Yesterday, Sierra Club announced that it opposes PPL's "Project Compass," at least the parts that it thinks will carry "dirty" energy.
Jeff Tittel, director of the New Jersey chapter of the Sierra Club, said his group "will definitely oppose" the section in that state.

Tittel said the Sierra Club's opposition is "absolutely" a challenge to the existing business model for utilities, which often rely on far-off plants to send power into populated areas.

Tittel said the PPL proposal is like "frack by wire" because the proposed route across northern Pennsylvania would encourage new power plants fueled by hydraulically fractured Marcellus Shale gas.
But what about the sections that environmental NGOs think will carry "clean" wind energy from the Midwest?  How is Sierra Club going to support the western parts of this project without connecting them to the eastern parts that deliver the load?
Tom Schuster, a regional Sierra Club representative, said the group hasn't taken a position on the entire project because there are still too many unknowns.
Meanwhile in Midwest states, Sierra Club is supporting new transmission lines intended to move electricity hundreds of miles across multiple states.  Aren't those also transmission lines that rely on far-off plants to send power into populated areas?  Yes, they are.
Environmentalists who testified said they support the [Grain Belt Express] plan. James Harmon of Kirksville, a member of the executive committee of the Sierra Club’s Missouri Chapter, said it would help Missouri and other states meet the new federal goals for reducing carbon emissions.
DILEMMA!

This is what happens when your policies are hypocritical.  Either you like big new transmission "for wind" (and everything else they carry), or you don't.  There are no "electron police" standing by to keep dirty electrons off new transmission lines.
Hello, left hand... let me introduce you to right hand.  May you two have a long and hypocritical life together!

So, how does Sierra Club want to plan our electric grid?  This is what happens when you let a bunch of "public policy" wonks have a seat at the table.  It doesn't sound like there's any real plan at work here.

Meanwhile, equally silly arguments about "mine mouth" gas plants hijack
the reporter's attention:
Jay Apt, director of the Carnegie Mellon University Electricity Industry Center, said that enormous natural gas production from the Marcellus Shale has led to significantly cheaper wholesale prices in areas of drilling. In other words, a power plant could produce electricity cheaply in Pennsylvania and a utility could transmit it to places with higher electric prices, such as Maryland, New York, and New Jersey.
Ever heard of a gas pipeline, Jay?  Gas can be transported to plants that burn it in places with higher electric prices.  You're going to have to transport something somewhere, and what's easier to get permitted?  A FERC-jurisdictional gas pipeline, or a state-jurisdictional 725-mile high voltage transmission line that meanders through four very urban states?  We all know that FERC has never met a gas pipeline it didn't like.
PJM says what it always says -- because when the only tool you have is a hammer, everything looks like a nail.  PJM never changes, no matter how many new rules get made.  PJM simply finds a way to bend the new rules to continue to support its generation and transmission incumbents.
PJM Interconnection of Audubon, Pennsylvania, which oversees wholesale electric demand for 61 million customers in a 13-state mid-Atlantic region, has said that the electric grid is "undergoing an extraordinary transformation" as coal-fired plants retire.

 PJM could approve all, part, or none of the PPL plan, but regulators agree that the region needs transmission upgrades to ensure reliable and affordable electric service. Allentown-based PPL said the line would take about a decade to build.
Dotter goes... doddering... on making silly analogies:
PJM spokesman Ray Dotter said it's like a huge version of the dilemma many individuals face: Is the most effective thing to buy a new car, or fix the old one you have?
The PPL plan is like the new car choice. PJM will review the proposal and is likely to vote on it in November or December, and is also considering numerous smaller projects from other utilities.
So, if PJM decides to buy PPL a new car, are they planning to trade in the old car?  Or do PJM and PPL intend to continue driving that old, inefficient car AND the brand new one?  New transmission that ignores current inefficiencies and outdated equipment simply adds to the problem, it does not solve it.

Then Tittel says something sensible:
"We have better places to invest our energy money" in or near in New Jersey, Tittel said, such as offshore wind, solar, and energy efficiency projects. He added that if money was spent in those ways "you wouldn't need the power line."
I hope this means that Tittel will now be supporting smart, new local transmission projects in New Jersey!

But, just in case the Sierra Club simply continues to flap its arms ineffectually and contradict itself, the citizens of the affected states will most likely be the REAL opposition that kills PPL's transmission project.

The citizens have each other's back, because they can't count on organizations like the Sierra Club to deliver a coherent message about new electric transmission.

We always show up to get the job done!

So, with that in mind, PJM wants to hear your comments about "Project Compass."  Tell them what you think.
 
 
Bees pollinate.  Bees make honey.  Bees can sting, too.  That hurts.

Spiders are scary.  But they also eat harmful insects.  Sometimes they bite, and some of the bites are painful, and poisonous.

Vultures are gross.  They eat dead things.  Nature's cleaning crew.

Sharks eat things.  Mostly other sea creatures, but sometimes they eat people who venture into the shark's dinner buffet line.

Traders trade.  They're supposed to make money doing it, but sometimes they lose money making risky investments.

