I think PPL needs to do a round of drug testing of its employees. Whoever came up with this idiotic idea must be on something.
PPL announced today that it had "submitted an application to PJM" to build a 725-mile 500kV line, estimated to cost $6B, through four mid-Atlantic states.
Never going to happen.
Residents of affected states are still reeling from PJM's last big transmission building idea, Project Mountaineer, that cost them billions, including nearly half a billion dollars for planned projects that were never built. Try it, PPL, and you will experience coordinated, strategic opposition like you've never seen before!
The Morning Call seems to be the first media outlet to... err... call PPL out on its outrageous money-making scheme. PPL interstate transmission project both costly and lucrative: Project would fill utility coffers while costing ratepayers billions of dollars.
Morning Call says:
The project also would be a significant source of revenue for PPL Corp., PPL Electric Utilities' Allentown-based parent. Under Federal Energy Regulatory Commission rules designed to encourage infrastructure investment, utilities may earn a profit of 11.68 percent on transmission projects.
That translates into a profit of up to $700 million. PPL would share the money with any other utilities that participate in the project.
PPL customers, meanwhile, would see the cost, including utility profits, reflected in their rates — though the burden of paying for the project would be shared by ratepayers in all four of the states involved.
But, Morning Call only sees the tip of this iceberg. PPL can apply to the Federal Energy Regulatory Commission for transmission rate incentives that would up its profits significantly. In addition to incentive ROE adders that can increase the 11.68 percent several percentage points, PPL can also ask for guaranteed cost recovery in event of abandonment, a return on construction work in progress that enables them to begin earning that juicy return immediately, even before the project is completed, and many other outrageous financial rewards.
In addition, Morning Call's math is wrong. The $700 million profit the reporter calculated is only that earned in THE FIRST YEAR of operation. Transmission project rates work sort of like a 40-year mortgage. The return is calculated and paid on the depreciating balance of the project cost every year! So, in the first year of operation, PPL would earn a return on $6B and collect a certain amount of depreciation on the project assets that would lower the balance owed by ratepayers. The second year, PPL would earn a return on the depreciated balance, and additional depreciation. And so on, over the 40 year (or more) life of the capital assets. PPL's possible profit from this ridiculous project is a nearly endless goldmine!
And, one last thing Morning Call gets wrong -- this project will be paid for, in part, by ratepayers in all 13 states in the PJM region because of its size. A 500kV project built in PJM is cost allocated at 50% to all ratepayers based on peak usage, with the other 50% being assigned to the cost causers/beneficiaries.
Moving right along into PPL's feeble assertions that its project will:
If approved, PPL predicts, the project will improve energy reliability and security and provide customer savings by eliminating transmission bottlenecks and encouraging development of lower-cost natural gas-fueled generation plants.
The new plants would help replace energy supplied today primarily by coal-fired plants that, under increasingly stringent federal air quality standards, are expected to be retired in coming years.
This doesn't even make sense. The coal-fired plants that will be closing are located in the Ohio valley, not on the east coast. Once those coal-burners are offline, it will free up significant transmission capacity for any new "mine mouth" Marcellus shale gas-fired plants built in the Ohio valley. Why would we need to build a new west to east transmission line when there's already plenty of them sitting idle due to coal-plant closings?
PPL says they will have a robust public input process to find out where to site the line. Seriously? That strategy doesn't work anymore. It's all about need for the line in the first place, not where to put it. Get with the brave new world of transmission opposition, PPL!
And speaking of siting the line... where is that new Maryland substation supposed to be on that featureless map? If you compare it to a real map of Maryland, it looks like it's in Howard or Carroll counties. But, what if there wasland available in neighboring Frederick County for a proposed substation? Oh, deja vu!
This has got to be the most thoughtless transmission proposal I've ever seen.
Never going to happen.
New kids on the Block! Block Clean Line Plains & Eastern (Pope, Newton, Johnson & Conway Counties)
has launched as a geographically-based offshoot of Arkansas Citizens Against Clean Line Energ
y, and in concert with the larger nationwide "Block" movement against all Clean Line Energy transmission projects. Arkansas is on fire!
