Yesterday marked the official conclusion of the FERC hearing that's taken up so much of my time over the past month or so.
I'm sure numerous celebrations occurred.
Some were more fun
For those who remarked that the second celebration didn't look like much fun, I offer that the beer was picked up off the table, the light turned out, and the room vacated. Instant fun!
Now, where did I leave my life? Anyone seen it?
First, I offer this article from WSJ* (I admit it, the world has been revolving even though I paid it little attention). It's finally been recognized that utilities may be investing in infrastructure as a cash cow. Ya think?
The way the regulated rate world works is that the more they invest, the more $$ they make. Although utilities have a built in O&M component in most stated rates, if they don't spend it all, they can use the money for something else, such as increasing shareholder dividends. And they did. But, as less power is sold, profits go down and the utility must turn to other profit centers, such as increased capital spending on long-neglected maintenance, or new transmission lines. And rates go up.
And they wonder why we drink...
*If you can't read the article, google the headline "Utilities' Profit Recipe: Spend More" and you should be able to access it directly.
Drama, drama, drama. I'm pretty sure the media over-dramatized the outages in DC yesterday. Maybe not a bad thing to raise awareness, but they've missed the real message.
OMG - like this outage affected IMPORTANT people doing IMPORTANT things! Like Pepco is sooooooo bad!
This article covers the basics, and with a few additional details from WaPo's more dramatic version, here's the story:
A hot 230-kV transmission line (conductor) just randomly fell off its tower in Southern Maryland. No storm. No damage. It just broke for no apparent reason. Live, uninsulated transmission line on the ground started a grass fire. Lucky it didn't fall on any people, vehicles, etc. that happened to be in the right-of-way at that time. The fault caused a bunch of other lines and generators to trip offline in self-defense against resulting voltage swings. And the lights went out many miles away in Washington, D.C.
So, no big deal, faults happen. But the grid is supposed to be designed so that other lines instantly spring to life and take the load of the one out of service and the fault ends up being nothing more than a barely-noticed blip. But that didn't happen, it started to cascade to other lines and generators. Comparison was made to the 2003 northeast blackout, when a fault on a transmission line in Ohio cascaded into a regional blackout. The concept is quite the same, but the effect not as far-reaching. Do you suppose we'll need a multi-million dollar government task force to examine the incident?
What's the real problem here?
Lack of maintenance and upgrades to existing transmission lines. The industry is so busy chasing the big profits that come from building NEW transmission that they aren't investing their money in maintaining the assets already in service. Perhaps our federal regulatory agencies need to start encouraging maintenance and rebuilds of aging lines with financial incentives?
And then there's the problem of parasites like DC that have no generation of their own and depend on transmission lines from distant generators. The more transmission lines we build, and the more centralized the system that supplies electricity, the bigger this problem becomes.
Stop it. Stupid.
Distributed generation and less transmission lines = reliability.
Disturbing news out of Colorado this morning. The Denver Post reports
that the legislature is playing games with funding of the Colorado Office of Consumer Counsel (OCC) for the next 10 years. Without funding and authorization, the OCC will simply cease to exist under Colorado's "sunset" law.
A concerned legislator likened the refusal to deal with the re-funding of the OCC to "Washington, D.C.-style politics."
"If people disagree on the policy, the substance or the process, that's fair; that's what we're each here to do," Garcia said. "But what we're seeing here is Washington, D.C.-style politics where you put something off to the side, and the committee chair doesn't give it due regard until it's too late."
Why is consumer counsel so important? Because it is the utility consumer's only defense against high rates and utility policy that compromises their interest. Only the consumer counsel is looking out for residential and small business interests during utility rate cases. Without the OCC, residential consumers would have no choice but to represent themselves in every utility case before the Colorado Public Utilities Commission. Who can afford the time or expense of that? Nobody, therefore consumers would be unrepresented. It's just not true that outside consumer groups, contingency-based lawyers, or class-action lawsuits can take the place of an independent, governmental advocate that defends the interests of all
residential and small business consumers.