Do we blame bees for being bees?  Do we blame spiders for being spiders?  Do we even want to think about vultures eating carrion, much less damn them for doing it?  Do we blame sharks for eating the occasional person?  (Well, unless you're Captain Quint and are convinced sharks eat people with menace and forethought, but that was Hollywood fiction.)

Then why do we want to villainize traders for trading?  The object of trading is to make money.  Traders don't go to work every day hoping just to break even, or take a loss that produces money for some other entity.

A recent article in the New York Times scandalizes profitable electric market trading and blames traders for "making consumers pay more."

When the regulators and legislators decided to create a competitive electricity market, they spread a bunch of financial chum in the water to attract investors to come buy the products the market created and shoulder some of the risk of wild price swings in order to shield utilities and consumers.  The NYT article puts it this way:
The contracts were intended to protect the electricity producers, utilities and industries that need to buy power. The thinking was that the contracts would help them hedge against sharp price swings caused by competition as well as the weather, plant failures or equipment problems. Those lower costs could reduce consumers’ bills.
So, the traders came.  They ate the carrion.  But, the nature of risk means there's a balance between reward and loss.  Sometimes you win, sometimes you lose.  The NYT article concentrated on a winner, without mentioning any losses.  The NYT article lambastes DC Energy for being successful.  What do the NYT reporters think would happen if DC Energy, and all other traders, stopped buying these electric market products?  Could we do away with competitive markets?  Would consumers pay more or less if we did?

When a trader buys one of these products they are assuming risk that they may lose their investment.  If they lose, should consumers make them whole?  Of course not, the trader assumed the risk when he bought the product.  But, when they win, people like Mayor Margot Garant think the trader should give the money they made back to the consumers.
“Why aren’t we getting that money?” said Margot Garant, mayor of Port Jefferson.
Because you didn't take the risk, Margot!

Traders serve a purpose to keep competitive electricity markets functioning.
Trading firms like DC Energy say they ultimately benefit consumers by bearing financial risks and fostering competition. They argue that power companies can hedge only if someone else is willing to speculate. Market forces, they say, can also help power companies determine where to invest in the grid.

“We believe this type of activity should cause prices to better reflect true costs and thus create a more efficient electricity infrastructure that should better serve the retail customer,” Andrew J. Stevens, a co-founder of DC Energy, said in an email.
A trader made this very apt analogy to me:

"Traders should perform a valuable role -- they absorb risk that other market participants don't want to take.  Kind of like insurance companies, which can be wildly profitable too. It's like asking: what would happen to home prices if we disallowed insurance companies from selling homeowner's insurance? If people couldn't insure their home and had to assume the risk and liability of it burning down, people would be less likely to buy homes, would be more worried when living in their homes, etc.  In general, insurance companies provide a stabilizing effect on the housing market.  As a society, we accept this even though we know that insurance companies generally collect more in premiums than they pay out in claims. In other words, they are profitable, yet that doesn't seem to irritate people so much because we like going to bed at night knowing that our homes are insured."

So, why do we revile all traders, even ones making money legally?  Is it because taking down successful traders makes big headlines for regulators swaggering through the OK Corral with their market manipulation magnum drawn?  It's nice to think that some really smart guys are keeping us safe from bad traders doing things that are illegal, right?

But, the regulators aren't that smart.  If they were, we wouldn't have electricity markets with money-making loopholes big enough to drive a truck through.  When a trader makes a bunch of money making legal trades, we ought to punish the regulators, or the market monitors, or the RTO personnel who created these badly designed market products.  Why do we want to punish the trader for doing what traders do?

Maybe it's because those not-so-smart regulators want to drive all the traders who are smarter than they are from the market.  That may be the only way to stop traders from making money in our competitive electricity market.  Only then will the regulators be the smartest guys in the room, but our competitive electricity market won't survive it.

WANTED:  Really stupid traders to assume electric market risk and take losses.  Must be dumber than regulators and market monitors/designers and have an endless supply of cash to give away to consumers.  Apply at FERC or your regional transmission organization.
 
 
Silly schemes and misleading names were in high gear during yesterday's FirstEnergy Q2 2014 Earnings Call.  You know you're in for a treat when Tony the Trickster opens the festivities with another one of his *heavy sighs*.

FirstEnergy announced its new plan to make Ohio consumers assume all the risk of its unregulated, competitive generation fleet and called it, "Powering Ohio's Progress."  But, let's get real here, FirstEnergy should really call it "Powering Our Profits," because that's its purpose.

And I blame the birth of this ridiculous scheme on the West Virginia Public Service Commission, who set up West Virginia's consumers to absorb the company's risk on its Harrison power station last year.  In that scheme, West Virginia customers took on the burden of paying the operating costs of the Harrison power station by purchasing all its generation.  In turn, FirstEnergy would sell any excess power into regional markets and return the profit it earned doing so to the consumers.  Sounds great, right?  However, the cost of owning and operating Harrison is greater than any profits that may be derived from selling excess power into the market, therefore, consumers would end up paying more.  But, the WV PSC added one important term to its crazy plan that required the company to use the profits from market sales of power to pay down the "acquisition adjustment" fee of acquiring Harrison that was added to rates.

It is because the WVPSC allowed FirstEnergy to foist the risk of owning and operating Harrison onto its consumers that FirstEnergy got so encouraged to attempt to foist the risk of two of its other competitive plants onto Ohio consumers. 

