One of my favorite moments in electric transmission history involves a 1966 initiative by our friends at the Edison Electric Institute to commission one of the "preeminent industrial design firms" of the day to design a number of "aesthetic" high voltage transmission structures that would "be universally acceptable to the industry and the public." You can read all about this stunning moment in electric transmission history in a research paper published in 1997 (Levy, Eugene. “The Aesthetics of Power: High-voltage Transmission Systems and the American Landscape”. Technology and Culture 38.3 (1997): 575–607.) You can read this paper free online at jstor.org
(requires sign-up for free membership). The paper reviews a whole bunch of mid-century utility efforts to make electric transmission towers prettier and thus more acceptable to a public who was increasingly opposed to the construction of these unsightly, dangerous structures in their communities.
Although EEI's project was an abysmal failure, the utility industry wasn't about to give up its attempt to "sway by words" and continued the effort to beautify transmission towers through a series of industry magazine advertisements. It wasn't really about swaying the public at that point, but about swaying the utility executives to purchase new designs that they believed were more beautiful than traditional towers. And the utility industry of the day was dominated by men. And the fastest way to a man's heart is through his... ummm... stop. Anyhow, a 1968 A.B. Chance Co. advertisement in one utility rag utilized what was supposed to be a hot 1968 woman, dubbed "Miss Beautility," singing a little song about her "15-minute color film showing the use of strong, tapered, galvanized steel unipoles." Oh, behave, you silly men! Get your minds out of the gutter. "Miss Beautility" wasn't talking about YOUR unipole!
American Electric Power is still enthralled with its unipole. It made some big to do about its new BOLD design recently. AEP claims that its "elegant" unipole "imparts a more favorable aesthetic appearance."
Says who? AEP hasn't published any public opinion polling results that back up its aesthetic claims.
Nevertheless, AEP claims, "Efficiency never looked so good!"
However, the public that opposes transmission towers hasn't expressed a desire for "a streamlined, low-profile structure with phase-conductor bundles arranged into compact delta configurations." Only AEP gets excited about that.
I'm really disappointed that AEP wasted all its brainpower developing another overhead transmission structure. It doesn't matter what the tower looks like. The industry has tried shaping them like people. Or Mickey Mouse. Clowns. Robot. Deer. And many more bright ideas to "disguise" or "amuse" the people who gotta live with them. I'm still waiting for the tower shaped like a dollar sign, since building new towers directly translates to increased utility profits.
But here's the reality. What society wants is not to see these towers at all. This is what the perfectly aesthetic electric transmission tower looks like.
Since AEP probably doesn't have any employees who look and think like this guy
AEP needs to get with the program and put its money and talents on a true aesthetically pleasing transmission solution. One we can't see.
AEP is wasting its time on overhead line design. It's BOLD design is about as appealing as a fresh turd. It won't do a thing to ameliorate public opposition to new transmission projects. Fail.
More problems for Dominion's troubled Skiffes Creek transmission project in the WaPo
The most recent problem involves fish. More precisely, the Atlantic Sturgeon.
Under choppy waters was the spawning ground of the Atlantic sturgeon, a large, prehistoric-looking fish credited with saving the early settlers from starvation. So abundant were the fish then that members of native tribes would wade into the river and catch them by hand. By 40 years ago, however, the sturgeon were thought to be wiped out because of decades of overfishing. Today, the fish are struggling to make a comeback as a federally protected endangered species.
Environmentalists believe construction of overhead towers in the James River will disturb the spawning of the endangered sturgeons.
The thumping percussion of the pile driver is likely to disturb not only the sturgeon, but also other anadromous fish that live their early lives in rivers before moving on to the ocean as adults.
“Every sturgeon killed by ship strike or a tower being pounded into the ground in this important area is a step backward in the effort to recover this population,” he said.
But wait, Dominion has a solution to the noise problem (and, no, it doesn't involve giving the fish little headsets that play music from The Little Mermaid
). Dominion says it will construct "a plastic bubble curtain to blunt the hammering."
And if that doesn't work... residents of Jamestown can once again wade into the river and catch stunned sturgeons by hand. Just think of all the community goodwill to be had if Dominion makes lemonade out of these sour lemons and sets up a riverside community fish fry for local residents!
Well, Happy Holidays to you from the Edison Electric Institute!
In a recent article in The Intercept, a recording of an EEI lobbyist strategy phone conference reveals that investor owned utility schemers are hoping that the refugee crisis will give them the cover they need to block the Waters of the United States (WOTUS) rule.
“We’re suddenly not the big issue,” said one call participant. “I mean, this is all going to turn on refugees.”
“I think that helps us,” said another call participant. “I think it helps us with the White House being on defense,” another legislative strategist on the call said.
The EEI schemers hope all the focus on the refugee crisis will allow them to advance a rider on the WOTUS rule.
In Washington, it's all about attaching unsavory things onto popular legislation that has nothing to do with the unsavory activities.
Lobbyists frequently use “must pass” legislation, such as raising the debt-ceiling and government appropriation bills, to enact proposals that would otherwise face a presidential veto. In the last omnibus spending bill, legislators slipped riders onto the bill that repealed rules that prevent banks from using taxpayer-backed funds from trading in derivatives, as well as more than $3 billion in weapons programs the Pentagon did not ask Congress to fund.
If congressional leaders attach provisions to the omnibus to block Syrian refugee settlement, the Obama administration may be forced to accept a compromise that allows for other legislative riders to sneak through.
The participants on the EEI call appeared eager to use the refugee fight to distract the administration.
“In our big meeting this morning, all our lobbyists, their report back from the Hill over the last couple of days in House and Senate is that offices have been saying they are hearing more on this refugee issue than they have heard on any other issue in the last eight years, more than Obamacare, more than anything,” one the legislative strategists remarked.
Who runs this country? Corporations do. EEI is a particularly nasty wart on the posterior of a democratic government of the people, by the people, and for the people. There's big money involved in EEI's courting of Congress and regulatory agencies
I particularly liked boingboing.net's take on the leaked phone recording. Using EEI's "mission" page, boingboing lifted a meme featuring a photo and quote of Thomas Edison:
What you are will show in what you do.
It does, EEI, it certainly does.
How do you chuckleheads sleep at night?
Lately, I've been bombarded with advertisements from a company named Arcadia Power that claims I can power my home with 100% clean energy, reduce my environmental impact and change the way America consumes its energy. Those are some pretty big claims! Can stock photos of children running through a field of golden grain showing (either real or photoshopped) wind turbines really save the planet? Is this really a "community wind" program? I was intrigued, so I peeled back the wrapper to see what was inside.
