That's what former Secretary of Energy Steven Chu had to say about claims that distributed solar was making the grid unstable.
“That’s another bullshit argument,” said Chu, a Nobel Prize winning physicist who served as energy secretary from 2009 to April, 2013. Solar installations don’t threaten grid stability until they approach 20 percent of the customer base, Chu said.
Finally released from officialdom, Chu is no longer telling utilities what they want to hear, but what they need to hear.  Feels, good, doesn't it, Dr. Chu?

Chu has some sage advice for utilities:  To ward off the inevitable "death spiral," they need to get into the rooftop solar business.

Chu said his advice has been met by utilities one of three ways:
“Tell us what to do.”
“Deer in the headlights.”
“We’re going to fight this.”
What was your utility's response?

Isn't it refreshing that former high ranking energy officials are loosening up and telling the truth now that they can?  Former FERC Chairman Jon Wellinghoff is also under fire for giving away energy industry "secrets" about the vulnerability of our centralized electric generation and transmission system.

This isn't just some random crackpot who overdosed on the Metamucil, but two guys who had their finger on the pulse of our electric system for years.  It's rather telling that the industry and governmental officials are screaming foul when two of their own finally break rank and spill.  The regulated and the regulator are way too cozy in this country.  Denying the advice of those who know the system best, when they are finally free to give it, is a head in the sand approach to disaster. 
 
 
Customers in the deregulated states of Illinois and Ohio are up in arms about FirstEnergy's plan to stick it to them with a $5 - $15 one-time charge to pay for what it says are "unexpected costs incurred during the polar vortex."

"FirstEnergy Solutions is preparing to bill about 2 million of its 2.7 million retail customers a surcharge for expenses the company will soon have to pay for reserve power it needed when temperatures plummeted below zero."  2,000,000 x $15 = $30M

That's $30M being transferred from consumers pockets into the pockets of FirstEnergy.  A company spokeswoman opined, “We consider that pretty nominal.”

I wonder if she also considers CEO Tony Alexander's annual $23M compensation "nominal."  If the big guy took a pay cut, it would almost cover the cost of the "polar vortex," wouldn't it?


Crain's described the reason for the charge like this:

"The company confirmed that it will impose a one-time charge of between $5 and $15 on customer bills in June to recover a portion of its power-purchasing costs made through PJM Interconnection LLC's regional grid, which serves 61 million people in all or part of 13 states from northern Illinois to the Mid-Atlantic, as well as Washington. In January, PJM — which acts as a market referee for power generators — lifted caps on the price natural gas-fired power plant operators could charge as the cost of gas soared due to record demand, and electricity consumption likewise spiked.
"

The Plain Dealer described the reason for the charge like this:

"When the arctic blast hit the region in early January, demand for electricity spiked - and simultaneously dozens of power plants failed because of the weather, mechanical problems or because of fuel problems.

About 20 percent of the PJM region's power plant capacity went down, he said, threatening the stability of grid. And because the cold was widespread and lasted many days, PJM grid operators found that they could not import power from other areas.

Wholesale power prices then skyrocketed. PJM reduced voltages by 5 percent, asked for voluntary conservation and even briefly considered rolling brownouts to avoid a grid collapse and blackout.

But PJM also ordered more expensive power plants to begin generating, just to keep the system stable, he said
." 

But here's another reason:

FERC compounded the problem by lifting a $1000 price cap and allowing these greedy corporate entities to further game PJM's malfunctioning markets.  FERC has allowed generators to charge whatever they want, and is in denial about any "harm" that may result: 

"FERC said PJM's proposal met the commission's criteria for approving waivers, as doing so would remedy a 'concrete problem,' would not harm third parties and would be limited in scope."


It's really not sounding very "limited in scope," is it?


In addition, FirstEnergy ended up purchasing so much expensive power because many of its generation plants were out of service.  Where does FirstEnergy's fault in that end and the consumer's responsibility for the charges begin?


Not all electric companies are passing these "polar vortex" charges on to their customers, however.  But, FirstEnergy is shuckin' and jivin' like a champ
on a "special website" the company has set up to serve you some koolaid, as well as in the media:

"
Francis of FirstEnergy Solutions declined to say how much her company has been billed by PJM, except to describe the amount as unprecedented. She said the company is passing on only a portion of the charge to customers."