But, the big difference here is that West Virginia is a fully regulated state, while Ohio is a competitive state.  In Ohio, electric customers can choose their generation supplier, but not their distribution provider.  The electric distribution system is owned and operated by the utility who traditionally served the customers.  Even deregulated states cannot change that, unless they allow other companies to construct their own separate distribution system to serve customers, and that's neither economic nor logical.  Therefore, even in deregulated states, customers are still served by, and receive a bill from, their regulated distribution provider.  Where generation is competitive, the distribution company simply adds the charge from your generation company to your bill and passes the costs through to you.

FirstEnergy's Powering Our Profits surcharge would be tied to its regulated distribution affiliates in Ohio.  The charge is non-bypassable, which means that it would be part of your distribution service and you would pay it no matter who your generation provider is.

So, let's look at this...  FirstEnergy Solutions is the FirstEnergy subsidiary that owns the competitive generators.  As the owner, FES must cover the entire cost to own and operate the plants, and in return it keeps any profits or absorbs any losses that result from selling the generation into the competitive power market.  But, market prices have been low and are not expected to recover any time soon.  This means that FES has been subject to more losses than profits from the generators it owns.  So, FirstEnergy's scheme will force its regulated distribution companies to enter into a contract to purchase all the power generated by FES's plants at a set price that will cover FES's costs and pay it an 11% profit.  Suddenly, FES's generators are profitable and risk-free!  But the distribution customers have a bunch of very expensive power they have purchased.  Can they use it?  No!  FirstEnergy's POP plan requires the distribution companies to sell the generation they have purchased into the competitive power market at whatever price it can get.  FirstEnergy says that in the first three years, where prices can be predicted, the distribution companies and their ratepayers will take a loss on the sale of power.  However, FirstEnergy says that its crystal ball predicts that power prices will rise in the remaining years of the 15 year contract and that a profit will be made selling purchased power into the market.  Gotta ask... if FirstEnergy is so certain there's a profit for these competitive generation plants just over the horizon, why don't they hold on them?  Because there isn't.  It's all smoke and mirrors, hopes and dreams.

FirstEnergy wants to hand the risky hot potato of owning uncompetitive generators to its Ohio distribution customers so that they can absorb the risk of market prices.

What a bunch of crooks!
 
 
Where do investor owned utilities get their silly project names?  PJM gives transmission projects alpha-numeric names.  Sometimes companies name their projects for the substations they connect (i.e. Susquehanna Roseland).  But sometimes a company proposes a project so big, so expensive, and so outrageous that it needs its own cutsie-poo name, like some sort of fire-breathing, money-eating dragon (i.e. PATH, TrAIL, MAPP).

Behold, Project Compass!
PPL proposed this monster last week in conjunction with its 2nd quarter earnings call.  Maybe it was just some elaborate distraction for investment analysts?  A poorly executed joke?

At any rate, here's the motivation for this ambitious and bodacious "investment" in new transmission:
The strong year-to-date increase in ongoing earnings was driven in part by a combined $69 million from our domestic utilities, driven by returns on additional transmission investments in Pennsylvania...
Well, shoot, if you can make a little money "investing" in transmission, why not go big and make a LOT of money, right?
Also this morning, we announced a PPL Electric Utilities proposal to PJM, as part of the competitive solicitation process under FERC Order 1000. As currently proposed, the 500 kV transmission line would run about 725 miles from Western Pennsylvania into New York and New Jersey, and also south into Maryland. The project is in the preliminary planning stages. The new line would improve electric service reliability, enhance grid security and enable the development of new gas-fired power plants in the shale gas regions of Northern Pennsylvania. The proposal would create savings for millions of electric customers by delivering lower cost electricity into the region and reducing grid-congesting cost. According to preliminary estimates, the cost of the project, which is not yet included in our CapEx projections, would be between $4 billion and $6 billion. Because of the magnitude of this proposal, there is a good chance we may enter into partnerships to develop and build the project. The preliminary timeline envisions completion of the project by 2023 to 2025, assuming all necessary approvals are received and construction begins in 2017. Approvals are needed from various regulatory and regional planning entities. We'll keep you posted on any further developments.
But it doesn't sound like the analysts shared PPL's enthusiasm and confidence in Project Compass:
Daniel L. Eggers - Crédit Suisse AG, Research Division
Bill, can you maybe get a little bit more into this transmission project today? I guess, kind of how the process works from announcing, looking at something to where we'll see action. What kind of dollars you have to spend upfront? And then, if you look at the challenges you guys had with Roseland and other folks have had in the past, trying to build these new Pennsylvania East type of transmission lines, how you guys think you're going to approach it to make it a higher chance of success?

William H. Spence - Chairman, Chief Executive Officer, President and Chairman of Executive Committee
Sure. So the processes itself is one that's not been well traveled in the past, as you know. It's a relatively new process. So we'll continue to work with all the stakeholders to make sure that we do everything in our power to make sure that we get this approved on a -- as timely a basis as we can. Maybe I'll ask Greg to take you through kind of what we understand to be some of the key milestones and processes we have to do to make this a reality, so, Greg?

