AEP Reaches Settlement in Mitchell Case at the WV PSC

Ken Ward reported in the Charleston Gazette yesterday that parties to the Mitchell power plant case at the WV PSC have come to an agreement about dumping the power plant onto rate payers in WV.  Half of Ohio-based AEP’s Mitchell plant, near Moundsville, WV, was dumped on KY rate payers last year, when the KY PSC approved the transfer of that half of the plant to Kentucky Power, the regulated AEP subsidiary in KY.  As Ward reports, and I reported earlier on The Power Line, the East VA State Corporation Commission prevented AEP from dumping the Mitchell plant on APCo, which is also operates in East VA and is subject to regulation in East VA.

So AEP opted to dump the other half of the Mitchell plant on its WV rate payers by transferring that part of the plant to its WV-only subsidiary Wheeling Power.  Through a special formula, APCo’s WV customers will also share the cost of Wheeling Power’s share of the Mitchell plant.

Ken points out what AEP appears to have agreed to a number of apparent concessions in the settlement.

The proposal, which needs commission approval, would leave out any transfer of ownership of Mitchell’s Conner Run Fly Ash Impoundment, protecting Wheeling Power customers from potential costs of a toxic cleanup there.

The deal also includes increased spending by AEP on energy-efficiency programs, and requires the company to issue a “request for proposals” in the future if it needs additional long-term generation capacity to meet West Virginia customer needs.

The Conner Run slurry pond exclusion is important, but it should never have been part of the deal in the first place.  Although AEP had insisted that the impoundment, which represents a significant financial liability in the near future, would be dumped on WV rate payers along with the obsolete Mitchell plant, all of the waste in that pond had been created to serve only AEP’s Ohio Power customers in years past.  Some of that past electricity had been purchased by Wheeling Power, but this was only a fraction of what went to AEP’s Ohio customers.

AEP is not as thuggish as FirstEnergy, so the concessions on energy efficiency and soliciting competitive proposals for future capacity are somewhat more generous than those in the FE’s Harrison plant dump.  However, the agreement on future capacity is essentially meaningless here, as it was in the Harrison case, because the Mitchell plant transfer will already provide more capacity than AEP needs to serve WV for the next thirty years.
The efficiency concession is just that, a concession.  Energy efficiency investment is a direct substitute for power plant capacity, at less than half the cost to rate payers.  Both the Mitchell and Harrison settlements treat efficiency investment as a sideshow.  The WV PSC Commissioners, excluding the now departed Ryan Palmer, have made it clear that they agree with their corporate friends who run WV’s electrical system that they support the much more expensive “steel in the ground” approach that puts higher profits in the pockets of AEP and FirstEnergy shareholders.
More and more US states have moved to rigorous integrated resource planning which requires power companies to integrate demand management and efficiency investments into their capacity portfolios on an equal footing with generation capacity.  The so-called integrated resource plan bill passed by the WV Legislature last year fails in this important regard.
Ken Ward quotes Energy Efficient West Virginia’s Emmett Pepper regarding the settlement:

Pepper, who also represents the West Virginia-Citizen Action Group, said that citizen groups continue to have concerns about ratepayers having to essentially buy old, coal-fired power plants, but is happy with some other provisions of the settlement.

“With the approval of this sale, West Virginia will have very little room for energy diversity, as electricity will come almost exclusively from coal,” Pepper said in a press release. “It is unclear what the impact will be from increasing reliance on a single source of energy, especially in the face of new regulations to address climate change.

“While we regret the fact that the political landscape in West Virginia is such that accepting this expensive power plant seems inevitable, we are still optimistic about the settlement provisions and are hopeful that the PSC will accept it.”

Mr. Pepper’s resigned acceptance of the settlement appears to indicate that WV CAG will not challenge the AEP Mitchell settlement as they challenged the FirstEnergy Harrison settlement.  This is understandable, particularly because Ryan Palmer is no longer on the Commission, but it is also disappointing.  At least Mr. Pepper is not trying to claim the settlement as a victory for energy efficiency as the Sierra Club did after the Harrison settlement.

