"Big green" has been hoodwinked into operating under a misguided premise by "big wind." Environmental groups that support certain transmission lines simply because they have been told the lines are "carrying wind power and clean renewable energy" have defined themselves as the biggest hypocrites.
When asked about transmission in a recent interview by E&E, the Environmental Law & Policy Center's Howard Lerner panned transmission lines "for coal," while promoting lines "for wind."
From an environmental group perspective we're very interested and supportive of those lines if they're carrying wind power and clean renewable energy, as some of them are saying that they're doing.
Lerner knows quite well that transmission must be "open access" for all types of generation. Transmission lines can't segregate "green" electrons from "brown" ones. There is no such thing as a transmission line "for wind."
To add to the hypocrisy, Lerner later talks up distributed generation:
Distributed generation, particularly solar, plays a vital role in terms of reliability, cleaning up the air and saving money for consumers. The efficiencies of solar panels are going up, the costs are coming down, and those entities that are getting behind it I think will be in good shape. People who are trying to stop the progress technologically when it comes to solar are going to be like the utilities that had landline telephones that tried to stop wireless telecommunications. It almost never works to stand in the way of technological progress.
Environmental groups that support new long distance transmission "for wind" are trying to stop the progress of distributed generation technology. Of course, this effort to thwart technology won't be effective. What if we poured all the money currently being wasted on centralized generation and transmission lines "for wind" into distributed solar instead? How reliable and cost effective would that be?
Howard also demonstrates how hookwinked he is about the cost to ratepayers of new transmission "for wind."
Well, renewable energy wind power can bring costs down. Building new transmission of course passes costs on to consumers. Some of the transmissions being used for renewables, some of that transmission is being used for coal. So what you have to do is not look at it as one size fits all, but look at particular transmission lines and really say, No. 1, are the costs justified? Are the benefits greater than the costs, and therefore you can build a line? Or had the world changed in which a particular transmission line, and there are a number of lines that are being challenged on this basis, given the demand has gone down is there less need for the lines, they shouldn't be built? Secondly the question is is the line carrying renewable energy like wind power, or is it carrying coal and natural gas? The premise of what the Midwest independent system operator did is that these transmission lines, they call them the MVP lines, are supposed to be carrying wind power. Some of them do, some of them don't very much. And that's going to be an issue both before the regional commissions and also an issue before FERC.
So, in Howard's world, the cost argument is secondary only to determining if a transmission line is being used for renewables or for coal? How does he make this determination? Do his transmission developer friends tell him which ones are which?
I don't think Howard cares how much transmission costs as long as someone tells him it is "for wind." Environmental groups are not very good advocates for consumer prices, so maybe they should stop trying to influence transmission development to meet their environmental goals. I'd feel a lot more comfortable if transmission was planned by grid planners, and not environmentalists, or politicians. Let the grid planners plan the grid guided by what the users of the grid want, not by what is environmentally desirable, politically expedient, or profitable for private investors.
But being seen as hypocritical by the consumers who pay for it all doesn't seem to bother these folks, as I saw demonstrated during a recent "webinar" by Big Wind's Big Front group. During the webinar, both the representative from regional grid planner PJM Interconnection, and the representative from the Rocky Mountain Institute, pointed out that the decision has not been made whether to pursue a big, new grid build out "for wind," or whether a localized, distributed generation future that does not require a whole bunch of new transmission would be more prudent. In fact, their presentations proffered information that a distributed generation future is highly likely, and more cost effective. But, never to allow reality to intrude on their fantasies, the environmental group and the "clean" transmission developer plowed presumptively right ahead with their "for wind" presentations, like the decision had already been made.
But, that's okay. The ones who actually make the decisions don't listen to the environmental groups or the transmission developers, they just pat them on the head and carry on with business. I think it might be pretty frustrating for the poor, little cleaniacs.
In the end, technology cannot be stopped by the financial wants of developers, or the pipe dreams of environmental idealists. Hold the line, transmission opponents, the future is bright!
Another quarter, another FirstEnergy earnings call
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.
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?
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.