Gregory N. Dudkin - Principal Executive Officer, President and Director
Yes, thanks. So first off is the filings. So PJM had a window that just closed recently. So this project, Project Compass, was filed as part of that window. As far as the approvals are concerned, so this project not only is part of PJM, but also goes into the New York ISO, still need approvals from both entities. Also we'll need state approvals, as well as utility commission approvals. So for me, what increases the probability of success is just the compelling nature of this project. When you think about what's happened in the industry over the past year, the polar vortex, substation security being a big issue, coal retirements being a big issue. This project really pulls all those issues together and provides significant benefits to the consumers in the region. So I think it's the compelling nature of the benefits of this project that will help the project move forward. We are putting together an outreach plan. In fact, I've started this morning to get people that will be involved in the project, up to speed and be looking to work with others to make sure that this is a success.

Daniel L. Eggers - Crédit Suisse AG, Research Division
Okay. So we should -- this will be, I guess, probably a little quiet from our perspective for -- in a period of time, while you get your ducks in a row. Is that kind of how we should think about it?

Gregory N. Dudkin - Principal Executive Officer, President and Director
Yes, I would say so. Because of all the entities we have to work with my sense is that we have a better idea about the timeline as far as approvals probably by the end of this year. But it should be fairly quiet from your perspective.

Daniel L. Eggers - Crédit Suisse AG, Research Division
And then the money you guys are putting into it now, is there a route for recovery if this is not successful or is this money you guys are burying on PPL for the time being?

Gregory N. Dudkin - Principal Executive Officer, President and Director
Yes, this is something that is not recoverable. So we'll -- if it doesn't go forward, then we'll just had to eat that.
Eat.  Eat.  Eat.

There's nothing "compelling" about this project.  It's uninspired, unrealistic overbuild in its purest form.  Why should ratepayers shell out billions to "fix" a bunch of minor problems?
Neel Mitra - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division
Question on the transmission project. It looks like the map you provided, the starting points are really kind of where the new CCGTs, that are announced for PJM in '16 and '17, are being built. Is the -- is kind of the economic reason for the project that some of those gas plants that are going to be built right on top of the shales, they just don't have enough transmission capacity to get to where they need to, to provide reliability? Or is there another real economic benefit that I'm not seeing?

William H. Spence - Chairman, Chief Executive Officer, President and Chairman of Executive Committee
Well, there's a number of potential benefits, and I'll let Greg describe some of those. But that clearly could be one of them, but there are others as well.

Gregory N. Dudkin - Principal Executive Officer, President and Director
Got it. And so, I would say when we are -- when potential generators come to us, one of the issues is they need to obviously connect to our transmission. And in some cases, that can be very, very high cost. So part of the thinking on the economics is if we sited through the region, the cost to connect for those generators would be much less. So again with potential coal retirements, we think there's economic advantage for that on a going-forward basis. And we use pretty conservative assumptions around generation retirements. But beyond that, there are reliability benefits. Again, we talked about substation security. There are benefits that, actually, we didn't really factor in the economics. But I think there'll be a significant economic benefit there, reduced congestion. So all that, when you factor all those together, it is a significant positive economic benefit to the consumers.
Oh, right, we're supposed to spend billions to make it cheaper for new merchant generators to sell their electricity in a "competitive" market.  If these new generators can't afford to compete in the market by paying their own way to existing transmission connections, then they're not profitable and competitive and shouldn't be built.

Reliability?  Where's the driver for that?  Or are we going to put the cart before the horse again and create the "opportunity" for transmission before creating the "reliability" issue it is intended to fix?

Substation security?  How do existing substations get made safer by building new ones?  Is it because we're going to increase the number of possible targets to water down interest in just a few crucial points?

Didn't factor in the economics... but I'm sure they can make something up!


Wow, pretty weak reasoning there, Greg!
Paul Patterson - Glenrock Associates LLC
A lot of my questions have been answered. But just -- and I know it's some way off in the future here, but when the transmission line is built, what do you expect it to do to the market? Is there any basis differential or any sort of impact you could sort of suggest, that sort of in the ballpark, that would happen as a result of these major projects.

William H. Spence - Chairman, Chief Executive Officer, President and Chairman of Executive Committee
Yes, as you can imagine, because it is so far out and there's so many moving pieces, coal retirements, how many new gas pipelines may be built to move shale gas away from the constrained areas, and so forth, that we really don't have a forecast that we could point you to suggest which way prices would move as a result of this transmission project.

Paul Patterson - Glenrock Associates LLC
Okay. And no part of the project is going to be really done before 2023, is that correct?

William H. Spence - Chairman, Chief Executive Officer, President and Chairman of Executive Committee
That's our target. So with it, the earliest would be 2023.
See question above... they didn't factor in the economics, they're going to make that part up later!
Rajeev Lalwani - Morgan Stanley, Research Division
My first question is on the transmission project that you announced. Can you provide some insight on any competing projects that PJM is also looking at?

William H. Spence - Chairman, Chief Executive Officer, President and Chairman of Executive Committee
At the moment, we're not aware of any competing projects. This is a very unique project, that I'm very proud of the team here that came up with the concept and the forward thinking to put something of this nature in front of PJM. So we're not aware of any competing projects. And the requests that PJM have had, have been smaller projects to basically address some relatively small reliability concerns. I think there 4 or 5 of them. And this project and I response to some of those, but it goes well beyond that. Again with something that we think is very unique and compelling from a stakeholder process -- perspective.
Because, ya know, when the only tool you have is a hammer, everything looks like a nail.

