The Approval Process, Or Not

The FERC Decision

The first step that AEP and Allegheny Energy took was to present the PATH project to the Federal Energy Regulatory Commission (FERC).  FERC regulates the interstate sale of electricity.  Before deregulation of electricity production and transmission in the 1980s, electric utilities produced and sold power in specific areas and there was not much national sale of electricity.  Now, with state and local markets for electricity deregulated, power companies can essentially sell electricity to anyone anywhere.

It is the interstate sale of electricity that is straining the regional power grid, not increasing demand for electricity in general.  If power companies produced power locally to meet local needs, PATH would not be needed.  Instead, power consumers in the Northeast and the Mid-Atlantic states will benefit from “cheap” coal in West Virginia to produce the electricity they do not want to produce themselves from resources they have locally like tidal forces, wind and solar energy.  Why should multi-millionaires on Martha’s Vinyard have to put up with the wind generators of the Cape Wind project, when we’ll destroy our mountains in West Virginia and ship them our electricity?  Coal is only “cheap” in West Virginia because no one, particularly government regulators, is controlling the massive destruction of our state’s land, water and people.

FERC has just approved a guaranteed rate of profit for AEP and Allegheny Power of almost 14.3% for all the electricity they transmit over the PATH power line to customers in other states.  I know a lot of small businesses in West Virginia that would like to have a government agency guarantee them a 14.3% profit rate.

See the FERC decision here.

The WV PSC & the TrAIL Power Line

State public utility commissions, or in West Virginia, the Public Service Commission, still retain the basic decision-making about whether to allow power lines to be built in their states.  This is so even when the power line will provide little or no direct benefit to the state.

It would seem that the PATH line would be a no-brainer for the WV PSC.  PATH will only hurt WV consumers and land owners.  That is not the case however.  The PSC raised a number of objections to the TrAIL project when it came before them last year, but almost overnight, Governor Manchin created a number of “benefits” where there were none, including requiring Allegheny Energy to build a new facility in Fairmont and hire 150 new employees.  These employees will be a new cost for the company and that cost will be included in the next Allegheny rate hike request, but who reads that kind of fine print.

In other words, Gov. Manchin’s policy appears to be to use the PSC’s “leverage” to create new “benefits” where there are none in the project itself.  In some circles, this leverage would be called extortion, in other circles, a shakedown.

The PSC process for the TrAIL line, which runs from PA through WV and into VA, gives us a pretty good picture of what may be in store for the PATH process.  PSC staff and the Consumer Advocate Office raised significant objections, the Governor’s office arranged a “settlement” outside the scope of the PSC hearings, and suddenly, just before the August 1 deadline, the PSC voted unanimously to approve the TrAIL project.

As you can see from the Gazette article, Gov. Manchin has already begun public discussion of his “settlement” proposals for the PATH line.  These “settlements” amount to attempts to bribe certain WV citizens into supporting, and the PSC into approving, projects that make no sense for the state or the country.  It looks as though the Governor wants to turn a very straightforward public utility case into a political circus.  This is not good either for West Virginians or West Virginia government.

The WV PSC’s Order in the TrAIL approval will give you a very clear idea of what is in store for the PATH project.  The Order provides a clear picture of how the PSC sees its role in assisting the development of the regional power grid as opposed to the welfare of the state’s citizens.  Here is the link to the TrAIL order.

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