According to a report prepared last fall, the OCC regularly saves this class of consumers between $40-50 million per year in increased rates. The cost of this representation is a mere $1.5M/year. The funding for the OCC comes from fees paid by regulated utilities, not out of the state's general fund. It costs consumers nothing, and it consistently saves them money. The report recommends continuing the OCC until 2026. However, the legislature is ignoring it, and without their nod, the OCC will sunset.
Don't let the Colorado legislature rob you of the representation that keeps your utility bill in check. Without the OCC, out-of-control rate increases could have you lamenting that "someone" should do something about that. The OCC is the consumer's "someone," even though most consumers don't even know they exist. Get educated and take an active role in the processes that control your utility costs -- support the re-funding of the Colorado Office of Consumer Counsel.
Halt The Power Lines makes it quick and easy to do your part! Visit them here to find out how to take action!
If I didn't know any better, I'd think that Clean Line's Grain Belt Express Project was trying to unload a whole bunch of 90s beanie babies. Once upon a time, beanie babies were so popular, it was a seller's market. Now, you can't give the critters away.
Same deal with GBE.
Big announcement that the results of GBE's open season attracted requests for service totaling more than 4 times available capacity. Beanie babies for sale!!!
However, GBE's open season didn't attract any buyers for the power in Missouri. Poor, homeless, unwanted beanie babies!!!
And why would that be? Because, according to the staff of the Missouri Public Service Commission, none of the utilities in Missouri need to purchase wind power to meet their renewable portfolio standard goals.
"Grain Belt Express has not shown its project is the most cost-effective means of compliance with renewable energy standards in Missouri, as all but one of Missouri's investor owned utilities has already disclosed that it has existing capacity and new contracts that will meet or exceed the 15% renewable portfolio standard target by 2021."
GBE's mouthpiece tried to pretend Missouri was always the intended terminus of his project.
Ten respondents submitted requests for service to deliver some 3,000 MW of power to Missouri, more than six times the available capacity at that delivery station, Lawler said.
“We have 500 MW going to Missouri, which is enough to power 500,000 Missouri homes,” he said. “The rest of it will go farther east, to Illinois and Indiana.”
“Originally we had it all going to Missouri, but the grid there is not robust enough to take full delivery, so we had to bust it up and make an additional delivery point.”
Something got busted up here, and I think it's Clean Line's propensity to make crap up. The Missouri converter station didn't exist until Clean Line came to the realization that there was NO WAY they could get their project approved in Missouri as long as it was intended as a fly over state to lucrative eastern energy markets. But, despite Clean Line's offer of beanie baby consolation prizes for Missouri, they're still in serious trouble.
“In Missouri, we’re at the very tail-end of the regulatory process,” Lawler said. “We expect an order from the (Missouri Public Service Commission) in the next couple of months. There is no regulatory time frame (for approval) like there is in Kansas. We expect a decision in the first half of this year.”
Sure, everyone expects an order from the MO PSC, but there's no guarantee that it will be a favorable decision. How much longer is Clean Line going to pretend everything is hunky dory while the SS Clean Line is rapidly taking on water? That's awfully brave of them, don't you think?
And what about the rest of the power that's intended to be delivered into PJM's eastern grid... any interest from buyers there? Nope. The eastern U.S. doesn't need any beanie babies, either.
So, just like its open season on its Plains & Eastern project, Clean Line is holding a bag full of beanie babies that nobody wants. None of these generators have been built yet, and won't be built until they have buyers for their product. Who is going to contract with an unbuilt generator to maybe supply power via an unbuilt transmission line that can't get state approvals? Utilities hate risk (and beanie babies).
Take a memo, Clean Line: There's no interest in your product. The utility industry has been trying to tell you this since your inception. You just can't overcome the chicken/egg scenario that makes utilities shy away from resource uncertainty. Yes, I understand Mikey thought they were wrong when he decided to market beanie babies way back in 2009. But time has been unkind to his beanie baby market. The sooner he admits it and stops this farce, the better off we'll all be!