Obviously there is no need for a new transmission project of this magnitude, but PPL thinks they can "compel" PJM into agreeing to this massive boondoggle without any competition developing.  This is exactly how PJM got into trouble on Project Mountaineer.  When it's not about reliability or economics, it's greed, not need.
Angie Storozynski - Macquarie Research
Okay. And lastly on the transmission project, I know it's many years out, but just looking at how the Susquehanna-Roseland went and the 3-year delay to cross, what, a 3-mile stretch through the Delaware Water Gap even though there was an existing right of away. I mean, obviously, we don't see exactly how this proposed line goes, but should we expect similar issues with siting of the transmission line?

William H. Spence - Chairman, Chief Executive Officer, President and Chairman of Executive Committee
Greg, do want to take one?

Gregory N. Dudkin - Principal Executive Officer, President and Director
Sure. Thanks. So certainly, when you're talking about a 725 mile line, siting is going to be a big issue. So we will work with all the stakeholders. We've had success, actually Susquehanna-Roseland is a great example. So it took us a while, but we were building through a national park. And I think it had been very successful. I think the folks there appreciate the care we took of the park, and so I think our reputation is good in that area and that's why I think we'll be successful.

Angie Storozynski - Macquarie Research
So this proposed line doesn't go through any national parks or any environmental -- that shouldn't face any environmental issues?

Gregory N. Dudkin - Principal Executive Officer, President and Director
No national parks.
No, no national parks.  Their last escapade in a national park cost the ratepayers $60M in hush money to the Department of Interior. 

ALL the stakeholders?  Landowners and ratepayers, grab your stakes, we're heading out!
 
 
The Association of Tennessee Valley Governments (ATVG) is an advocate for TVA and the local governments that reside in the Tennessee Valley region.  ATVG represents the nearly 1,000 local governments that reside within the seven-state TVA region. They represent local governments in Alabama, Georgia, Kentucky, Mississippi, North Carolina, Tennessee, and Virginia.  There is strength in numbers. Collectively, they are over nine million people strong.

The Association of Tennessee Valley Governments has urged the Tennessee Regulatory Authority to "...exercise caution as it considers the application of Clean Line Energy Partners, LLC, for a certificate of public  convenience and necessity to operate as a public utility with powers of eminent domain within the State of Tennessee..."

One more strike against Clean Line, and this time it's coming from seven states that Clean Line has targeted as potential customers for its Plains & Eastern Clean Line.

On August 1, the ATVG made the following resolution, to be forwarded to the United States Department of Energy, the Tennessee Regulatory Authority, the Tennessee  Congressional delegation, the Governor of Tennessee, and the TVA Board of Directors
:
Whereas, the Association of Tennessee Valley Governments (ATVG) represents local governments within more than 200 Tennessee Valley River Region Counties which closely monitor issues associated with the
Tennessee Valley Authority (TVA); and

Whereas, TVA's mission focuses on providing low cost, reliable electricity, environmental stewardship and economic development to the people of the Tennessee Valley; and

Whereas, the TVA Act of 1933 mandates that TVA provide power to its customers at the lowest feasible cost; and

Whereas, TVA is currently evaluating a proposal to purchase a large amount of wind generated electrical power from the Oklahoma panhandle from Clean Line Energy Partners, LLC, and transport It 700 miles using a single high voltage direct current transmission line that will bypass the existing network of power
lines to Memphis, Tennessee; and

Whereas, such a partnership between Clean Line and TVA would likely transport wealth outside the Tennessee Valley to the detriment of the nine million residents of the Valley; and

Whereas, TVA has stated that electricity demand in the Tennessee Valley is not expected to return to 2007 levels until 2020; and

Whereas, the nation's power grid is a complex, interconnected network of generating plants,
transmission lines and distribution facilities; and

Whereas, bypassing the grid to purchase electricity from such a long distance away increases security threats by providing additional exposure for natural or malicious events due to the extreme distance between generation and point of use without needed network redundancy; and

Whereas, wind is an intermittent power source that lacks the dispatch capability of other resources and does not eliminate the need for base load or dispatchable power plants like other more dependable resources such as nuclear, natural gas, coal and hydropower; and

Whereas, the number of property parcels and property owners that may be negatively affected by eminent domain as a result of the construction of this proposed 700 mile transition line is unknown;

now, therefore

BE IT RESOLVED by the Association of Tennessee Valley Governments (ATVG), that we strongly encourage the Tennessee Regulatory Authority to exercise caution as it considers the application of Clean Line Energy Partners, LLC, for a certificate of public convenience and necessity to operate as a
public utility with powers of eminent domain within the State of Tennessee until it is proven that its proposal meets TVA's obligation to provide reliable power to its customers at the lowest feasible cost.
The ATVG recognizes the security, reliability and economic drawbacks of importing unreliable wind energy hundreds of miles, considerable price considerations aside.  ATVG has also heard the message of the Clean Line opposition groups loud and clear -- eminent domain for Clean Line's projects is just plain WRONG!

