Another quarter, another FirstEnergy earnings call.

Heavy sigh.

They sounded like they were all on some sort of doggie downer while reading their scripts for the first half of the call.  It was only when the line was thrown open to questions that the party started.

Stupid business buzz word for this quarter:  "glide path."  Ex.  FirstEnergy sees its glide path to riches dotted with the corpses of its customers.

It seems that FirstEnergy is about to take one in the shorts because much of its generation was offline during the polar vortex and it had to purchase power.  Very expensive power.  FirstEnergy also expects to be hit with a bundle of PJM charges resulting from the vortex, but that's okay, the company expects to either drop them on regulated customer doorsteps, stick it to competitive customers through contracts, or simply whine to PJM and FERC about the unfairness of it all.  When asked (repeatedly) to put a ballpark number on this, Tony the Trickster avoided the question.

Heavy sigh.

FirstEnergy expects 80% of its earnings to come from its regulated business in the future.  That includes FirstEnergy's new found love of transmission upgrades.  Once again, FirstEnergy puts all its eggs in one basket.  Ooooh!  Shiny object!  Transmission spend!

Does anyone but FirstEnergy really think that milking regulated customers for transmission upgrades of questionable necessity isn't going to run into a regulatory buzz saw?  My Magic 8 Ball tells me "it is certain."  Maybe Tony needs to get a Magic 8 Ball to help him run the company?

Heavy sigh.

FirstEnergy is all ticked off about PJM's markets not working.  What they mean is that the markets are not working to make FirstEnergy a bundle of money.  But, FirstEnergy seem intent on making a regulatory nuisance of itself

Heavy sigh.

One more thing before I go....

This is a vocabulary lesson for Leila:

The word you were searching for is exacerbate

exacerbate |igˈzasərˌbāt|
verb [ with obj. ]
make (a problem, bad situation, or negative feeling) worse: the forest fire was exacerbated by the lack of rain.

Here's a link where you can hear the word pronounced.

The word is not pronounced "exasperate."  These are examples of incorrect usage:

"The situation with market power prices in January was a product of base load generation that was stretched to its limit and exasperated by gas units that were impacted by constrain gas transmission and high spot trading prices."

"The fact that JCP already has the lowest rate in the state of New Jersey, which again further exasperates the consequence of that."

Leila's misuse of exacerbate exasperates me.

Heavy sigh.

Zacks Investment Research sent a love note to our favorite transmission-dependent electric utilities on Valentine's Day.

In a commentary about the utilities sector, Zacks advised transmission lovers that they're about to become obsolete:
The emergence of Microgrids for power generation could threaten the dominance of the age-old power distribution system in the U.S. Microgrids have evolved from simple power backup systems to small smart grids. The swift and cost effective installation of Micro grids could help distribute electricity among the masses. These rooftop solar systems meet the energy needs of the customers. In addition, the customers are allowed to sell excess power back to the utilities.
A report from American Society of Civil Engineers estimated that utilities need to spend $763 billion by 2040 to properly modernize and harden the existing grids against natural disasters. We believe that rather than going for a very costly maintenance, it will be economical to develop these Microgrids, which could lend support to the existing system.
That's right, instead of building more transmission it will be more economical to develop more secure microgrids.

A microgrid is defined as:
A microgrid is a localized grouping of electricity generation, energy storage, and loads that normally operates connected to a traditional centralized grid (macrogrid). This single point of common coupling with the macrogrid can be disconnected. The microgrid can then function autonomously. Generation and loads in a microgrid are usually interconnected at low voltage. From the point of view of the grid operator, a connected microgrid can be controlled as if it were one entity.
Microgrid generation resources can include fuel cells, wind, solar, or other energy sources. The multiple dispersed generation sources and ability to isolate the microgrid from a larger network would provide highly reliable electric power. Produced heat from generation sources such as microturbines could be used for local process heating or space heating, allowing flexible trade off between the needs for heat and electric power.
Wow!  What a great idea, right?