Mr. Pepper puts on a brave face, but the fact is that dumping the Mitchell plant on WV customers will prevent any significant change in how WV produces its electricity.  With this expensive over-supply of electricity for the next 30 years, there is no need for power companies or the WV PSC to do anything to increase energy efficiency or substitute renewable power in our state.

 

A Scared Dominion and Other Utilities Walk Out of East VA Solar Value Committee

East Virginia has a terrible record when it comes to renewable power.  The state legislature allows electric companies to impose punitive “stand by” charges on renewable power producers.  AEP’s Appalachian Power Company, which also controls about half of WV’s electrical system, has imposed monthly fees on solar power producers.  When it comes to renewable power, East VA is as much of a failed state as WV.

In the controversy over East VA’s extra feed in charges on renewable power, the state legislature did create a commission to determine whether solar and wind generators cost other customers money or whether renewable generators created benefits to the system for which they are not being compensated.  The East VA Senate’s Distributed Generation and Net Metering Solar Stakeholder Group has almost completed the draft of the final report of its findings.

Here is a link to a good account of what happened next.  Dominion Energy, the holding company that owns Virginia Electric Power, the state’s largest electric company, just walked away from the Stakeholders Group, hoping to sabotage the process.

David Botkins, a spokesperson for Dominion Virginia Power, said after providing “feedback” to a draft report by the Group, it determined “the group has migrated into issues that are more appropriate for the SCC (State Corporation Commission) and General Assembly to consider.”

When asked why Dominion did not assume, from the beginning, that a report from the Group was destined for the Senate, Botkins added, with “the report nearly complete (it has been through several drafts) it seemed an appropriate time to discontinue our participation.”

Susan Rubin, Vice President-Legislative Affairs of the Virginia, Maryland and Delaware Association of Electric Cooperatives informed DMME and DEQ of their withdrawal saying ”We began the process hoping, in the end, the work product would be the result of collaboration.  Following the last meeting (in August), it became clear that we must remove ourselves from the list of participating stakeholders as we cannot be associated with the final report this group will issue.”

Pitt of VCU, the Group’s meeting leader, said, “Basically the utilities all said that the report was heading in a direction that they wouldn’t be able to support.” He added, they “wouldn’t say anything specific about what parts of the report they disagreed with.”

The withdrawal is leading several solar advocates to conclude that the utilities opined the valuation methodology headed would set too high a value for solar, setting the stage for a debate, and perhaps legislation, they might have a difficult time controlling. Several long-time observers have long doubted this study would have much, if any, impact because Republicans control the House of Delegates, as well as, the Senate. Neither body has demonstrated interest in enabling markets for cleaner energy in Virginia, even as the economy needs to replace tens of thousands of jobs lost to cut backs in defense contracting.

The East VA power companies are scared of what an objective study of the net value of solar power to the grid really is, because it undermines their claims that solar producers are “free riders” on non-productive “consumers.”  As John Pierobon points out in his blog post:

The value of a rooftop solar system is drawing increasing interest from advocates and a lot scrutiny from utilities since Minnesota became the first U.S. state in March to officially set a value on solar-generated electricity.  That value, in the form of a tariff, is a kilowatt hour payment that Minnesota utilities may opt to pay as an alternative to the state’s policy for crediting excess generation of electricity on a monthly or annual basis – known as net metering – at the retail rate paid by homeowners and most businesses.

Minnesota’s valuation was the result of a lengthy process based in part on the Federal government’s calculation of the social cost of fossil-fuel sources of power and their carbon emissions.  Tariff’s are unique to each utility. Analysts estimate tariffs in Minnesota are likely to range between 12 and 14 cents per kilowatt hour. The higher the value, the higher revenue drain that such a determination poses for utilities which make money simply by selling more electricity. There is long-running debate in regulatory circles about how to “decouple” utility profits from pure sales.

Pierobon provides an account of why the power companies pulled out at the last minute:

Some of that control sought by utilities might have been provided by the Department of Environmental Quality’s coordinator of the working group, Carol Wampler. Wampler is a former lobbyist for the Virginia Manufacturers Association whom the utilities trusted to help steer the Group deliberations in a direction they could live with.