Bravo, ATVG!  And congratulations to the thousands of hard working grassroots activists across the midwest who remain resolute on their path to victory!
 
 
W T
PPL?
I think PPL needs to do a round of drug testing of its employees.  Whoever came up with this idiotic idea must be on something.

PPL announced today that it had "submitted an application to PJM" to build a 725-mile 500kV line, estimated to cost $6B, through four mid-Atlantic states.

Never going to happen.

Residents of affected states are still reeling from PJM's last big transmission building idea, Project Mountaineer, that cost them billions, including nearly half a billion dollars for planned projects that were never built.  Try it, PPL, and you will experience coordinated, strategic opposition like you've never seen before!

The Morning Call seems to be the first media outlet to... err... call PPL out on its outrageous money-making scheme.  PPL interstate transmission project both costly and lucrative:  Project would fill utility coffers while costing ratepayers billions of dollars.

Morning Call says:
The project also would be a significant source of revenue for PPL Corp., PPL Electric Utilities' Allentown-based parent. Under Federal Energy Regulatory Commission rules designed to encourage infrastructure investment, utilities may earn a profit of 11.68 percent on transmission projects.
That translates into a profit of up to $700 million. PPL would share the money with any other utilities that participate in the project.
PPL customers, meanwhile, would see the cost, including utility profits, reflected in their rates — though the burden of paying for the project would be shared by ratepayers in all four of the states involved.
But, Morning Call only sees the tip of this iceberg.  PPL can apply to the Federal Energy Regulatory Commission for transmission rate incentives that would up its profits significantly.  In addition to incentive ROE adders that can increase the 11.68 percent several percentage points, PPL can also ask for guaranteed cost recovery in event of abandonment, a return on construction work in progress that enables them to begin earning that juicy return immediately, even before the project is completed, and many other outrageous financial rewards.

In addition, Morning Call's math is wrong.  The $700 million profit the reporter calculated is only that earned in THE FIRST YEAR of operation.  Transmission project rates work sort of like a 40-year mortgage.  The return is calculated and paid on the depreciating balance of the project cost every year!  So, in the first year of operation, PPL would earn a return on $6B and collect a certain amount of depreciation on the project assets that would lower the balance owed by ratepayers.  The second year, PPL would earn a return on the depreciated balance, and additional depreciation.  And so on, over the 40 year (or more) life of the capital assets.  PPL's possible profit from this ridiculous project is a nearly endless goldmine!

And, one last thing Morning Call gets wrong -- this project will be paid for, in part, by ratepayers in all 13 states in the PJM region because of its size.  A 500kV project built in PJM is cost allocated at 50% to all ratepayers based on peak usage, with the other 50% being assigned to the cost causers/beneficiaries.

Moving right along into PPL's feeble assertions that its project will:
If approved, PPL predicts, the project will improve energy reliability and security and provide customer savings by eliminating transmission bottlenecks and encouraging development of lower-cost natural gas-fueled generation plants.
The new plants would help replace energy supplied today primarily by coal-fired plants that, under increasingly stringent federal air quality standards, are expected to be retired in coming years.
This doesn't even make sense.  The coal-fired plants that will be closing are located in the Ohio valley, not on the east coast.  Once those coal-burners are offline, it will free up significant transmission capacity for any new "mine mouth" Marcellus shale gas-fired plants built in the Ohio valley.  Why would we need to build a new west to east transmission line when there's already plenty of them sitting idle due to coal-plant closings?

PPL says they will have a robust public input process to find out where to site the line.  Seriously?  That strategy doesn't work anymore.  It's all about need for the line in the first place, not where to put it.  Get with the brave new world of transmission opposition, PPL!

And speaking of siting the line... where is that new Maryland substation supposed to be on that featureless map?  If you compare it to a real map of Maryland, it looks like it's in Howard or Carroll counties.  But, what if there was land available in neighboring Frederick County for a proposed substation?  Oh, deja vu!

This has got to be the most thoughtless transmission proposal I've ever seen. 

Never going to happen.
 
 
Marcelino Cuadra is in big trouble.  He's been sentenced to seven years’ probation after he pleaded guilty to charges of corrupt organizations, theft of services and conspiracy to commit theft of services in connection with electric meter tampering incidents in Pennsylvania.  He also has to complete 60 hours of community service and re-pay nearly $350K to electric utility PECO.

Cuadra was convicted of tampering with numerous business and residential electric meters to "fix" them so monthly usage would be reduced.  He says the electric customers paid him for the "fix."

Compare Cuadra's plight to West Virginia's recent meter scandal, where FirstEnergy subsidiaries Mon Power and Potomac Edison were found by the Public Service Commission to have failed to read customer electric meters bi-monthly as required.  This resulted in consecutive estimated bills where monthly usage would be reduced, only to show up on an actual read bill months later that amounted to thousands of dollars.

What was FirstEnergy's sentence?  A $7.5M yearly rate increase to pay for monthly meter readings.

I think it must have all been in the technique employed to commit the act, since both seem to be the result of corrupt organizations and conspiracy.

But, don't call Marcelino, there are safer ways to save energy.
 