Just one more warning shot across the investor owned electric utility bow.  Transmission is a dead end.  Save yourself, utility friends!  After all, if my favorite utilities die, who am I going to pick on in my spare time?
Moody's researchers have been busy contemplating investor owned utilities' most recent scheme to "de-risk" their holding companies by shifting investments to the regulated side of the business.  After gathering all sorts of information available, Moody's has weighed the risks and decided that this utility investment scheme is a safe harbor for the time being, and utilities engaging in it should receive higher credit ratings.

I think Moody's got it wrong because they discounted the mettle and determination of regulators, elected officials, not-for-profit entities, and the people they represent, to continue to toss banana peels into the utility feeding frenzy that threatens to bleed them dry.  We're quite creative and getting smarter every day. :-)

Although the actual report is for subscribers only, an article in Platts tell us that Moody's has concluded that utility holding company transmission subsidiaries have a stranglehold on regional transmission operators.
"FERC transmission regulation provides forward-looking formula rates, true-up mechanisms and premium authorized returns on equity. Transmission owners face limited revenue risk, owing to strong counterparty relationships with the operating utilities and the regional transmission organization," Moody's said.

The report also "highlight[ed] the key role that US Federal Energy Regulatory Commission policies are playing in driving transmission investment" and attributed "a premium return and good cost recovery" for transmission as "thanks in part to FERC's regulatory policies, calling the commission's oversight "a material credit positive."

Moody's chose to bat aside the current parade of ROE complaints at FERC.  Perhaps Moody's thinks that ridiculous petitions like WIRES' request to stop the complaints actually has merit?  Moody's needs to take a gander at the RM13-18 docket and face reality.  The money buffet isn't going to last forever.

And Moody's totally checked out on the one thing that utilities, FERC and transmission operators have no control over:

The exploding resistance to new transmission in the form of landowners, ratepayers and local elected officials.

FERC's "premium return" means nothing when transmission can't be built due to overwhelming opposition that equates to political poison, or when ratepayers accept their responsibility to examine and challenge transmission rates they must pay.

But, that's okay, Moody's.  We're patient, and we're used to being on the cutting edge of new trends, instead of running behind trying to shore up failing business models.
Ever listened to an investor owned utility's earnings call?  They're an acquired taste, because your first one sounds like complete and utter gibberish.  Are these people speaking English?  Is there some fancy 1% business speak language that they didn't teach you in school?  Nope.  I think company management just plain ol' makes crap up to keep the investment analysts guessing.

Case in point -- Nick Akins and his "block and tackle spending." 
And then, when you look at the other capital that we're spending, it's block and tackle spending that typically is recovered from a regulated standpoint.
Blink.  Blink.  What?  Just for shits and giggles I plugged "block and tackle spending" into google.  I got a wikipedia description of block and tackle that describes it thus:  "...a system of two or more pulleys with a rope or cable threaded between them, usually used to lift or pull heavy loads," and a whole bunch of boating websites.  So, Nick is going to rig up some contraption that spends money using a system of pulleys and rope?  Sounds complicated.  I guess that's why they pay him the big bucks!

Anyhow... once you realize that the emperor has no clothes and that these corporate elitists are really not speaking in some special language, like pig latin, that your plebeian self doesn't understand, earnings calls are quite entertaining.  AEP's 4Q 2013 call on Monday was no exception.

AEP's CFO finally gets around to admitting that energy efficiency has flattened out residential demand growth and it's not expected to recover.
Residential sales, shown in the upper left quadrant, were up 0.9% for the quarter, which brings the annual sales flat to 2012. We continue to see modest customer growth in our Western service areas, while our East customer accounts were essentially flat. Average usage per customer has been impacted by home energy efficiency programs. For these reasons, we are expecting normalized residential sales to be down nearly 1% in 2014.
Too bad he's arriving late for the party.  How much do they pay this guy to make these brilliant conclusions?