After all, the ad encourages me to "learn more," doesn't it? The first place I started "learning more" was by clicking the ad to end up at Arcadia Power's Facebook page
. I asked them where they sourced their renewable energy certificates (or RECs) and how much they paid. After all, I'd like to know what renewable energy projects I'm supporting, and what the mark-up is on the product Arcadia buys and re-sells to consumers. In answer to my question, Arcadia told me I could find the answers to my questions on my "dashboard." But, I don't have a dashboard. In order to get one, I'd have to sign up as a customer of Arcadia. That sort of defeats the idea of caveat emptor, right? So, I asked more questions. And what did I get for my trouble? Arcadia not only refused to respond to my questions, they also removed or hid them from view and banned me from any further postings on its Facebook page. I guess they have decided they don't want me as a customer. Go ahead, check Arcadia's Facebook page out. Be sure to click to see all the comments on its postings -- you can't see them! The vast majority are hidden from public view. I'm guessing I'm not the only one who asked questions Arcadia would rather remain unasked. And, right there, I lost all faith in this company and its promises. But, never fear, I'm quite capable of educating myself to get the answers Arcadia refused to give me. And Arcadia's rudeness and evasiveness gave me the warm fuzzies that further fueled my curiosity!
So, what does Arcadia propose to sell me?
Arcadia Power will buy renewable energy to match your usage, ensuring that an equal amount of clean energy is getting on the power grid.
Arcadia Power buys renewable energy? Or do they merely buy renewable energy certificates?
...we buy Renewable Energy Certificates (RECs) on behalf of residential and business customers, and sometimes we source our own RECs from projects we directly invest in.
Oh, so Arcadia doesn't really buy renewable energy. It's not an electric company. It buys RECs and resells them to consumers as a way to feel good about offsetting my carbon footprint.
But, does it work?
First, I needed to understand what RECs are. A REC represents the social and environmental benefits of a megawatt hour (MWh) of clean electricity generated. It does not represent the actual energy generated. A clean energy generator has two income streams derived from production of clean energy. One income stream comes from the actual energy produced, which is sold to users on the grid. A second income stream is derived from the sale of RECs. RECs can be sold either bundled with the actual electricity produced, or unbundled from the electricity and sold separately. So, if a company like Arcadia tells me that I'm using the clean energy represented by the unbundled REC, am I really? Didn't someone else purchase and use the actual clean energy produced, without spending additional money to buy the associated REC? I learned that RECs aren't really energy at all.
Why is there any market for created products like RECs? Because utilities are required by law in many states to make sure a certain percentage of the power they purchase for their customers comes from alternative sources. These individual state laws are called Renewable Portfolio Standards, and every state has its own unique version. A utility can meet its state RPS requirement by purchasing RECs. Ahh.... so now I've found the purpose of RECs! So a utility doesn't really have to purchase alternative energy to meet state RPS requirements, it can simply purchase the "social and environmental benefits" of alternative energy? Well, sort of. Many states put some sort of qualifiers on what RECs count towards RPS compliance. Certain types of generators, certain locations for generation. Many states contain a requirement that some or all RECs purchased for compliance must come from sources in the state, in the region, or physically able to be used by the utility taking the credit. Apparently this is what causes unbundling of RECs from the actual energy produced. A utility is only going to buy those RECs it needs for compliance. Therefore, the RECs necessary for compliance in any given state or region are the most valuable. After that, the value of the REC can decrease sharply, because nobody needs to purchase it.
Not all RECs are created equal. In a state with substantial renewable/alternative energy supply, there will be many more RECs created than needed for RPS compliance. There's no real market for these RECs after utilities purchase what they need for compliance. Therefore, they end up in the "voluntary" REC market, where entities purchase them for the right to say they "use 100% clean energy." The intent is that one KWh of dirty electricity used is offset by one KWh of clean electricity generated somewhere else in the world. Some experts contend that this is just wishful thinking and that voluntary REC purchases are nothing but "green washing."
RECs are not offsets and the voluntary green power market does not reduce emissions from electricity generation.
The problem is that green power markets, as currently structured, cannot achieve this goal. They were created on a fundamentally flawed foundation—that buying a virtual attribute can substitute for physically consuming a specific good or service. Further, the incentives of the participants in green power markets—power companies selling RECs, intermediaries marketing them, organizations certifying them, and companies buying them—are aligned, leaving no one with a strong interest in questioning the claims being made.
With these concerns in mind, we are challenging everyone to question their own assumptions about voluntary green power markets.
Nonetheless, claims that voluntary RECs reduce carbon emissions are highly suspect. Their direct effect is not to reduce net emissions, but to shift responsibility for emissions between parties. They only reduce net emissions, if at all, indirectly, by demonstrating demand for clean energy and by providing a modest boost in revenue to the clean electricity industry.
It's weak tea. Buy voluntary RECs if you like, they're cheap as hell, but have no illusions that by doing so you are offsetting your emissions. It's like tossing your supermarket change into a Unicef jar. Whatever, it's better than not doing so, but you're not "curing poverty."
This article talks about "additionality," which is roughly described as the income stream flowing to the generator from the sale of RECs. If the RECs are good quality RECs needed by utilities for compliance, or bundled with the electricity as part of a PPA, then the RECs provide some real value that could help that particular generator be financed and built. However, if the RECs produced by a generator are unbundled voluntary junk RECs that are now selling as low as a buck or two, then the sale of RECs doesn't add the "additionality" that provides a significant income stream to the generator. If you're buying cheap RECs in the voluntary market, you're buying junk that doesn't do a thing to offset your carbon footprint or increase the use of renewables.
So, voluntary junk RECs in oversupplied markets are selling for a buck? Some Texas utilities are giving away free electricity, too, in order to deal with the glut of wind energy produced in the state that peaks at night, when electricity use is lowest.
If an unbundled REC can be purchased for a buck, how much is a company like Arcadia charging to resell it to consumers like me?
We offer a flat-price premium of $0.015 per kWh for 100% Wind Energy in all states except for Oregon and Washington state.
One REC equals 1 MWh of electricity. It takes 1,000 kWhs to equal 1 MWh. Therefore, Arcadia is charging a flat rate of $15 per REC. If Arcadia is buying voluntary RECs for one dollar each, then the company is adding a huge markup by reselling them to you and me. Since Arcadia couldn't or wouldn't answer questions about where it sources its RECs and how much it pays, then I have to assume they are buying the cheapest unbundled RECs they can find from places very far from my east coast home.
I can come to no other conclusion than to think that this scheme sounds like something P.T. Barnum would sell at a trashy carnival. Somebody's getting rich somewhere, and it's not the generator. I don't want to increase my electric bill by any unnecessary amount, so I won't be signing up for Arcadia Power. They can quit bombarding me with advertisements now. Decision's made.