But Wampler retired at the end of August. On September 5, the utilities notified various offices of the state government of their withdrawal.  Some seasoned political observers familiar with the significant influence Dominion exerts on the General Assembly, agreed that the combination of a harmful report and Wampler’s retirement was too much for them to stomach. Wampler would not comment for this column.

“It looks like the utilities didn’t like what the study is finding, and they are hoping that walking out of the room will make it go away,” said Ivy Main, a prominent blogger about clean energy in Virginia and a participant in the Group. Main has been a vocal critic of in-state utilities’ intransigence about any policy enabling a significant market for solar energy in their service territories.

Utilities have complained that net metering amounts to an unfair subsidy for customers that own solar panels at the expense of those who don’t. Solar advocates counter that the retail rate underestimates the value of solar panels to the grid and society, taking into account the health and environmental impacts of harmful greenhouse gas emissions.

Monique Hanis, of Falls Church, VA, a member of the Group’s Steering Committee representing solar system owners who formerly was senior manager of the national Solar Energy Industries Association, said she was “excited about the possibilities of working together with utilities, companies, municipal leaders and conservation groups, not just on this report, but on expanding options for customers to ‘go solar,’ creating more jobs and driving innovation across the state.”

It’s all about power company control of the political process.  When that control is threatened, the power companies just walk away.

 

East Virginia Illustrated

It is a convention here on The Power Line to refer to the state immediately to our east as East Virginia, largely for the benefit of those who haven’t quite wrapped their minds around the fact that West Virginia and East Virginia have been two separate, and very different, states since 1863.  An old friend from the PATH fight just sent me this illustration to further drive home the point (thank you, John)-

east va

Note that the maps are not to scale.

Dominion Crushing Solar Producers in East VA

My great blogging colleague over in East Virginia, Ivy Main, has posted a great assessment of the Edison Electric Institute’s attack on solar power generation over at her blog Power for the People VA.

I have been covering the Edison Electric Institute’s creeping attack on solar producers in Arizona and other states.  While the attack is expanding across the country, Ms. Main points out that the East VA SCC and Dominion Power, the state’s biggest electric company, have already teamed up to stifle new solar power investments with a $30 to $60 per month “standby fee” imposed on large East VA solar producers.

The latest effort to squelch solar is through standby charges: fees imposed on net metering customers that compensate the utility for “standing by,” ready to sell grid-produced energy at night and on cloudy days. In 2012 in Virginia, Dominion Virginia Power won the right to charge customers with large residential systems (10-20 kilowatts) up to $60 per month—a charge that destroyed this market segment. This summer Dominion pressed its advantage, indicating in a submission to regulators that it will likely seek more standby charges on a broader class of solar customers.

Note that Virginia has less than 15 megawatts (MW) of solar installed across the state. Dominion Power alone has around 19,000 MW of coal, gas and nuclear. So the notion that net metering by solar customers has any perceptible effect on the grid or other customers is silly. The point of Dominion’s stand-by charges is to stifle the solar market, not cover costs.

Ms. Main goes on to blow apart the argument made by EEI and their dark money friends at ALEC that solar producers don’t pay their “fair share” of electricity costs:

Meanwhile the conservative American Legislative Exchange Council (ALEC) has gotten into the act, drafting a model resolution insisting that net metering customers should have to pay their “fair share” of utility costs through measures like standby charges. Not incidentally, Dominion Power is a member of ALEC and sits on the energy and environment task force next to the fossil fuel shills from Heartland Institute.

But the “fair share” argument is bogus. Utilities weren’t set up to ensure Americans all paid their “fair share” of the costs of the electric grid. If they were, there would still be mountain communities without power today. Residents of cities and towns subsidized the cost of running power lines to far-flung rural homes inhabited by people who could never have afforded their “fair share” of this infrastructure.

Even today, city dwellers pay more than their “fair share” of transmission costs to subsidize people like me who live in leafy, sprawling suburbs and less-populated parts of the state. Anybody voting for an ALEC-style resolution about “fair shares” had better be willing to stick it to suburban and rural consumers.

