Mon Power Down Again

I’m sitting here in my office pondering a conundrum.  Back in 2013, the WV PSC granted Ohio-based power company holding companies AEP and FirstEnergy the right to add significant new charges to WV electric bills to cover the costs of a new right-of-way maintenance program that would reduce the regular blackouts that hit West Virginians.

The PSC just granted FirstEnergy’s Mon Power and Potomac Edison a new base rate increase which includes the cost of this program that was supposed to increase system reliability in WV.  Mon Power and Potomac Edison rate payers are now paying a surcharge that will bring in $50 million a year to the power companies for supposedly enhanced right-of-way maintenance.

Yesterday morning, with Mon Power’s electricity still coming in through my meter, I thought that maybe WV rate payers might actually be getting their money’s worth.  FirstEnergy has made a big right-of-way clearing push in Calhoun County in the last two years.  They have even illegally sprayed my neighbors with herbicides.

Well, I was wrong.  Yesterday (Friday), just after noon, Mon Power’s power went down.  We have 15 solar panels, 8 six-volt batteries and lots of sunshine today, so we have plenty of power.

Back in 2013, the PSC and the power companies told us everything would be fine if West Virginians just forked over more money.  Guess what?  This recent storm has knocked out power to over 100,000 customers.  How have things changed?

If you want to see a history of my posts on this subject, click here.

The Wind Blows, Power Goes Out in WV

Here’s the account from the Charleston Gazette of how 20-30 mile per hour gusts were “knocking out power to thousands of West Virginians” on Monday.

The WV PSC will probably give both AEP and FirstEnergy significant rate increases in their current base rate cases for right of way maintenance.  Monday’s local blackouts indicate, however, that WV’s aging electrical distribution system is still very brittle.

Keep in mind that this was just wind, on a relatively warm day.  There was no rain or snow, and still there were thousands of customers without power.

Too bad WV government “leaders” aren’t taking a tip from New York on building real reliable electrical systems:

Under an innovative program to create at least 10 “microgrids” (independent community-based electric distributions systems) statewide, the State will launch NY Prize, a $40 million competition, to help build community-scale power grids for areas with approximately 40,000 residents. Microgrids can operate in tandem with existing power supply during normal conditions, but will disconnect and operate as an independent power system to keep the lights on during an emergency.

WV PSC Raising Rates to Cover AEP Maintenance Costs

Yesterday, the WV PSC filed a final order approving Ohio-based AEP’s plan to maintain its rights of way in WV.  AEP’s plan for APCo and Wheeling Power grew out of PSC general investigations into failed power company responses to the moderate 2009 snowfall and the 2012 derecho storm.

An article in this morning’s Charleston Gazette claims that AEP has estimated that its WV customers will see their bills rise by $2.38 per month, if they use 1000 kwh of electricity in a month, once the company’s new vegetation management plan rate increase take effect.

The PSC did not approve AEP’s desire to add more surcharges to the Christmas tree horror show on its WV electric bills.  In its order, the PSC summarized testimony in the case concerning the company’s Vegetation Management Plan (VMP):

The WVEUG, CAD and Staff witnesses testified that the Companies should not be allowed a VMP Surcharge. They all stated that the proper way for the Companies to  recover costs of the VMP is in a Rule 42 base rate case. WVEUG witness Baron testified that it would be unreasonable to add another surcharge mechanism when the Companies already recover a significant portion of the overall revenue requirement through various surcharges. Exh. SJB at 6. Mr. Baron also stated that the addition of another surcharge would be particularly unnecessary given the expectation that the Companies will file abase rate case before the summer of 2014.

As a result of the testimony by the three main parties in the base besides AEP, the PSC ordered:

3. A rate recovery mechanism is not necessary at this time given the expected filing date of the Companies’ next base rate case being mid-2014.
4. The Commission has identified a public service need to implement an enhanced VMP, and it is reasonable to authorize the Companies to commence the enhanced VMP with the effective date of this Order and incur the related increase in costs in advance of a specific VMP cost recovery mechanism to be established in the upcoming general rate case, particularly when a rate case is to be filed in the near future.
5. The issues raised by the parties regarding cost estimates, capital costs versus maintenance expenses, and cost allocation of VMP related costs can and should be further analyzed in the context of a base rate case.
6. It is reasonable to defer the recovery of prudently incurred incremental increases for VMP O&M expenses that the Companies incur between the issuance of this Order and the conclusion of the upcoming base rate case.
7. It is reasonable for AEP to include in that deferral a carrying cost of four percent (annual rate) given the short timeframe between the effective date of this Order and the cost recovery mechanism for VMP costs to be established in the upcoming base rate case.