After several years of Clean Line's unnoticed, cozy planning with federal agencies and environmental and business interests, affected landowner "stakeholders" have recently found out about Clean Line's destructive plans for their private property, and word is spreading quickly. The Clean Line cat is out the bag! (Along with some deee-licious ham!)
These resourceful grassroots activists have managed to dig up even more embarrassing Clean Line foibles (just when you thought we'd gotten to the bottom of the barrel!)
First interesting tidbit is the Tennessee Regulatory Authority Clean Line Plains & Eastern docket. Clean Line filed a petition to be granted public utility status back in April, along with the usual letters and resolutions of support from various business interests and local government entities. No landowners or other stakeholders stepped up to intervene or protest. Should be smooth sailing for Clean Line, right?
The TRA issued an Order on May 13 Convening A Contested Case And Appointing A Hearing Officer. No rubber stamp for Clean Line in Tennessee! Toto, I think they're not in Kansas anymore!
The TRA docketed the exchange of letters between Senator Alexander and Rep. Fincher and the TVA.
Clean Line's submitted testimony is rife with the same old specious claims about how much the project is wanted and needed by the TVA and mysterious "others."
Clean Line president Michael Skelly says:
The TVA and other load serving entities have a strong and growing demand for cost-effective electricity from renewable resources.
There has and will continue to be a demand for affordable and reliable renewable energy in Tennessee, the larger TVA service footprint, and throughout the Mid-South and Southeast.
The Project will allow TVA and other utilities in the South to reliably and consistently access the country’s most cost-effective wind energy resources.
In particular TVA has been a leader in realizing the benefits of wind energy in the Southeast. In its most recent Integrated Resource Plan, TVA called for 2,500 MW of renewable energy purchases by 2020. Wind energy from economical locations such as the Oklahoma Panhandle can provide a consistent, long-term, low-cost energy supply to TVA and other load-serving utilities in the Mid-South and Southeast.
These wholesale buyers may include TVA as well as other utilities inside and outside of Tennessee that seek to purchase low-cost electricity generated in the Oklahoma Panhandle region.
I guess Skelly is now in charge of the TVA's integrated resource planning? Maybe not. TRA staff recently submitted their first data request
, covering some of the same hard questions landowners across the Midwest have been asking the company, to no avail. This time, Clean Line has to answer.
The Petition states that the Company will provide wind power to TVA and other potential customers. Please identify all other potential customers that Plains and Eastern has had discussions with regarding the purchase of power and provide copies of any agreements reached with these customers.
On page 6 of David Berry's testimony, he provides a list of wind power purchase
agreements involving the TVA (purchaser). To your knowledge, discuss the TVA's process for choosing to enter into such projects, including whether the projects go through the RFP process.
Is TVA or other potential wholesale purchasers under any obligations (including any state or federal requirements) to purchase additional wind power to meet its renewable energy objectives? Provide supporting documentation. To your knowledge, is TVA currently meeting its renewable energy objectives? Will TVA be able to meet its renewable energy objectives absent approval of Plains and Eastern's petition?
Provide a copy of all Memorandums of Understanding with TVA.
Please explain and describe in detail any guarantees or assurances that Plains and Eastern can provide lower cost renewable energy to TVA than TVA currently purchases.
Please list all available state and federal tax credits that Plains and Eastern currently
receives related to projects in other states and federal credits that the Company anticipates receiving upon completion of the project proposed in this docket. Are these federal credits figured into the pricing model used by Plains and Eastern? If so, please explain in detail the impact on rates, as well as the Company's overall operations, that
would result if these federal credits were discontinued by the federal government.
On page 9 of Michael Skelly's direct testimony, he states, "The TVA and other load serving entities have a strong and growing demand for cost-effective electricity from renewable resources." Provide the source from TVA and other potential entities stating they have a growing demand for renewable resources.
On page 11 of Michael Skelly's direct testimony, he states, "The Project will allow TVA and other utilities in the South to reliably and consistently access the country's most cost effective wind energy resources." Please provide all underlying support and rationale
relied upon for the assertion that this project will allow access to "the country's most
cost-effective wind energy resources."
For clarification, please provide the estimated number of construction jobs that would be
created in Tennessee if the petition is approved. Also provide the estimated duration of these temporary construction jobs.
For clarification, please provide the estimated number of permanent full-time jobs that
would be created in Tennessee upon completion of the project.