One more thing before I go....
This is a vocabulary lesson for Leila:
The word you were searching for is exacerbate.
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.
A mysterious, new group advocating for "more ways to send Iowa's wind power out of state" appeared on TV screens all across Iowa on Monday. The mysterious group claims it includes "wind power activists, vendors and industry leaders" and that is it "neutral" about the Rock Island Clean Line. How could a group advocating for transmission lines in Iowa not be for RICL?
The Rock Island Clean Line is one for-profit company proposing to ship wind power produced in western Iowa to the outskirts of Chicago. None of that power would stay in Iowa and a number of landowners along the proposed 500-mile-long transmission line route have opposed the plan. Some owners and farmers have expressed concerns about potential damage to land from transmission tower construction and the threat of eminent domain to push a route if enough willing sellers aren’t found.
But Lang, and Mike Prior, interim director of the Iowa Wind Energy Association, hope the new organization could serve as a “go-between” to bridge some of the disagreements between land owners and the Clean Line developers.
"Neutral," my eye!
A front group is an organization that purports to represent one agenda while in reality it serves some other party or interest whose sponsorship is hidden or rarely mentioned. [or denied!] The front group is perhaps the most easily recognized use of the third party propaganda technique.
Larson Shannahan Slifka Group (LS2group) is a bipartisan public relations, public affairs, and marketing firm that guides its practices with one goal in mind: what others may do, we strive to do better. We offer clients an unparalleled commitment to excellence and take pride in our consistent delivery of successful outcomes. Our strength lies in the diversity of our team and its determination to apply creative solutions and unique perspectives to clients' needs. We see possibilities others cannot and have a track record of helping our clients reach their goals.
Right. I'm sure other public relations companies cannot "see" the wheels coming off the front groups they set up for their clients at roll out. But, that's neither here nor there.
Who are LS2Group's clients?
"LS2group has a thorough understanding of our needs and responds quickly to our requests, coupled with a vast network of strong relationships with key officials."
- Cary K., Director of Development, Rock Island Clean Line
Who are LS2Group's employees? I saw this one
minding the Clean Line information table at the first Mendota public hearing. Others have reported seeing her at other Illinois and Iowa public events.
This same LS2Group employee is also the named company contact on a recent press release about the Rock Island Clean Line project.
The claims that Windward Iowa is not advocating for Clean Line's RICL project, and has nothing to do with the company, are beyond credible belief.
Windward Iowa incorporated as a non-profit Iowa corporation on December 12, 2013. According to its Articles of Incorporation, its purpose is:
to promote social welfare by seeking to educate and encourage landowners to become familiar with wind energy production and transmission, and expand the wind industry in the state of Iowa to further the common good and general welfare of the people of Iowa and the Midwest.
According to its Articles:
no substantial part of the activities of the corporation shall be the carrying on of propaganda, or otherwise attempting to influence legislation, and the corporation shall not participate in, or intervene in (including the publishing or publication of statements) any political campaign on behalf of or in opposition to any candidate for public office
and must abide by the laws for a 501(c)4 corporation
as determined by the Internal Revenue Service. This also means that donations to this corporation are not tax deductible.
Donations? Yes, that's one of the ways you can "get involved" with this group, in addition to "submitting a letter to the editor or opinion editorial; commenting online through Facebook, Twitter or LinkedIn, or on an article; commenting to the Iowa Utility Board; or contacting your legislator or local government official." Hey, wait a tick, doesn't that last one violate the Articles' prohibition on attempts to influence legislation? That's some pretty thin ice!
I also wonder what the legal implications are of this corporation involving itself in negotiations with property owners that eventually result in eminent domain takings?
Windward Iowa's Facebook
page contains numerous links to stories about RICL.
Windward Iowa's website makes sweeping statements
that it does not back up, such as: "Experts predict the U.S. will soon be in the midst of a transmission crisis. It is important to be proactive in addressing the issue and developing new infrastructure. We cannot afford to wait another 60 years for wind energy development.
The country’s electric grid is outdated and in need of attention and upgrades. Projects that bring wind energy through new avenues are part of the solution to providing clean, dependable, and renewable power."