Branstad, who appoints the members of the utilities board, warned against "political interference" into the administrative review process by which a pipeline carrying Bakken crude oil and a transmission line transporting wind-generated electricity could be approved.
"It would be mistake to get politics into this," Branstad said. "We should abide by the processes that have been put in place."
However, Carol Overland reports
that Governor Branstad has changed his mind and made some changes to the Iowa Utilities Board at the urging of MidAmerican Energy. It doesn't get any more political than this!
An outgoing member of the Iowa Utilities Board has bluntly told Gov. Terry Branstad in a letter that his decision to remove her is improper and being done to placate a powerful energy company.
Sheila Tipton told the governor in the March 18 letter that his move to replace her and demote board chairwoman Elizabeth Jacobs is an inappropriate attempt to influence future decisions to favor utilities and "appease MidAmerican Energy." The company had complained about a ruling requiring the company to use some proceeds from a $280 million wind energy investment to reduce customers' rates.
So, what is Branstad saying here? Is he saying that the interests of Iowans represented by their elected representatives aren't as powerful as campaign contributions he may receive from energy companies the IUB regulates?
Where I come from, that's called hypocrisy, and it's shameful. Only when regulators may regulate without political interference can the industry they regulate fail to capture them. It's time for the voice of the citizens of Iowa to be heard!
Second big Sunday story to blog about today, the St. Louis Post-Dispatch's examination of Clean Line as "a new kind of transmission developer."
This "new kind" of transmission developer is attempting to build transmission based on a "merchant" model. Under this construct, the transmission developer shoulders all project risk. In traditional transmission development, a project is ordered to be built by a regional planning entity to meet some reliability, economic or public policy need. Because the project is undertaken to supposedly benefit regional ratepayers, a developer charges its project costs to ratepayers. Ratepayers absorb the risk of successful development. Clean Line's merchant projects chose not to proceed through this traditional process, therefore there is no determined need for its projects. They are proposed completely as a speculative, profit-making venture, supposing that if they build it, a need will develop. If Clean Line fails, its investors lose their investment. There's no ratepayer-guaranteed regulated return. Clean Line accepts all risk for its market-driven projects.
However, Clean Line has told state regulators that it may "have to" apply to regional planning authorities for cost allocation of its projects in the future. In fact, Clean Line has been busy behind the scenes in the past, trying to drum up support for cost allocation of its projects. Clean Line's "build it and they will come" strategy may also extend to getting its projects permitted, customers signed up, and then dumping the entire thing into the regional planning process as a needed "can't fail" project. Beware, the enemy is at the gate!
So, Clean Line must shoulder all market risk of its voluntarily-undertaken projects. However, Clean Line also wants state public service commissions and the U.S. DOE to grant it the power of eminent domain to take private property for use in its projects. Eminent domain authority provides compensation to property owners for their property taken for use in public projects. It also ensures that holdouts cannot derail a project, and that property is acquired at a reasonable price so public projects aren't burdened by the expensive land acquisition costs that a developer would be faced with if land acquisition wasn't forced on property owners. There's a huge disconnect here! If the privately-funded Clean Line is shouldering all market risk of its projects, that includes the cost of voluntary land acquisition. Further examination of Clean Line's business model notes that the rates it may charge customers include all project costs, plus profit. Cheaper land acquisition allows lower rates and/or higher profits -- Clean Line's choice. Assuming all market risk for its project should also include the financial risk of voluntary land acquisition.
Clean Line's request for eminent domain authority is the driving force behind the huge rebellion of landowners, citizens, and local governments in seven target states. Clean energy advocates and environmental organizations have unwisely chosen to involve themselves in the debate. The Post-Dispatch talked to a representative of one such group, the National Resources Defense Council, who showcased his disconnect with the grassroots opposition groups:
“Clean Line’s not asking everyone within the region to pay for the line,” Moore said. “That’s the piece that sometimes causes state utility commissioners to pause, because the commissioners haven’t seen this kind of truly competitive business plan before.”
