The WV PSC’s Reliability Fan Dance

The WV PSC’s now-you-see-it, now-you-don’t fan dance with reliability actually began back on August 1, 2008.  On that date, the Commission issued the final order in the TrAIL case which ordered Allegheny Energy, since swallowed by FirstEnergy, to submit a plan, one year after the TrAIL transmission line was activated, for how the company would reconductor and upgrade its high voltage transmission facilities in WV.  On May 17, 2012, FirstEnergy submitted a report, but it wasn’t a plan.  Here is a link to the comments filed by the Coalition for Reliable Power (C4RP) which describe FirstEnergy’s failure to follow the August 1, 2008 PSC order.

We will see if the PSC responds to C4RP’s comments and actually orders FirstEnergy to submit a real report.  Or did the PSC just tack this reporting requirement onto the TrAIL order to make it look like they supported improving the reliability of FirstEnergy’s WV system, when they had no intention of really doing anything?

Act 2 of the fan dance was forced on the PSC by the December 2009 blackout, when the long-neglected distribution systems of FirstEnergy and AEP in WV collapsed under a moderate snowfall.  Sen. Truman Chafin, many of whose constituents were without power for 2 weeks in the blackout, demanded and got a general investigation of that blackout by the PSC.

In the 2009 blackout case, senior PSC engineer James Ellers testified that (1) the snowstorm was not an unusual event, as claimed by the power companies and (2) the WV has no performance standards for system reliability as are used in most other states in the US.

As a result of Mr. Ellers’ revelation, the PSC ordered a new case to set performance standards for WV.  In that new case, PSC staff engineer Don Walker filed an excellent report which determined that WV power companies lag far behind power companies in other states which operate in similar terrain to WV’s in terms of numbers of incidents and length of time it takes to restore power.  Walker recommended specific statistical targets that would lead to real improvement in the reliability of WV’s electric system.

Of course, AEP and FirstEnergy responded to Walker’s report by saying they wanted much looser standards which would result in no change at all in reliability performance.  Last Wednesday, July 18, the PSC filed its procedural order setting the schedule for its final hearing in the reliability standards case.  Here is an excerpt from the discussion section of that order:

As did the winter storm of 2009, the recent severe summer storms in our state have reemphasized the importance of proper maintenance of utility rights-of-way and general reliability of the electric distribution system. Electric utility customers reasonably expect and demand reliable service and the purpose of the Reliability Targets that are the subject of this proceeding is to improve reliability by reducing the occurrence and duration of preventable outages.

By the same token, a utility’s operational costs will increase when it transitions to a more frequent trimming schedule and a schedule of increased maintenance of its distribution system rights-of way. At the same time that utility customers demand
reliable and uninterrupted service, customers are likely to oppose rate increases to cover those higher maintenance costs. One of the utilities has asserted in this proceeding that the more rigorous Staff recommended Reliability Index Targets would result in additional costs in the hundreds of millions of dollars. Recovery of those costs could result in customer rates that many would view as unreasonably high. Although the Commission expects reliable and dependable services, in its review of these cases, the Commission must be mindful of the cost to meet the proposed Reliability Index Targets. [emphasis added]

Note fudge words “many would view” in the bolded sentences.  Is this another fan dance by the Commissioners?  Are they really saying “real reliability standards would be nice, but we think, like the power companies, that they are just too expensive”?  And this is by the very same Commissioners who will be presiding as judges in a hearing that hasn’t even happened yet.  These same “judges” will then issue a final order based on all the evidence, rather than their own pre-determined biases.  By the way, while the Commissioners claim to be concerned about rising rates from creating a really reliable distribution system in WV, the PSC’s own Consumer Advocate Division wholeheartedly supports real performance standards.

On Friday, July 20, Act 3 of the reliability fan dance opened.  Yesterday, the PSC issued an order opening a new case to investigate the June 2012 blackout.  Here are the items that the Commissioners say they want power companies to report on:

The utilities joined as respondents should file an initial report with the Commission that addresses the following matters as well as any other issue considered relevant by the utility:
1. Describe operational plans to deal with outages attributable to major weather events. If plans are in written form, please provide copies.
2. Describe the extent of outages on your system, the damage experienced and an estimate of the cost to restore service.
3. Describe the actions taken in response to the weather event. If the response protocol is in writing, please provide a copy of that document.
4. Describe the particular problems which delayed repairs.
5. Describe any unforeseen problems that were experienced in restoring service.
6. Provide a restoration of service timeline which shows the approximate number of customers restored over time, including the priorities the utility followed in establishing service.
7. Describe in detail new plans or amendments to existing plans to deal with future major event outages and any estimated increase in expenses.
8. Describe in detail any planned or desired modification to existing infrastructure and estimated costs.
9. Describe your vegetation control programs and the amount of money spent for such programs for each of the past five years. Provide a copy of your program if available.
10. Describe how third party attachments to electricity poles affects potential damage and how third parties pay a share of the
replacement of poles.
11. Describe the extent of damage attributed to electric utility lines attached to third party poles and the responsiveness of the owners of those poles in replacing them as part of the service restoration process.

Note that the PSC did not ask the power companies, or the telephone and water companies that are also required to file reports, to provide information or ideas about improving reliability by encouraging businesses and homeowners to generate their own power or invest in battery systems to provide emergency power during blackouts.  Note also that there is no mention of any kinds of distributed generation backup systems among these items.

To be fair, this is only the start of the investigation, and the PSC did require the utilities to include “any other issue considered relevant by the utility.”  Do you think any of the power companies will address distributed generation as a long range solution to the reliability disaster that is the WV electrical distribution system?

As is their habit, it appears that the PSC Commissioners are playing their traditional passive role, instead of taking over leadership in the situation.  Their statutory responsibility is to insure the reliability of the WV electrical in the most economical way possible.  The PSC has broad legal authority to initiate their own research through their engineering staff.  They have the authority to develop, propose and order real solutions.  Will they do it?

Right now, considering their lack of initiative in Acts 1 and 2 of the reliability fan dance, it appears that the PSC is headed in the direction of doing nothing, either in the way of setting real improvement standards for power company performance or by proposing innovative and long term solutions.  The Commissioners will support their “do nothing” position by claiming that doing nothing is the least expensive “solution.”  This “solution” will condemn WV citizens to increasingly frequent and bigger blackouts from smaller and smaller “weather events.”

By leaving the search for solutions up to power company executives, instead of considering all of the available alternatives, the WV PSC will once again be forced to do a fan dance to appear to be doing something, while pursuing their usual “do nothing” policies.

And if you think doing nothing is “cheap,” guess again.  AEP CEO Nick Akins said in last week’s AEP investor conference call that the initial estimate of AEP’s costs for the recent blackout is $230 million.  This includes all states where AEP operates, so the WV cost for APCo and Wheeling Power, AEP’s two WV power companies, probably breaks out to about $100 million.  That does not include the costs for WV’s FirstEnergy subsidiaries.  A few weeks ago, APCo’s CEO told a reporter that APCo’s costs for the 2009 blackout were about $36 million for which APCo rate payers are currently paying.  So in less than three years, APCo’s rate payers will incur triple the costs from a blackout that happened less than three years ago.

When will the next blackout hit?  How much more expensive will it be? Is the PSC’s do nothing policy really the least expensive option here?

Or, as Keryn put it in a comment on my previous post:

We are too “poor” to pay for reliability, but we’re not too poor to pay for unreliability, apparently.

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