Please describe any assurances and/or guarantees that Plains and Eastern will hire
Tennesseans for the temporary construction and permanent jobs detailed above.
Provide the latest update on the environmental impact statement being prepared by the DOE under NEPA. Also provide the latest update on all federal reviews/environmental studies being performed by the DOE.
Provide an update regarding Plains and Eastern's CCN application in Arkansas.
Well done, TRA!
Also, the trade press has developed a sudden and voracious appetite for all things Clean Line after Arkansas NPR affiliate KUAF did an in-depth story.
First the "Recharge News" wrote a piece all about Clean Line's aspirations to use the federal eminent domain power of the Department of Energy to take privately held land from the people of Oklahoma, Arkansas and Tennessee. Except, the reporter got it wrong and had to correct his original assertion that Clean Line had received eminent domain authority in Oklahoma. The reporter got schooled about the legal status of Plains & Eastern by an Arkansan, not by company president Michael Skelly. The reporter also "miscommunicated" the authority for the federal EIS, claiming that "Clean Line is in the process of preparing a draft environmental impact statement (EIS) for the project, which it hopes to release later this year for public comment." Oh, so that explains why DOE personnel, who are actually preparing the DEIS for release and public comment this fall, act more like minions of Clean Line than the federal government. Something really stinks in that stall!
The reporter also tells us that the DOE approval of this scheme to take privately held land for corporate profit is "eventual," although even he couldn't use the word "partnership" without quotes.
The eventual “partnership” with DOE through its agency Southwestern Power Administration (SWPA), which markets power in six south-central states, would be limited to use – if needed – SWPA’s eminent domain authority to obtain right-of-way in Arkansas.
SPRA has concerns in general about implementation of Section 1222, and specifically about the proposed Plains and Eastern project. Of specific concern is the protection of SPRA’s federal power customers from any and all liabilities arising from the planning, design, construction, operation, maintenance, and/or ownership of Section 1222 projects. Other concerns include the
demonstrated need for any proposed project and that such projects promote interconnection of the grid in which they are located.
And maybe Coombs thinks that Section 1222 isn't exactly legally bulletproof:
SWPA’s original authority to construct transmission facilities is limited by Section 5 of the Flood Control Act of 1944 to “only such … facilities as may be necessary in order to
make the energy and power generated at … [Corps] projects available” to its wholesale
customers. SPRA is concerned about extending SWPA’s authority to construct transmission facilities beyond this original mandate.
Well, it looks like the wild and crazy X Partay going on between the California Public Utilities Commission and utility PG&E has come to an end, for now.
Fierce Energy reports that the City of San Bruno and the CPUC have reached a settlement in the City's suit over CPUC's violations of the public records act. In exchange for dropping its suit and agreeing to assume its own legal expenses, the City will finally get access to the documents it's been requesting for more than a year.
CPUC thinks it's scored big time in the settlement because it always intended to hand over the documents anyhow:
"The CPUC is committed to facilitating access to records requested under the California Public Records Act and always intended to meet the broad public records requests of the City of San Bruno," said CPUC interim General Counsel Karen V. Clopton in response to the allegations. "The delay in doing so was due to the breadth of the city's requests, the volume of records to be located and reviewed, and the limited availability of staff resources to conduct a comprehensive search and review. Under the settlement, the CPUC has produced records that it would have made publicly available regardless of the complaint."
So, what was in the documents?
"[The] disclosure (from more than 7,000 pages of documents received after San Bruno filed the Public Records Act lawsuit against the CPUC) demonstrates an ongoing, illicit and illegal relationship between the CPUC and PG&E," said San Bruno Mayor Jim Ruane in a statement. "Not only do these private communications violate the law, but they provide evidence of a relationship between the utility and the CPUC that is familiar, collegial and cozy."
The private emails over the past 36 months are alleged to expose more than 40 violations of the law against ex parte contact by Peevey and top CPUC staff in the San Bruno case.
In a statement, the City of San Bruno said: "We cannot have the same man who has proven to be biased presiding over the so-called 'penalties' that the CPUC will levy against PG&E. Nor should the citizens of our state be endangered by the CPUC's inability to ensure pipeline safety issues."
Time to clean house at the CPUC, and about a thousand other captured regulatory agencies.
