Norman Bay barely squeaked by a Senate vote yesterday to officially become a FERC Commissioner.  The vote on Bay was close, 52 - 45, and RTO Insider reports that it was a "party-line vote."  Just what we need... more political manipulation inside a federal regulatory agency.

Incumbent Commissioner Cheryl LaFleur was easily confirmed for a second term.

And here's where the political manipulation happened... it has been reported that a political deal was struck to allow LaFleur to remain as Acting Chairman for 9 months, at which time newcomer Norman Bay will ascend the throne.  I'm not sure what that was supposed to accomplish... what's on the agenda for the next 9 months that's so crucial?  Maybe FERC is planning a long, hysterical pregnancy of some kind. 

The Senate doesn't have any say over who is appointed Chairman, it can only confirm or deny Commissioners in general.  Or at least that's the way it's supposed to happen according to the law...

As if consumers don't already have enough problems with regulatory capture and the revolving door whereby regulated and regulator switch places with amazingly incestuous ease, now Harry Reid wants to run FERC.

Why?  In order to turn his state into the "Saudi Arabia of renewable energy," says Trib-Live.  Because none of the other 49 states want to produce their own renewables and reap the economic benefits of a distributed generation energy renaissance within their own borders.  Or maybe the other state representatives just don't have the cojones to stand up to Reid and serve their own constituents?

At any rate, it looks like the beatings will continue until morale improves.  I wonder what's going to happen to the guys at Powhatan Energy Fund now, in the wake of their very public campaign against Bay's nomination?

FERC is turning into a real circus lately.  The environmentalists have finally located the headquarters in DC and tried to block the entrance the other day.

FERC has even been serenaded.

I think this situation calls for more lobbyists!  Or perhaps just some comedy...

Read the recent
Motion to formally Lodge this as the longest filing name in Commission history, where a former energy insider has gone rogue and spills... in a most delightfully humorous way.

I am just a private citizen with an unnatural interest in (a fetish, if you will) and some history in dealing with unreserved use.  I apologize to any and all for my cheekiness and informality, but I ain’t getting paid to do this and if I never see the information for which I am asking I will not miss any meals.  With that said, I’ve got nothing better to do except enjoy a glass of tequila and write this quickly, so here goes....
Whatever happened to regulation in the interest of protecting consumers?

Is that song stuck in your head now, too?
 
 
In a predictable move, the U.S. Court of Appeals for the 7th Circuit kicked the Illinois Commerce Commission v. FERC can back to Washington today.

This case has been dragging on for nearly 5 years.  When it first started, ratepayers in PJM's Illinois territory were looking at sharing a huge chunk of the cost of PJM's multi-billion dollar Project Mountaineer collection of unneeded transmission projects.  Although the bill has shrunk considerably with the cancellation of PATH and MAPP, the argument has only grown.

It centers on PJM's 2006 adoption of the "postage stamp" cost allocation methodology.  This method assigned costs of new transmission 500kV or greater to all ratepayers in the region based on their share of regional electricity sales.  The more power an area used, the greater its share.  PJM did this to spread out (socialize) the cost of its Project Mountaineer venture over more customers so it could get that transmission built before the hoi polloi noticed, "before it became common dinner table talk."

However, it's important to realize that PJM no longer uses the 100% "postage stamp" cost allocation method and hasn't since last year.  Today's 7th Circuit decision will have no effect on any proposed or future transmission projects in PJM, or any other RTO.  Today's decision will only affect those projects that were built (or not!) before last year's new allocation method went into effect.  PJM's new, FERC-approved cost allocation methodology relies on a 50-50 split of two different methods for transmission lines of at least double-circuited 345kV or greater.  The first 50% is allocated according to the old postage stamp method, and the remaining 50% is allocated either to the cost causers or the beneficiaries, depending on the reason for the project.  Costs for transmission projects based on "public policy" clean energy state laws will be allocated to the states that require them under PJM's "State Agreement Approach."  If a state doesn't agree to shoulder the cost burden for a project designed to meet its renewable portfolio standard, then it will not be built.

Today's decision echoed the first remand from the 7th Circuit, that found that FERC had not done enough to show that utilities in "western PJM" received benefit from Project Mountaineer that was commensurate with their cost responsibility under the old "postage stamp" allocation method.


FERC dealt with the first remand by rolling its eyes and making up more crap about how "western PJM" benefited from Project Mountaineer.
  It pulled an even bigger diva act on rehearing.  But FERC just can't out-diva Judge Posner of the 7th Circuit.