So AEP will get their rate increase, but it must come in the company’s next base rate case.  AEP can begin work under their VMP immediately, and they can recover interest on any money they need to borrow to operate the program until their new base rate increase takes effect.

And how much money are we talking about?

5. The Companies have spent between $14.050 million and $17.150 million on non-storm related vegetation management expenses and capitalized between $2.760 million and $6.8 million of vegetation management expenditures over the last three years.
6. VMP, both expensed and capitalized, will be approximately $5 8.02 million. The Companies project the total first year expenditures for the enhanced VMP, both expensed and capitalized, will be approximately $58.02 million.

So under the new Vegetation Management Plan, AEP’s expenditures for right of way maintenance will almost triple.  That is a clear picture of how underfunded the maintenance of WV’s centralized electrical infrastructure has been, likely for decades.  Once again, we see that WV’s relatively low electric rates are not the result of cheap coal but of serious neglect, paid for by customers and businesses during repeated power collapses.

And will AEP customers receive trouble free electrical service for this tripling of right of way costs?

The Commission concludes that the implementation of a four-year, cycle-based VMP will (i) enhance the ability of the Companies to identify and repair faulty or failed equipment, (ii) improve customer service and reliability, and (iii) will initiate a more proactive approach to vegetation management. The Commission did not require the utilities to adopt a program that would prevent every outage, especially from the most severe storms, but concludes that the enhanced VMP will lessen the impact of storms on numbers and duration of outages.

I agree that the expensive new VMP programs will help, but tripling spending will not eliminate the fundamental vulnerability of a centralized generation/transmission/distribution system to collapse from natural and human made causes.

PSC approval of FirstEnergy’s VMP and rate increases is still pending in case 13-1064-E-P.  In that case, FirstEnergy has filed for a surcharge (of course) that would increase monthly residential bills for 1000 kwh by $2.90 to cover new costs they estimate at $69 million per year.

Highly Centralized Eastern Interconnect Showing More Signs of Brittleness in Cold

The Eastern Interconnect, the inter-connected grid system that ties together all of the US and Canada east of the Rockies, except for most of Texas, is showing all the danger signs of hyper-centralization and dependence on high voltage transmission.  Back in early January, the first big cold snap caused PJM Interconnection to set a new winter peak load record and resulted in appeals to customers to reduce their electrical use.

Now we have this account of the multiple stresses that this winter’s cold weather is putting on our brittle electric grid.

An unprecedented 50,000 megawatts of power plant outages occurred east of the Rockies during last week’s cold snap, which also badly crimped natural gas delivery systems in key pockets of the country, federal and industry watchdog officials reported Thursday in analyses that raise more questions about reliability of the U.S. power grid as it becomes increasingly dependent on gas-fired generation.

The startling power plant outage data-which far exceeded outages seen in previous winter cold waves-were revealed by the North American Electric Reliability Corp. (NERC), the nation grid reliability watchdog, at a Federal Energy Regulatory Commission meeting.

FERC staff said the severe weather also significantly disrupted gas delivery by interstate pipelines and local distribution companies, and that cold temperatures also crimped gas production in some areas, including the Marcellus Shale.

Generally, the NERC and FERC reports described a series of extraordinary actions by grid operators, gas and electric utilities and pipeline operators that avoided widespread cuts in gas or power supplies for customers.

The new dependence of US electrical generation on natural gas has raised new threats to both electrical and natural gas systems as each system becomes more dependent on the other.  The problem is especially dangerous at winter electrical peak, because natural gas is also used for direct home and business heating.  Demand for both gas and electricity is at its highest for both power sources at the same time in extremely cold weather.  Shortages of gas cause shortages of electricity.  We saw this clearly last winter in New England.

As The Energy Daily notes, this problem has spread to PJM this year.