Who are these "experts" and where have they made these statements? Or did the public relations firm just make it up out of whole cloth?
Compare this information to the signs of a front group here
1. The group does not report who they are really working for, who their members are, or the source of their funding. The idea that three individuals spontaneously decided to start an advocacy group managed by a pricey lawyer and a public relations group defies belief.
2. There is no physical address or list of staff on the website.
3. The group claims neutrality on some hot button issue and appears to be making general arguments about a topic only marginally related to the issue, and yet they mainly focus on a “secondary” issue (RICL).
This is all so classic. I've had experience uncovering and reporting on transmission company front groups in the past, and my opinion is that Windward Iowa is a front group being paid for by Clean Line Energy Partners.
Because RICL and Clean Line Energy Partners are no longer viewed as an impartial and trustworthy source of information in Iowa, the company and its public relations contractor have created a supposedly "neutral" third-party entity that will continue to advocate for its project under another name. If you wouldn't believe a word RICL says, then don't believe anything the company tells you when it is wearing its "Windward Iowa" mask.
Windward Iowa only has the same amount of credibility as RICL, and should be treated accordingly by opposition, elected officials, and the media. It's very disappointing that none of the reporters attending the group's "launch" yesterday had the curiosity to ask where this group is getting its funding. That's the literal "million dollar question."
TVA is in final negotiations to allow a proposed $2 billion transmission line carrying wind power 700 miles from Oklahoma to connect to TVA's grid near Millington.
However, it will be another issue entirely whether Texas-based Plains & Eastern Clean Line LLC can send its wind-generated electricity into the TVA system, TVA spokesman Chris Stanley said Tuesday.
TVA policy requires the federal utility, which supplies electricity to MLGW in Memphis, only buy power priced competitively with other energy sources.
No consumer prices have been disclosed by the Houston firm.
"Inter-connectivity just allows Clean Line, in this case, to connect to our grid," Stanley said. "They do not, however, have the ability to inject any power into our system."
TVA is now waiting on Clean Line to request a "transmission study," he said.
"We had to do studies and make sure we have system reliability. That's all happened and we're in final negotiations with them about what that looks like going forward,'' Stanley said.
After the interconnection study is completed, a the transmission-service study will look at sending wind power into the electric grid.
Looks like Clean Line's much ballyhooed Memorandum of Understanding with TVA
isn't proof that the TVA is willing to buy power from the project after all.
Clean Line has been pulling this same scheme with all of its transmission projects by pretending that there are some potential customers in "desperate need" of power supplied by the project, or that a regional grid operator, or federal entity like the TVA, has "approved" its project or contracts to purchase the electricity. Nothing could be further from the truth! The interconnection studies simply determine whether or not Clean Line would compromise system reliability if they interconnected, and also determine what alterations need to be made to the system to accommodate Clean Line's interconnection. Clean Line is responsible for the costs of the studies and any system upgrades determined to be needed in the studies.
Clean Line is in a catch-22. They can't negotiate prices for their transmission capacity until they have completed all permitting, siting, land acquisition, engineering, contracting, etc., and know exactly how much their project will cost to build. The cost of the project will inform the amount of the capacity charge. The capacity charge will be added to the price of the wind (or other) generation and then a power purchase agreement will be negotiated between the generator and the utility buying the power. The generators don't exist. The customers don't exist. The transmission project doesn't exist. Clean Line is nothing more than an overly-ambitious and fantastical business plan. I don't believe it will ever happen.
But as long as Clean Line's "patient" investors want to continue to dump money down this rat hole, entities like TVA will continue to take their money and produce "studies".... because they have to. State utility commissions also have to entertain Clean Line's permit applications, but they don't have to approve them. And they certainly don't have to grant such a speculative venture utility status and its attendant power of eminent domain.
