The interview is a teaser for next weekend's SOUL Wisconsin Energy Action Fair, where we will be speaking.
Hope to see you at the fair!
Missed the show? Listen to a replay.
Here's another article.
Won't we have fun?
Tune in at 10:00 a.m. Eastern on Tuesday morning to hear the hour-long interview we did with WDRT's "Heart of Wellness" radio show.
The interview is a teaser for next weekend's SOUL Wisconsin Energy Action Fair, where we will be speaking.
Hope to see you at the fair!
Missed the show? Listen to a replay.
Here's another article.
Won't we have fun?
Keryn and Ali filed a third Formal Challenge to PATH's rates at FERC today. The previous two Challenges, which were granted in part and set for settlement and hearing by FERC last fall, covered PATH's spending in 2009 and 2010. The Challenge filed today covers PATH's 2011 expenses.
Remember, the project wasn't put into abeyance until Feb. 28, 2011, and then PATH had the rest of the year to wind down its unneeded project and wallow in the financial and logistical mess it had made.
The total of this third challenge is $4.4M, and when added to the $5.7M set for hearing in the previous challenges, the amount challenged totals more than $10 million dollars. What could you have done instead with that $10M?
The Challengers ask for the Commission to grant the Challenge and consolidate it with the existing Challenges, which were consolidated with PATH's abandonment.
We do hope you enjoyed your April Fool's day as much as we did...
FERC issued a whole bunch of interesting decisions at its meeting last week. Unfortunately, I've been too busy over the last week writing FERCenese* to spend much time reading it.
Finally, here's your first FERCenese translation from last week about FERC's Order on Rehearing regarding postage stamp rates in PJM.
Not surprisingly, FERC reconfirmed it's original Order on Remand and brushed off all the arguments made by parties in their requests for rehearing. The Commission continues to cling to its illogical presumption that “When a system is integrated, any system enhancements are presumed to benefit the entire system.”
Also not surprisingly, Commissioner LaFleur dissented (again). However, joining her in dissenting this time around was the newest addition to the FERC stable, Commissioner Tony Clark.
Both dissenting Commissioners mentioned that FERC is reaching by assigning PJM "system wide benefits" to "Western PJM" entities like ComEd in exchange for bearing 14.7% of the costs. These "system wide benefits" accrue from membership in PJM, and not from construction of the subject transmission projects. Commissioner Clark also opined that FERC has fallen short of the 7th Circuit's directive in remanding the case back to FERC.
Although I usually encourage you all to read these filings yourself, this Order is a real deja vu snoozer that doesn't say anything new. Everything you need to know is contained in the dissents.
Commissioner LaFleur's Dissent
Commissioner Clark's Dissent
The only thing different this time around is that a new cost allocation process for PJM transmission projects has been approved as part of PJM's Order No. 1000 compliance. The new cost allocation method became effective February 1, 2013. Therefore, this Order on Rehearing affects only a specific set of transmission projects approved between June 20, 2006 and February 1, 2013 (aka The Project Mountaineer Era). These projects (TrAIL, Susquehanna Roseland and the dearly-departed, abandoned PATH and MAPP) will continue to be allocated and paid for by the postage stamp rate methodology that has been decided in this Order.
PJM's new cost allocation methodology will allocate 50% of the cost of transmission 345kV and over by postage stamp methods, with the remaining 50% allocated via a DFAX methodology, which more accurately assigns costs to those who cause them and to those who receive current benefits from the project. (More on that in a future FERCenese translation).
So, while "Western PJM" will continue to pay an equal share of 500kV+ Project Mountaineer lines that are exclusive to the east coast, the current 345kV expansion going on in "Western PJM" (where they don't build 500kV lines) won't be allocated to "Eastern PJM" in the same proportions. Sound fair to you?
FERC reasons that since this postage stamp business now applies only to a finite, historical set of projects that this decision will put the matter to rest.
Probably not. The parties can now bump it back to the 7th Circuit.
And, curiously enough, the Illinois Attorney General intervened out of time in the PATH abandonment docket today.... because now Illinois is going to be stuck paying 14.7% of PATH's abandonment costs. Coincidence?
