On August 19, the U.S. Department of Energy issued its long overdue "National Electric Transmission Congestion Study" for public comment. You're the public! Serendipity!
I'm not sure what DOE is trying to hide, but I didn't get any notice about this study, although I participated in one of the webinars, and usually get 15 copies of these kinds of notices forwarded to me from lots of different folks when they get them. Nope. *crickets*
Maybe it's because I've been engrossed in the project from hell and not paying attention to much else?
Virtual paper cuts be damned, I happened across it the other day while putting together some links for a transmission opposition group. Serendipity, again!
It looks like the DOE really didn't pay much attention to the comments it received before writing this study. They still seem to think that we need more transmission to make sure that every electron produced can be used anywhere else, no matter how far from the generation source.
The DOE is supposed to do a triennial congestion study. That means every three years. But after it got the stuffing kicked out of it in the 9th Circuit over its 2009 designation of National Interest Electric Transmission Corridors (NIETCs) without properly consulting the states, and without performing a proper environmental review of said corridors, we can understand why DOE is only just now getting around to the triennial study it was supposed to complete in 2012. It's taken them this long to venture timidly out of their cave. I'll guess that this "study" is only a tentative foray back into the game, since it states that another study will be completed in 2015, to keep to the original triennial schedule. It's September, 2014 now, right? DOE moves at a glacial pace... Seriously? What's the point of this year's study?
Anyhow... please do read the 175 page study, paying particular interest to your particular geographic area, or transmission project of concern.
And I'd like to mention a few special things that DOE said in this report that you should be thinking about while crafting your comments.
The first is a particular pet peeve of mine. Perhaps in my next life I'll finally find time to do the full accounting of the TRUE cost of building new transmission that I've been constructing in my head over the last few years while listening to how transmission proposals affect hundreds of opponents across the country. Maybe we can start making a dent in it by addressing it here. DOE says:
Construction of major new transmission facilities, in particular, raises unique issues because transmission facilities have long lives – typically 40 years or more. Evaluating the merits of a proposed new facility is challenging, because common practices take into account only those expected costs and benefits from a project that can be quantified with a high degree of perceived certainty. This has two effects:
First, it leads to a focus on the subset of cost and benefits that can be readily quantified. Not taking into account the costs and benefits that are hard to quantify has the effect of setting their value to zero in a comparison of costs and benefits.
Second, it leads to projections of costs and benefits that are generally on extrapolations drawn from recent experiences. Projections based only on recent experiences will not value the costs and benefits a transmission project will have under very different assumptions or scenarios regarding the future because they ignore or discount the likelihood of these possibilities. Such a narrow view of the range of costs and benefits that could occur provides a false sense of precision.
Transmission developers are all about tossing made up, speculative, or fantasy "benefits" onto the table in order to make their projects appear to pass a cost-benefit analysis. But no one has ever quantified the REAL cost of transmission. I'm not talking about a project's total capital spend, or its annual revenue requirement. I'm talking about the very real costs to landowners who are unlucky enough to be picked to sacrifice their homes, businesses, retirement, health, peace of mind and countless other intangible COSTS for the benefit of the electricity-slurping public in some far off city. Market value payments for the involuntary sale of transmission right of way only attempt to compensate for the value of the land, not all the other costs to the landowner's way of life that can't be... in DOE-speak... "readily quantified."
Also, the DOE still seems to think that offshore wind is experimental.
As will be discussed later in this chapter, many states adopted Renewable Portfolio Standards with requirements or goals to use more renewable‐sourced electricity.
Because much of the best utility‐scale renewable resource potential is relatively remote from the load centers, the states then had to authorize new transmission construction to enable the desired renewable‐based electricity to reach the grid.
Maybe you can give DOE a link to its own map
showing the best utility-scale renewable potential located just a few miles offshore, conveniently near load centers? Quit tinkering, Einstein, and get 'er done!
And how about this?