FirstEnergy also said the company has no idea how much it will have to pay
.

"Ms. Francis declined to say how much in unanticipated vortex-related costs FirstEnergy Solutions must pay, saying that figure was confidential. FirstEnergy will know next month precisely how much the surcharge will be, she said."

Yes, it seems that the real cost to FirstEnergy is going
to remain a deep, dark secret, not even revealed to the company's investors.

That's because:


"We thought it was necessary to pass through these costs to customers where contracts allow,” FirstEnergy spokeswoman Diane Francis said."

Necessary?  FirstEnergy thought using the fine print in its contracts to stick it to customers in deregulated states was so very funny during its last earnings call.

Steve Fleishman - Wolfe
Yeah. Hi, good afternoon.

Tony Alexander - President & CEO
Hi, Steve.

Steve Fleishman - Wolfe
Hi, Tony. I guess this question might be for Leila. I think you mention the PJM ancillary cost that some of those get pass through the customers?

Leila Vespoli - EVP, Markets, and Chief Legal Officer
Yes.

Steve Fleishman - Wolfe
Is that just in certain states or how does that work? How do we know which areas get pass through or not?

Leila Vespoli - EVP, Markets, and Chief Legal Officer
It is pursuant to contract in a specific language within the contract so it is not a state by state kind of thing, Steve.

Steve Fleishman - Wolfe
Okay. So it is certain types of your customer classes?

Leila Vespoli - EVP, Markets, and Chief Legal Officer
In?

Steve Fleishman - Wolfe
In a retail business?

Leila Vespoli - EVP, Markets, and Chief Legal Officer
It is not even the same throughout particular classes.

Steve Fleishman - Wolfe
Okay.

Leila Vespoli - EVP, Markets, and Chief Legal Officer
It is as that contract language was developed for that particular customer or grouping of customer. So there is no way I can even give it to you by segment.

Steve Fleishman - Wolfe
Okay. So some of the cause when you get this data come up will be cause that you absorb but some of those would be available to essentially pass through your contracts to the customers?

Leila Vespoli - EVP, Markets, and Chief Legal Officer
Correct.

Steve Fleishman - Wolfe
And in the future, do most of your contracts have that clause, so new ones do or not older ones or vice versa?

Leila Vespoli - EVP, Markets, and Chief Legal Officer
I think it would be safe to say that we are going to be adding that language where we can in the future.

Steve Fleishman - Wolfe
Got it. Okay. Thank you. Just want to clarify that.

Leila Vespoli - EVP, Markets, and Chief Legal Officer
Okay.
So, if you don't want to get stuck with these kind of charges in your deregulated electric bill again, do like the City of Rockford and look for a new supplier ASAP.
 
 
Opponents of FERC's Order No. 1000 made oral arguments before the D.C. Circuit Court of Appeals last Thursday.

Order No. 1000 requires interregional transmission planning and broad cost allocation, introduces competition to build transmission, and mandates "consideration" of state renewable energy goals to allow regional planning authorities to interpret and decide how such goals may be accomplished with long distance transmission, instead of in-state resources.  And they wonder why there's been a run on repeal of state RPS laws this year?


A few oral argument summaries have popped up online that seem to agree that the Court pretty much gave the authority and ROFR arguments the hand.  Reporters also agreed that opponents' cost allocation arguments fared better.

Read the RTO Insider summary.

Read an E&E summary.

Cost arguments drone on about eliminating "free ridership" whereby some electric consumers may receive benefit from an interregional transmission project but not have to pay for it.

That same argument could be used for the "free ridership" of some electric consumers who receive benefit from new transmission lines but don't have to sacrifice their land, homes, businesses, and health for the "good" of others.  There are a multitude of unrecognized "costs" of transmission that aren't monetary and cannot be sufficiently compensated by one-time right of way payments.  But I don't think anyone bothered to stick up for sacrificial landowners at the D.C. Circuit.