But here's the part that really, really concerns me:
Arcadia Power pays your local utility directly and provides you with a consolidated statement each month that combines your local utility charges with your clean energy from them.
Arcadia Power simplifies your life by providing every customer with automatic billing – either with a credit card or direct debit from your checking account. We provide you with an easy-to-read e-statement every month and you never have to worry about missing a payment!
Arcadia will somehow take over your regulated electric bill and you will no longer receive a bill from your electric provider (don't worry though, I'm sure you'll continue to receive those exciting offers for Exterior Electrical Wiring Protection Plans from HomeServe.) So you will no longer know how much electricity you use, when your meter was read, how many days are in your billing cycle, or receive notification about rate increases and other information from your provider. Instead you'll get a "consolidated" monthly bill from an unregulated company. If you have a billing dispute with Arcadia, your public service commission can't help you. What happens when you have a dispute with the amount your electric company bills you, such as when they neglect to read your electric meter for years on end and then send you a "catch-up" bill totaling thousands of dollars
? Arcadia pays your bill for you each month and then automatically deducts that amount from your credit or debit card, without your authorization. While you could dispute an outrageous bill directly with the power company and set up a payment plan, you lose that privilege once you sign up for Arcadia Power. Your electric company bills. Arcadia pays. Then you pay. Is Arcadia marking up your local electric bill, too? This loss of control of a regulated service makes me very, very nervous. We'll have to see what happens when unregulated companies insert themselves between regulated entities and the consumers they are required to serve by law
. I'm sure there are plenty of unique state electricity tariff provisions related to billing that can be violated by an unregulated entity like Arcadia Power.
Do educate yourself before allowing your carbon footprint guilt to toss spare change in the climate change Unicef jar each month in order to save your soul. Make sure your clean energy dollars aren't going to buy P.T.
Barnum a yacht and his own, private island in the Caribbean.
There's probably more than a handful of folks down in Houston this morning falling to their knees thanking their makers that today is the last day of this week. What else can happen? The day's not over yet!!!
Each one of Clean Line's Midwestern projects suffered a setback that caused media backlash at some point this week, and the victories for affected landowners just keep piling up.
First, landowner groups in Illinois came out undaunted about the ICC's approval of the Grain Belt Express project last week. Because of the scathing dissent of two ICC Commissioners regarding the legalities of Clean Line's permit, appeal seems quite likely. And quite likely to be successful.
Block Grain Belt Express President Dave Buchman said, “We are disappointed by today’s decision but it was not unexpected. It is imperative for members of the opposition to remain united in our common goal of preserving property rights.” Buckman is anxious to review the order so that the group may formulate a plan of action. They have many avenues of defense still available, such as appealing the decision because the ICC violated state law by allowing Clean Line to file under an expedited permitting process for public utilities, although Clean Line is not a public utility. Additionally, Buckman advises that it is crucial to remember that if landowners stick together, the eminent domain process will be significantly more difficult, if not impossible, for Clean Line.
And in Missouri, the Missouri Landowners Alliance announced its victory in Caldwell County Circuit Court:
Opponents of Grain Belt Express recently won another significant victory in their efforts to block construction of a proposed mega electric transmission line through Missouri. Last month, the Caldwell County Circuit Court found that a project franchise initially granted by the County, but later rescinded, was void. Under Missouri law, Grain Belt Express must have the franchise of all counties crossed in order to build its project.
Last year the Missouri Landowners Alliance (MLA) filed a petition in the Circuit Court of Caldwell County, asking the Court to find that the franchise supposedly granted by the Caldwell County Commission to Grain Belt was void and/or unenforceable. The franchise would have allowed Grain Belt to build its line on and over the public roads of the county.
On October 7, the Circuit Court issued an Order finding in favor of the MLA. The time for Grain Belt to appeal that Order has now passed. Therefore, as a practical matter, Grain Belt now has no legal authority to build its proposed line across Caldwell County. And Grain Belt would have no such authority to build, even if it could somehow persuade the Missouri Public Service Commission to reverse its decision earlier this year that denied Grain Belt a Certificate of Convenience and Necessity. Grain Belt must obtain authorization not only from the PSC, but also from the County Commission in each of the Missouri counties where it plans to locate the line.
Grain Belt’s only apparent hope for building the line through Caldwell County would be to convince the County Commission to reissue a new franchise for the proposed line. Given that the County Commission supported the MLA in the Caldwell County Circuit Court case, the MLA is optimistic that the County Commission would reject any such overtures from Grain Belt. A survey taken last year for Grain Belt revealed that the citizens of Caldwell County overwhelmingly oppose the proposed transmission line.
Grain Belt could conceivably try to salvage this project by somehow re-routing the line around Caldwell County, into other neighboring counties. But given Grain Belt’s claim that the optimal route for the line is through Caldwell County, that option would seemingly raise a host of problems for Grain Belt.
The Grain Belt project is spearheaded by a Houston-based, investor-owned company with the goal of transmitting energy from Kansas to the richer eastern markets. After a lengthy court battle, in July the Missouri Public Service Commission issued an order finding that Grain Belt Express has failed to meet, by a preponderance of the evidence, its burden of proof to demonstrate that the project is necessary or convenient for the public service.
Recently, the Illinois Commerce Commission granted Grain Belt permission to build in Illinois, leaving Missouri as the only holdout. Jennifer Gatrel from grassroots group Block Grain Belt stated, “The decision by the Illinois commissioners is in no way final. There will be an extensive appeals process, which the opposition has an excellent chance of winning. We are all very grateful for the two brave commissioners who, in their dissent, outlined why it was illegal for Clean Line to be allowed the expedited permitting process available for public utilities. Their support will be invaluable in the appeal.”
Russ Piscotta, President of Block Grain Belt Missouri, stated, “We have beat them once and we will beat them again as many times as necessary. We have spent this time preparing our strategies and are ready to once again defend ourselves. Overall, as a grassroots group, we are doing excellent. We need to remember that Clean Line's goal is to dishearten us. Our goal is to prevent the precedent of a private company getting access to eminent domain. We are doing great so far and will continue to win. We simply cannot afford to lose. Many thanks to the thousands of devoted landowners who have sacrificed much. We are all in this together, and together we will succeed!”
In Iowa, the fate of RICL is equally uncertain. RICL has directed the Iowa Utility Board to suspend all work on their application. In spite of 18 months of land agent activity, less that 15 percent of the easements have been acquired and opposition remains strong.
Carolyn Sheridan, president of the grass roots organization Preservation of Rural Iowa (PRIA) commented, “We have a strong legal team and support continues to grow as they and we monitor all aspects of this proposed project. There is no indication that landowners will change their opposition to the misuse of eminent domain."