AEP also got some apt questions about its planned "transmission spend," such as what it's going to take to make AEP fall out of love with transmission as an investment vehicle... oh, say, maybe as a little section 206 complaint or two:
Michael J. Lapides - Goldman Sachs Group Inc., Research Division
Yes, 2 questions unrelated. First, on the transmission side. We've seen in the MISO and in New England dockets where interveners are seeking lower transmission base ROEs. If same things happens in some of -- whether it's the Southwest Power Pool, whether it's in PJM, how -- what do you think that tipping point is where we change or, I don't know, you're incentive or your desire to be a sizable investor in transmission in the U.S.?

Nicholas K. Akins - Chairman, Chief Executive Officer, President, Member of Executive Committee and Member of Policy Committee
I think, as long as transmission is, at a premium or equal to the state rates, we're in good shape. And I think, clearly, there is an incentive being placed on building transmission. We're happy with that. And if -- really, once again, the FERC needs to send some messages here that from a policy perspective that we want to continue building transmission in this country. And as long as that premium is at or above the state rates, then we're in good shape.

Brian X. Tierney - Chief Financial Officer and Executive Vice President
FERC was clearly, Michael, looking to attract a capital into this space. And what they've done with their ROEs has done exactly what FERC wanted to happen. So as long as they, as Nick was saying, as long as they continue to send a signal that they want increased investment in this area, we'll respond to that signal.

Nicholas K. Akins - Chairman, Chief Executive Officer, President, Member of Executive Committee and Member of Policy Committee
Okay, I think it's good -- I think, it continues to be part and parcel to the overall grid expansion that's going on in the resilience of the grid. And there's going to continue to be spin regardless. The question is, do you really want to satisfy that precursor of transmission being build out to respond to the generation retirements and so forth to optimize the grid so that you can do that as a prerequisite and then focus on the rest of the underlying system. That's what key. I think you got to get through this transitional process we're at in this industry. So transmission needs to be incentivized in that regard because that will provide the greatest benefit in terms of resiliency of the grid, but also in terms of the optimization of the resources that are attached to the grid.
Blah, blah, blah, grid expansion, transmission build out, blah, blah, what could go wrong?

What about fierce, organized opposition to AEP's transmission plans?  The people have spoken and their action has seriously complicated or delayed many of AEP's transmission plans, in the past, currently, and in the future.  In fact, opposition is getting more organized and more knowledgeable.  And we're not going away.

AEP needs a new business plan.  Transmission is not the carefree investment vehicle Nick thinks it is...
Sometimes it's worth getting to work early to enjoy a little schadenfreude!  FirstEnergy put on a special show for investment analysts this morning in the wake of the company's announcement yesterday that it would FINALLY be cutting its dividend to reflect the mess our pal Tony the Trickster has made of the company.

Investors have long used the services of voice analysts to pick up clues that indicate CEO lying.  In response, companies have done a better job preparing their CEOs to mask verbal tells.  And then there was today's FirstEnergy call...  no fancy voice analyst needed!  It was obvious to anyone tuning in that Tony was very put upon to be there and have to answer questions.  Very pointed questions.

The call began with much heavy sighing and attitude, and if that wasn't enough, once the questions from analysts began, the sound of someone scribbling furiously on a piece of paper to feed answers to company officials kept getting louder... and louder... and louder.  Right.... that's the sound of a healthy company poised for enormous growth....

So, what's Tony's next great plan?  Betting on guaranteed earnings from FirstEnergy's regulated business.  If you've been listening in on the earnings calls of Ohio's utility Tweedledum and Tweedledee over the past few years, you may note that Tony the Trickster was so focused on "beating" rival AEP in the Ohio retail market, that he didn't see what was sneaking up behind him.  AEP was forced to retreat from its competitive business a lot sooner, because FirstEnergy was so willing to take quantity over quality in order to sign up the most customers in Ohio.  Fortunately for AEP, concentrating on its regulated business a lot sooner than FirstEnergy saved it from a lot of sighing and scribbling.