The TVA is currently working on its integrated resource plan (IRP). An IRP is a long-range plan by a utility to determine the proper mix of resources that will serve its customers reliably and economically in the future. The IRP will determine whether TVA will purchase huge quantities of wind from Oklahoma. TVA's IRP won't be completed until 2015. Although one of the stakeholder participants in the process recently asked the question, "Would it be appropriate to consider a scenario around grid/transmission expansion - for example, an HVDC line is built from the Midwest making lower cost wind energy available to the TVA?" it looks like this question was batted aside by the group think of the TVA's IRP process.
Maybe Clean Line needs to do a little reading on the Delphi Technique?
It looks like Clean Line's business plan is nothing but a house of cards, and a big wind is starting to blow.
But some people don't like the project, which is why the bill came forward. Landowners who are wary of eminent domain powers are speaking up against the project. In large part it has become an issue pitting pro-business groups and legislators against people who carry the NIMBY, or Not in My Backyard, mindframe.
Propagandists use the name-calling technique to incite fears or arouse positive prejudices with the intent that invoked fear (based on fearmongering tactics) or trust will encourage those that read, see or hear propaganda to construct a negative opinion, in respect to the former, or a positive opinion, with respect to the latter, about a person, group, or set of beliefs or ideas that the propagandist would wish the recipients to believe. The method is intended to provoke conclusions and actions about a matter apart from an impartial examinations of the facts of the matter. When this tactic is used instead of an argument, name-calling is thus a substitute for rational, fact-based arguments against an idea or belief, based upon its own merits, and becomes an argumentum ad hominem.
Clean Line is so frightened by the righteous concerns of landowners being asked to make a sacrifice for the pecuniary aspirations of a company from Texas, that they have resorted to cheap party tricks like "NIMBY."
News Flash: Use of the "NIMBY" name in transmission battles is passe and ineffective. The Alliance has already overcome that stereotype quite effectively.
And why shouldn't landowners be concerned or, as the editorial puts it, "not like the project." The project is asking them to sacrifice their property, their business, their peace of mind and their physical well-being for the needs of some phantom others in "states farther east." Who wouldn't resist it? Would you resist a similar attack on your own home, income and way of life?
In addition, the "project" isn't even needed for reliability or economic reasons. It's a scheme to make a lot of money supplanting existing generation in "states farther east" that have no desire for the power in the first place.
While the financial windfalls may be shared with a handful of politically-connected landowners in NW Iowa who voluntarily host turbines, the buck stops there. The Alliance landowners are being forced to take a one-time "market value" payment, not share in the wealth. Their contribution to the effort is not being fairly recognized or compensated.
While Clean Line's lobbyists hyperventilate that the legislation will "shut down this project as well as kill jobs,” the proposed legislation merely removed the company's threat of eminent domain against landowners who refused to go along. As the Illinois Farm Bureau said in its Illinois Commerce Commission brief:
"In addition, if granted § 8-503 relief, what Rock Island characterizes as “voluntary” easement negotiations with farmers will actually sound something like “Rock Island has been directed by the Commission to construct a transmission line on an approve[d] route, which crosses your land.” Characterizing the easement negotiations as voluntary under these facts is kind of like giving someone the option of jumping off of a cliff before you push them."
If RICL is a viable and economic project, it shouldn't have any trouble compensating landowners to their satisfaction, and would not need the threat of eminent domain. The use of eminent domain for private gain is the issue here, not jobs or economic development. At what point does a person's right to own and enjoy property become less than another individual's desire to confiscate that property for his or her own pecuniary goals? If you believe this is okay, as long as it's in someone else's back yard and you're sharing in the wealth, you're heading down a very slippery slope. Because if you think it's okay in someone else's back yard, you are also saying it's okay in your own, and some day, the chickens are going to come home to roost and then you will be the "NIMBY."
Why is Clean Line so scared? Think about it.
FirstEnergy finally filed a public copy of its Electric Power Research Institute (EPRI) report
on its West Virginia billing problems. The report can only be described as a grammatical HOT MESS
The general gist of the report tells FirstEnergy to stop screwing around with its estimation algorithm because it works well, except that it overestimates customer usage an average of 14%.