Unless the Court reins in FERC's heavy-handed transmission exuberance, the arguments will continue.  This will tie the matter up in the courts forever and result in nothing of substance getting built.
Utilities and groups also contend that FERC is infringing on states’ rights because several states already regulate transmission planning. FERC countered that the order would not interfere with state authority, and if the state vetoed a project, it wouldn’t be built.
States will continue to exercise their authority over siting and permitting, denying projects that provide no local benefits.  And the feds will continue trying to usurp state authority through Secs. 1221 and 1222 of the Energy Policy Act.  Isn't this where we've been stuck for years now?

When are the needs of consumers going to be considered?  Consumers aren't buying the specious arguments that billions of dollars of new transmission provide benefit to them.  In fact, more and more consumers are taking steps to check out of the grid and invest in their own onsite generators.  Only then will these ridiculous and expensive arguments end.  Meanwhile, fight on fellas.

You can listen to a recording of the 3-hour oral argument here, if someone's paying you gobs of money to stay awake and pretend you care (or if they're not, you can do it anyhow if you have a 3-hour supply of tasty alcohol on hand, and a twisted sense of humor).
 
 
The Missouri Landowners Alliance has retained excellent counsel to defend its interests against the intrusion of Texas-based Grain Belt Express.

After a long career with a big utility, attorney Paul Agathen brings a wealth of experience to the Alliance's legal team.  Paul has gone on the offensive with a Protest of the Grain Belt Express Application for Negotiated Rate Authority at the Federal Energy Regulatory Commission and a Formal Complaint before the Missouri Public Service Commission alleging that Grain Belt Express has violated and continues to violate the Commission's rules regarding ex parte communications.

First, let's take a look at the FERC Protest.  As a merchant (self-funded) transmission project, Grain Belt Express must concoct its own rate scheme to recover its cost of building and operating its proposed transmission line from customers.  GBE's rate scheme is under the jurisdiction of the FERC and must adhere to FERC's rules, including its non-discriminatory open access transmission rules.  GBE's rate scheme proposes that the company be allowed to negotiate rates with willing transmission customers in a open and non-discriminatory bidding process.  FERC's job is to review and approve GBE's proposed negotiation process BEFORE it occurs.

And, according to the protest, that's just the problem.  Although GBE hasn't "officially" initiated its "open season" for potential customers, GBE has already started soliciting interest from its preferred customers via a "Request for Information" directed solely toward wind project developers in Kansas.  Directing its solicitation to only wind developers discriminates against other forms of electric generation, such as solar or gas, that could potentially bid for capacity on GBE's transmission line.  This discrimination violates FERC's open access transmission rules.

GBE has been doing an elaborate fan dance with FERC, promising to provide access to all forms of generation, while touting its project as a "wind only" transmission line and soliciting interest from wind developers.

The Alliance's Protest asks that the Commission determine that GBE's proposed solicitation of customers is unduly discriminatory and dismiss GBE's application for negotiated rates.

Without negotiated rate authority from FERC, GBE will have no way to collect its cost of service.  No money, no GBE.

Moving on to the Missouri PSC Complaint, the Alliance alleges that GBE has been violating the Commission's ex parte rules.  Ex parte means "one side only" and refers to communication between the decisional authority and only one of two (or more) parties in a case.  It's like one person getting to have a private conversation with the judge in order to sway his opinion against the other person.

But that's not exactly the way the Alliance alleges GBE has violated this rule.  The ex parte rules state:
It is improper for any person interested in a case before the commission to attempt to sway the judgment of the commission by undertaking, directly or indirectly, outside the hearing process to bring pressure or influence to bear upon the commission, its employees, or the presiding officer assigned to the proceedings.
The Complaint alleges that GBE violated this rule through its extensive public relations campaign intended to influence public opinion through statements on its websites, the gathering of boiler plate letters of support for its project, public statements and media interviews, and meetings with local government officials.

The Alliance is not objecting to GBE providing legitimate information to the public:
The Alliance is not objecting here to  everything on the two Grain Belt websites.
It recognizes, for example, that it is perfectly acceptable for Grain Belt to provide  nonargumentative factual descriptions of the Line and its supporting towers; to include maps of the alternative routes of the Line; to provide information for potential suppliers of
component parts for the line; and to address any other matter which is not likely to be a
contested issue at the forthcoming  Commission hearings.
The Alliance is objecting to GBE's elaborate public relations campaign:
As is apparent from all of the above, Grain Belt has engaged and continues to engage in an elaborate PR campaign designed to sway public opinion on matters which it will litigate in the forthcoming Commission proceedings. Their campaign is extensive, it is expensive, and it is professionally managed in all of its various aspects. They have even incorporated Facebook and Twitter into their PR arsenal, and added links in their website to a number of video presentations.