Posner hates coal, and transmission lines that carry it.  But, he loves postage stamp rates for transmission lines that are supposed to be "for wind."


This Sybil act must also be confusing to FERC, but hopefully they can get it right this time... because third time's a charm, right?

Go ahead, read today's decision.  It's quite chatty and reads like some guy's geeky blog post about electricity and cost-benefit analyses, until you get to the 9-page dissent by
Judge Cudahy, who seems to be writing from the other side of the political spectrum.  It's fairly entertaining.  However, I suspect FERC is not as amused as you are.

 
 
Sorry, you're going to have to do your own analysis on this one.

A story in the New Haven Register reports that the ruling is a setback for New England ratepayers.

Here's the dissent of Commissioner Norris mentioned in the article:

He's concerned, "...that this determination subjects consumers to unjust and unreasonable rates in this proceeding and potentially in future ROE proceedings."

Here's a geekier article about it.

Here's the entire Order, for those with "super geek" status.
 
 
After enough wrangling to make a cowboy cry, the Senate Energy and Natural Resources Committee confirmed the nomination of Norman Bay as Chairman of FERC... as long as he keeps the training wheels on his regulatory tricycle for the next 9 months.

Bay can be a FERC Commissioner, as long as Acting Chairman Cheryl LaFleur gets to continue to "act" for the first 9 months of Bay's tenure.

RTO Insider has the best coverage of today's events here.

RTO Insider notes that our own Plastic Senator Joe Manchin sold out in a hurry.
Among those who had expressed concern over Bay’s limited energy policy experience was Manchin, who helped sink the bid of Obama’s previous nominee, former Colorado regulator Ron Binz.

That sparked a flurry of negotiations over the last several days among the White House, Murkowski and Energy committee Chair Mary Landrieu (D-La.), which resulted in the president’s concession not to appoint Bay chairman immediately.
Poor, old Plastic Joe.  Some days, he just can't seem to make up his mind.
 
 
I came across an interesting FERC filing the other day.  It's about something called "unreserved use," which is kind of a geeky, complicated subject, but the real issue here seems to be FERC's deference to one of its regional transmission operator pets, and a contradiction about whether specific information should be public or privileged.

Now where else has FERC had issues with that lately?

Unreserved use is failing to reserve transmission before utilizing it, so planners cannot account for the usage until they see it in real time, some call it "leaning on the system."  In most tariffs, a company gets a 200% penalty for the extra stuff it puts on the system.  FERC has asked that RTOs annually account for those penalties.  FERC also wants the RTO to distribute the penalty amounts to non-offending customers, so it's a two-pronged incentive to follow the rules.

In FERCenese, here's how it's supposed to work:
In Order No. 890, the Commission required each transmission provider to report its operational penalty assessments and distributions in an annual informational filing. The annual filing must contain the following information: (1) a summary of penalty revenue credits by transmission customer; (2) total penalty revenues collected from affiliates; (3) total penalty revenues collected from non-affiliates; (4) a description of the costs incurred as a result of the offending behavior; and (5) a summary of the portion of the unreserved penalty revenue retained by the transmission provider. Each transmission provider must report on its penalty assessments and distributions in an annual compliance report submitted on or before the deadline for submitting its FERC Form No. 1.
Sounds rather routine, right?  Except that some RTOs make their compliance filing as a public filing, but MISO has decided that its compliance filing is privileged because:
MISO contends that this type of information could be used by other "MISO market participants to discern trading patterns, and even trading strategies, adopted by other MISO market participants.
Well, yee-haw, cowboys!  SPP files this information publicly!  Cue the crooked traders.... And PJM has NEVER even made a compliance filing.  FERC has so many clear rules it doesn't try to enforce, yet sticks its nose into the murky but headline grabbing world of supposed market manipulation where it doesn't even know its own rules.

Just what IS it about MISO's unreserved use filing that can't stand public scrutiny, anyhow?  Something doesn't add up here...
 
 
Our friends at Clean Line have been as busy as a nasty nest of yellow jackets this past week, while I was tied up with other things.  So, on this beautiful Sunday, let's hunker down around the campfire and catch up on some scary stories...