Oh, that competition thing... it can make smart men do really stupid things.  Tony the Trickster got all offended when asked if the company would need to continue to inject cash in its loser competitive business segment, or if that part of the business would begin supporting itself.  Truth hurts, doesn't it?

FirstEnergy finds itself squarely behind the curve now, so the next great plan is to start pumping money (i.e. "investing") into its regulated transmission business.  What can go wrong with this plan?  Lots. 

FirstEnergy also plans to file base rate cases in West Virginia and Pennsylvania this year, despite the fact that its JCP&L rate case in New Jersey hasn't actually "derisked" the company.  Tony forgot to tell analysts that it must file a West Virginia rate case as a result of its dumping of the Harrison power station into West Virginia's regulated system, not that it wants to file a rate case to increase earnings.

Tony says that "reality" caused the company to most effectively "reposition" itself because now is the time to make a move to eliminate uncertainty, speculation and rumors by refocusing the company.

You believe him, don't you?
Wow!  Looks like FirstEnergy made all sorts of important lists in 2013!  Here's another stunning accomplishment for the company:
FirstEnergy and other utilities began to slide in May after Federal Reserve Chairman Ben Bernanke suggested that the central bank could begin go to pull back on its stimulus measures.

FirstEnergy, which serves 6 million customers across the Midwest and the Mid-Atlantic, also got hit after the company posted a nearly 50% drop in earnings for the third quarter due to cooler than usual summer temperatures cutting the need for air conditioning. Shares have recently been trading at their lowest levels in a decade.
The long, slow slide into irrelevance will be enjoyed by many!
Remember Jonathan Fahey?  He wrote an article in 2011 headlined Shocker: Power demand from US homes is falling that pioneered the idea that even though we're using more electric "gadgets" than ever, power use is dropping.  Well, now he's back with a similar article, Home electricity use in US falling to 2001 levels.
The trend Fahey first reported in 2011 continues, more than 2 years later.

Have utilities gotten any smarter since then?  Partially.  It took them forever to admit that dropping demand wasn't tied to the economy and that a rebound of electric use wasn't just over the horizon.  However, some utilities have simply moved on to other unsound business plans that continue to bank on the same old ideas that are no longer sustainable. 

Now utilities have moved on to transmission investments as their savior.  This is pretty puzzling, considering that long-distance transmission champion AEP concluded a year ago that enormous projects built across multiple states were an impossible dream.
Mr. Akins said he wants to avoid the bruising battles that delayed or doomed big projects in the past, like the 275-mile Potomac-Appalachian Transmission Highline project from West Virginia to Maryland. AEP and partner FirstEnergy Corp. dropped development plans for the complex project in 2011.

"Sometimes, we were just dreaming" that the companies could get enormous power lines built across multiple states, Mr. Akins said. He said AEP now is focusing on shorter projects blessed by federal regulators that eliminate grid bottlenecks. "It's where you want to put your money," he said.
The transmission investment gravy train has also left the station.  The sheer number of new transmission projects proposed combined with today's ease of online information sharing and social media tools has led to an explosion of knowledgeable, interconnected transmission opposition groups who are combining resources across the country to delay or stop unneeded projects altogether.

Instead of embracing innovation and new technology to make the existing grid smarter, some utilities are intent on merely building more of the same old dumb grid, or actively attempting to stifle innovation by forcing us all into an historic "consumer" position where we must funnel money to incumbent utilities in order to survive.  Ultimately, this plan will also fail, because technology marches relentlessly on

How we produce and use electricity is also changing.  Not only is producing our own electricity locally better for our economy, it's also much more reliable.  Hurricane Sandy was one of the biggest wake-up calls we've had recently, and the inevitable Monday morning quarterbacking of that disaster reveals that increasing long distance, aerial transmission from remote generation is simply dangerous.
  Making our grid more reliable isn't about building more transmission.  It's about change:
This includes traditional tactics, such as upgrading power poles and trimming trees near power lines. But it also encompasses newer approaches, such as microgrids and energy storage, which allow operators to quickly reconfigure the system when portions of the grid go down. Implicit to such plans is the need to ensure uninterrupted power to critical sites such as oil and gas refineries, water-treatment plants, and telecommunication networks, as well as gasoline stations, hospitals, and pharmacies.