*FERCenese: [fur ken ees] noun
Style of technical, legal prose utilized in filings and orders at the Federal Energy Regulatory Commission. To the average layperson, the filings appear to be written in a language other than the familiar English. The Scott Thorsen Dictionary, 2013.
If you've been wondering what's going on with PATH's abandonment and the Formal Challenges at FERC, here's your update.
Sorry, that's the only public information that's available.
While you wait for closure, perhaps you can entertain yourself contemplating the meaning of FERC's paper mache sculpture that sits in the hallway outside the hearing room.
"The evidence is clear that generators are profiting excessively from RTO power markets, and that sellers’ rates are not ‘just and reasonable’ as the law requires. Consumers are paying the price, to their detriment and that of the overall economy."
That's the conclusion of a report on FERC's restructured regional electricity markets published in December by Elise Caplan of American Public Power Association and Stephen Bobeck of the Consumer Federation of America.
The report takes a look at how FERC has restructured regulation of wholesale power to rely on market based rates and regional transmission organizations. "FERC has chosen to rely on supposed market “competition” to ensure that prices are “just and reasonable,” as required under the Federal Power Act."
Do these markets work to protect consumers? No. The report opines that, "Instead, evidence is mounting that customers have been harmed by the markets."
Despite repeated attempts to get FERC to do some sorely needed analysis and adjustment to its competitive market experiment, "FERC has still not undertaken such an analysis. But there is a wealth of data available to support the conclusion that consumers actually have been harmed by the restructuring of wholesale electricity markets and that access to alternative retail suppliers does not solve the fundamental problems of the wholesale market from which those suppliers must purchase power."
In the report, "...we discuss specific RTO rules and structure that have provided opportunities for excess generator earnings at the expense of consumers."
In uncompetitive RTO cartel electricity markets, "Offers into the energy market need not reflect the sellers’ actual costs of generation, as FERC would have required under a traditional cost-of-service ratemaking regime. Rather, the sellers set their own price offers, regardless of their actual costs, subject only to review and possible adjustment by the RTOs’ market monitors. In PJM, the market monitor typically mitigates less than one percent of the energy offers in both the real-time and day-ahead markets."
Thanks, Market Monitor! Always looking out for my interests, aren't you? It's just too bad that PJM's attempt to replace the Market Monitor isn't intended to provide more protection for consumers, but LESS.
And here's another problem we've written about before that pops up in the report: "The conceptual basis for LMP is that these differential prices will send “price signals” to indicate where there is a need for new generation or additional transmission capacity, or to reduce load through conservation or shifting the times when energy is consumed. As discussed below, this theory has not borne fruit in practice."
In PJM, new transmission is always proposed before new generation has a chance to happen, and demand side resources aren't given serious consideration. This is why consumers are now paying half a billion dollars for two failed transmission projects -- transmission projects that were approved and intended to be quickly rammed through before demand side resources and new generation could be recognized. Ultimately, PJM's Project Mountaineer scheme failed, along with the transmission projects, when demand side resources and generation developed despite PJM's best efforts to squelch them.
"The theory behind locational pricing is to provide price signals indicating where new transmission and generation is most needed. But in reality, new resources have not developed to respond to higher prices in these markets. Instead of inducing new resource development, the higher prices provide a financial incentive for incumbent generation owners to keep supplies constrained, or at least to ensure that prices bid by new market entrants remain high.
The financial benefits of constrained supplies can be seen in the candid presentations by merchant generation owners to the financial community wherein the potential closure of coal plants is touted as a benefit to their earnings."
You know... like how FirstEnergy's wave of coal plant closures last year provided the company with jacked up capacity prices in ATSI and a whole bunch of new transmission projects in which to invest its "transmission spend" to increase the company's earnings. Remember that?
So, what protections are built into RTO markets, and do they work? "FERC relies solely on market monitors for each RTO to determine whether the wholesale electricity markets are competitive. These market monitor analyses are based on a limited frame of analysis that ignores evidence, such as the profitability data presented later in the report, which raises questions about the competitive nature of these markets. Moreover, the reports issued by the market monitors do not always support a definitive finding of competition. For example, in the most recent State of the Market Report for PJM, the market monitor found that the local market structure in the energy market and both the local and aggregate market structure in the capacity market were not competitive, as was the structure and the performance in the regulation market."