There are other ways electricity rates aren’t “fair.” Dominion’s residential rates are structured so people who use less electricity pay more per kilowatt hour than those who use more—again, making it roughly a transfer of wealth from urban apartment dwellers to those with larger or less efficient homes elsewhere. The utility’s goal is to encourage the use of electricity, and compete more effectively with the gas company for heating. People paying their “fair share” just doesn’t enter into it.

And while we’re at it, if we were serious about subsidies we’d slap a tax on electricity made from fossil fuels to reflect the costs they impose on society. Asthma, heart disease, mercury poisoning, groundwater contamination, and of course, the dumping of carbon into the atmosphere—these are all costs of fossil fuel that ought to be included in power bills to make sure everyone is paying their “fair share.” People who install solar panels deserve a thank-you for their service to society, not standby charges based on bogus “fair share” claims.

The argument for standby charges is, pure and simple, an attempt by entrenched monopolies to block competition. The “fair share” argument is a red herring from utilities that don’t want a fair fight. And with good reason: they’re going to lose.

This is exactly right.  There is nothing about the “fair share” argument that can’t be applied to hundreds of other costs involved with providing electricity across the US.  And, of course, readers of The Power Line are well aware of the uncounted costs imposed on all of us by coal and nuclear power in particular.

Thank you Ms. Main for your clear and thorough debunking of the real reasons behind the “standby charge” and “fair share” propaganda.  And, as you say “they’re going to lose.”

East Virginia’s Dominion Power Sees Plant Closings as Opportunity for Growth — And No Whining

Unlike whiny AEP executives, Dominion Virginia Power sees their coal plant closings as an opportunity for business growth and diversification of their sources of power.  Here is a news story about Dominion’s plans.

Dominion is making a big commitment to new natural gas generation including “12 smaller natural gas-fired turbine units coming into service between 2020 and 2026 at locations to be determined.”  Compare this plan with plans by AEP’s WV subsidiary APCo to build no new natural gas plants in WV because they can’t build a big monster plant.

Dominion’s plan is not perfect.  The company appears to only be giving lip service to expanding solar and wind capacity, but they do include new initiatives in their plan.  And they are still talking about a third reactor at their North Anna plant which is built directly over an active earthquake fault.  If you don’t think this is a good idea, after the recent earthquake centered near North Anna, take a look at this report of how Virginia Power, now owned by Dominion, lied about the fault to get permits to build the first two reactors.

There is no reference in the article about any Dominion whining about the EPA.  Dominion clearly sees this as an opportunity to strengthen their electrical system through diversification and beginning a move to smaller generating units.

AEP’s APCo operates in part of East Virginia, and APCo will have to present a similar plan to the VA SCC.  Here is the final sentence of the article: “Appalachian Power, the state’s second-largest utility, planned to file its plan with the SCC Thursday, but officials said uncertainty in federal environmental regulations could change its plan dramatically.”  Of course, more whining.

Cross posted from Coalition for Reliable Power

East Virginia SCC Orders Dismissal of PATH

On May 24, the East Virginia State Corporation Commission issued an order dismissing the PATH application in that state.  Here is a link to the dismissal order.

Unlike the WV PSC, the SCC placed conditions on AEP/FE should the companies ever want to apply for PATH again in East Virginia.  These conditions were taken directly from the recommendations of SCC Hearing Examiner Alexander Skirpan in his April 12 report to the SCC.

These conditions are:

(1) PATH-VA’s Motion to Withdraw should be granted;

(2) PATH-VA should be directed to preserve the analyses underlying the TEAC Slide [A slide from a PJM report on why PATH was not included in PJM’s 2011 Regional Transmission Expansion Plan, also known as the RTEP];

(3) PATH-VA should be directed to file the following information in this docket: (i) the solution of the’Base Case’ and ‘Base Case + Warren’ as text files; (ii) the power flow tests used to identify NERC thermal violations for the’Base Case’and’Base Case +Warren’ scenarios in PSS/e electronic format; (iv [sic])) the results of the studies summarized on the TEAC Slide for the ‘Base Case’ and ‘Base Case + Warren’ in a format and level of detail equivalent to Exhibit Nos. 1-3, of Mr. Paul McGlynn’s prefiled direct testimony in this proceeding ; and (iv) tables of generation loaded into the ‘Base Case’ and ‘Base Case +Warren’ and what generation was reduced in the at-risk scenario. [Alternative scenarios that the SCC had required AEP/FE to provide following attempts by PJM to rig comparisons among various alternatives to PATH.]