Some of the nation’s leaders seem receptive to such approaches.
Elected officials, progressive regulators, energy producers, energy consumers, and innovative companies embracing new technology are also increasingly joining forces to move our energy economy forward and away from the dated centralized generation and transmission business plan of the past.  Companies who continue to deny the inevitable will ultimately be the ones left behind in irrelevance.
The Columbus Dispatch and a couple of investment analysts gushed all over AEP CEO Nick Akins for "leading on ideas" yesterday.

What's Nick's idea?  Getting out of the generation business and betting AEP's future on long-distance transmission.

Bad idea.
...a transformation of the company’s structure and a shifting notion of what AEP needs to do to remain relevant in a changing energy landscape.

In doing so, the company is de-emphasizing what was once a crown jewel, the fleet of Ohio power plants, and putting a greater focus on developing an interstate network of power lines.

“The less we have to spend on centralized generation, the better off we are,” he said in a recent interview.

When he says “centralized generation,” he means big power plants. AEP will be closing more plants than it is building.

The company is shifting resources so it can expand its transmission system, made up of the high-voltage power lines that carry electricity across state lines and between metro areas.
Maybe ol' Nick missed the EEI report earlier this year, Disruptive Challenges: Financial Implications and Strategic Responses to a Changing Retail Electric Business.  The report cautioned electric utilities to avoid "that Kodak moment" for investors by embracing new technology and addressing competitive threats.

While getting out of the competitive centralized generation business "addresses" the threat that AEP may lose some of it's golden eggs in an unpredictable market, AEP is not embracing new technology or making itself relevant in a changing energy landscape.  It's simply putting even more of its golden eggs into a business plan that it will help to make obsolete. 

As competitive centralized generation closes, it is being replaced by independently owned distributed generation.  Distributed generation doesn't need new transmission.  Nick won't be collecting any eggs if he kills all the chickens.

A better idea to embrace new technology and establish future relevance was adopted by competitive generation company NRG earlier this year.
...NRG is installing solar panels on rooftops of homes and businesses and in the future will offer natural gas-fired generators to customers to kick in when the sun goes down, Chief Executive Officer David Crane said in an interview.
AEP loves regulated businesses.  It's a guaranteed revenue stream for a bulky, staid, not-particularly-innovative company.
AEP, which was reluctant to split its Ohio operations, has responded by focusing on the delivery business.
Meanwhile, the Ohio power plants are a shrinking asset. Because of environmental rules and the age of some of the plants, the company has announced a series of shutdowns that will occur over the next few years.

Also, AEP is in the process of transferring two plants away from Ohio regulation. The plants, both of which are in West Virginia near the Ohio line, will be regulated in nearby states that allow a utility to sell electricity directly to consumers.

Once the moves are complete, AEP will have 8,668 megawatts of power-plant capacity in the new Ohio power-plant subsidiary, which will be down from 11,652 megawatts today.

Akins says the company is responding to an economic climate in which there is little reason to build power plants in Ohio. The state’s electricity demand has been flat, and the regulatory structure provides no clear way to pay for plant construction.
So, dumping competitive, centralized generation is a smart idea, but increasing investment in long distance transmission to support a shrinking pool of centralized generators is not sustainable.

While AEP is banking on federally regulated interstate transmission to nearly double earnings from transmission activities from 2013 to 2014, AEP seems to have forgotten what happened with its PATH project.  Big, interstate transmission projects with long lead times lead to big failure.  That's because "need" for these projects is constantly shifting, and if opposition can delay them long enough, they become obsolete.  Opposition is growing by leaps and bounds.  AEP ain't seen nothing yet!