EPRI tells us that when the meter is read every other month, both monthly kwh values are a forecast or estimate, because the first month is estimated and the second or "actual" month is actually a result of actual use plus any true-up amount from the first estimated month. In other words... you never get a monthly bill for the actual amount you use. Customers whose bill is read every month have accurate bills, but not you.
The report goes wrong in the first paragraph:
The focus of this assessment is to evaluate the BE protocols’ performance where bi-monthly
meter reading is the standard.
The General Investigation was not triggered by the inaccuracy of FirstEnergy's estimation algorithm. It was triggered by a huge outcry by customers whose electric meters had not been read as required by FirstEnergy's tariff. FirstEnergy made it about its algorithm by focusing on that during the investigation and hearing. By asking the wrong question, FirstEnergy shifts the focus off its willful disregard of its own tariff and the injury it caused (and continues to cause!) to its customers.
"If they can get you asking the wrong questions, they don't have to worry about the answers." - Thomas Pynchon
And, therefore, this hot mess should be tucked away in File 13 and forgotten. It's not relevant to the investigation.
Besides, it's the hardest read I've come across in a long time. Yes, it's hopelessly technical, but it seems that FirstEnergy also ran it through the Gibberish translator before approving its final content. This thing is chock-a-block full of typographical errors, missing words, extraneous words, incorrect words, and incomplete sentences, to the point that the reader is constantly stopping to reach for their secret Gibberish decoder ring. Here's just one of the hundreds of sentences that gave me pause. What does this mean?
When the values are designated as actual, then BSE assumes that they are actual meter reads and treats when according to the
protocols employees in levelization.
Here are a few quotes from sentences that didn't need decoding:
Note: "BE" stands for "Bill Estimation." Just think, if EPRI had named it the "Bill Simulator" instead, we could have been treated to a report full of "BS." Oh, wait, I think that happened anyhow...
As the number of consecutive estimates increases, the BE performance deteriorates.
...ascertain if using the Prior Period should not be considered for the Base Period if the Prior Period was estimated, and especially if there are indications that there was a large but unwarranted reconciliation.
In the case of scenario 10b (Figure 7-13), which imposed two months of 33%
underestimation followed by a large reconciliation, the performance was not quite as good. The R-value distribution became less compacted around R = 1.0, and the
percentage extreme R-value increased to 8%, four time that of scenario 1b. This might
result because underestimation of usage results in systematically poorer performance of the BE in situations where the estimated month’s usage and the reconciliation amount is large. More testing is called for to verify this result before changes are made to the BE
protocols to mitigate this apparent bias.
Missed scheduled meter reads resulted in a modest increase in the extent of
overestimation measured by the mean R-value, but more importantly more individual
customer R-values are in the extreme tails.
Blah, blah, blah, who cares? But if you can manage to get through nearly 100 pages of this Gibberish, there's a treat at the end for you. It's a 12 slide deck of FirstEnergy's "response" to the EPRI report. Why did FirstEnergy need a slide deck? Maybe it's because:
EPRl was asked to perform objective statistical testing of our estimation processes. While we (FirstEnergy) agree with EPRl that the estimation algorithm performs well for most customers we also believe that performance can be improved.
As such we recognize the need to mitigate any unintended impact to customers in the interim and will as proposed in the settlement:
Bill message customers who received a bill varying by more than 25% from previous year following multiple estimates to remind of
payment options (February 2014);
Exception customers whose current estimate vary by more than 25% from their previous year’s bill for manual review (May 2014).
Settlement? What settlement? Is the Commission going to allow FirstEnergy to skip out with a slap on the wrist in a settlement?
Lynn Pugh opened her AEP bill this month to see just how much the cold January had set her back, but she found something in her bill that she normally doesn’t see.
“I’ve never seen the consumer rate relief charge,” said AEP customer Lynn Pugh.
Starting in December of 2013, AEP began adding the consumer rate relief charge to customer bills. According to the company, the new charge is a way to help them account for the spike in the price of coal in 2008-2009.
“It’s actually a reflection of a settlement we had with the PSC to recover the cost of coal,” said AEP spokesman Phillip Moye.