Many points of transmission congestion today result from the need to deliver electricity from
changing sources of generation. For example, generation sources are changing because of
state‐mandated RPSs. The best renewable resources (i.e., those with the highest potential capacity factors) tend to be located far from load and sometimes in areas with less transmission than desired for effective resource development. Existing transmission constraints may deter development of these resources. While this is not a challenge in all parts of the Eastern Interconnect, it is a principal cause of evolving congestion concerns in the Midwest.
Maybe you could let the DOE know about the economic benefits that come with LOCALLY-produced renewable energy? Jobs, tax revenue and economic development happen where renewables develop. States that buy, rather than create their own, renewables are only exporting their energy dollars to other states or regions and hurting their own communities.
Oh, and let's make this next part a fun scavenger hunt... can you find all the little hidden mentions of the Clean Line projects in this report?
So, what's the point here? The DOE is going to use this draft and the comments it receives to create the final report. From that report it may designate National Interest Electric Transmission Corridors (NIETCs). NIETCs are very bad news, and a stupid idea left over from the 2005 energy policy act (don't ya wish your congress-person would get off their tookus and fix that mess?)
Designation of an area as a National Corridor is one of several preconditions required for
possible exercise by the Federal Energy Regulatory Commission (FERC) of “backstop” authority to approve the siting of transmission facilities in that area.
No. No. NOOOO!
So, what can you do? Read the report. Write a comment. Send it here. Do it now! Comments are only going to be accepted until October 20. If you don't participate, no one's going to care what you think later...
In a predictable move, the U.S. Court of Appeals for the 7th Circuit kicked the Illinois Commerce Commission v. FERC can back to Washington today.
This case has been dragging on for nearly 5 years. When it first started, ratepayers in PJM's Illinois territory were looking at sharing a huge chunk of the cost of PJM's multi-billion dollar Project Mountaineer collection of unneeded transmission projects. Although the bill has shrunk considerably with the cancellation of PATH and MAPP, the argument has only grown.
It centers on PJM's 2006 adoption of the "postage stamp" cost allocation methodology. This method assigned costs of new transmission 500kV or greater to all ratepayers in the region based on their share of regional electricity sales. The more power an area used, the greater its share. PJM did this to spread out (socialize) the cost of its Project Mountaineer venture over more customers so it could get that transmission built before the hoi polloi noticed, "before it became common dinner table talk."
However, it's important to realize that PJM no longer uses the 100% "postage stamp" cost allocation method and hasn't since last year. Today's 7th Circuit decision will have no effect on any proposed or future transmission projects in PJM, or any other RTO. Today's decision will only affect those projects that were built (or not!) before last year's new allocation method went into effect. PJM's new, FERC-approved cost allocation methodology relies on a 50-50 split of two different methods for transmission lines of at least double-circuited 345kV or greater. The first 50% is allocated according to the old postage stamp method, and the remaining 50% is allocated either to the cost causers or the beneficiaries, depending on the reason for the project. Costs for transmission projects based on "public policy" clean energy state laws will be allocated to the states that require them under PJM's "State Agreement Approach." If a state doesn't agree to shoulder the cost burden for a project designed to meet its renewable portfolio standard, then it will not be built.
Today's decision echoed the first remand from the 7th Circuit, that found that FERC had not done enough to show that utilities in "western PJM" received benefit from Project Mountaineer that was commensurate with their cost responsibility under the old "postage stamp" allocation method.
FERC dealt with the first remand by rolling its eyes and making up more crap about how "western PJM" benefited from Project Mountaineer. It pulled an even bigger diva act on rehearing. But FERC just can't out-diva Judge Posner of the 7th Circuit.
Posner hates coal, and transmission lines that carry it. But, he loves postage stamp rates for transmission lines that are supposed to be "for wind."
This Sybil act must also be confusing to FERC, but hopefully they can get it right this time... because third time's a charm, right?
Go ahead, read today's decision. It's quite chatty and reads like some guy's geeky blog post about electricity and cost-benefit analyses, until you get to the 9-page dissent by Judge Cudahy, who seems to be writing from the other side of the political spectrum. It's fairly entertaining. However, I suspect FERC is not as amused as you are.