This came back to bite Clean Line on Thursday, when the press somehow got the idea that they'd previously been lied to. Never lie to reporters! They eventually find stuff out.
Such as the fact that Clean Line quietly asked the Iowa Utilities Board to stop reviewing its application for RICL back in the spring.
Those closely monitoring the project say they were told months ago it had been put on hold. Land agents haven't been in the state for months.
Iowa Republican Gov. Terry Branstad, a supporter of the line, said at a wind energy conference in September that the plan had "kind of been placed on hold right now." Clean Line Energy Partners spokeswoman Sarah Bray said the next day that the project was "certainly still moving forward," with biological studies, wind resource assessment and commercial discussions.
Bray struck a different tone in response to an inquiry on Thursday.
"Given the unique regulatory structure in Iowa, we are currently assessing ways to move the project forward and continue easement negotiations without incurring significant financial and regulatory risk," she wrote in an email.
This caused a whole bunch of weasel words and backpedaling by Clean Line... and more inaccurate and whiny claims by the company spokeswoman. Bray also whined that the IUB regulatory process would cause the company to spend "tens of millions" of dollars to acquire land with no guarantee that their project would be approved. Not true! The IUB requires that a company seeking a transmission line permit submit certain information for each property it may take by eminent domain. Because Clean Line's land acquisition in Iowa has been such a failure (only 17% of needed easements have been acquired to date) Clean Line doesn't want to do all the work required to take the remaining 83% of the needed easements. The law doesn't require Clean Line to own all easements up front, it could just as easily acquire signed option agreements to purchase easements if the project is approved by the IUB. But, the fly in that ointment is that the landowners are having none of it. So, when Bray says that the company's negotiations with landowners "have been very positive,"
she's spinning like crazy.
Meanwhile, down in Arkansas, Clean Line's release of an "economic study" of the benefits of its Plains & Eastern project for Arkansas was a major flop. First of all, most people realize the study is nothing but cooked numbers created from Clean Line's data plugged into a generic spreadsheet that calculates numbers that don't jive with the economic data included in the Environmental Impact Statement released by the DOE.
A controversial electric transmission line project pushed by Houston-based Plains & Eastern Clean Line with the regulatory process challenged by members of Arkansas’ Congressional delegation would create a $660 million impact to Arkansas’ economy, according to a University of Arkansas report.
When asked about the UA economic impact report, Sen. Boozman said the issue is not the impact, but with the process and the potential cost to Arkansas ratepayers.
“Arkansans are not opposed to building needed infrastructure projects, but questions remain about whether this particular project is needed. No Arkansas utilities have signed up to purchase power from the line,” Boozman noted in a statement sent to Talk Business & Politics. “There are questions about the long-term benefits and costs to the state of Arkansas. Not only should a transmission project be necessary, but the state must be given an opportunity to review and approve it – just as it has always has in the past. When DC bureaucrats force a project on the state, as they have in this instance, the harm and costs may not be properly addressed.”
A statement from Rep. Womack’s office to Talk Business & Politics raised a question about who funded the UA study.
“Our concerns about the project are not based on whether Clean Line can commission a favorable study, but rather if the federal government should be able to supersede a state’s right to decide to license a utility and allow the use of eminent domain on behalf of a private company,” Womack said in the statement.
When asked about the perceived credibility of a study commissioned by Clean Line, Deck provided the following statement: “One of the things that our Center does for a wide variety of organizations is estimate economic impacts. Clean Line came to us to understand how its expenditures in Arkansas will affect the state’s economy. We very carefully looked at how much direct expenditure would be made and how the supply chain and personal expenditures that will result from that direct investment would impact the state. For this kind of study, there is no way to estimate economic impact without considerable input from the companies that are involved. And, of course, companies are the most interested in understanding their own particular economic impact. So, for economic impact studies, you will almost always find that the economic impact generator is the funder of the work.
“As always, economic impact should be considered a single piece of the puzzle as we live in a complex world. But, it is an important piece.”
Landowner opposition groups say the report doesn't address their concerns:
Jordan Wimpy, attorney for Arkansas Citizens Against Clean Line Energy, said Tuesday, “At this time, the primary concern of our clients is Department of Energy’s review of and potential participation in a project that meets no identified or documented transmission need. This is particularly concerning when the federal government’s involvement will circumvent normal state level review and may well include the use of federal eminent domain to condemn the property of private landowners in order to benefit a private, for-profit transmission company.”
Alison Millsaps, spokeswoman for Block Plains & Eastern Clean Line, said, “Again and again, Clean Line and their supporters attempt to focus solely on economic development in regard to Plains & Eastern. The people who make up the opposition to this line aren’t against economic development, they’re against the use of eminent domain to further what is essentially private economic development.
“Dangling big numbers doesn’t always make a proposal necessary or legal. We believe both of those issues will ultimately be determined in a court of law, not by a study on construction benefits,” she said.
Flop. Flop. Flop.
So, let's recap. Clean Line's RICL project is dead in the water and there is no federal override over the IUB's permitting authority. RICL's Illinois permit is being appealed. Clean Line's Grain Belt Express project is blocked by counties in Missouri, and will most likely be successfully appealed in Illinois. Clean Line's Plains & Eastern project just keeps gathering the ire of the State of Arkansas and nobody is buying the manufactured "benefits" of the project.
The only thing moving forward here is bad press.
Well, it's finally happened. An electric transmission owner sited its line in the backyard of the wrong person. Those transmission siting etch-a-sketch toys can be so risky!
And now the way society thinks about the use of eminent domain for energy transmission easements is about to change.
Andrew P. Morriss, Dean & Anthony G. Buzbee Dean’s Endowed Chairholder, Texas A&M School of Law; Senior Fellow, Property & Environment Research Center; Senior Fellow, Reason Foundation; and Research Scholar, Regulatory Studies Center, George Washington University. A.B. Princeton University; J.D., M.Pub.Aff. The University of Texas at Austin; Ph.D. (Economics) M.I.T., lately found himself in the bullseye of an electric transmission project. And he hired counsel. And then Morris and his lawyers wrote a paper published in the LSU Journal of Energy Law and Resources.
In the interests of full disclosure, we should note that we are not neutral observers of
eminent domain abuse in this area. Morriss’s wife’s parents, wife, brother-inlaw, and sister-in-law are involved in proceedings contesting the valuation of a power transmission easement across property held by a family limited partnership in Kimble County, Texas, in which they are represented by Barron & Adler. As a result, none of us feels particularly charitable toward utilities that make use of eminent domain for acquisition of power line corridors.
Whoopsy! But, finally, someone with a big enough megaphone to question the utility easement status quo has done the unspeakable -- suggested that the use of eminent domain for "large infrastructure easements" (or LIEs, proving that acronym creation is an art) should end.