Marcelino Cuadra is in big trouble.
He's been sentenced to seven years’ probation after he pleaded guilty to charges of corrupt organizations, theft of services and conspiracy to commit theft of services in connection with electric meter tampering incidents in Pennsylvania. He also has to complete 60 hours of community service and re-pay nearly $350K to electric utility PECO.
Cuadra was convicted of tampering with numerous business and residential electric meters to "fix" them so monthly usage would be reduced. He says the electric customers paid him for the "fix."
Compare Cuadra's plight to West Virginia's recent meter scandal, where FirstEnergy subsidiaries Mon Power and Potomac Edison were found by the Public Service Commission to have failed to read customer electric meters bi-monthly as required. This resulted in consecutive estimated bills where monthly usage would be reduced, only to show up on an actual read bill months later that amounted to thousands of dollars.
What was FirstEnergy's sentence? A $7.5M yearly rate increase to pay for monthly meter readings.
I think it must have all been in the technique employed to commit the act, since both seem to be the result of corrupt organizations and conspiracy.
But, don't call Marcelino, there are safer ways to save energy.
After being pelted with correspondence from transmission developers, regulators, and environmental organizations
promising vehement opposition, the PJM Board of Managers "delayed action"
on PJM staff's recommendation of PSE&G's "7K" project to solve its Artificial Island problem.
But lest you think sanity has finally prevailed and the Board has rolled back the process to ensure it is carried out fairly and transparently going forward, don't be silly! The Board has merely kicked it back to staff in order for the other four "finalist" bidders to "supplement" their projects to try to undercut finalist LS Power's self-imposed cost cap on its project.
So, how hard can it be to simply make up a number lower than LS Power's $171M construction cost cap? It's not like anyone's going to hold them to it, right? PJM doesn't have any performance standards for transmission developers and is unlikely to bat an eye at "unforeseeable" cost overruns.
PJM's Herling also says that his TEAC will "review" specific issues with process and transparency that were raised in the letters. Who wants to guess how that will go? Herling rules the TEAC with an iron fist. He also babbles on about how "especially challenging" new process can be. I have to agree, it's especially challenging to continue on like nothing's changed when you're supposed to be following new rules and the unruly children challenge your authority.
Still no recognition about PJM's incorrect determination of the "constructability" of the PSE&G project. This despite an even more pointed letter from the Delaware Riverkeeper, promising "active and committed opposition" to the selected project.
But don't worry, PSE&G also made an appearance with a letter defending its project. Send in the clowns!
PSE&G says that they are the preferred choice of park rangers everywhere when it comes to having precious national park resources destroyed by transmission developers:
For example, the Susquehanna-Roseland project had environmental and other types of challenges, but PSE&G and its co-developer, PPL Electric Utilities Corporation, overcame the challenges to get the line sited and built. The
National Park Service spokesperson for Delaware Water Gap National Recreation area recently stated: “They worked through one heck of a winter. They didn't miss too many days. ... If you have to have somebody building a power line in your backyard, these folks were great to work with.”
So, if you want to have your backyard destroyed, remember to call PSE&G for fast, prompt and friendly service!
And is this supposed to be a threat or a promise?
The same PSE&G team that brought Susquehanna-Roseland to a successful conclusion is committed to this project.
Oh, dear heavens, NO! The Susquehanna Roseland project was a permitting disaster that cost ratepayers $60M in hush money
to the Department of the Interior in exchange for allowing the destruction of a park that belongs to these very same ratepayers. The $60M "mitigation" fronted by PSE&G will be re-paid to the company over the many decades that this project will be in service. The re-payment will come out of ratepayer pockets and will reward PSE&G with a 12.9% yearly return on its "investment" in the "mitigation" hush money.
With friends like that, ratepayers are sure to be smiling all the way to the poor house!
Stay tuned... sounds like the PJM fun is only beginning at Artificial Island!
So, what's been happening in the aftermath of the recent confirmation of a new and a returning FERC commissioner?
Pennsylvania Senator Robert Casey sent a letter to Energy Department inspector general Gregory H. Friedman asking some hard questions about FERC's enforcement office and requesting an "examination."
The Philly Inquirer wants to inquire why Senator Casey voted for Norman Bay before sending his letter:
Except, shouldn't the investigation come before a guy's promoted?