FERC Commissioner Philip Moeller said “early numbers” suggest that 9,000 MW of capacity in PJM was unable to get sufficient gas during the cold snap. That is somewhat surprising because other regions of the country, namely New England, are thought to be more exposed to reliability problems due to a growing dependence on gas for both power generation and heating.

FERC staff said New England was spared problems during the cold snap because temperatures there were actually “well below their all time winter peak,” requiring no emergency procedures.

Centralization and fossil fuel dependence to not promote electrical system reliability.  But you already knew that because you read The Power Line.

The WV American Water Blackout

Water blackout?  Is that what’s happening in Charleston right now?

Let’s see,

  • WV American Water Company is a government regulated utility,
  • Over the last 20 years, WV American Water has steadily increased the centralization of water services around Kanawha County and beyond by buying out smaller water systems,
  • WV American Water is serving a large geographic area from a single plant with a single intake point in the Kanawha Valley which is full of lightly regulated chemical storage and manufacturing plants (Freedom Industries, the immediate cause of the current disaster was completely unregulated by the WV DEP, because it was a storage plant, not a manufacturer.  The logic of this WV law and Legislature-approved regulation completely escapes me, except that it is a gift to a dangerous industry at the expense of WV citizens.),
  • The measure of reliability for a water utility is whether it can provide safe drinking water to the people in its service area whenever they need it,
  • The resilience of the system depends upon the ability of the utility to restore service within a reasonable time following an emergency to minimize economic loss to its service area,
  • The WV PSC, the WV DEP, WV legislators, the Governor, federal regulators and local government officials are all responsible to see that a robust regulatory system exists to insure safety and reliability of the system as a whole.  In the current case, they all failed.

Yup.  Sounds just like the chain of problems that creates electrical blackouts that WV has experienced over the last three years.  Now centralization, bad mergers by shareholder owned companies, and lax regulation has spread the blackout disease to WV’s largest private water utility.

And the solutions are much the same as in the electricity world:

  • Manipulation of local systems by large out-of-state holding companies,
  • Lax regulation that allows unsafe centralization and unsafe practices,
  • Poor public investment in local resilient community based microgrids (in the case of water, local Public Service Districts and small town water systems),
  • Regulators and government officials too busy kowtowing to big corporations that they fail to protect their own state’s communities.

People in the Charleston area who have their own water wells are immune to the disaster that is unfolding in the WV American Water system.  Just like people who produce their own solar power who also have battery back up systems are able to produce their electricity when electric utilities fail.  The big difference is that people with their own water supplies are totally “off grid” from the WV American Water system.

Just as generating their own power is not an option for people who live in shady neighborhoods, many people who live on ridge tops or in the city simply or have had their wells destroyed by the coal industry can’t economically or safely drill wells for their water.  So we need to have local systems that provide public services like electricity and water.

There is a limit to the effective size and structure of these systems, however.  Just as decentralization and local control make sense for our electrical system, they also make sense for our other public utilities, like water.

The WV American Water disaster is another in a long line of wake up calls about how centralization and merger mania among privately owned monopolies is destroying the reliability and resilience of our public resources.

NY Going with Microgrids to Ensure Reliability and Resilience

Remember back at the end of 2012 when I filed this public comment in the WV PSC’s investigation of the 2012 derecho blackout?

So let’s get to what the Commission can do right now to really improve reliability by making microgrids a reality in West Virginia.

  1. Expand virtual metering: In the Commission’s current net metering regulations, there is provision for virtual metering if primary loads are on a different meter from the meter circuit that contains solar power generation.  The regulations, however, limit the creation of a virtual meter to meters located on contiguous property.  By expanding virtual metering to a single customer entity, but for loads in different non-contiguous locations, the Commission could create long term viability for municipal and county emergency backup systems that could locate solar arrays at water or sewer plants that could then be used to charge battery systems at various first responder and emergency services locations owned by a county or city.
  2. Expand power sales opportunities:  The Commission could also create a new tariff structure for small scale power producers from local microgrids using renewable or NGCC generation that would allow them to generate revenue from their local systems during normal, non-emergency operation.  Current tariffs in West Virginia do not provide enough revenue to make the kinds of investments in these systems which would dramatically increase the reliability of emergency systems needed in power company failures.
  3. Identify appropriate microgrid opportunities in West Virginia:  The Commission took the initiative in the 2009 blackout general investigation that led directly to the establishment of the new reliability standards.  The Commission should initiate a new case to study appropriate microgrid technologies and strategies for using microgrids in West Virginia to strengthen critical services during power company failures.  This study case is vital, because there is so little microgrid expertise in West Virginia or its Ohio-based power companies.  In 2008, Allegheny Energy received a multi-million dollar grant from the US Dept. of Energy to build and test a microgrid at WVU called the Super Circuit.  The project was to begin in the fall of 2009 and continue for 4.5 years.  To date, FirstEnergy has revealed no practical applications for West Virginia developed in this project.  By now, FirstEnergy should be able to share many useful results of the Super Circuit project.