We argue that eminent domain laws need to be reformed to address these problems. The simplest reform is to eliminate eminent domain from LIEs entirely, forcing utilities to negotiate easement terms in arm’s length transactions and leveling the playing field between the utilities and landowners. Because the burdened landowners are a dispersed and unorganized interest group, while utilities have considerable political clout, this may be
unobtainable through the political process in many states. Similarly, the even more potent “bootleggers and Baptists” coalition of utilities and environmental pressure groups, which
back expansion of transmission lines for renewable energy, if not natural gas or oil pipelines, mobilize powerful interests behind
maintaining the power.
- Easement agreements are written by utilities in their own interests.
- Easement agreements do not adequately compensate landowners.
- Courts hearing the eminent domain case simply accept the easement agreement as written and concentrate solely on "fair market value" of the property taken.
Why do we allow ourselves to be treated this way?
Much of the growth is likely to involve the use of eminent domain because utilities and
governments often consider eminent domain to be a cheaper and easier alternative to negotiating with potentially resistant, unhappy landowners for the acquisition of property.
The paper points out that in lieu of doing away with utility eminent domain authority altogether, reform is needed.
For example, providing courts (and other third parties with roles in eminent domain proceedings) with the opportunity to alter the easement terms proposed by utilities for LIEs would serve as an important step toward solving many of the problems we describe. In addition, states and the federal government can take further steps to improve the LIE acquisition process by gathering and disseminating market data to, and providing greater statutory guidance for, valuation
The five reforms recommended in the paper include:
- Limiting eminent domain power of utilities.
- Empowering neutral decision makers to structure easements.
- Create exit rights. (Utilities should not be able to take perpetual easements).
- Create better data on LIE costs and provisions.
- Establish standards to guide determination of value. (Not all costs to landowners are immediate or quantifiable).
The paper is also a great guide to things you should consider adding to any proposed easement agreement presented to you by a utility during the "good faith" negotiation period required by law before the utility resorts to eminent domain. Of course, the utility will most likely bat your efforts away, but in that case, how much "good faith" is the utility actually displaying? It's all about the money to them, although money is usually at the bottom of the landowner's list of concerns about involuntarily hosting a utility LIE.
And this paper makes you think. Ever since I saw my first purchase option agreement and easement agreement presented to landowners by the PATH transmission company more than five years ago, I've wondered how anyone thinks this playing field is fair. The agreements contained many clauses that I would never agree to, however these agreements are often presented to landowners lacking legal knowledge of any kind, and without the benefit of counsel. When real estate changes hands in a market-based arm's length transaction, both parties are represented by their own counsel. It's the way we do things. Have you ever sold your real property sitting alone at your kitchen table with a fast-talking stranger who's just come knocking on your door, checkbook in hand? Of course not, unless you've been a victim of a utility LIE. Why is it okay for utilities to prey on landowners this way? This needs to stop! The landowner should have the right to independent counsel, at the utility's expense, before signing any agreements. In fact, it should be required.
Any why should eminent domain for utility LIES continue? If you've never been affected by a LIE, you may think eminent domain is a necessary evil to providing a public necessity, like electricity, highways, and other public infrastructure. Arrogant eminent domain proponents believe that because the power you use required an easement across someone else's land at some point, that you should be eager to provide that same easement for someone else's electric need. It's been many, many years since America was electrified. During electrification, eminent domain was accepted because everyone was getting the benefit of the infrastructure. Today, some greedy transmission companies are proposing eminent domain be used for LIES that aren't needed to provide anyone with basic service. Transmission lines have been proposed that are intended to make the electricity cities waste keeping their skylines lit up all night "greener." This isn't public necessity. It's keeping you stupid believing that utilities shall have the right of eminent domain for whatever they propose. It's time to rethink this because America is rebelling against this kind of thinking in a big, big way.
Start your thought journey by reading the Morriss paper. And think, really think, what if this happened to me? Because if we let this continue unabated, it will.
This post wouldn't be complete without thanks to Janna Swanson in Iowa for digging up this thought-provoking paper. Janna moonlights as an energy activist and researcher, when not producing food to feed ungrateful utility executive pieholes.
“The ICC approval brings the Grain Belt Express Clean Line one step closer to dramatically increasing the low-cost wind energy available to customers in Missouri and Illinois.”
I disagree. The ICC's CPCN expires two years from date of issue. Although GBE requested its permit be issued with a two and one-half year expiration date, the Order did not do so. So, it's two years. Tick Tock, Clean Line!
Clean Line's patchwork quilt of permits is an exercise in harvesting low-hanging fruit, with the most desired pieces still way out of reach. Despite its six years of effort to get any of its four (or it is five?) transmission projects totaling thousands of miles permitted, Clean Line still doesn't have all the permits it needs for even one of them. They've built a crazy quilt of random permits and their timing is way off. Permits are going to start expiring before new ones are issued, creating a game of permitting whack-a-mole.
Its Rock Island project has a two-year Illinois permit on which it only has one year left to begin construction. Meanwhile, Rock Island is completely stalled in Iowa. No way will it complete its Iowa permitting before the Illinois permit expires.
Its Plains and Eastern project lacks a permit in Arkansas and eminent domain authority in Oklahoma.
And its Grain Belt Express project has been flat out rejected by Missouri. Clean Line made some noises about figuring out its options in Missouri -- either reapplying with the state or attempting a federal override. Either way, Clean Line has no chance of clearing up its issue in Missouri within two years.
I think this is just poor strategy and management of Clean Line's permitting process. Clean Line seems more concerned about having a piece of paper to show its investors, rather than making logical progress toward building a single project. Maybe this handful of speculators have bitten off more than they can chew?
Anyhow... about Grain Belt's CPCN from the ICC... Its a conditional permit, again (the Rock Island permit also came with conditions and no eminent domain authority).
The first condition imposed by the ICC is that GBE have all its financing in place before beginning construction. The ICC figures this will stop GBE from building the transmission line to nowhere before running out of money and expecting the government or electric ratepayers to bail it out to finish the project. Does the ICC think this is a possibility without the condition? That's quite telling in itself, isn't it? A real public utility usually has more than an idea and a fantastical plan to get rich quick. At least the ICC seems to realize Grain Belt Express has nothing behind it.