Go ahead, click through and read this analysis:
"Prior to examining the empirical evidence of the effects of RTO markets on electricity prices paid by utility customers, this section describes the structural flaws in RTO markets – conceptual problems that have led to higher prices than would have occurred absent such markets. These fundamental features of RTO markets, discussed below, provide both incentives and opportunities for merchant generators to earn excess revenues at the expense of consumers".
How does PJM "fix" their markets when things go awry? "When a given market structure does not achieve its goal of providing satisfactory revenue to RTO generators, the response – prompted by generators, many of them the spun-off affiliates of formerly vertically-integrated utilities – has been to induce the RTO to add a new, more complex market or a rule to prop up prices, such as a tightening of the minimum offer price rule in PJM." This kind of "make the rules up as you go" is the basis for the most recent bickering over new MOPR rules secretly concocted by PJM and its incumbent generators. This is the behavior of a cartel, not a competitive market.
If competitive markets save money for consumers, why do "RTO generation owners’ 10-K reports to the Securities and Exchange Commission list restrictions on competition as a potential risk to their earnings?"
The evidence examined in the report "lead[s] to a conclusion that the restructured RTO-operated markets have increased prices above what would be seen in the absence of restructuring."
How much? "...a possible $12 billion excess payment from consumers to generating companies that do not face genuine market competition – demonstrates the scope of restructuring’s negative impact."
And this about sums it up:
"The greatest beneficiaries of restructuring have been not consumers, as was promised, or innovative companies that were expected to emerge, but the “usual suspects” – owners of previously regulated, largely depreciated generating units."
How do we fix this mess? "It is crucial that FERC, as the regulator responsible for ensuring under law that wholesale prices are just and reasonable, determine whether RTO markets are achieving their cost-reducing potential, and, if not, to implement needed reforms."
Don't hold your breath. FERC refuses to even examine the results of their RTO experiment, much less take any action to fix it. Perhaps it's time for Congress to step in.
If you've been following PATH's abandonment recovery case at FERC, here's the latest.
PATH filed what it called its "case-in-chief" last week. Not sure why PATH couldn't have filed its case when it applied to recover its abandonment costs on September 28. I guess PATH was seriously expecting the Commission would rubber stamp that dreadful mess it filed last year so PATH wouldn't actually have to go to the trouble of filing a case?
At any rate, some of it may be worth a read. The testimony of Archie Creepyfreak and Snidely Whiplash is worthy of a scoffing snort or two. The testimony of the accounting ladies and Milo -- eh, probably over the average person's head and not worth your time.
Don't miss the testimony of PATH's hired ROE "expert," Dr. William Avera because it's the most amusing part of this whole 500+ page filing. Now, keep in mind that PATH is paying this guy a pretty penny (from YOUR piggy bank, little ratepayer) to blather on for 78 pages about PATH's ROE during the 5-year amortization period. 78 pages! Plus 24 more pages of exhibits! One hundred and two pages to say what can be simply paraphrased as: When we do the DCF analysis, the median that the Commission usually uses is 9.1%. We even tossed out a bunch of low numbers while keeping in the high ones, but that was the highest we could get it. But we want 10.4% *stomps feet*!!! Therefore, the Commission should abandon their usual approach (that provides regulatory certainty) and just give PATH what it wants. PATH needs a higher number because this ROE is going to be be in place for five whole years, during which time they expect that the cost of equity is going to rise. Gee, I didn't hear this guy talking about the longevity of PATH's original 14.3% ROE when the cost of equity went down in following years. PATH's "expert" comes up with several other ways to twist and massage numbers and make crap up that would give the Commission an excuse to award PATH the 10.4% ROE it wants. And if that doesn't work, Dr. Avera is going to try to confuse you or bore you to death with his financial diarrhea. I'm betting his testimony (102 pages!) cost more than PATH stands to gain by maintaining the 10.4% ROE, however, you're paying the bill!
Don't bother with the last 350 pages or so. PATH actually tells the truth for a change when it characterizes the Period I and II data as useless and "trying to fit a square peg in a round hole."
And now parties to the abandonment case have less than two weeks to go through all this before the first settlement conference on Feb. 26. Happy reading, everyone :-)
What was it I said last week? It's going to get worse, much worse?