For example, it its Application to the FERC for approvals regarding the proposed Line, Grain Belt refers to their video "that describes the need for the Project and how Grain Belt Express will bring significant economic benefit to states through much-needed transmission expansion for new wind energy projects .... " (Exh. 23, p. 8).

This description of the Grain Belt PR efforts is not intended in the pejorative sense at all. The Grain Belt publicity campaign is undoubtedly effective, and will no doubt accomplishing two of its principal goals: to sway public opinion on the Line in Grain Belt's favor, and to thereby convince members of the public to sign on to the computer-generated letters of support which Grain Belt will file with the Commission.

The letters may have no effect at all with the Commission. However, the ultimate impact of Grain Belt's efforts should not be the deciding question here. If Grain Belt has violated the Commission's ex parte rules, their conduct should not be excused by some sort of "no harm, no foul" escape clause.

We may never know how many people in Missouri were exposed to and influenced by Grain Belt's one-sided presentation on issues which they themselves will raise later at the Commission. Nor could the Alliance ever hope to present its own position to all of the people reached by Grain Belt. Grain Belt has been waging an extensive PR campaign for about four years, and will likely win that battle.

Just how Grain Belt has gone about doing so is illustrated in materials presented at a recent conference in Houston, where participants spent two days learning various techniques for "selling" a transmission project to the public.
A copy of the initial brochure for that  conference is attached here as Exhibit 18.
As noted on the first page, the conference was held this past January, and was to be
hosted by Grain Belt's parent company- Clean Line. As noted at page 3 of that brochure, the keynote speaker at the conference was to be the Executive Vice-President of Clean Line.

According to the brochure, this is a sample of what those involved with building and siting transmission lines were to learn in Houston:

• How best to utilize social media to "engage the public", including who you can expect to reach, and how to go about doing it. (Exh. 18, p. 4) Not surprisingly, an expert in social media from Clean Line was to be one of the two speakers on this subject.
• How to deal with people disparagingly referred to as "NIMBYs" and "BANANAs". Ironically, the audience at that session was also told that a driving force behind the emergence of community-based opposition groups has been the push to build more infrastructure to support more renewable energy. (Exh. 18, p. 4).
• In "Marketing to Mayberry" the attendees would learn, among other things, how to talk down to people in small town, rural America, by communicating with them "in a conversational tone rather than corporate tone ... "  Presumably, these techniques were designed with the citizens of rural northern Missouri in mind.
• "How to frame and 'sell' infrastructure projects ... ", and how to use "effective
strategies and tactics, and share in critique of on-camera training ... "
• How to deal with the media, including:  "Getting into a reporter's head"; "How to answer questions you don't want to be asked"; and how to "position" your message to the media. (Exh. 18, p. 6)
• Finally, the Executive Vice President from Clean Line was to explain "how to ensure that our stakeholders feel they are informed and part of the process". (
emphasis added). Apparently, it is not important to Clean Line that stakeholders actually be informed, or actually be involved in the process, so long as they are somehow made to feel that they are.

The Complaint asks the Commission to find that GBE violated the ex parte rules, order it to revise its websites to conform to the rules, "that the letters of support included by Grain Belt with its Application for
Commission approval of the Line constitute the fruit of a poisonous website, and be therefore stricken from the record in that case,"
and other just and reasonable relief.

Everyone needs to read this Complaint.  The uneven playing field on which transmission owners and the public who oppose them do battle has been clearly defined as unfair.  This is the new normal of transmission opposition, so transmission developers may as well get used to it and turn over a new leaf to play fair.
 
 
Over the past year, confidential settlement discussions have been held at FERC between PATH and parties to the consolidated case of PATH's request to recover $121M of  abandoned plant, and the three Formal Challenges filed by Ali & Keryn seeking return of $11M they allege was wrongly recovered by PATH between 2009 - 2011.