The second condition imposed by the ICC is a whole bunch of make-believe. The ICC requires Clean Line to come back before it to receive "permission" to charge Illinois ratepayers for the project through FERC-jurisdictional regional cost allocation. Ha ha ha ha ha ha ha. Why am I laughing? Because the ICC has no authority to accept or reject cost allocation to Illinois ratepayers. It is a regional process under the jurisdiction of the Federal Energy Regulatory Commission. The most the ICC can do is file a complaint that goes like this, "But, FERC, GBE promised us that we would have jurisdiction over a cost allocation decision!" And who is GBE to change FERC's jurisdiction? Can't happen. So, the ICC's logic goes like this: If GBE tries to get cost allocation to Illinois ratepayers, then we can suspend its permit and then they can't build the project! But... what if... GBE constructs its project and THEN receives approval for regional cost allocation? What you gonna do then, ICC? Cry? Waste time and money fighting this at FERC like you did the PJM cost allocation for the Project Mountaineer projects? That took, what... 10 years? And cost how much? The really frustrating part about this is that ICC has had it explained to them six ways to Sunday that they have no jurisdiction to impose this "condition."
But here's the big oops... the vote to issue the CPCN in the first place was 3-2 in favor. Two Commissioners issued a dissent that I'm going to call "blistering" (because Clean Line likes to say that about the Missouri dissent). The issue here is particular to Illinois law. Section 8-406 allows for the application for and issuance of a CPCN. Section 8-503 allows the ICC to order or authorize a company to build a certain project. Section 8-503 is a prerequisite to eminent domain authority under Section 8-509. The ICC may issue a CPCN under 8-406 without Section 8-503's authority that is the basis for an eminent domain grant under 8-509. That's exactly what happened with the Rock Island project. The project was issued an 8-406 CPCN but the Commission did not order or authorize the project to be be built under 8-503. This gives Rock Island the ability to build its project if it can get 100% voluntary land acquisition, otherwise Rock Island has to go back before the Commission to request a determination under 8-503 before it can proceed to 8-509's eminent domain authority. However, in 2010 the Illinois legislature added Section 8-406.1 to create an expedited process for public utilities to apply for a CPCN. This speedy process automatically includes the 8-503 grant. Because Clean Line didn't want to end up with another useless CPCN without 8-503 authority, it decided to use the expedited 8-406.1 process. The fly in the ointment, however, is that only a public utility may apply under 8-406.1. Clean Line is not a public utility in Illinois. This issue was the subject of several motions to dismiss and an interlocutory appeal to the Illinois Supreme Court during the proceedings. I've heard that the ICC acted quite suspiciously in denying the motions, without public discussion of any kind at the meeting where they denied the motions to dismiss. And here it comes again, in the form of a dissent from two Commissioners. I'd say chances of GBE's permit being overturned on appeal are pretty good.
And what then, Clean Line, what then? Why were you in such a hurry to get your Illinois permit for GBE when it was obvious Missouri was going to deny your application? What strategy was that? Just covering another square on your transmission permitting bingo board? Yay, you!
So, the Clean Line saga grinds on. No generators, no customers, not enough permits. When are Clean Line's investors going to quit tossing money down this rat hole? One of the more interesting things to come out of Illinois recently was Clean Line's filing regarding its Rock Island project regarding a change of investors. Although Clean Line made much earlier this year of a "$50M investment" in its company by Bluescape Resources, it turns out that investment was tied up in a ball of string. Clean Line got $12M. Bluescape got two seats on Clean Line's Board of Directors. The Board of Directors can order Bluescape to kick in another $5M at any time, once Oklahoma approves Bluescape's investment. The other $33M is completely at Bluescape's option. Bluescape wasn't foolish enough to give these wind cowboys all $50M up front. Clean Line keeps adding investors to its stable as the ones already there don't seem to be interested in upping their investment. Remember, if Clean Line can't get their projects built, their investors lose everything. Every last dime.
And there Clean Line's management sits, with their permit bingo board missing crucial links and no idea whether the balls they need are even in the hopper.
...the Commission concludes that, as courts have recognized, retail customers may file complaints and protest transmission rates and wholesale sales rates before the Commission. Moreover, allowing retail customers to challenge such rates does not violate principles of federalism or interfere with states’ rights.
The settlement judge in a formal challenge proceeding involving a subsidiary of investor owned utility AEP had submitted what are known as "Certified Questions" to the Commission on Oct. 13. A certified question is intended to seek the Commission's consideration and disposition of "any question arising in the proceeding, including any question of law, policy, or procedure
." The Commission had 30 days to answer the questions posed, otherwise they would revert to the judge who posed them for decision. The questions posed were:
(1) Shouldn’t section 306 of the Federal Power Act (FPA) be interpreted
in pari materia with section 201 of the FPA? FPA section 201 gives the Commission jurisdiction over wholesale interstate rates and interstate transmission; therefore, retail ratepayers would not have the right to file complaints against wholesale rates.
(2) Wouldn’t an expansive interpretation of section 306 of the FPA (allowing retail ratepayers or end users to file complaints against interstate wholesale rates) violate the delicate balance of federalism; in other words, by giving complaint authority to retail rate customers, is the Commission interfering with states’ rights by asserting jurisdiction over retail rates?
The judge had recommended that the Commission:
answer the questions as follows:
(1) “retail ratepayers are not permitted to bring an FPA section 205 complaint against wholesale sellers of electricity[;]” and (2) a different interpretation (i.e., allowing such retail ratepayer complaints) “would interfere with state jurisdiction over retail rates.”
The Commission didn't see it that way, and yesterday they issued an Order that explained to the judge:
Complaints may be filed under sections 206 and/or 306 of the FPA, 16 U.S.C. §§ 824e, 825e (2012). While section 205(e) of the FPA refers to “complaints,” 16 U.S.C. § 824d(e) (2012), the Commission commonly refers to these filings as protests. See 18 C.F.R. § 385.211 (2015).
The plain language of the FPA and the Commission’s implementing regulations allow broad participation in proceedings before the Commission. Specifically,
section 306 of the FPA explicitly authorizes “[a]ny person” to file a complaint with
the Commission. The Commission’s regulations are to a similar effect. For example, Rule 206(a) of the Commission’s Rules of Practice and Procedures provides that “[a]ny person may file a complaint seeking Commission action against any other person alleged to be in contravention or violation of any statute, rule, order, or other law administered by the Commission or for any other alleged wrong over which the Commission may have jurisdiction.
Ms. Peine, an intervenor in this proceeding, is contesting the SWEPCO/AEP transmission formula rate inputs, and thus rates for transmission of electric energy in interstate commerce, which is within the Commission’s exclusive jurisdiction under Part II of the FPA. These transmission inputs, i.e., costs, flow through to Ms. Peine’s retail electric bill. Stated another way, Ms. Peine is an “end-use customer that will pay . . . some portion of that [transmission] rate when flowed through [her] retail bill.” Thus, by challenging the transmission formula rate inputs, Ms. Peine has alleged injury in fact that can only be addressed by the Commission. Under these facts, Ms. Peine is permitted to file a protest or a complaint and to participate in this proceeding by intervening.