 
After being pelted with correspondence from transmission developers, regulators, and environmental organizations promising vehement opposition, the PJM Board of Managers "delayed action" on PJM staff's recommendation of PSE&G's "7K" project to solve its Artificial Island problem.

But lest you think sanity has finally prevailed and the Board has rolled back the process to ensure it is carried out fairly and transparently going forward, don't be silly!  The Board has merely kicked it back to staff in order for the other four "finalist" bidders to "supplement" their projects to try to undercut finalist LS Power's self-imposed cost cap on its project. 

So, how hard can it be to simply make up a number lower than LS Power's $171M construction cost cap?  It's not like anyone's going to hold them to it, right?  PJM doesn't have any performance standards for transmission developers and is unlikely to bat an eye at "unforeseeable" cost overruns.

PJM's Herling also says that his TEAC will "review" specific issues with process and transparency that were raised in the letters.  Who wants to guess how that will go?  Herling rules the TEAC with an iron fist.  He also babbles on about how "especially challenging" new process can be.  I have to agree, it's especially challenging to continue on like nothing's changed when you're supposed to be following new rules and the unruly children challenge your authority.

Still no recognition about PJM's incorrect determination of the "constructability" of the PSE&G project.
  This despite an even more pointed letter from the Delaware Riverkeeper, promising "active and committed opposition" to the selected project.

But don't worry, PSE&G also made an appearance with a letter defending its project.  Send in the clowns!

PSE&G
says that they are the preferred choice of park rangers everywhere when it comes to having precious national park resources destroyed by transmission developers:
For example, the Susquehanna-Roseland project had environmental and other types of challenges, but PSE&G and its co-developer, PPL Electric Utilities Corporation, overcame the challenges to get the line sited and built. The
National Park Service spokesperson for  Delaware Water Gap National Recreation area recently stated: “They worked through one heck of a winter. They didn't miss too many days. ... If you have to have somebody building a power line in your backyard, these folks were great to work with.”
So, if you want to have your backyard destroyed, remember to call PSE&G for fast, prompt and friendly service!

And is this supposed to be a threat or a promise?
The same PSE&G team that brought Susquehanna-Roseland to a successful conclusion is committed to this project.
Oh, dear heavens, NO!  The Susquehanna Roseland project was a permitting disaster that cost ratepayers  $60M in hush money to the Department of the Interior in exchange for allowing the destruction of a park that belongs to these very same ratepayers.  The $60M "mitigation" fronted by PSE&G will be re-paid to the company over the many decades that this project will be in service.  The re-payment will come out of ratepayer pockets and will reward PSE&G with a 12.9% yearly return on its "investment" in the "mitigation" hush money.

With friends like that, ratepayers are sure to be smiling all the way to the poor house!

Stay tuned... sounds like the PJM fun is only beginning at Artificial Island!
 
 
So, what's been happening in the aftermath of the recent confirmation of a new and a returning FERC commissioner?

Pennsylvania Senator Robert Casey sent a letter to Energy Department inspector general Gregory H. Friedman asking some hard questions about FERC's enforcement office and requesting an "examination."

The Philly Inquirer wants to inquire why Senator Casey voted for Norman Bay before sending his letter:
Except, shouldn't the investigation come before a guy's promoted?
Whoopsie!

The guys at FERC Litigation have posted a bunch of new news stories and documents.  It appears that their battle continues.

Our friends at RTO Insider published an in-depth look at the "lingering uncertainty" at this federal agency, with information about some interesting questions that were asked in private conversations before a recent FERC open meeting:
How assertive will Acting Chair Cheryl LaFleur be as a lame duck? And will she remain for her five-year term after she has to relinquish the gavel?

With Commissioner John Norris openly musing about his post-FERC future, who will replace him and how soon?

How will Bay resolve the investigation into Powhatan Energy Fund, whose principals have been running a public relations campaign accusing FERC of heavy-handed enforcement tactics?
And, this morning, an opinion piece by investigative reporter David Cay Johnston accuses that federal regulators let utilities gouge customers.

Although my understanding and consumer's perspective of FERC probably differs from Johnston's, it seems that his nose works just fine.  Something stinks here!

Regulator, regulated, regulator, regulated, regulator, regulated, regulator, regulated.... the door is spinning!  Johnston gets right to the root of the problem:
FERC commissioners, however, disregard the just and reasonable standard, routinely ignore evidence and act more as agents of utilities than fair-minded regulators.

Absent from the commission is anyone who represents the rights of consumers.
Johnston ends by painting Norman Bay as a "ray of hope" for consumers.

I think perhaps FERC needs some public relations polishing.  Maybe these guys would be willing to help?
 
 
PJM Interconnection has completely screwed up its first competitive transmission project proposal process.  And now transmission developers and regulators are schooling PJM on what "constructability" really means (of course, for English language purists, "constructability" isn't even a real word, but some bastardized business buzz word).

While FERC's Order 1000 reforms were supposed to usher in a new wave of competition, pricing and cost allocation beneficial to consumers, nothing has changed except the window dressing.  When push came to shove, PJM selected a project proposed by one of its favored incumbent transmission owners and kicked all the other proposals to the curb.