Normally AEP pays around $50 per ton for coal, but in ’08 and ’09 they were paying over $100 per ton because of a coal shortage.
The Public Service Commission signed off on the charge and has allowed AEP to keep it on your bill for the next 15 years. Pugh was shocked to learn that the charge would be on her bill for the next 15 years.
Moye said the AEP opted to go with the additional charge rather than increasing the rate on the price of power.
“The impact on the rate would have been tremendous,” Moye said. “30 to 40 percent increase, and that obviously is more than what customers can bare.” [bear!! although maybe customers will tear off their clothes and run naked through the legislature in protest?]
Pugh said she understands why she is paying the additional charge, but doesn’t think it should be on there for the next 15 years.
“I can’t imagine that they paid that much extra for coal that every AEP customer is going to have to pay this.”
The charge is based on how much your bill costs. Pugh’s charge was almost 11 dollars.
Ms. Pugh is only beginning to understand that now, in addition to all the old coal debt, she's also paying for other deferred regulatory assets, plus interest and fees.
We tried to stop this craziness in 2012, but customers like Ms. Pugh weren't paying any attention and took no interest in helping themselves. If Ms. Pugh had known then what she knows now, might she have picked up the phone and called her elected representative, or dashed off an email to the PSC? Probably.
Now APCo customers have the next 15 years to lament their lack of consumer education. When will West Virginia fund an effective consumer advocacy program that includes public education? Or does our legislature prefer us to remain barefoot, pregnant and chained to the coal-fired power station?
We have a lot of work to do, West Virginia!
When Clean Line Energy's Grain Belt Express shell company recently filed a notice of intent with the Missouri Public Service Commission, opposition to the project exploded.
Hundreds of landowners came together at public education meetings and the media took notice. This video was part of a story in the Kansas City Star.
The video has drawn the attention of affected landowners, citizens, elected officials, and other entities I'm not at liberty to reveal. Ut-oh, Grain Belt Express, another race lost right at the starting gate! Missouri may be your worst nightmare yet! You see, the opposition to your projects is getting better and more knowledgeable. And there are thousands of us in multiple states.
The video has also drawn the fascination of other transmission opposition groups who want to replicate it. But first, they have to determine why this video works so well.
It's the people. The KC Star used a variety of interests and personalities in their video. The people are very, very real. They aren't making complicated arguments, they are simply speaking from the heart. The emotion is raw and the viewer identifies with the landowners.
Contrast the landowners with the little vignettes of Grain Belt manager Mark Lawlor that have been interspersed here and there. At best, he's Waldo come to life, creeping around in all sorts of places, hoping you'll notice him. At worst, he's been called an unblinking alien by someone who viewed the video. Point here is that he's emotionless and boring and comes off as an uncaring corporate stooge.
It's that contrast that makes this video work so well. None of the participants had any idea during the filming that the finished product would be so brilliantly edited. It's pure kismet, and it's a home run start to Missouri's successful battle against Grain Belt Express. Well done, Missouri, well done!
It appears that FirstEnergy didn't learn a thing from its recent trip to the PSC hot seat over the company's shocking disregard for its customers who were trampled on the way to "merger synergy savings." FirstEnergy maintains that it never did anything wrong, but has magnanimously offered a few ineffectual parting gifts for its customers as a fig leaf to cover its hoped-for ruling by the Commission that would let the company off scot-free.
The PSC Staff and the Consumer Advocate Division have different ideas, and the Staff, in particular, rakes FirstEnergy over the coals in its own blistering brief. That's all fine and good, but I hope a bunch of scathing words in a brief isn't all we get out of this. Staff says:
The Companies responding to this General Investigation proceeding have provided a lot of excuses to the Commission as to why so many customers received multiple consecutive poorly estimated bills that led to dramatically high “true up” bills.
Originally, the Companies tried to convince the Commission and the public the problems
were mainly caused by the timing and size of the Derecho and Super Storm Sandy.
When the problems continued, the Companies started providing further excuses, but did
not take responsibility for their role in creating many of the problems themselves and compounded the problem further by making unreasonable demands for payments from the impacted customers. In Staffs opinion, they still have not taken that responsibility.