My multilingual, Arkansan friend, Doc, alerted me to an interesting discovery this week.  Clean Line's project manager for its Plains & Eastern "Clean" Line, slated to plow through Arkansas like Godzilla on his way to Tokyo, is a Mr. Mario Hurtado.  In the Spanish language, the word "hurtado" means "to steal."  So, Clean Line is sending out some guy named "to steal" to... ummm... steal land from Arkansans.  Brilliant!  Perhaps Clean Line watches too many old movies and expected its opponents in Arkansas to behave like movie characters...
...and not like multilingual PhD's.

So... Arkansas... Beware the Hurtado!

My friend Doc says he looks like this:
Meanwhile, in other "Clean" news from Arkansas...
"Clean" Line has submitted a second application for negotiated rate authority from the Federal Energy Regulatory Commission.

I guess their first one wasn't good enough, since they didn't even bother to mention it in their new filing.  So, inquiring minds want to know... is "Clean" Line just stupid, or are they trying to pull something on FERC?

Negotiated rate authority is no big thing, though.  It simply bangs out a plan for the company to negotiate rates with potential customers in a fair and non-discriminatory fashion.  It doesn't get them any customers.  It is not an "approval" of the project.  FERC's only authority over this project is ensuring its rate structure is fair.  FERC has no authority over the siting and permitting of this project.  Big deal, Mr. To Steal.

And, news from Missouri...

"Clean" Line has been quoting industry-influenced WHO studies as "proof" that their transmission projects will have no health effects on nearby residents.  However, a well-respected, local physician has been compiling and reviewing medical research on the health risks of the proposed "Clean" Line.  The Moberly Monitor did an indepth report about what Dr. Smith has found.  Shocking and dangerous!  Dr. Smith's findings are a MUST READ for every person in proximity to one of these "Clean" Lines.

Other news outlets have also picked up on Dr. Smith's EMF research, and the truth is spreading like wildfire!  SeeABC News, the News Democrat, and about 18 other major news outlets.

"Clean" Line needs to finish watching the movie that they've been using as the basis for their arrogant expectations of the intelligence and cunning of their local opposition.  They must not have watched far enough to see this scene yet:
 
 
RTO Insider has a special report about yesterday's Senate Energy and Natural Resources Committee hearing on the nominations of Cheryl LaFleur and Norman Bay to the Federal Energy Regulatory Commission.

Bay has been publicly criticized by twin investment fund managers Kevin and Richard Gates, who have been under investigation for market manipulation by Bay in his capacity as Director of FERC's Office of Enforcement, without being officially charged.  The Gates have recently made their case public in an effort to stymie Bay's nomination.

In LaFleur Cruises, Bay Bruises in Confirmation Hearing, RTO Insider reports:

When Bay stood up to be sworn in, Richard and Kevin Gates — the twin hedge fund managers whose case Scherman cited as exhibit A — were sitting in the row behind him. Richard was on camera, over Bay’s shoulder, during the entire two-hour hearing.
There's even a photo.  It looks to me like the Gates brothers attempted to make Bay slap himself during the hearing through the power of telekinesis.  Go see the picture for yourself! 

Meanwhile, West Virginia's Joe Manchin used his time to talk about his master, coal.  I wonder what coal thinks about Norman Bay?
 
 
Clean Line Energy Partners is making a big deal out of FERC's conditional authorization of its proposal to negotiate rates for its Grain Belt Express project.  Of course, this isn't surprising -- Clean Line has shown great expertise in "miscommunicating" the actual meaning of its regulatory activities in an effort to make it appear that regulators and other entities "approve" of its project, or require it to be built.

What is surprising is that Clean Line has chosen to further its "miscommunication" that its project capacity is only available for transmission of wind energy.  You'd think they might be thankful to have dodged the discrimination bullet for the time being and show more decorum, but no, not Clean Line.  It appears that the company has interpreted FERC's action of kicking the discrimination can down the road to mean that FERC won't enforce its own regulations later, or simply doesn't care.

Clean Line's press release claimed:
The Grain Belt Express Clean Line (Grain Belt Express) is an approximately 750-mile, overhead direct current transmission line that will connect wind energy from western Kansas with utilities and customers in Missouri,  Illinois, Indiana and states farther east.

Receiving this authority will allow Clean Line to sell transmission capacity to potential customers of the project, including utilities and other load serving entities or clean energy generators.

The Grain Belt Express is estimated to enable more than $7 billion of investment in new wind farms.  Clean Line recently issued a Request for Information (RFI) to wind generators in the western Kansas
region, and results confirmed the need for transmission to access larger markets for renewable energy.  Developers of wind projects totaling over 13,500 MW of potential capacity shared information on high
capacity factors and cost-competitive wind energy prices. The combined capacity of these wind projects under development could fill the Grain Belt Express line over three times.
So, what are you saying here, Clean Line?  That "clean" wind energy will fill your project over three times before you allow any competition from other generators?  Naughty, naughty!