Initial steps toward microgrid reliability are perfectly suited to building a stronger emergency response capability in West Virginia.  These are steps that the Commission can take right now to move us forward.  When will we face the next major power blackout?

Needless to say, the PSC didn’t even mention the word “microgrid” in their final order in the investigation case.

Not so in NY.  Here’s the press release issued by NY Gov. Cuomo’s office on Jan. 7.  From the press release:

A RESILIENT ENERGY SYSTEM – $1,414,792,188

Harden Existing Electrical Grid – $1,374,792,188

New York will utilize federal funds to harden the State’s existing electrical grid, including the move of approximately 500 miles of overhead primary wire underground, elevating vulnerable substations, expanded tree-trimming and raised power lines for newly elevated homes, and creating a new outage response system. With the new PSEG-Long Island in place in 2014, the State can take its ongoing fixes even further to protect Long Island against future storms.

Create 10 Microgrids – $40,000,000

Under an innovative program to create at least 10 “microgrids” (independent community-based electric distributions systems) statewide, the State will launch NY Prize, a $40 million competition, to help build community-scale power grids for areas with approximately 40,000 residents. Microgrids can operate in tandem with existing power supply during normal conditions, but will disconnect and operate as an independent power system to keep the lights on during an emergency.

Kevin Law, President and CEO of Long Island Association, said, “The Governor’s plan is propelling New York’s storm preparation into the 21st century. By investing funds into the expansion of the FUEL NY program and the hardening of our existing electrical grid, he is taking smart, necessary steps to ensure that New York has a reliable and stable energy network that can hold up during the next storm. In addition, the creation of 10 microgrids that can operate independently of our normal grid will serve as a reinforcement in communities that have no power. I commend the Governor on these bold, creative ideas that will undoubtedly make a difference in communities throughout New York.”

That’s right, TEN microgrids.  Here in WV — NOTHING.

New Rate Increase Coming at Mon Power/Potomac Edison

On top of the rate increase for the Harrison power plant purchase, FirstEnergy’s customers (Mon Power/Potomac Edison) will be hit with a possible 3% rate increase in the next few months.

Remember this post from last January?  If you had clicked on the link in my post to the January final order in the WV PSC’s general investigation of the 2012 blackout in WV, you would have found this in the Conclusions of Law section of the order:

5. The responsible regulatory course of action is to require all electric utilities to file, within six months of the date of this Order, separate petitions for Commission review and approval of proposed programs for systematic and comprehensive, end-to-end, time cycle-based overhead right-of-way vegetation control with spot trimming as necessary. Each electric utility must develop and propose its programs based on the specific operational and reliability targets for that utility. Each petition should also include an explanation of how efforts will be coordinated with other entities that have facilities in the same rights-of-way.
6. Because a comprehensive cycle-based vegetation control program will be more costly than current trimming practices and result in higher costs than are presently included in rates, it is likely that the utilities and ratepayers will pay more in the future. This higher cost should, however, be offset by reduced outages, lower customer impact, and less disruption from future storms. [emphasis mine]

In other words, as I described the order in my post about the order:

Here is the summary:

  • It’s the trees.
  • Cut the trees.
  • Your rates are going up.
  • We will ignore any investment to really make WV’s electrical system more reliable.

Like I said – nothing new.

Well, as the WV PSC and I predicted, your rates are going up to pay Ohio-based FirstEnergy to do the job they were supposed to be doing already.  FirstEnergy filed its required case about it’s right-of-way clearing program back in July.  You can see the case record and what they asked for in their petition here.