Tammy "something extra" has now listed all but one of PATH's River's Edge properties in Loudoun County for sale. Here's how much these deals will cost you, assuming PATH receives full list price for the properties (which is never going to happen).
PATH purchased this property in February 2009 for $689,000, 98% of Loudoun County's assessed fair market value at that time. It's on sale today for only $630,000.
PATH purchased this property in April of 2009 for $418,000, 102% of Loudoun County's assessed fair market value at that time. It's on sale today for only $400,000.
PATH purchased this property in April of 2009 for $910,000, 110% of Loudoun County's assessed fair market value at that time. It's on sale today for only $735,900.
And the big, big loser is this property that PATH purchased in March 2009 for $1,175,000, 246% of Loudoun County's assessed fair market value at that time. It's on sale today for only $459,000.
Looks like Loudoun County's assessor was a lot more accurate about fair market values than PATH's appraiser back in 2009. But yet PATH expects ratepayers to pay the difference between purchase and sale price and make the company whole. Right now, the difference between PATH's purchase prices in River's Edge and their current list prices amounts to $1,021,300. That's over a million dollars that ratepayers stand to lose on PATH's unnecessary and premature "investment" in real estate, and there's still one PATH-owned River's Edge property that has yet to hit the market, for which PATH paid 123% of market value in 2009. Ouchies, little ratepayers, ouchies!!!
Let's take a look back at PATH's antics in River's Edge. Now PATH adds insult to injury of these homeowners and dumps a whole bunch of real estate in their neighborhood at bargain basement prices, which is going to have a significant effect on their own home value and equity. PATH -- the gift that just keeps on giving.
And PATH is so not done yet... they've still got to unload those substation properties they purchased for millions more than fair market value. Get out your wallet, little ratepayer...
PATH properties.... get yer PATH properties... in the market for some dirt-cheap but poorly maintained real estate, or maybe some completely useless land with a burned out trailer or falling down shack? PATH's real estate agent can help you with that, and she "offers something extra!" I can't imagine what that "something extra" might be, but I'm sorta frightened by the offer.
PATH went ahead and listed some of its property for sale, despite the Federal Energy Regulatory Commission's November 30, 2012 Order that set the disposal of property for hearing:
"Because PATH has not completed the sale and transfers of land and other assets, we cannot determine based on the record whether self-dealing or cross-subsidization will occur as a result of these future transfers to affiliates, and whether the proposed prices for sales to third parties are reasonable. As part of the hearing and settlement proceedings, we therefore direct parties to consider the reasonableness of such transfers and sales, including whether future transfers and sales of real property should be reported in periodic reports that identify the parties, date and price of each transaction. Parties in the hearing and settlement proceedings may also consider whether the formula rate should be modified to include such information, which would allow review of the asset sales and transfers under the formula rate annual update process."
So, how "reasonable" are PATH's "fair market value" sale prices compared to "fair market value" amounts PATH spent purchasing each property?
PATH purchased this property for $50,000 in April of 2010. It's on sale today for only $9,000!
PATH purchased this property for $64,000 in April of 2009. It's on sale today for only $12,000!
PATH purchased this property for $307,185 in March of 2009. It's on sale today for only $229,900!
Let's add up the difference between PATH's purchase price and PATH's sale price, because that is the amount PATH wants YOU to pay for its little unnecessary and overly generous property buying spree: $170,285! Even if PATH sells these properties at list, that's how much of a loss PATH expects ratepayers to absorb for just these three properties. And it's going to get worse, much worse.
Bargain basement prices for unneeded properties - get yer worthless PATH properties today - and if you find out what Tammy's "something extra" is, do let us know.