This morning, the settlement judge issued a report informing the Commission that the parties "
...have reached an impasse in their efforts to reach a settlement in Docket Nos. ER09-1256-000 and ER12-2708-000.  Accordingly, I recommend termination of settlement proceedings..."

Therefore, the next step is for the cases to proceed to "a public trial-type evidentiary hearing."

 
 
Much to the Federal Energy Regulatory Commission's chagrin, Wall Street Journal's Rebecca Smith continues exposing our dangerously centralized grid's foibles.

WSJ published another article yesterday that said "[t]he U.S. could suffer a coast-to-coast blackout if saboteurs knocked out just nine of the country's 55,000 electric-transmission substations on a scorching summer day, according to a previously unreported federal analysis."

To read the article, plug this phrase into Google: "U.S. Risks National Blackout From Small-Scale Attack" If the WSJ really wanted the public to be aware of their investigative journalism coup and foment an army of misguided public outrage, it shouldn't stick all its articles behind an easily avoided pay wall.  Just a suggestion.

The article seems to have drawn its information from "sensitive" FERC documents:
A memo prepared at FERC in late June for Mr. Wellinghoff before he briefed senior officials made several urgent points. "Destroy nine interconnection substations and a transformer manufacturer and the entire United States grid would be down for at least 18 months, probably longer," said the memo, which was reviewed by the Journal. That lengthy outage is possible for several reasons, including that only a handful of U.S. factories build transformers.
Acting Chairman (woman?) Cheryl LaFleur was quick to reach out and slap WSJ for its impudence by issuing a statement that read, in part:
"Today’s publication by The Wall Street Journal of sensitive information about the grid undermines the careful work done by professionals who dedicate their careers to providing the American people with a reliable and secure grid. The Wall Street Journal has appropriately declined to identify by name particularly critical substations throughout the country. Nonetheless, the publication of other sensitive information is highly irresponsible. While there may be value in a general discussion of the steps we take to keep the grid safe, the publication of sensitive material about the grid crosses the line from transparency to irresponsibility, and gives those who would do us harm a roadmap to achieve malicious designs. The American people deserve better."

In response to the WSJ's last grid vulnerability expose, FERC Commissioners issued statements on February 20 designed to quell panic and a rush to throw money -- your money -- at the security risk posed by our interconnected grid that is currently being designed to support Enron-style energy trading.  Only one of the Commissioners showed an understanding of the real underlying problem.  Commissioner Norris noted that efforts to decentralize the grid would address resiliency:
“To address physical vulnerability, it is also important to focus our efforts on modernizing our electric grid. Building the grid of the future will play a key role in addressing multiple security and reliability threats or situations. We should look to further deployment of phasor measurement units, wide-area management systems and enhanced situational awareness. Furthering efforts in the development and deployment of microgrids and smart grid technology will also greatly assist in addressing grid resiliency. These efforts, along with system-wide planning, are just a few examples of how we can increase our ability to make the grid more reliable and efficient.
Last week, FERC directed NERC to "address physical security risks and vulnerabilities related to the reliable operation of the bulk-power system."
But the WSJ plowed right on ahead with their next article, which fails to even mention decentralization.  Instead, the WSJ focused on more centralized "solutions."
Because it is difficult to build new transmission routes, existing big substations are becoming more crucial to handling electricity.
This isn't about building new transmission and "safer" substations to further centralize our energy production and delivery system, but about decentralizing by building more small-scale, fuel-free generation at point of use.

But that doesn't sell newspapers, fill days and days of Faux News programming, or plump up corporate balance sheets.  When are these people going to start telling YOU the truth?



 
 
A settlement has been approved by the Federal Energy Regulatory Commission in the matter of recovery of costs of PJM's failed Mid-Atlantic Power Pathway (MAPP) project.

MAPP was one of four unnecessary transmission projects proposed by PJM in their Project Mountaineer initiative to increase the use of coal-fired resources by shipping 5,000MW of coal-fired electricity from the Ohio Valley to the East coast.  Of these 4 projects (MAPP, PATH, TrAIL and Susquehanna Roseland), two have been cancelled, one has been completed, and one is under construction.  The only difference between them is timing and execution by their owners.

All four of these projects took advantage of newly-minted transmission project incentives available from FERC, brought to you by the Energy Policy Act of 2005.  One of the incentives granted to these projects was the guaranteed recovery of prudently-incurred project investment in the event the project was abandoned and not built through no fault of the owner.