FirstEnergy took the PSC’s 2012 blackout final order to heart, with its strange passive voice statement “ratepayers will pay more in the future.”  That future is now:

The proposed Program costs, budgeted to be an average $69 million per year over the first 5 years, is proposed to be recovered through a surcharge beginning with the start of the Program and continuing year after year. Both Mon Power and PE would have a separate Vegetation Management Surcharge. The Companies propose to file their reconciliation and new proposed rates by November 1 ofeach year for changes to rates to be effective the following January 1.

Hey, Mon Power and Potomac Edison customers, how does that sound?  A surcharge “continuing year after year.”  And how much would the surcharge increase electric rates?

Expected average annual revenue requirement for the surcharge would be approximately $35.8 million for the first year. Revenue requirement would be expected to increase slightly as the program ramps up during the initial implementation 5-year period. The average residential customer would experience a rate increase of $2.90 per month or approximately 3.1% as a result of the Program.

Note that this new surcharge is based only on the start up cost of $35.8 million for the first year.  FE projects that the average cost of the surcharge over the first five years will be $69 million.  This is almost double the first year’s cost alone.  To generate an average of $69 million per year over five years, costs in years 4 and 5 will likely be much higher than $69 million.  That means that the surcharge in those years will be more than double the surcharge in year one.  So not only will Mon Power and Potomac Edison’s rates rise, the rate of increase of those rises will also speed up as the years progress.  And the WV PSC has already signaled that this will be OK with them.

FirstEnergy goes on to list a lot of projected benefits from this rate increase and concludes:

It is difficult to forecast benefits, and certainly they will be different among various customers, some of whom will likely receive immediate and meaningful benefits and others who will not. Overall the benefits will be real and should increase over time. The Program will help the Companies achieve their reliability standards agreed to in Case No. 12-0015-E-P and, more importantly, reduce the impact of wind and snow storms on electric service.

There are a number of things going on here.

  1. A real right-of-way maintenance program (btw – What have we been paying Mon Power and Potomac Edison to do for the last 30 years?  I thought it was their job to maintain their systems.) should certainly reduce the severity and duration of many storm-related blackouts.
  2. The PSC’s two blackout investigations (of the 2009 winter blackout and the 2012 summer derecho blackout) failed to investigate why WV’s power companies had allowed their systems to deteriorate so severely over the past 30 years.
  3. As noted in the 2009 investigation, the WV PSC had never set performance standards for system reliability for WV power companies.  The PSC tried to remedy this situation by imposing its first standards ever in case 12-0015-E-P as noted in FE’s petition above.
  4. It is clear from FE’s surcharge petition that the company will be using the right-of-way clearing surcharge to pay for their part of their performance improvements under the new standards.  They say so right in the quote above.
  5. The WV PSC, and certainly FE, never considered broader measures to decentralize WV’s grid to provide both improved reliability and better resilience to WV’s electrical system.  Even the first steps toward local solar power generation, expanded battery storage and small scale natural gas-fired electrical generation, would have provided a real move toward real reliability in our state.

Want to see what other states are doing about real reliability?  Keryn has a nice survey of expanded microgrid technology across the US.  Keryn points out that one of the steps that our neighbor MD took in response to the same 2012 blackout was to create the first commercial microgrid, powered by solar power.

This innovative renewable energy project, which brings Maryland closer to reaching its goal of increasing Maryland’s in-state renewable generation to 20 percent by 2022, combines the strengths of Maryland’s booming solar energy market and the power of grid resiliency. In the event of a conventional power grid outage, the innovative solar PV array will stay online through the power of an advanced energy storage system. If grid power grid goes down, the system batteries will keep a critical load of 50 kW online for just over four hours at night and recharge the next day.

The MD microgrid is essentially the same as my own PV/battery system, which is now a reality for many people in WV.  There’s really nothing fancy about these systems.

What have WV policy makers done to support microgrid technology and a more stable decentralized power system?

In the 2012 legislative session, the WV Legislature eliminated the state tax credit for renewable energy investments by homeowners and businesses.

WV PSC Commissioners Albert and McKinney just voted to further centralize power generation in our state by forcing WV rate payers to buy all of the obsolete, coal-fired Harrison power station from FirstEnergy’s unregulated power generator.

Now, Mon Power/Potomac Edison rate payers will be paying more for right-of-way maintenance, on top of the Harrison purchase, while the Legislature has taken away any state assistance for creating a more reliable system.