The transmission industry, safely ensconced in its self-congratulatory echo chamber dream world, continually perpetuates poor performance, execution mistakes, and bad ideas. In the real world where the rest of us live, successful "public participation in transmission line siting" is based on successfully interacting with the public to convince them that a project is needed, and to maintain effective communication with the public as a project proceeds through approvals. It's all about what the public deems successful, since they are the ones who are "participating" in said project information sessions. It really does no good for other deaf and blind transmission owners to judge whether their transmission-owning peer's transmission projects are successfully participating with the public. This blind leading the blind self-contratulatory echo chamber reaches a pinnacle every year with EUCI's (that's Electric Utility Consultants, Inc., whose sole existence is derived from getting the utilities to participate in its continuing "education" seminars) Public Participation in Transmission Siting Conference. During this conference, utility employees make presentations crowing about their "success" participating with the public, even when the reality is that said utility employees are piloting a rapidly sinking Titanic of a failed public relations program. For example, PATH's PR laughing stocks presented this little gem just 6 short weeks before withdrawing project applications and giving up, after being thoroughly trounced by that "entrenched opposition":
LEVERAGING LESSONS LEARNED
Tom Holliday, Director of Communications Services, American Electric Power
Doug Colafella, Manager, External Communications, Allegheny Energy
American Electric Power and Allegheny Energy are applying best practices to help gain approvals for the Potomac-Appalachian Transmission Highline (PATH), a 765-kV project extending 275 miles through West Virginia, Virginia, and Maryland. Learn how the two companies are working together to apply successful strategies for grassroots outreach, community involvement, and public education while contending with project delays, entrenched opposition, and the economic downturn.
So, what are participants at EUCI's conference really learning? How to congratulate each other for failure, apparently. Yee-Hawwww!
This year's conference upped the fun factor by adding a special award to the festivities:
EUCI will debut the EUCI Excellence in Public Participation in Transmission Siting Award! The 2013 award will focus on the most engaging, creative, and useful websites. Websites serve as a foundation for sharing project information with the public. EUCI wants to recognize and share the industry's most engaging transmission line siting websites. Finalists will present at the conference and winners will be chosen by the conference attendees.
Wowzers! It's almost like winning the lottery, huh? In addition to this great honor, tell the audience what the winner will receive, Rod Roddy...
Rod Roddy: Winners will receive:
Highlight of website and award announcement in EUCI Energize Weekly newsletter
Web banner recognition for winning website
Award Plaque for your office !!!
What do you get when you combine a bunch of self-congratulatory airheads taking nominations for their website award with two successful transmission opponents who never miss a chance to tell the industry the fearful truth?
We thought our entry would be immediately tossed in the cyber trash, after all, we didn't attempt to hide anything. It was just a little laughter over a couple of beers.
Apparently there's dumb and then there's EUCI dumb.
I do have to hand it to them for running a "fair" contest and making sure all "entries" were judged inside the self-congratulatory transmission echo chamber by public relations shysters in denial: a panel of industry experts to include RES Americas, PEPCO, American Transmission Company, Allegheny Energy, Southern California Edison, and The Wilderness Society. Just a little FYI observation... some of the transmission project judging species are much dumber than others...
So, did we win? Of course not! EUCI and their transmission owner stable don't want to feature and award any "public participation" that actually got its hands dirty participating with the public (to stop an unnecessary transmission project). Therefore, in the spirit of EUCI's self-congratulatory echo chamber, we hereby award ourselves the FIRST ANNUAL EFFECTIVE PUBLIC PARTICIPATION IN THE REAL WORLD TRANSMISSION PROJECT OPPOSITION WIN! Award.
It's just as valid and just as satisfying as any award from EUCI's echo chamber, and best of all, the industry stays safely separated from any real world truth so they can keep making the same "public participation" mistakes that doom transmission projects.
So, which websites won the "contest" and were judged "most engaging, creative and useful for the public?" I can't speak to three of the nominees, but one of the websites nominated was Clean Line Energy's Rock Island Clean Line website. Useful? Creative? The last time I checked, Clean Line was busy deleting comments from and banning "the public" from participating on their websites. Not very "effective" participation with the public in my book. RICL's opposition seems to be doing a better job here and here. Maybe I'll make Block RICL its very own special little website ribbon to compete with RICL's... sort of a People's Choice Awards vs. The Oscars thing.
Thanks for the laughs, EUCI, your organization plays a great straight man! And thanks for sending "Allegheny Energy" our contest entry so that our little coal fella could have a panicked moment wondering if his peer judges were laughing at him (and yes, indeed they were!) And thanks for making sure that none of that nasty ol' reality confronts any of your precious transmission owners and makes them question their bag of stale "public participation" best practices that are easily neutralized by reality-based opposition.