It's a risky proposition and I don't think it's a particularly good idea.
Akins says he’s having fun and is eager to see the work of the past two years come to fruition.

“We are now at a point where we can start defining our success,” he said. “Before, we had a huge anvil we were dragging around, whether it be environmental expense or whether it be other things we were dealing with that were reactionary. We’re finally at a point where we can map out the strategy of this company going forward. It is exhilarating.”
We'll be "having fun" too, supporting companies embracing the new technology of distributed generation, and dragging the progress of AEP's transmission projects down like a huge anvil.  Although AEP can ignore growing public discontent, it ultimately cannot be denied.
Building transmission (whether it's needed or not) has been a utility profit center for years.  But now investor owned utilities are really shaking the transmission money tree to make up for the fact that the rest of their business is failing.

And like all good utility money-making schemes, West Virginia's out-of-state utility tedious twins go head-to-head to see which one can make the most money doing it fastest and "bestest."

Last week, FirstEnergy's Tony the Trickster made some big deal about a new transmission money making scheme approved by FirstEnergy's Board of Bamboozlers.  This $2.8B "transmission spend" was given cover by being dubbed the "Transmission Reliability Excellence Plan 2014-2017," like it's all about reliability and not about "target[ing] annual transmission Net Income growth of 20+%."  At what point do the reliability needs of customers intersect with FirstEnergy's need to make money?  Wow, serendipity!  FirstEnergy's system is going to be as "unreliable" as needed to grow income 20+%.  The more "unreliable" FirstEnergy's system is, the more money FirstEnergy makes!
The "near term" plan consists mainly of rebuilds and upgrades to FirstEnergy's ATSI and TrAILCo systems.  FirstEnergy will concentrate on its 69 & 138kV systems in order to avoid regulatory or community opposition hurdles that could slow down the "investment."  FirstEnergy also reasons that an improved system will cut down on future maintenance costs, and that will help keep O&M in check.

But, wait a tick, how much of this "need" for re-building has been caused by FirstEnergy's long-term failure to maintain its system, and therefore should properly fall under the category of ordinary maintenance expense that the company has already been reimbursed for?  If it were this easy, utilities could simply refuse to perform any maintenance on their transmission systems, and then wrap all the ordinary course repairs into some fancy package called a "Transmission Reliability Excellence Plan" and get reimbursed for it separately (and at higher rates) when a need to grow income arises.  This isn't "reliability," it's a ratepayer shakedown.  If FirstEnergy gets away with it, the company plans to increase their "reliability" to the tune of $12B "over time."

FirstEnergy reasons:  The majority of these projects located in the ATSI region will target 69kV lines, which are outside of the RTEP approval process, and that construction would occur on land where most rights- of-way are already secured.  But, assets assigned to TrAILCo must receive PJM RTEP approval and operate at 100kV and above, therefore these will be secondary to the low-hanging fruit in ATSI.

You'll be happy to know that public-money-sucker Burns & McDonnell has been hired to manage the engineering, procurement, construction and completion of the capital portfolio created for the plan and has established an office in Akron, OH
.  It's full steam ahead to spend as much of your money as fast as possible, little ratepayer!

FirstEnergy plans to put all its "transmission spend" eggs into its FERC jurisdictional formula rate baskets -- ATSI with a return of 12.4%, and TrAILCo, with a return of 11.7% for non-TrAIL projects and 12.7% for rebuilds and upgrades to the two-year old TrAIL line.

Is this really about "energizing the future by improving the health, capacity, and reliability of the transmission system for existing and new customer loads," or is it more about "energizing the future by improving the health, capacity, and reliability of the FirstEnergy balance sheet for existing and new shareholders"?