Back in March, when GBE's FERC application was still pending, the Missouri Landowners Alliance filed a protest, informing the Commission that GBE had been soliciting interest in its project exclusively from wind generators in contravention of FERC's open access policies.  FERC requires transmission owners to provide non-discriminatory transmission access to prevent gaming of electricity markets.  A transmission owner is like the highway toll collector, and may not pick and choose which cars can use its road as that would allow the toll collector to give preference to the cars that increase its market share, profits, or any other criteria it values.  Therefore, GBE must offer its capacity to ALL generators equally, not just those producing electricity at wind farms.

In response to the protest, FERC said:
We find that Landowners’ concerns are based on speculation as to Grain Belt Express’ solicitation efforts, which Grain Belt Express  has not fully implemented. Grain Belt Express has not proposed in its application, and we do not approve, selection or ranking criteria based upon the type of generation that a potential transmission customer might seek to interconnect. That Grain Belt Express has posted an inquiry about potential wind development in Kansas does not prove that Grain Belt Express intends to exclude other resources, and it is premature to judge now the totality of its solicitation efforts. As Landowners have recognized, the Commission has previously disapproved of a proposal that would include a preference for renewable resources as part of a transmission owner’s open season criteria where the transmission owner did not justify such preference. [Rock Island Clean Line] As discussed elsewhere in this order, Grain Belt Express is required to make a filing after the conclusion of its solicitation process that demonstrates compliance with the commitments made in its application, and any concerns that Grain Belt Express has unduly discriminated against non-wind resources can be addressed in that proceeding.
FERC has merely kicked that can down the road for the time being.  FERC's Order is only a conditional authorization for GBE to negotiate to sell capacity, contingent upon the company making the required compliance filing after it sells its capacity.  In that filing GBE bears the burden of proving that it complied with its own plan to publish broad notice of its project to ALL generators, and that its selection of customers was non-discriminatory.

FERC's "approval" ain't no big thing.  Any legal monkey could have concocted a "plan" to negotiate transmission rates using prior FERC orders.  As more than one lawyer has told me, creating legal filings is mere mimicry of prior filings that were successful.  The real "approval" from FERC may only come after GBE has properly conducted its negotiations as per the plan and made its compliance filing without attracting protests or complaints that GBE discriminated against certain customers.  Good luck there, Clean Line ;-)

Of course, authorization to negotiate rates does not equate to the ability to do so.  GBE still needs approval from every state in which it intends to build its project, including Missouri and Illinois.  It needs to put a real price tag on the cost of its project so that the fantastical business plan can generate profits by selling its service.  It needs some customers, either generators (that don't exist), or utilities wanting to buy power from the non-existent generators.  It has none, and is not actively seeking any at this time.
“FERC’s jurisdiction is pretty much limited to making sure that the process of selling transmission rights is open and transparent and non-discriminatory,” said Mark Lawlor, director of development for Clean Line Energy. “To make sure we aren’t building lines to give some competitors an advantage that others don’t have access to.”
Company officials don’t expect the line to go into commercial operation until 2018, but with FERC approval the company can begin talks with potential customers, Lawlor said.
The exact method for selling capacity on the line or how it will be priced hasn’t been determined, he said.
In the meantime, the company continues to work its way through state regulatory processes, he said.
This is not a "federal approval" for GBE's project.  Words on paper need to be followed through with actual deeds.  Do you think Grain Belt Express will be able to deliver on its promise to FERC?
 
 
It looks like there's a new wrinkle in Obama's latest nomination for FERC Chairman.  Norman Bay, the current Director of FERC's Office of Enforcement, was nominated after last year's Binz bungle.  The Senate will hold confirmation hearings on Bay's nomination this month. 

Binz got raked over the coals *heh* by the Senate, and our dear Senator Manchin sided with his friend coal, effectively killing Binz's nomination.  I wonder how Norman Bay feels about coal?

But, coal may be the least of his worries, as it appears he has a different group of folks opposing his nomination.

