranteed return, it’s not enough profit for these goons, it’s never “enough” when they have stockholders breathing down their neck for higher and higher returns. Us “hogs” are getting mighty sick of this scenario and people are turning away from the undependable corporate “trough” in droves. The traditional utility business model is dying.

    • In yesterday’s interview in the Charleston Gazette (http://www.wvgazette.com/News/201207030266), APCo CEO Charles Patton noted that APCo’s total emergency costs from the 2009 blackout, $18 million, is being mostly recovered from rate payers over 8 years. Now the costs of this system failure will be added to this amount, and probably also recovered on a deferred basis. Remember from the 2008 APCo coal cost disaster and the unpaid Century Aluminum electric bill that the WV PSC allowed deferred recovery as well. WV’s electrical system is getting more and more expensive, and the power companies and PSC are trying to hide the rate impact by spreading the rate increases out over several years.

      In the case of APCo’s big coal bill and the Century situation, falling electricity demand meant that the deferred cost plans didn’t work because the planned amount wasn’t able to be recovered in the allotted time period. Falling demand undoubtedly has impacted the 2009 blackout deferred recovery schedule as well, but $15 million is a pretty small sum against APCo’s unrecovered coal bill and Century’s bill, which total $390 million.

      Now we have the cost of this new blackout. More deferred cost recovery. More hiding rate increases. WV’s electricity is getting very, very expensive, and someday, rate payers will have to pay the piper.

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