Therefore, once MAPP was abandoned, its owner, Pepco, filed with FERC for permission to recover its investment in the unbuilt project.  Unrecovered investment included capital expense "construction work in progress" costs, which is roughly defined as all expenses for electric projects under construction, including such items as land purchased, labor, engineering and regulatory costs.  The amount Pepco filed to recover was $87.5M.

Because some parties intervened and protested the recovery, FERC set the matter for settlement and hearing.  A settlement was reached and recently approved by the Commission.

The settlement allows Pepco to recover $80.5M in abandonment costs over a three year period, and allows the company to maintain ownership of all land and land rights purchased as part of the project.  However, Pepco must remove the land from its rate base (capital account) that earns a yearly return paid by all electric consumers in the PJM region.

In its cost recovery filing, Pepco valued its land acquisition activities at $38.1M, although actual land values would most likely be much less.  So, how much land did Pepco buy for MAPP that the company now owns free and clear?
Converter station sites in Calvert and Wicomico County, MD and Sussex
County, DE were acquired;

Takeoff points into and out of the Chesapeake Bay were acquired;

Transition station locations in Dorchester County were acquired; and

Transmission line right-of-way for entire length was acquired, except for one property in Dorchester County where negotiation was pending.
Looks like Pepco has enough land to concoct another unnecessary transmission project at ratepayer expense, and it looks like Pepco still holds these landowners' lives in limbo under the threat of building a transmission line across their properties.  Let this be a lesson to you... do NOT sign right-of-way agreements early in the process, before a project is approved and receives a permit from all states through which it is routed.

Ratepayers in 14 states will remember PJM's failed Project Mountaineer as they pay off Pepco's unbuilt MAPP debt in their electric bills for the next three years.
  Thanks, PJM!



 
 
From the train wreck files... the pieces of information you try to drive by without looking closely, but inevitably you turn around and drive by again for another look:

An article on Risk.net entitled Power trading firm blasts Ferc over manipulation probe tells an interesting tale.
In an unorthodox move, a little-known power trading firm has disclosed that it is under investigation by the US Federal Energy Regulatory Commission (Ferc) for market manipulation, mounting a vigorous public defence of its activities and arguing that Ferc has overreached in going after its trader.
The company has put together a website with a bunch of case documents I don't have time or inclination to read, videos, and opinions that support its position that it's being picked on by FERC.

The Risk article describes the issue this way:
Chen's trades made use of an obscure type of PJM transaction called 'up-to-congestion' (UTC) trades, which involve the scheduling of electricity flows across the border between PJM and one of its neighbouring wholesale power markets, such as the one operated by the Midcontinent Independent System Operator (Miso). When carrying out a UTC trade, a market participant can specify the maximum level of congestion costs that he or she is willing to pay to move power across a particular path. For instance, if the threshold of the UTC trade is set at $50 per megawatt-hour (/MWh), then PJM will schedule the flow, as long as the congestion cost between the two specified nodes stays below $50/MWh. If the cost of congestion along that path rises above that level, the trade gets knocked out and no electricity flow is scheduled.

Powhatan – like other financial trading firms operating in US power markets – trades only 'virtual' power. In other words, whenever it schedules any electricity flows in the day-ahead market, it cancels them out in the real-time market, so no physical power actually flows. Such traders essentially act as arbitrageurs between the day-ahead and real-time power market.

Chen's trading strategy involved pairs of UTC trades, with two legs that ran in opposite directions along the same path — for instance, from the Miso border to a node in PJM, and back from that node to the Miso border. According to the documents posted on FercLitigation.com, Chen discovered a profitable trading strategy in which he could enter such paired UTC transactions and then collect money from transmission loss credits (TLCs) – a type of rebate payment that PJM makes to market participants that use its transmission lines. Until September 2010, when PJM implemented its rule change, it was possible for virtual traders such as Powhatan to collect TLCs from UTC transactions, even though they were not actually sending physical power through the grid.
The article notes that FERC approved an after-the-fact change to PJM's market rules to prevent further use of this trading strategy.