After enough wrangling to make a cowboy cry, the Senate Energy and Natural Resources Committee confirmed the nomination of Norman Bay as Chairman of FERC... as long as he keeps the training wheels on his regulatory tricycle for the next 9 months.
Bay can be a FERC Commissioner, as long as Acting Chairman Cheryl LaFleur gets to continue to "act" for the first 9 months of Bay's tenure.
RTO Insider has the best coverage of today's events here.
RTO Insider notes that our own Plastic Senator Joe Manchin sold out in a hurry.
Among those who had expressed concern over Bay’s limited energy policy experience was Manchin, who helped sink the bid of Obama’s previous nominee, former Colorado regulator Ron Binz.
That sparked a flurry of negotiations over the last several days among the White House, Murkowski and Energy committee Chair Mary Landrieu (D-La.), which resulted in the president’s concession not to appoint Bay chairman immediately.
Poor, old Plastic Joe. Some days, he just can't seem to make up his mind.
While Dominion has been doing a great job with directly affected landowners, the company has completely failed to disseminate any information about its project to the greater community. As if folks don't notice the access roads, the helicopters, the construction traffic, the road closures, the implosive splicing... I've gotten mighty tired of having to reassure people that this is not the PATH project, that this is a permitted activity, and that the world is not exploding. But I do it, not for Dominion, but for the people who are the victims of Dominion's "secret" rebuild project.
Mt. Storm - Doubs (MSD) is a smarter, better solution than building the PATH project ever was. So, let's get 'er done, fellas, so that I can stop having this distraction sitting on the edge of a rather full plate
The MSD transmission line begins in Mt. Storm, West Virginia
and ends at the Doubs substation in Frederick County, Maryland. The 96 miles of the line located in West Virginia and Virginia are owned by Dominion. The last 3 miles of the line in Maryland are owned by FirstEnergy. Each company is responsible for permitting and constructing its own segment of this project. Dominion has been working on its portion of the project for more than 4 years. FirstEnergy only recently got off it's corporate ass to do its part on the last three miles.
Well, yay, FirstEnergy! You da man! Fourteen transmission towers and 3 miles of line?
Awesome! Put Toad Meyers in a hardhat and push the "on" button. That should ameliorate your billing and meter reading fiasco, right?
Back in 2010, while the PATH was still madly attempting to get it's 300 mile, 765kV transmission line sited and permitted
on new right of way, Dominion dropped a bombshell on transmission planner PJM Interconnection
. Dominion proposed several alternatives to the PATH project (which was never actually "needed"). One of the alternatives involved rebuilding MSD because of deteriorating towers. A rebuilt and modernized MSD would increase the thermal capacity of the existing line 66% and make the addition of PATH's capacity unnecessary. Both PJM and PATH partners FirstEnergy and AEP tried to deny the proposal and insist that PATH was still necessary
. That was the beginning of the end for PATH. The Virginia SCC got mighty suspicious
and ordered PJM to re-run some data on the necessity for PATH if MSD was rebuilt. Low and behold, the data showed that there really wasn't a need for PATH after all and PJM suspended (and later cancelled) the PATH project. PATH withdrew all its project applications and went into hiding, after wasting a quarter billion dollars of consumer funding on the project.
Ahhh... good times! :-)
Now FirstEnergy says "look at me!" and give me credit for modernizing the electric grid.
Kind of makes you wish that someone would drop a load of insulators on Toad's hard hat, doesn't it?
Oh, what would I do if I didn't have this little outlet...
"Transmission siting fatigue." I ran across this rather apt phrase recently while poking through a FERC docket
FERC defines "transmission siting fatigue" as:
Transmission siting fatigue is the idea that, after a transmission line is sited and permitted in an area, it will be significantly more difficult to get an additional transmission line sited and permitted in that same area.
Reasons for this were noted as:
- Regulatory concerns - A state public utility commission will begin to look skeptically at multiple projects vying for permission to accomplish very similar goals.