Did Obama's New FERC Nominee 'Criminalize' Energy Regulation? (Forbes)

Going Public: Powhatan Energy Fund’s "Insurance Policy" Regarding FERC Enforcement’s Non-Public Manipulation Investigation Into The Fund’s "High-Frequency" PJM Trading Activity (Mondaq)

With confirmation hearing set, Obama's pick to lead agency faces uncomfortable questions (E&E)

The Investors at War With Political Power:
How a once-obscure federal agency targeted two brothers, and what happened when they decided to fight back in the age of Obama
(Wall Street Journal)

If You Have a FERC Problem, Maybe Don’t Hire a FERC Lawyer (AboveTheLaw)

FERC’s Prosecutorial Tactics (Cato Inst.)

Read more here.
Well... ut-oh.
 
 
Remember, little ratepayer and property owner, you're a PJM "stakeholder," too, and you should be participating in the planning process that at some point in the future may require you to sacrifice a right of way through your private property, or pay for big, new transmission lines of questionable benefit to you.

It's another hot time at the expensive, luxury hotel for our "stakeholders," where market power players and their toadies will be turning out in their best "resort casual" wear to partake in free leisure activities sponsored by the corporations that make big profits from the cartel.
You are cordially invited to attend the 2014 PJM Annual Meeting of Members to be held at the Hyatt Regency Chesapeake Bay. Please note that the dress code is “Resort Casual”. The program will be similar to last year's event starting on Tuesday, May 13 with registration and an Opening Reception and ending on Thursday, May 15 with the Members Committee meeting and buffet luncheon.

On Wednesday, May 14 we will have the General Session followed by lunch and leisure activities. Thanks to the generosity of our sponsors, each attendee may select one leisure activity at no cost to themselves. The following leisure activity selections will be available for choosing onsite at the registration desk and will be filled on a first-come, first-serve basis.

Golf
Spa
St. Michael’s Winery/Tour
Fishing
Biking
Kayaking
They forgot to add extracting obscene profits from consumer pockets, but maybe that's not a leisure activity; instead it's one that requires hard work.

So, what do the PJM aristocracy do at these meetings, when they're not participating in leisure activities, receptions and luncheons?
They review the past year of incumbent electricity conglomerate rule.  They "train" your Consumer Advocates.  They eat dinner and hand out golf awards.  Then they have entertainment night with desserts.*  I think it would be pretty entertaining to give a couple of sponsor CEOs a pie in the face, but that's probably not what PJM has in mind.  They also allow the well-funded environmental elite to perform a song and dance for the assembled dignitaries, but no one really pays any attention to it, although that never stops the "public interest group" PIGs from believing that this year's production will be the one that convinces everyone to pay even more for "clean" electricity. 

So much glib self-congratulation at your expense, so little time.  If your electric supplier is one of PJM's meeting sponsors, run (don't walk!) to sign up for one of the free leisure activities.  You're probably paying for it in your electric bill anyhow, might as well enjoy.

And what are the worker bees doing at PJM while the lords and ladies play on Maryland's Eastern Shore?  They're holding PJM's annual capacity market auction, where the prices consumers will pay to have generation resources available in 2017-2018 will be determined.  Where prices may end up seems to be a matter of opinion.  Incumbent generators have been plagued by low prices in previous auctions.  PJM's market monitor says the capacity market is broken and has championed several changes that have been recently approved by FERC to raise prices. 

PJM has instituted a limit on imported capacity that is supposed to stop the flood of bids from generators in other regions that have been gaming the market by receiving revenue for resources they can't deliver, or resources controlled by other regional operators (yes, big wind, they're talking about y-o-u).  Oh, go ahead, read more about it here, but first a little mood music to help you prepare.  Sorry about that, but it was actually a pretty concise explanation of PJM's reasoning for the CIL.

The other change is supposed to "result in the more efficient and flexible use of demand response," but will probably just drive some resources from the market altogether.  Because demand response lowers overall demand at times of peak use by paying participants to reduce their load, this means that more actual generation capacity will be needed.


But some generators aren't optimistic that the changes will do much to raise prices enough to satisfy their greed and save their bacon.  Some generators seem to want more.

And if you think all this capacity auction stuff is about as exciting as watching paint dry, you're not alone.  This blogger so thoughtfully compares PJM's capacity markets to steroids in baseball so that we can understand it:

PJM admits that steroids are endemic to the game but then recalculates the final score of the game based on what they believe the outcome would have been if the players were not on steroids.
Maybe PJM should just be doing more of this, and less of this.

*Update!  PJM has changed its agenda today.  It no longer says "Entertainment night with desserts."  Now it says "Dessert Reception and Lawn Games."  I guess FirstEnergy showed up with the