How assertive will Acting Chair Cheryl LaFleur be as a lame duck? And will she remain for her five-year term after she has to relinquish the gavel?
With Commissioner John Norris openly musing about his post-FERC future, who will replace him and how soon?
How will Bay resolve the investigation into Powhatan Energy Fund, whose principals have been running a public relations campaign accusing FERC of heavy-handed enforcement tactics?
And, this morning, an opinion piece by investigative reporter David Cay Johnston
accuses that federal regulators let utilities gouge customers.
Although my understanding and consumer's perspective of FERC probably differs from Johnston's, it seems that his nose works just fine. Something stinks here!
Regulator, regulated, regulator, regulated, regulator, regulated, regulator, regulated.... the door is spinning! Johnston gets right to the root of the problem:
FERC commissioners, however, disregard the just and reasonable standard, routinely ignore evidence and act more as agents of utilities than fair-minded regulators.
Absent from the commission is anyone who represents the rights of consumers.
Johnston ends by painting Norman Bay as a "ray of hope" for consumers.
I think perhaps FERC needs some public relations polishing. Maybe these guys would be willing to help?
Power struggle in Parker, Colorado, tonight!
Grassroots group Halt the Power Lines takes to the streets to pack the Pace Center for tonight's PUC hearing on Xcel's plan to add a second overhead high voltage transmission line to an existing right-of-way that snakes through dense urban development south of Denver.
Xcel has claimed that its plan will have no ill effects on the neighborhoods affected, and that its much too expensive to bury the line. Xcel has also gathered some unlikely advocates under mysterious circumstances.
No matter -- the grassroots group is strategically prepared to pack tonight's hearing. May the loudest (and most genuine) voices win!
PJM Interconnection has completely screwed up its first competitive transmission project proposal process
. And now transmission developers and regulators are schooling PJM on what "constructability" really means (of course, for English language purists, "constructability" isn't even a real word, but some bastardized business buzz word).
While FERC's Order 1000 reforms were supposed to usher in a new wave of competition, pricing and cost allocation beneficial to consumers, nothing has changed except the window dressing. When push came to shove, PJM selected a project proposed by one of its favored incumbent transmission owners and kicked all the other proposals to the curb.
PJM staff has recommended that its Board of Managers approve its selection of PSE&G's "7K" project that will construct a new 500kV line parallel to an existing circuit. PJM staff has stated that the "constructability" of the PSE&G project, as evaluated by hired consultants, was the basis of its decision.
And then the letters from regulators, public interest groups, and competing transmission developers started rolling in...
Competing developer Atlantic Grid sums up the problems with PJM's over-managed RFP process quite nicely:
Lastly, this decision is risky as precedent for future RFPs that should encourage innovative, well-engineered proposals and rigorous competition. In a typical RFP, a problem in need of fixing is published and competitors are invited to submit proposed solutions. The customer (PJM in this case) evaluates the proposals, disqualifies the ones that don’t work, and makes a selection from the remaining qualified projects. But PJM’s RFP was more like a “call for ideas.” It appears that PJM took the proposals and then re-engineered a solution it liked best by mixing and matching pieces from different project proposals. The result is that PJM’s recommended 7K Project looks almost nothing like the original 7K proposal submitted by PSE&G. Unfortunately, if this RFP sets the pattern for the future, PJM will discourage participants from spending time, money and engineering resources to develop innovative, well-engineered RFP responses. And ratepayers will lose when the robust, competitive process PJM hoped for fails to develop.
Somebody needs to step in here and put PJM staff on a strict non-manipulation diet. I know it's really hard to step away from the buffet line when you've been gorging for years, but that kind of manipulation made the entire RFP worthless, and wasted the time of the independent developers who invested time and money in innovative proposals. Hey, who remembers Primary Power
and FERC's hope that Order No. 1000 would put a stop to that kind of favoritism? I'm thinking it didn't work.