This outcome is consistent with federalism. Section 201 of the FPA recognizes the authority of the states over retail sales and facilities used in “local distribution.” Ms. Peine’s formal challenges, however, go to the transmission formula rate inputs identified in the SWEPCO/AEP 2013 and 2014 Annual Updates. Ms. Peine’s claims, therefore, go to the transmission of electric energy in interstate commerce and not to local distribution
Moreover, this issue is not a matter of first impression, as both the courts and the Commission have concluded previously that protecting consumers is one of the Commission’s primary responsibilities.
...the relevant definition of “interested parties” under the SWEPCO/AEP Protocols is not the version that was filed in 2007, but rather the version that was in effect when Ms. Peine filed her formal challenges under the Protocols, and that version did not include the examples that the Settlement Judge construed as limiting the definition of interested parties to exclude Ms. Peine. Moreover, we disagree with the Settlement Judge’s interpretation of the parenthetical phrase in the earlier version of the SWEPCO/AEP Protocols. The parenthetical phrase “(e.g., Transmission customers and affected state and federal regulatory authorities)” provided examples of categories of interested parties, and should not be read as exhaustive. This parenthetical language would not preclude an end-use customer, like Ms. Peine, who will pay a portion of the transmission rate in her retail bill, from challenging the inputs to the SWEPCO/AEP transmission formula rate.
Lastly, as to the administrative efficiency concerns raised by the Settlement Judge and AEP, we note that the Commission’s Rules of Practice and Procedure provide appropriate measures to streamline Commission proceedings.
So, the judge made a complete mess of a whole bunch of law in her rush to deny standing to a ratepayer. She also doesn't know the difference between "e.g." and "i.e."
And AEP and the Judge need to kwitcherbitchin about how terribly hard and unfair it is to utilities to have their rates examined by those who pay them. Did they expect that the Commission was going to do away with annual reviews of formula rate inputs altogether? There's no way to limit participation. It's all in or nothing. And the Commission just can't legally go with shutting down rate transparency.
Perhaps there's also a lesson here for AEP, who did a whole bunch of whining
about how burdensome and costly customer reviews of wholesale transmission could be as an excuse to escape rate review altogether. AEP has been down this road before as one of the parent companies involved in the PATH
decision the Commission cited over and over in yesterday's Order. Shame on you, AEP! If someone suggested that you could steal from your grandmother and get away with it, would you do it? Even though you know full well stealing from Granny is wrong? I thought AEP was supposed to "do the right thing?"
Here's a little advice from your own CEO to apply the next time you see an opportunity to do something that you know is wrong in order to take unfair advantage over someone who appears to be weaker than you:
I urge you to make the concepts described in this book a regular point of reference for the manner in which you carry out your work and the treatment of others.
Remember when the environmental community was a kind and gentle, financially struggling, underdog that Americans could look to for help against corporate energy schemes? That wasn't so long ago, but the environmental community has done a complete 180 in the past seven years to morph into an arrogant, mean-spirited, well-funded, corporate bully. And their halo (and popularity with the American people) has tarnished. Along with their increased funding has come corporate and political agendas that the environmentalists must pursue in order to keep receiving their fat, donated paychecks. No longer does their funding come from the American people through memberships and donations. Now they're big business, living high on the hog while feeding on corporate largesse and political contributions. Big Green has become the enemy of the American people. Just another corporate lackey.
Some of them may be quite unaware of how they're perceived by the rest of us, but the majority must be quietly whispering in shocked tones about the way the public now perceives them as the enemy. In its defense, the environmental community continues to deny there's an issue, and make excuses for its hypocritical choice of which energy projects to support or oppose.
For example, a recent piece in political rag Triple Pundit attempts to compare and contrast the Keystone XL pipeline with the Plains & Eastern Clean Line. This piece fails at the starting gate:
After all, both involve transporting energy from one place to another; both require the taking of right-of-way from property owners; and both will create relatively few direct and permanent jobs once completed.
Those are the important points that Americans care about. The rationalization that follows to explain why those detriments are okay as long as the project has the name "Clean" in its name is nothing but fantasy.
The author is a public relations wonk and "author of books and articles on recycling and other conservation themes." Well, recycling... that certainly qualifies her to expound on the need for electric transmission and the condemnation of private property for energy projects. Not.
The author claims that Clean Line will provide more jobs than Keystone, and she bases that on information from... Clean Line. Just because Clean Line says it will "source" its components from US companies doesn't mean they will be produced in the US. The author points out that Keystone components will be produced in foreign countries and simply "sourced" in the US. In fact, Clean Line would be fiscally imprudent to sign contracts for components with US companies now, long before any shovel hits the ground. It's common practice to issue an RFP for project components and then evaluate the bids for price, quality and deliverability. If she'd looked underneath the "clean" veneer, she'd realize that Clean Line's promises of US manufacturing jobs are just that... promises. There are no signed procurement contracts for certain components at fixed prices. And there are no guarantees of new jobs.
There's no logic in pretending a transmission project provides more "operations" jobs than Keystone. Maybe if the author knew anything about how transmission lines are operated she'd realize that the "operators" are already employed at regional transmission authorities. One more line in the stable isn't going to create any new jobs. Jobs at wind farms? Sure, the same as jobs that would fill the Keystone pipeline with its liquid gold. No difference.
The Energy Department has not given Clean Line its "Seal of Approval," no matter what Clean Line wants to spout in the media. A decision still has not been made.
Mention of TVA? Why? The TVA has not included Clean Line in its Integrated Resource Plan and has remarked that any possible use of the project is at least a decade away. It isn't about where Clean Line connects, it's about finding buyers for the energy Clean Line transports at the connection points. There are none. Moreover, there are no generators to sign contracts with end users. Who builds a road without any cars to drive on it? We don't build public infrastructure unless there's a need for it, and only public utilities with a need to transmit power have a right to eminent domain authority. Sure, any investor can build a shopping mall and hope shoppers show up, but we don't use eminent domain for that kind of speculative, for-profit enterprise. And that's exactly what Clean Line is -- a "build it and they will come" idea. Block GBE-MO said it best, "No need, no gain, no eminent domain!"
And let's talk about those mid-point converter stations. Without buyers, they're just useless monstrosities. And there are no buyers. Just because Clean Line builds a converter station does not mean power flows to that location. The converter station is a tollbooth -- if there are no buyers to pay for the juice, it doesn't pass the tollgate. Arkansas doesn't magically "get" 500 MW of electricity unless someone pays for it. And if there are no buyers, why invest $100M in a converter station that sits idle? There's no guarantee that a converter station will be built in Arkansas if it's not profitable.