(4) Any future application for the PATH Project should include information regarding PJM’s 2012 or later RTEP;

(5) Any future application for the PATH Project should include an analysis of changes in circumstances (as measured from the ‘Base Case’ of the TEAC Slide), including changes in generation,demand response, and energy efficiency resources;

(6) Any future application for the PATH Project should provide information on the PATH Project’s original routes (including routes that do not impact Virginia), consistent with other proposed and alternative routes;

Note in particular that item (4) above requires that AEP/FE must include information from “PJM’s 2012 or later RTEP” in any future application.  PJM releases its RTEP for a particular calendar year in February of the following calendar year.  This requirement effectively prevents AEP/FE from re-applying for PATH in East Virginia until after February 2013.  By then, Dominion’s Mt. Storm to Doubs rebuild project might be nearing completion and Dominion’s huge new combined cycle gas-fired power plant will also be nearing completion, all but making it impossible for PJM to justify a new application for PATH in East Virginia, or anywhere else.

A Closer Look at Mr. Skirpan’s Ruling in East Virginia

I have finally had a chance to review SCC Hearing Examiner Alexander Skirpan’s recommendations and ruling in the East Virginia PATH case.  You can view the entire ruling here.

Mr. Skirpan’s recommendations are clear, thorough and judicious.  I believe he made exactly the decisions that needed to be made in any withdrawal of a PATH application for a certificate of need.  The WV PSC’s hasty decision, with no conditions was exactly the wrong way to manage a withdrawal.

I found Mr. Skirpan’s explanation of PJM’s base case projections to be simple and clear.  If you’ve been wondering what all the ruckus was about, here is a simple description:

In this proceeding, the latest base case load flow analysis completed by PJM indicated that the first thermal violation does not occur until 2021 and is on the Mt. Storm-Doubs transmission line.8 This violation will be addressed by the rebuild of the Mt. Storm-Doubs.9 The only other thermal violation slated to occur before 2025 in PJM’s current base case load flow analysis is on the Pruntytown-Mt. Storm transmission line in 2024.10 This violation will be eliminated with the construction of Dominion’s Warren County 1400-megawatt gas-fired generation project.11 In other words, in this proceeding, PJM’s latest base case load flow analysis fails to indicate any thermal violations through 2025.

When PJM ran its system under peak load with two generators dropped off, as in a serious emergency, all the electricity that needed to be transferred was able to get where it was going on PJM’s system except for overheating (thermal violations) beyond required limits on two existing transmission lines.  One, Mt. Storm to Doubs, will be rebuilt soon, eliminating one set of thermal violations.  The other problem is on the Pruntytown to Mt. Storm line in WV (which the WV Legislature just urged the WV PSC to require FirstEnergy to rebuild).  That problem will be resolved when Dominion Virginia Power builds its new natural gas fired power plant in northern Virginia in the next five years.

That’s it.  No PJM mumbo jumbo about TEACs and RTEPs.  Just a plain and simple “not needed.”

The other wise decision that Mr. Skirpan made was to rule that any future application must be based on PJM’s 2012 Regional Transmission Expansion (Why can’t they call it “improvement”?) Plan.  This effectively postpones any new application for any PATH-like project until early 2013 at the earliest.

FirstEnergy attorney Randall Palmer whined that setting a date for any future application was against Virginia law.

Mr. Skirpan replied that his ruling was based on simple logic, not any attempt to set a deadline.  AEP/FE was requesting a withdrawal of the current PATH application based on information developed in their 2011 RTEP process.  The final RTEP won’t be released until February or March of 2012.  The 2011 RTEP states clearly that PATH is not needed at all, so PJM will have no new information which could possibly justify a new PATH application until the next RTEP, the 2012 RTEP, is completed and published in early 2013.

So, at least in East Virginia, there cannot be a new PATH-like application until March 2013 at the earliest.