Atlantic Grid points out PJM's "constructability" error:
For PJM it is risky because significant permitting hurdles mean that the project
has a high likelihood of being rejected at the state and/or federal levels and a
needed reliability solution will be substantially delayed because PJM has proceeded down a dead end. As discussed below, the New Jersey Board of Public Utilities (NJBPU) has submitted comments warning about the permitting risks of all of the preferred options, including the 7K Project, and pointing out that none of the preferred options took advantage of the opportunity to get a preliminary determination of permitting feasibility. The NJBPU warns that the protests, delays, and costs well above initial estimates for mitigation during construction that plagued the Susquehanna-Roseland project also may affect PJM’s recommended solution “especially given that a viable alternative exists.”
And what happens when PJM makes a "constructability" error? Sixty-some-odd-million consumers will end up paying for more failed projects
, and reliability will suffer.And that brings us to... the regulators.
The New Jersey Board of Public Utilities and the New Jersey Division of Rate Counsel sent a joint letter
to the Board of Managers, pointing out that the "constructability" of PJM's selected project will receive national, even international, opposition from environmental groups because of its unnecessary crossing of "wetlands of international importance." New Jersey regulators point to the LS Power proposal as a lesser cost and more environmentally friendly alternative.
Competitive developer LS Power not only called PJM on its heavy-handed, manipulative "evaluation" of competing proposals, but it also threw a bomb into the center of the room. LS Power has offered to cap its project cost at $171M, much less than the PSE&G project's $297M estimate.
Well, that's a first. A transmission project with a firm cost cap that requires the developer to actually perform during construction. This is exactly the kind of "performance-based" behavior Congress expected out of transmission developers when handing them very profitable incentives in Sec. 219 of the Energy Policy Act. Unfortunately, FERC didn't see it that way and chose to open the incentive buffet with absolutely no performance standards or cost caps on qualifying projects. The more it costs, the more they make!
The Delaware Public Advocate's letter, on the other hand, supports PJM's choice of the 7K project. But, Delaware's support is not because 7K is a superior choice from a "constructability" angle, it's simply because Delaware will be allocated less total cost from the 500kV 7K project than from LS Power's cheaper 230kV solution due to PJM's new cost allocation methods. Well, if this isn't a walking advertisement for cost allocation issues causing short-sighted transmission choices...
Dominion's transmission company (because if you don't have your own independent transco in order to take advantage of extra FERC incentives, you're just not part of the "in" crowd these days) also takes issue with the way in which PJM evaluated projects and made its selection.
Exelon doesn't shill for its own losing project, but concentrates on the mess PJM made of its competitive process, and makes some suggestions for improvement.
Here's a suggestion Exelon didn't think of... why not remove any sponsor-identifying information from the proposals before evaluating their technical merits, costs, and "constructability"? Playing favorites among incumbents seems to be the most basic problem here. Maybe PJM can issue little blindfolds to their planning staff, because justice is blind and all, especially when she gets her eye poked out with the rod of favoritism.
And bringing up the rear of the letter flurry, New Jersey Sierra Club slaps PJM with a glove regarding the environmental issues with its selected project. This is pretty much a guarantee of a public opposition charlie foxtrot that PJM would do well to heed.
So, when is PJM's selection of new projects going to become a truly competitive, cost effective and forward-looking process that builds for the future? PJM has not improved its processes under Order No. 1000, and its ratepayers and consumers are going to be the ones to suffer poor "constructability" choices, short-sighted "minimum required for now" choices, and ineffective, but cheap solutions to reliability issues.
This is one giant FAIL.
Remember the letter to the TVA
from Tennessee Congressmen Alexander and Fincher that asked some hard questions about Clean Line's Plains and Eastern Project?
The TVA has responded, and it's not looking good for Clean Line! The letter, from TVA CEO William Johnson, is an exercise in reading between the lines, but here's my take on it, in a nutshell:
Clean Line is not economic for the TVA and presents reliability issues.
The answers to Alexander's and Fincher's questions are:
1. Does purchasing electricity from this distance increase security threats to TVA's
power supply? Former U.S. Secretary of State George Schultz has said we should
pay attention to generating more energy where we use it because of national
The power grid is a complex, interconnected network of generating plants,
transmission lines, and distribution facilities. This system is designed with
redundancy and resiliency at its core to ensure a reliable electric power system.