Perhaps the Tennessee Chamber of Commerce (a traditional utility ally that the environmental groups have disregarded as biased in the past) is looking forward to "new supplies of clean energy," but again, without buyers, they get nothing.
And then the author trots out a 5-year old "report" Clean Line presented to the TVA (who elected NOT to purchase any of its electricity). This has about as much validity as any other lobbyist promise, I suppose, and is not worth reading. But, this point is so off the mark it deserves mention:
Greater transmission reliability: The project increases transmission capacity and grid reliability. This is especially important in light of potential for coal power plant retirements and the lack of inter-regional transmission projects.
Reliability is not a measure of the amount of available transmission. Reliability is the ability to deliver power at all times. Our current grid is managed by regional planners/operators who order new projects needed for reliability. No regional grid planner has ordered Clean Line. It's completely outside any regional grid planning. It's completely unneeded for reliability purposes. Furthermore, the most reliable electric delivery system is located as close as possible to the point of use. Transmission lines are a link in the power supply chain that can be broken at a moment's notice. The more power you depend on from far away, the more unreliable your system (more moving parts, more chance for problems). As well, Clean Line is proposing an electric supply provided by intermittent renewables. There is no reliability to a generator that cannot be counted on to run when called. That's unreliability.
The article then goes down a political rathole to make partisan attacks on elected officials. Nobody in the real world cares!
And finally, the author gets on her soapbox to tell the world why and how Keystone will affect the landowners and what makes it "bad."
...property owners and communities throughout the length of the pipeline would be saddled with the risk of a pipeline leak, break or other mishap.
And what makes this different than the burdens saddled on Clean Line-affected landowners? There is no contrast here, just some blather she probably pulled out of newspaper articles about the opposition. I wonder how many Keystone-affected landowners this recycling queen has actually spoken to? I'm guessing none.
I've spoken to plenty of landowners affected by Clean Line's proposal, as well as regular folks concerned about energy issues. Here's the common thread: They're not going to put up with eminent domain for energy projects any more. Whether its Keystone or Clean Line, the project must be built without the heavy hand of government land theft. While use of eminent domain for energy projects was used repeatedly to build the infrastructure we have today, it's no longer acceptable. It's a new generation, with a new way to organize and fight. Nobody's lights are going to go off if we don't build new energy projects. Instead, what these environmentalists propose is to build an entirely new infrastructure to replace our current system, but basing it on yesterday's unpopular ideas. The American people don't want "clean" energy that costs them more or that usurps their right to own and enjoy property.
We're at an energy crossroads. We can embrace new ideas and create a new, democratic and reliable energy future -- or we can simply replace our corporate masters with new "clean" corporations and continue with the status quo. The people are rising up -- no more corporate energy control!
Only when the environmental groups come to terms with their new unpopularity will they become an impetus toward a new energy future and stop dragging the future down into the corporate past.
The U.S. District Court for the Eastern District of Virginia looks like the O.K. Corral in the aftermath of the recent paper showdown requesting dismissal of FERC's petition to request an Order Affirming the Commission's Order Assessing Civil Penalties of $34.5M
against defendants Powhatan Energy Fund and Alan Chen.
On October 19, Powhatan and Heep Fund, et. al. (Chen defendents) filed Motions to Dismiss FERC's request prior to trial.
The Powhatan Motion to Dismiss relies on FERC's failure to provide fair notice that the trades at issue were illegal at the time they took place. Powhatan says this raises serious due process issues.
The Heep Fund Motion to Dismiss relies on a contention that the statute of limitations had expired before FERC's filing in U.S. District Court for all but 4 days of the subject trading. Heep Fund also says that the complaint does not state a claim for market manipulation. They also claim the same due process issues raised in Powhatan's Motion. And, finally, Heep contends that the FPA does not authorize manipulation claims against individuals like Dr. Chen.
FERC responded on October 30, claiming Fair Notice precedent supports their claim and that Powhatan mischaracterizes the Commission's actions and precedent, and that none of their claims have merit. FERC's response to Heep Fund made similar claims that their Motion to Dismiss was all wet.
What I found interesting here was FERC's reading of its Black Oak precedent as recognizing that traders may make trades solely to capture MLSA payments, however FERC "fixed" that problem by requiring traders to also purchase transmission.
In March 2009, PJM followed the narrower approach, proposing to pay MLSA to all trades with paid transmission (physical or virtual). In response to that filing, no party suggested that UTC trading would be susceptible to the kind of perverse incentives that the Commission understood could apply to most virtual trades.
No party filed any comments rebutting this contention as to the narrow distribution method, and the Commission accepted it in September 2009. Black Oak Energy, LLC, et al. v. PJM Interconnection, L.L.C., 128 FERC ¶ 61,262 (2009).
So, the Commission believed it had closed any loophole that created an incentive to place trades with the intention of collecting MLSA payments by requiring traders to purchase transmission. But it didn't. And the trading happened.
FERC contends, nevertheless, that the trading was an illegal type of trading, and in an effort to build a villain it uses the word "Enron" 19 times. Everybody knows that Enron was bad, right? And because this whole issue is so technical and hard to think about, maybe people will just go with the bad aura created by glittering generalities? Here's another: FERC used the words "Death Star" 17 times. No average Joe knows what "Death Star" trading is, but it conjures up images of our Star Wars heroes being in jeopardy. And it sounds really, really bad!!
FERC also prattles on about the Powhatan & Chen defendant's trading depriving other market participants of MLSA payments they would have scored if the defendants didn't trade. But in this alternate universe where the defendants didn't trade, might others have traded instead, which would throw off any entitlement to MLSA payments by the other market participants? And FERC has still failed to convince me that the MLSA payments would have flowed through to the electric rates paid by customers of the other market participants, instead of into the corporate coffers that pay share dividends. Since FERC can't explain this properly, it must not be true that the other participants failure to receive MLSA payments caused higher rates for electric consumers. I'm still waiting here...
Yesterday, Powhatan and Heep filed Rebuttals to FERC's responses.
Powhatan pointed out that FERC has changed its position on what the Black Oak orders meant, and "misses the forest for the trees." Powhatan also points out a gap in FERC's logic: If the Black Oak orders prohibited the trading at issue, why did FERC find it necessary to change the tariff to prevent this kind of trading AFTER it discovered what the defendants had done. By closing the barn door after the horse got out, the Commission can now only retroactively fine Powhatan for trading that wasn't illegal when it happened. And, of course, that idea is preposterous.
The Heep Rebuttal also refuted FERC's contentions in its Response.
So, now we'll see if the rocket docket blasts off towards the Death Star, or dismisses this case, once the smoke clears in the corral.