Our friends at RTO Insider also have an article about this issue that provides more information and made me think that FERC might be behaving like a bully.  But, I'm still having a hard time mustering up any real, personal sympathy for anybody involved in this case.  It just doesn't tug my heart strings like senior citizens who can't pay their outrageous electric bill because there's so much nonsense added to the actual cost of service.  Call me jaded.

So, is this the kind of aggressive FERC we would see under the leadership of Norman Bay, who was nominated for the Chairman position in January, after the big green failure of the Binz nomination late last year?

Bay will have to go through the same confirmation process that raked Binz over the coals, and no stone will be left unturned to pick him apart before the Senate Energy Committee.

Meanwhile, I think I'll go organize my record collection.

 
 
Regulation vs. deregulation debates pop up from time-to-time.  I think the last one I participated in was presented as a way to "fix" Potomac Edison's billing & meter reading transgressions through competition.  Of course, deregulation doesn't change your local electric company that meters and bills your service, it simply changes your generation supplier, so deregulation is, once again, useless as a solution.

I've had people swear to me that deregulation saves consumers money, but my research has actually revealed the opposite.  Deregulation, an invention of our friends at Enron, actually costs consumers money.  Deregulation inserts a middleman between you and the generator, and that middle man wants to get paid.  While some may argue that the middleman can insert competition into a monopoly situation to result in savings, that's unlikely to happen.  The monopoly is prohibited by regulation from the kind of usurious rate gouging that goes on in deregulated markets.  Being from West Virginia I say this with a smirk on my face, because I am also unconvinced that our regulators actually have consumer interests in mind, and believe they will look the other way, or even encourage, regulated rip-offs of captive customers by out-of-state electric conglomerates.

Electric consumers in Pennsylvania's deregulated electricity market are up in arms because the state's regulators have not protected them from signing open ended variable rate contracts.  What did they think "deregulated" meant?  My experience has been that the average electric consumer is uneducated about his electric bill, the electric rates he pays, and the regulatory process, and he LIKES it that way!  It is only when a bill shows up that seems to be higher than normal that average electric Joe gets upset and demands that "someone" do something to lower his bill!

Pennsylvanians who signed variable rate contracts with deregulated electric suppliers got slammed by PJM's markets during this year's "polar vortex."  Customers received bills hundreds of dollars higher than normal because their middleman may have been locked into power purchase contracts that didn't adequately protect against price spikes caused by generator outages and high demand for natural gas to generate electricity.  And, it's probably going to get worse.  At its earnings call last week, FirstEnergy made it clear that the company's future power purchase contracts will contain language that passes this volatility through to customers:
Steve Fleishman - Wolfe
And in the future, do most of your contracts have that clause, so new ones do or not older ones or vice versa?

Leila Vespoli - EVP, Markets, and Chief Legal Officer
I think it would be safe to say that we are going to be adding that language where we can in the future.
Neither the generator, nor the middleman, wants to absorb the cost of PJM's market failure so it will always be passed on to the deregulated customer because no one is protecting average electric Joe in a deregulated environmment.  FERC and PJM fail to realize that those poor, persecuted generators who were required to operate at a loss for a few hours or days due to the price cap are making money hand over fist every other day of the year.  Pay to play, little generators!

FERC compounded the problem by allowing these greedy corporate entities to further game PJM's malfunctioning markets.  FERC has allowed generators to charge whatever they want, and is in denial about any "harm" that may result: 
FERC said PJM's proposal met the commission's criteria for approving waivers, as doing so would remedy a "concrete problem," would not harm third parties and would be limited in scope.
Maybe affected customers in Pennsylvania should send FERC a copy of their outrageous "concrete problem" bills so they can make note of the harm PJM's markets have caused to real people. 

Deregulation sounds great in theory, but it rarely saves the consumer money in the real world.
 
 
Moody's researchers have been busy contemplating investor owned utilities' most recent scheme to "de-risk" their holding companies by shifting investments to the regulated side of the business.  After gathering all sorts of information available, Moody's has weighed the risks and decided that this utility investment scheme is a safe harbor for the time being, and utilities engaging in it should receive higher credit ratings.

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

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

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

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

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

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

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

But, that's okay, Moody's.  We're patient, and we're used to being on the cutting edge of new trends, instead of running behind trying to shore up failing business models.