Some increase in security risk is unavoidable as distance increases between
generation and point of use. The extra distance provides additional exposure for
natural or malicious events to force a transmission path out of service. The potential
for an interruption with long duration to power supply increases if full transmission network redundancy is not provided or as greater amounts of supply are obtained
from more remote sources. The Department of Defense has become aware of this
risk; it is implementing a program to make its major installations self-sustaining in
energy to mitigate the potential interruption from the grid.
Translation: Yes. The most reliable system is one where generation is located as close as possible to point of use. Long transmission lines increase the opportunities for equipment failure, natural disaster, or terrorist activity. Our military realizes this and has begun to island itself from the vagaries of our increasingly complex grid and long distance power shipments by building its own secure generation sources on site, which is known as distributed generation.
2. What is the cost of purchasing wind electricity compared to TVA generating or
purchasing other types of electricity generation?
TVA is studying the addition of new wind energy resources as part of the
development of its new Integrated Resource Plan (IRP). This process provides
opportunity for public participation. When TVA evaluates the cost of wind energy,
we include the value of the energy itself, as well as the cost to transmit out-of-valley
wind energy to the Tennessee Valley. In addition, there are costs associated with
the intermittent nature of wind generation. Through the IRP, TVA will rigorously
compare wind energy purchases against other alternative sources of energy
(renewables, new and existing TVA generating assets, or purchased power) to
serve local power companies and directly-served customers in a cost-effective
In FY2013, TVA's average fuel rates by asset type were as follows: nuclear,
$6/MWh; coal, $32/MWh; and gas, $39/MWh. The TVA average system fuel cost,
which includes hydro (no fuel cost) and purchased power, was $24/MWh. By
comparison, off-system wind purchases were $80/MWh (including transmission).
The cost of both wind and solar have trended steadily down in recent years. Lazard
Freres and Company, LLC, a leading financial advisory firm, does a periodic study
on the costs of renewable energy. Its most recent report states that the cost to
generate wind with the Federal production tax credit (PTC) is as low as $23 MWh;
without the credit, the costs are as low as $45 MWh. (Note that these are
production costs that do not take into account the cost of delivery to or the impact on
the TV A system.)
Translation: Wind is the most expensive resource in TVA's portfolio of resources. Wind without the PTC (and there currently is no PTC) costs $45 MWh to produce. In order to get remote wind into TVA's system, Clean Line will add transmission costs that the company previously pegged at $25 MWh
, for a total of $70 MWh. This is a figure very generous to Clean Line, because it doesn't include any of the additional costs Clean Line is going to have to cover to pay for any necessary upgrades to TVA's transmission system to handle the injection of its generation. TVA's $80 MWh price for remote wind is probably pretty accurate. In addition, TVA says there are additional indirect costs due to wind's intermittent nature that must be considered. All of this number crunching will occur as part of TVA's Integrated Resource Plan, which is still in process. A decision on Clean Line is still a long way off.
3. There is substantial opposition in Congress to the wind production tax credit. Will
TVA ratepayers be at risk of increased rates if the wind production tax credit is not
TVA does not benefit directly from the PTC. As noted in the prior response, the
PTC has a material impact on the cost structure of wind developers and, in turn, the
price they can offer to TVA or other purchasers of the wind energy. Any TVA
purchase of wind energy would be under a long-term contract that would place risk
associated with the tax credit on the seller.
Translation: That would be the wind farm's problem because any contract TVA would sign would be for a fixed price. If a lack of tax incentives makes building new wind farms uneconomic, then they won't be built!
4. What is the reliability of purchasing wind power as compared to other types of
electricity generated by natural gas, nuclear, coal, or hydropower?
Because wind is an intermittent resource that lacks some of the dispatch capability
of other resources, it does not eliminate the need for base load or dispatchable
power plants like nuclear, natural gas, coal and hydropower. Adding intermittent
generation resources like wind can be challenging to manage, particularly as the
volume of generation from those sources increases. Wind patterns are fairly
predictable, but not entirely so; in addition, weather and other factors can affect
output. To maintain reliability, a wind energy purchaser must keep adequate
capacity and spinning reserves to cover the variability inherent to wind. Spinning
reserve is typically calculated as the amount of capacity available to cover the loss
of the largest generation source on the system. Utilities across the country have
been integrating more wind into their systems over the last several years, and TVA
already integrates 1,515 megawatts of off-system wind power. The industry has
growing experience with this issue, but it does make ensuring reliability more
Translation: Because wind is intermittent, it's not reliable. TVA would have to pay to have reserve generation available at all times to make up for wind's unreliability. In other words, buying wind would do little to shut down existing fossil fuel plants.