- Environmental concerns - Multiple new rights of way through environmentally sensitive areas are going to cause trouble with Big Green.
- Urban areas - There's only so much open land available in urban areas. Having it all clogged up with multiple transmission lines means there may not be room for more!
Let's add to that list, shall we?
Once an attempt is made to site a line through a community, the people get informed and organized and will oppose the transmission project. Siting a second project in the same community would likely rekindle this knowledge base and organization.
In the past, opposition groups would rise up when transmission was proposed. But after the immediate, personal threat to each individual was ameliorated, interest would fall away, and the momentum and assembled knowledge would be lost. This is why routing changes were often effective tools for transmission developers, because with each new route, new opponents would have to start all over again with the education and organization process. With each new route, the time available for the opposition becomes shorter, and, like a game of hot potato, someone finally ends up with the transmission line on their land.
But that was then, this is now.
Because of "transmission siting fatigue" and today's quick and easy sharing of information via the internet, transmission opposition no longer has to re-invent the wheel each time a transmission route threatens. "NIMBY" is no longer part of the game and opponents from many different projects have joined forces against their common enemy.
The growing transmission opposition knowledge base can easily be accessed to jump start new opposition groups, and effective opposition strategies can be quickly passed from one group to the next. Nothing draws kindred souls together like the threat of eminent domain and new transmission rights of way. Opposition is a brotherhood, a private club, a state of mind that outsiders don't understand. We are one cohesive unit.
Transmission siting fatigue is everywhere and can no longer be avoided. It's here to stay!
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."
Ever listened to an investor owned utility's earnings call? They're an acquired taste, because your first one sounds like complete and utter gibberish. Are these people speaking English? Is there some fancy 1% business speak language that they didn't teach you in school? Nope. I think company management just plain ol' makes crap up to keep the investment analysts guessing.
Case in point -- Nick Akins and his "block and tackle spending."
And then, when you look at the other capital that we're spending, it's block and tackle spending that typically is recovered from a regulated standpoint.
Blink. Blink. What? Just for shits and giggles I plugged "block and tackle spending" into google. I got a wikipedia description of block and tackle
that describes it thus: "...a system of two or more pulleys with a rope or cable threaded between them, usually used to lift or pull heavy loads,"
and a whole bunch of boating websites. So, Nick is going to rig up some contraption that spends money using a system of pulleys and rope? Sounds complicated. I guess that's why they pay him the big bucks!
Anyhow... once you realize that the emperor has no clothes and that these corporate elitists are really not speaking in some special language, like pig latin, that your plebeian self doesn't understand, earnings calls are quite entertaining. AEP's 4Q 2013 call on Monday was no exception.
AEP's CFO finally gets around to admitting that energy efficiency has flattened out residential demand growth and it's not expected to recover.
Residential sales, shown in the upper left quadrant, were up 0.9% for the quarter, which brings the annual sales flat to 2012. We continue to see modest customer growth in our Western service areas, while our East customer accounts were essentially flat. Average usage per customer has been impacted by home energy efficiency programs. For these reasons, we are expecting normalized residential sales to be down nearly 1% in 2014.
Too bad he's arriving late for the party. How much do they pay this guy to make these brilliant conclusions?
AEP also got some apt questions about its planned "transmission spend," such as what it's going to take to make AEP fall out of love with transmission as an investment vehicle... oh, say, maybe as a little section 206 complaint or two:
Michael J. Lapides - Goldman Sachs Group Inc., Research Division
Yes, 2 questions unrelated. First, on the transmission side. We've seen in the MISO and in New England dockets where interveners are seeking lower transmission base ROEs. If same things happens in some of -- whether it's the Southwest Power Pool, whether it's in PJM, how -- what do you think that tipping point is where we change or, I don't know, you're incentive or your desire to be a sizable investor in transmission in the U.S.?