“The more favorable decisions from commerce commissions, the more opposition will recede,” Moore said.
Clean Line's business plan isn't "competitive," it relies on a government-granted right to condemn and take property. If Clean Line's compensation package was so great, landowners would be falling all over themselves to sign on. Instead, the company is looking at condemnation rates north of 80%. 80% of needed land condemned through eminent domain! Never going to happen.
Moore is also completely WRONG in his contention that opposition will recede if public service commissions (or the U.S. DOE) make decisions favorable to the project. Perhaps Moore doesn't want to acknowledge that Clean Line's "approval" in Illinois for its RICL project was conditioned on land acquisition being voluntary. That's right... no eminent domain authority for Clean Line in Illinois. Why? Because those resistant 80% of targeted landowners number in the thousands and the political price would be too great. Decisions favorable to Clean Line's land grab will actually drive increased opposition and public revolt. The opposition numbers in the thousands and extends across seven midwest states (double in Illinois because it is a target of both the RICL and GBE projects). And it's increasing every day. Moore knows nothing about the Clean Line opposition and doesn't care to. He's just pontificating in a most revolting way. Maybe he should get to know an opponent or two before telling the media how they're going to react to PSC decisions?
Clean Line has no customers and is facing increased public and political opposition. It's the poster child for a "new kind" of transmission development failure.
Because transmission is such a long-term asset, we must be extremely mindful of
how new projects relate to each other to achieve comprehensive energy policy goals. If we continue to approach transmission as a hodgepodge, knee-jerk reaction to serve short-term goals and provide sustainable revenue streams to investor-owned utilities, we risk setting ourselves up for a possible future where a huge investment in transmission becomes the financial responsibility of a shrinking pool of ratepayers. Technological advances and affordability are making it possible for an increasing number of consumers to produce their own power and feed it into the local distribution grid by making their own smart, fuel-free, power producing investments. Energy efficiency and demand management gains continue to shatter future demand projections, further decreasing the need for billions of dollars of investment in new transmission infrastructure.
Nothing like a wake-up slap across the face, eh, EEI?
In September of 2012, EEI held a pow-wow to talk about how they were going to manage this strange, new world where their control of the electricity-consuming public was going to erode with alarming alacrity. Instead of approaching the problem honestly, EEI preferred to use its power, money and influence to try to find ways to kill distributed generation, instead of getting on the wagon and finding a way to turn it into a profitable business model.
In early 2013, EEI produced a white paper addressing what it termed "disruptive challenges" heralding doom and gloom for their stable of investor owned utilities.
And the battle lines were drawn.
Solar advocates have created their own issues, with polarized insistence that their use of the distribution system to sell their excess back to the utilities should be free, and that they provide so many benefits to the system that they should actually be paid more for avoided costs.
Because utilities are so bloated and focused on building more infrastructure from which they derive their profits, a shrinking pool of ratepayers increases the costs to the ones who don't install solar. Utilities crying about the burden placed on "the poor" is ludicrous and hard to stomach.
There has been no middle ground, and messaging on both sides is pretty ridiculous. Too much rhetoric causes increased polarization that stymies progress and the eventual realization of our energy future. Can't we get it together here, and effect a reasonable compromise?
Otherwise, the utilities can continue their self-destructive initiative to have it all, while solar advocates can disconnect from the public utility grid and build their own system to share their excess. Seems kinda silly, doesn't it? Where's King Solomon when you need him?
Energy markets aren't special.
They're just another product of the PJM cartel's enabling of its members profits.
Bowring said the process that RTOs use to create market rules is flawed because market players get to vote on those rules, and sometimes they block the passage of needed reforms because they are engaging in the behavior that a new rule would prohibit.
It's like attending goody-two-shoes-kindergarten if you want to participate in PJM's energy markets, and you're going to have to tattle on yourself if you make too much money:
Bowring said market participants also have a duty to inform market overseers of faulty rules and false arbitrage opportunities and to not engage in such behavior once they suspect it to be wrong. He said the "vast majority" of market players do just that, and that those who think "they're the smartest guys in the room" by figuring out how to exploit some rule loophole are usually not since others have also seen that opportunity but chose to do the right thing by not engaging in such behavior.