Meanwhile, not to be outdone, AEP has also announced its own plan to spend around $5B on the "reliability" of its transmission systems over the next 3 years.
AEP CEO Nick Akins said the company’s infrastructure investments will be aimed at improving the reliability of electric service to customers. He said the company expects to invest nearly $5 billion in its AEP Transmission Holding Co. unit through 2016, adding the holding company’s contribution to earnings will nearly double in 2014 alone.
However, AEP isn't afraid to invest in joint ventures and big, new projects outside its footprint. 

Both companies have also submitted numerous bids on the first two PJM transmission project bidding windows.

Which transmission investment business plan will be the winner?  And how much is this going to cost us before regulators catch on to the "reliability" scam and challenge it?  And what if someone goes after the companies' FERC ROEs?  The fun is only just beginning...

Maybe we should distract their attention by challenging these two companies to see which one of them gets into the solar business first?  How much money is there to be made putting solar on every residential roof and then charging the customers "rent" for the investment?  Or will they continue pumping the transmission "reliability" well until it runs dry before taking any positive action to make themselves relevant in a brave, new, distributed generation world? 
Remember PJM's little boo-boo earlier this month that resulted in controlled little mini-blackouts of up to 8 hours for certain electric consumers in three states?

PJM still refuses to call it what it was... a failure of their planning process.  But, never fear, PJM and its "stakeholders" (not to include any people who were actually affected) intend to examine it ad nauseam and recommend changes.

Here's PJM's official sequence of events and excuse for its own failure.  PJM "sincerely regrets" their flub.

See another, better written and more understandable, unbiased version of events at RTO Insider here.

So, what caused this?
  1. Too much generation and equipment offline for routine maintenance.  PJM pretends to be surprised that the weather was really hot during the first part of September.  I wasn't.  September can produce some really hot days -- do these guy live on the same planet as the rest of us?  Maybe PJM's historical data didn't warn them that this could happen, but have they noticed that climate change has produced some really "unusual" weather over the past few years?  Also, we could ponder what effect an odd really hot day would have on a system that keeps getting bigger and more interconnected while generators get bigger and farther away from load. 
  2. Equipment failures.  Transformers and transmission lines in AEP & FirstEnergy's service territory failed, causing operators to have to shift loads, which caused overloads elsewhere.  Maybe if PJM didn't promote the building of new transmission to the detriment of maintenance and upgrading of existing transmission lines, equipment wouldn't be so vulnerable to failure at the first sign of stress. As well, both companies involved routinely brag to investors about cutting their maintenance costs in order to toss a few more cents into quarterly dividends.  When is PJM going to enforce proactive maintenance over shareholder dividends?  And, again, what if the PJM region wasn't increasingly dependent on long distance transmission to deliver electricity from greater and greater distances?  "Economies of scale" mean nothing when they cause expensive "load shedding" (aka BLACKOUTS).
  3. Reserve generation didn't come online when called.  We pay these clowns to be ready to provide extra generation when PJM says it's needed.  But they just couldn't get it together -- because they weren't ready.
And speaking of clowns, let me introduce you to my "friend" Raymond from International Transmission Company (ITC) who opines:
Why would you say we need less transmission if a transmission failure triggered a brownout or blackout. I work for a transmission company and we have been prevented from building transmission between regions designed solely to prevent situations like happened. Also, what you don't know much about is that whereever there is a lack of transmission, power plants must be run out of economic order to relieve the line congestion. This causes electric customers (everybody) to pay more. Not only are lines needed for reliability (keep the lights on) but also for economics. Economic studies determine if it's cheaper to add new lines/equipment or just redispatch generation occasionally. If done properly based on well thought out criteria, tranmission is only added when needed and is economic.
Ray needs to ponder number 1 and 2 above.  This "event" can probably be blamed on increased transmission, which wasn't really "economic" at all when the lights went out in Michigan, Pennsylvania and Ohio.  Bigger, inter-regional transmission lines aren't the answer. 

Ray also needs to ponder the wonders of distributed generation microgrids, but that's not what ITC pays him to do.

Who wants to guess how much time and money PJM spends "investigating" itself... and will the lights stay on while they dither over avoiding the obvious?