Nicholas K. Akins - Chairman, Chief Executive Officer, President, Member of Executive Committee and Member of Policy Committee
I think, as long as transmission is, at a premium or equal to the state rates, we're in good shape. And I think, clearly, there is an incentive being placed on building transmission. We're happy with that. And if -- really, once again, the FERC needs to send some messages here that from a policy perspective that we want to continue building transmission in this country. And as long as that premium is at or above the state rates, then we're in good shape.
Brian X. Tierney - Chief Financial Officer and Executive Vice President
FERC was clearly, Michael, looking to attract a capital into this space. And what they've done with their ROEs has done exactly what FERC wanted to happen. So as long as they, as Nick was saying, as long as they continue to send a signal that they want increased investment in this area, we'll respond to that signal.
Nicholas K. Akins - Chairman, Chief Executive Officer, President, Member of Executive Committee and Member of Policy Committee
Okay, I think it's good -- I think, it continues to be part and parcel to the overall grid expansion that's going on in the resilience of the grid. And there's going to continue to be spin regardless. The question is, do you really want to satisfy that precursor of transmission being build out to respond to the generation retirements and so forth to optimize the grid so that you can do that as a prerequisite and then focus on the rest of the underlying system. That's what key. I think you got to get through this transitional process we're at in this industry. So transmission needs to be incentivized in that regard because that will provide the greatest benefit in terms of resiliency of the grid, but also in terms of the optimization of the resources that are attached to the grid.
Blah, blah, blah, grid expansion, transmission build out, blah, blah, what could go wrong
What about fierce, organized opposition to AEP's transmission plans? The people have spoken and their action has seriously complicated or delayed many of AEP's transmission plans, in the past, currently, and in the future. In fact, opposition is getting more organized and more knowledgeable. And we're not going away.
AEP needs a new business plan. Transmission is not the carefree investment vehicle Nick thinks it is...
Frederick County Commissioner Billy Shreve is asking Potomac Edison to donate some land for a park; specifically, the 150-acre Browning Farm, where the utility was planning to build a substation for the Potomac Appalachian Transmission Highline.
He called it a win-win for First Energy and county citizens.
Mr. Akins said he wants to avoid the bruising battles that delayed or doomed big projects in the past, like the 275-mile Potomac-Appalachian Transmission Highline project from West Virginia to Maryland. AEP and partner FirstEnergy Corp. dropped development plans for the complex project in 2011.
"Sometimes, we were just dreaming" that the companies could get enormous power lines built across multiple states, Mr. Akins said. He said AEP now is focusing on shorter projects blessed by federal regulators that eliminate grid bottlenecks. "It's where you want to put your money," he said.
The transmission investment gravy train has also left the station. The sheer number of new transmission projects proposed combined with today's ease of online information sharing and social media tools has led to an explosion of knowledgeable, interconnected transmission opposition groups who are combining resources across the country to delay or stop unneeded projects altogether.
Instead of embracing innovation and new technology to make the existing grid smarter
, some utilities are intent on merely building more of the same old dumb grid, or actively attempting to stifle innovation by forcing us all into an historic "consumer" position where we must funnel money to incumbent utilities in order to survive
. Ultimately, this plan will also fail, because technology marches relentlessly on
How we produce and use electricity is also changing. Not only is producing our own electricity locally better for our economy, it's also much more reliable. Hurricane Sandy was one of the biggest wake-up calls we've had recently, and the inevitable Monday morning quarterbacking of that disaster reveals that increasing long distance, aerial transmission from remote generation is simply dangerous.
Making our grid more reliable isn't about building more transmission. It's about change:
This includes traditional tactics, such as upgrading power poles and trimming trees near power lines. But it also encompasses newer approaches, such as microgrids and energy storage, which allow operators to quickly reconfigure the system when portions of the grid go down. Implicit to such plans is the need to ensure uninterrupted power to critical sites such as oil and gas refineries, water-treatment plants, and telecommunication networks, as well as gasoline stations, hospitals, and pharmacies.
Some of the nation’s leaders seem receptive to such approaches.