The Derecho and Super Storm Sandy undeniably played a significant role in the problems underlying this case. However, all along the way, the Companies made poor decision after poor decision with little to no thought as to how it might impact their customers.
These poor decisions lead to multiple and continued violations of their tariffs. Staff takes
these violations very seriously and believes it is time the Companies own up to their mistakes and provide the Commission with concrete evidence these types of problems
will not reoccur. Further, the Companies should be required to either correct the ongoing problems with their estimation routine or switch from bi-monthly to monthly meter reading.
Hurricane Sandy struck the service territories with large amounts of heavy, salt-laden, snow that tore down trees and power lines...
Really, FirstEnergy? That's a meteorological first -- it snowed heavy "salt-laden" snow on the trees and power lines? What the heck, FirstEnergy? How does that happen? How does the salt get into the atmosphere and how does it become encapsulated in snowflakes? When "salt-laden" snow melts, does it leave a residue behind? That defies common sense! Got a little carried away there, didn't you?
So, what was the REAL cause of the problems? Staff says:
It is easy, and some may say unfair, to play Monday morning quarterback with the decisions of the Companies. Staff does not believe it is unfair to do so in this circumstance. A poor decision here or there is just that, a decision that did not work out.
What we have here is something completely different, poor decision on top of poor
decision on top of devastating storms on top of more poor decisions with no management
thought of potential impacts to customers. This is a pattern of behavior. It appears FirstEnergy had a plan for integration and was determined to follow through with that
plan no matter the result. Little consideration was given to the customers, “merger
synergy savings” had to be captured. Indeed the Companies suspected as early as
September of 2012 there may be problems, but did nothing to attempt to resolve them
until April 2013. At that point, the problems had become so widespread the Companies
had no choice but to try and address them. However, shockingly, the Companies
continue to act as though they were simply a victim of circumstance. Generally, Staff believes the Commission should send a strong message to the Companies that this type of behavior will not be tolerated, that the Commission believes the Companies did indeed violate their tariff in multiple ways and that continued violations will be looked upon
The Consumer Advocate's brief
was not kind either. The Consumer Advocate is still requesting that FirstEnergy be ordered to read every meter, every month, for one year
Bad historical usage data begets bad data and, thus, CAD believes the only way to correct the problem caused by the Companies’ failure to conduct bi-monthly reads of residential meters is to obtain one year’s worth of reliable data from actual monthly meter reads. It is the goal of the CAD that this matter be resolved in the best possible manner for customers of MP and PE, who have undeniably suffered - and, in some instances, continue to suffer - the ill effects of the Companies’ meter reading and billing practices.
The Consumer Advocate also thinks the companies' storm excuses are a feeble attempt to pretend that the real culprit isn't the company's merger:
Throughout the course of this proceeding, the Companies have attempted to place the
majority of the blame for their billing and meter reading problems on the Derecho that occurred in June 2012 and Superstorm Sandy, which occurred in October 2012. However, while the storms may have exacerbated the Companies’ existing problem, it is inaccurate to contend that the storms caused the billing problems so many customers have faced. In actuality, the evidence shows that the merger of Allegheny Power into FirstEnergy in 2011 and subsequent transition issues in the wake of the merger, including understaffing, transitioning from the Allegheny billing system to the FirstEnergy billing system, and the questionable timing of the meter route “renumbering” project, created this problem.
The Consumer Advocate also noted that, contrary to the company's contentions, customer complaints have been trending up again this winter. We ain't seen nothin' yet!
Underestimations in January bills, combined with this month's prolonged frigid temperatures, are sure to cause a charlie foxtrot of unprecedented proportions in February. Enough is enough.
Even though FirstEnergy's EPRI report still seems to be suspiciously missing, it's time for the Commission to act, if nothing else than from a position of self-preservation. I'm starting to lose track of all the "let's punish the PSC" legislation that's been introduced in Charleston this session. Although we'd rather see the company punished for its transgressions, I guess someone has to take the fall for this.
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...