5. TVA's peak power demands tend to be between 4:00 p.m. and 7:00 p.m. and wind
tends to mostly blow at night. How does wind power fit into TVA's overall demand
structure if the electricity isn't being produced when TVA needs it the most?
TVA analyzes historic and forecasted wind patterns to determine expected wind
deliveries at our system peak. Our forecasting and planning processes reflect
adjustment to wind generation at our summer peaks based on this analysis. Clean
Line has told us that a production profile provided by the independent meteorology
firm, 3Tier Oklahoma, shows that panhandle wind energy produces at about a 50
percent capacity factor between the hours of 4:00 p.m. and 7:00 p.m., thus
contributing to meeting peak demand. TVA's current wind resources produced
about 25 percent average capacity factor over that peak period last summer, with
significant variation each day (between 5 and 65 percent capacity factor). TVA will
take the seasonal and time-of-day energy patterns of wind into account when
evaluating adding additional wind energy to its portfolio.
Translation: Clean Line says its generation will be available 50% of the time, but reality and experience shows it will actually only be available 25% of the time, with extreme highs and lows. When there are lows, the lights could go out if there isn't enough reserve generation ready to go (spinning).
6. At a roundtable in September 2013, hosted by Senators Corker and Alexander, you
said that TVA didn't need additional electricity generation capacity as the result of
reduced electricity demand. Has this projection changed?
Electricity demand is not expected to return to 2007 levels until the end of this
decade. We are projecting growth in demand of approximately 0.6 percent per year,
net of TVA's energy efficiency efforts. TVA believes that we have adequate
supplies to meet the near- to mid-term energy needs of the Valley reliably. Cleaner
energy sources, including nuclear, renewables, hydro and energy efficiency, provide
diversity within TVA's existing balanced energy portfolio. TVA is evaluating future
power needs and opportunities to meet them through the IRP. Wind and other
generating resources are regularly evaluated against existing or planned asset
additions to address changing conditions.
Translation: Demand has tanked and is not expected to recover.
7. If the projection for TVA's electricity demand has changed since September 2013,
does it make more sense to purchase this wind power from Clean Line Energy
Partners, to build additional nuclear capacity, or to build additional natural gas or
While demand over the next decade or so is predicted to be stable with low growth,
the TVA generation fleet is in transition. TVA has retired or will retire a substantial
portion of its coal fleet; we are committed to the completion of Watts Bar Nuclear
Plant Unit 2 and to a large new gas combined cycle plant in Paradise, Kentucky.
We have the potential to get incremental megawatts from the hydro system and a
significant amount from power uprates in the nuclear fleet. We have to either
retrofit, retire, or replace the Allen Plant in Memphis before 2019 under the terms of
an agreement with EPA and others. (Clean Line cannot supplant Allen because of
the need for a generation source physically located in that area to provide
transmission support that imported wind generation cannot provide.) In addition,
other market participants have approached TVA with expressions of interest to
provide electricity from gas, nuclear, wind and solar assets. TVA also factors in
energy efficiency and demand response programs into its resource decisions. The
recently announced draft 111 (d) rule from EPA, if enacted in its current form, will
also have a national impact on future decisions.
Clean Line will be evaluated in this context of low growth, transitioning fleet and
other options by application of the statutory mandate and guidance noted in the
preamble of this letter.
Translation: In a word, no. Clean Line isn't even a useful substitute for generation from coal plants that TVA is planning to close. There are plenty of other resources available.
The rest of the questions deal with eminent domain questions, which TVA could have batted away entirely because TVA will not participate in those activities. However, TVA answered each question with, "Clean Line said...." and repeated the same old carefully crafted lines about "voluntary acquisition," continued use of the properties for farming and ranching, and compensation in accordance with Clean Line's paid-for market value studies. Read these answers using a falsetto voice for the things Clean Line said and you'll get a better appreciation for TVA's tongue-in-cheek repetition of Clean Line propaganda.
Bottom Line: Clean Line needs to look elsewhere for customers for its Plains & Eastern payload.
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?