PJM staff has recommended that its Board of Managers approve its selection of PSE&G's "7K" project that will construct a new 500kV line parallel to an existing circuit.  PJM staff has stated that the "constructability" of the PSE&G project, as evaluated by hired consultants, was the basis of its decision.

And then the letters from regulators, public interest groups, and competing transmission developers started rolling in...

Competing developer Atlantic Grid sums up the problems with PJM's over-managed RFP process quite nicely:
Lastly, this decision is risky as precedent for future RFPs that should encourage innovative, well-engineered proposals and rigorous competition. In a typical RFP, a problem in need of fixing is published and competitors are invited to submit proposed solutions. The customer (PJM in this case) evaluates the proposals, disqualifies the ones that don’t work, and makes a selection from the remaining qualified projects. But PJM’s RFP was more like a “call for ideas.” It appears that PJM took the proposals and then re-engineered a solution it liked best by mixing and matching pieces from different project proposals. The result is that PJM’s recommended 7K Project looks almost nothing like the original 7K proposal submitted by PSE&G. Unfortunately, if this RFP sets the pattern for the future, PJM will discourage participants from spending time, money and engineering resources to develop innovative, well-engineered RFP responses. And ratepayers will lose when the robust, competitive process PJM hoped for fails to develop.
Somebody needs to step in here and put PJM staff on a strict non-manipulation diet.  I know it's really hard to step away from the buffet line when you've been gorging for years, but that kind of manipulation made the entire RFP worthless, and wasted the time of the independent developers who invested time and money in innovative proposals.  Hey, who remembers Primary Power and FERC's hope that Order No. 1000 would put a stop to that kind of favoritism?  I'm thinking it didn't work.

Atlantic Grid points out PJM's "constructability" error:
For PJM it is risky because significant permitting hurdles mean that the project
has a high likelihood of being rejected at the state and/or federal levels
and a
needed reliability solution will be substantially delayed because PJM has proceeded down a dead end. As discussed below, the New Jersey Board of Public Utilities (NJBPU) has submitted comments warning about the permitting risks of all of the preferred options, including the 7K Project, and pointing out that none of the preferred options took advantage of the opportunity to get a preliminary determination of permitting feasibility. The NJBPU warns that the protests, delays, and costs well above initial estimates for mitigation during construction that plagued the Susquehanna-Roseland project also may affect PJM’s recommended solution “especially given that a viable alternative exists.”
And what happens when PJM makes a "constructability" error?  Sixty-some-odd-million consumers will end up paying for more failed projects, and reliability will suffer.

And that brings us to... the regulators.

The New Jersey Board of Public Utilities and the New Jersey Division of Rate Counsel sent a joint letter to the Board of Managers, pointing out that the "constructability" of PJM's selected project will receive national, even international, opposition from environmental groups because of its unnecessary crossing of "wetlands of international importance."  New Jersey regulators point to the LS Power proposal as a lesser cost and more environmentally friendly alternative.

Competitive developer LS Power not only called PJM on its heavy-handed, manipulative "evaluation" of competing proposals, but it also threw a bomb into the center of the room.  LS Power has offered to cap its project cost at $171M, much less than the PSE&G project's $297M estimate.

Well, that's a first.  A transmission project with a firm cost cap that requires the developer to actually perform during construction.  This is exactly the kind of "performance-based" behavior Congress expected out of transmission developers when handing them very profitable incentives in Sec. 219 of the Energy Policy Act.  Unfortunately, FERC didn't see it that way and chose to open the incentive buffet with absolutely no performance standards or cost caps on qualifying projects.  The more it costs, the more they make!

The Delaware Public Advocate's letter, on the other hand, supports PJM's choice of the 7K project.  But, Delaware's support is not because 7K is a superior choice from a "constructability" angle, it's simply because Delaware will be allocated less total cost from the 500kV 7K project than from LS Power's cheaper 230kV solution due to PJM's new cost allocation methods.  Well, if this isn't a walking advertisement for cost allocation issues causing short-sighted transmission choices...

Dominion's transmission company (because if you don't have your own independent transco in order to take advantage of extra FERC incentives, you're just not part of the "in" crowd these days) also takes issue with the way in which PJM evaluated projects and made its selection.

Exelon doesn't shill for its own losing project, but concentrates on the mess PJM made of its competitive process, and makes some suggestions for improvement.

Here's a suggestion Exelon didn't think of... why not remove any sponsor-identifying information from the proposals before evaluating their technical merits, costs, and "constructability"?  Playing favorites among incumbents seems to be the most basic problem here.  Maybe PJM can issue little blindfolds to their planning staff, because justice is blind and all, especially when she gets her eye poked out with the rod of favoritism.

And bringing up the rear of the letter flurry, New Jersey Sierra Club slaps PJM with a glove regarding the environmental issues with its selected project.  This is pretty much a guarantee of a public opposition charlie foxtrot that PJM would do well to heed.

So, when is PJM's selection of new projects going to become a truly competitive, cost effective and forward-looking process that builds for the future?  PJM has not improved its processes under Order No. 1000, and its ratepayers and consumers are going to be the ones to suffer poor "constructability" choices, short-sighted "minimum required for now" choices, and ineffective, but cheap solutions to reliability issues.

This is one giant FAIL.