When is FERC going to "do the right thing" and get rid of its mysterious and dysfunctional energy markets?
They need to realize that they need outsiders to make their silly markets work. If outsiders aren’t allowed to make money playing by the market rules without suffering the occasional random sacrifice from their ranks to serve as an example of a "bad egg" and a demonstration of FERC's power, then perhaps they should just outlaw their participation altogether. Will the beatings continue until morale improves?
It’s like slopping a whole bunch of chum into the water and complaining when sharks show up instead of some pretty goldfish.
Thirty-seven dozen people showed up at the Fort Smith Convention Center in Fort Smith Arkansas last night to tell the U.S. Department of Energy what they think about the Plains & Eastern Clean Line. It was a madhouse (in a most literal sense!)
Arkansan Julie Morton summed it all up quite nicely:
“If you keep trampling on the rights of ‘we the people’ you may have another American Revolution on your hands!"
Clean Line's spokesman continued to blow smoke up everyone's ass by telling them that they shouldn't be concerned about possible health effects. I don't think anyone believed him, and judging from his body language, I'm not certain he even believed himself!
What is certain is that the people of Arkansas WILL NOT peaceably accept this transmission line.
It's time for DOE to fall on its sword and stop this travesty!
This just in...
Boozman, Cotton Introduce Bill Giving States Power to Reject Federal Electric Transmission Projects
U.S. Senators John Boozman (R-AR) and Tom Cotton (R-AR) today introduced legislation to restore the right of states to approve or disapprove of electric transmission projects before the federal government exercises its power to take private property.
The Assuring Private Property Rights Over Vast Access to Lands (APPROVAL) Act would require that the U.S. Department of Energy (DOE) receive the approval of both the governor and the public service commission of an affected state, before exercising the federal power of eminent domain to acquire property for Section 1222 transmission projects. For projects on tribal lands, DOE would have to receive the approval of the impacted tribal government.
“When a road, pipeline or power line is built the use of eminent domain is sadly unavoidable in some cases,” Boozman said. “However, this difficult decision should not be in the hands of Washington bureaucrats. If a project is not good for Arkansas, our governor or public service commission should have the power to say ‘no.’”
"Arkansans should have a say in any decision that affects our land,” Cotton said. “The APPROVAL act will rightly empower Arkansans and preserve the Founding Fathers vision of states’ rights."
In addition to allowing states the ability to reject the use of federal eminent domain for a project, the Boozman-Cotton legislation would ensure to the extent possible, that approved projects are placed on federal land rather than on private land. Specifically, for approved projects, DOE would be required (to the maximum extent possible) to site projects on existing rights-of-way and federal land managed by: (1) the Bureau of Land Management, (2) the U.S. Forest Service, (3) the Bureau of Reclamation, and (4) the U.S. Army Corps of Engineers.
The decision to permit electric transmission projects has long been the responsibility of the individual state. As noted in a 2011 report from the non-partisan Congressional Research Service, “The location and permitting of facilities used to transmit electricity to residential and commercial customers have been the province of the states (with limited exceptions) for virtually the entire history of the electricity industry.” The report says that state and local governments are “well positioned” to understand the concerns of the area and the factors for making a decision on these projects.
DOE is currently seeking public comments on one proposed Section 1222 project: the Plains & Eastern Clean Line Transmission Project, a high voltage direct current electric transmission system and associated facilities, which (if approved) would cross Arkansas. Interested citizens may provide comments through March 19, 2015, to DOE, either online at: http://www.plainsandeasterneis.com/nepa-process/public-involvement.html; by mail addressed to: Plains & Eastern EIS, 216 16th Street, Suite 1500, Denver, Colorado 80202; via email addressed to comments@PlainsandEasternEIS.com; or by fax to (303) 295–2818.
The APPROVAL Act has been referred to the Senate Energy and Natural Resources Committee for further review.