Elected officials, progressive regulators, energy producers, energy consumers, and innovative companies embracing new technology are also increasingly joining forces to move our energy economy forward and away from the dated centralized generation and transmission business plan of the past. Companies who continue to deny the inevitable will ultimately be the ones left behind in irrelevance.
The Columbus Dispatch
and a couple of investment analysts gushed all over AEP CEO Nick Akins for "leading on ideas" yesterday.
What's Nick's idea? Getting out of the generation business and betting AEP's future on long-distance transmission.
...a transformation of the company’s structure and a shifting notion of what AEP needs to do to remain relevant in a changing energy landscape.
In doing so, the company is de-emphasizing what was once a crown jewel, the fleet of Ohio power plants, and putting a greater focus on developing an interstate network of power lines.
“The less we have to spend on centralized generation, the better off we are,” he said in a recent interview.
When he says “centralized generation,” he means big power plants. AEP will be closing more plants than it is building.
The company is shifting resources so it can expand its transmission system, made up of the high-voltage power lines that carry electricity across state lines and between metro areas.
Maybe ol' Nick missed the EEI report earlier this year, Disruptive Challenges: Financial Implications and Strategic Responses to a Changing Retail Electric Business
. The report cautioned electric utilities to avoid "that Kodak moment" for investors by embracing new technology and addressing competitive threats.
While getting out of the competitive centralized generation business "addresses" the threat that AEP may lose some of it's golden eggs in an unpredictable market, AEP is not embracing new technology or making itself relevant in a changing energy landscape. It's simply putting even more of its golden eggs into a business plan that it will help to make obsolete.
As competitive centralized generation closes, it is being replaced by independently owned distributed generation. Distributed generation doesn't need new transmission. Nick won't be collecting any eggs if he kills all the chickens.
A better idea to embrace new technology and establish future relevance was adopted by competitive generation company NRG earlier this year.
...NRG is installing solar panels on rooftops of homes and businesses and in the future will offer natural gas-fired generators to customers to kick in when the sun goes down, Chief Executive Officer David Crane said in an interview.
AEP loves regulated businesses. It's a guaranteed revenue stream for a bulky, staid, not-particularly-innovative company.
AEP, which was reluctant to split its Ohio operations, has responded by focusing on the delivery business.
Meanwhile, the Ohio power plants are a shrinking asset. Because of environmental rules and the age of some of the plants, the company has announced a series of shutdowns that will occur over the next few years.
Also, AEP is in the process of transferring two plants away from Ohio regulation. The plants, both of which are in West Virginia near the Ohio line, will be regulated in nearby states that allow a utility to sell electricity directly to consumers.
Once the moves are complete, AEP will have 8,668 megawatts of power-plant capacity in the new Ohio power-plant subsidiary, which will be down from 11,652 megawatts today.
Akins says the company is responding to an economic climate in which there is little reason to build power plants in Ohio. The state’s electricity demand has been flat, and the regulatory structure provides no clear way to pay for plant construction.
So, dumping competitive, centralized generation is a smart idea, but increasing investment in long distance transmission to support a shrinking pool of centralized generators is not sustainable.
While AEP is banking on federally regulated interstate transmission to nearly double earnings from transmission activities from 2013 to 2014, AEP seems to have forgotten what happened with its PATH project. Big, interstate transmission projects with long lead times lead to big failure. That's because "need" for these projects is constantly shifting, and if opposition can delay them long enough, they become obsolete. Opposition is growing by leaps and bounds. AEP ain't seen nothing yet!
It's a risky proposition and I don't think it's a particularly good idea.
Akins says he’s having fun and is eager to see the work of the past two years come to fruition.
“We are now at a point where we can start defining our success,” he said. “Before, we had a huge anvil we were dragging around, whether it be environmental expense or whether it be other things we were dealing with that were reactionary. We’re finally at a point where we can map out the strategy of this company going forward. It is exhilarating.”
We'll be "having fun" too, supporting companies embracing the new technology of distributed generation, and dragging the progress of AEP's transmission projects down like a huge anvil. Although AEP can ignore growing public discontent, it ultimately cannot be denied.