Looks like FERC has its Grinch hat on this Christmas.  On Wednesday, the Commission issued an Order to Show Cause and Notice of Proposed Penalty to Kevin Gates, his companies, and trader Alan Chen and his companies.

FERC proposes that Gates and his companies cough up $22,358,208.00, while Chen is supposed to come up with $12,160,576 in penalties and disgorgement.  That's nearly $35M.  I'm wondering if Gates and Chen even HAVE $35m?

I've read some of the OE FERC staff report, and I gotta say I'm not feeling the outrage in the same way everyone was outraged at the Enron schemes.  It reads like a witch hunt, and I kinda feel sorry for Gates and Chen.  So, FERC staff is all up on its high horse about protecting consumers, but I'm left wondering where that $4.7M in marginal loss surplus allocations would have ended up if Chen had not made these trades.  It would have ended up in the pockets of other traders.  It would not have ended up in the pockets of electric ratepayers. 

What is FERC going to do with the money, if it manages to prevail in this matter?  $4.7M will be re-distributed to other traders, Robin Hood style.  That leaves $30M in penalties.  What is FERC going to spend that on?  Maybe they could spend it hiring some smarter guys to design and monitor their markets... like Gates and Chen?
 
 
The National Park Service and grant-money-grubber The Conservation Fund are misleading the public about land being "donated" to the Delaware Water Gap National Recreation Area.

In recently-generated press, the entities claim that additional park land was purchased by The Conservation Fund and "donated" to the park.
The purchase of these lands by The Conservation Fund from willing and interested sellers without the use of any taxpayer dollars, and their subsequent transfer to the NPS, ensures that they remain in the public trust for future generations to learn from and enjoy and that they will continue to provide both ecological and economic benefits to the region.
The Conservation Fund used YOUR money to purchase these lands, and skimmed a nice "administrative fee" for themselves off the top.  How nice of them to "donate" the land to you. 

The land was purchased with a $66M mitigation fund that the Department of the Interior extorted from utilities PSE&G and PPL, who were allowed to build a gigantic electric transmission project through the heart of the park in exchange for the payoff.  In turn, PSE&G is recovering the $66M from all electric ratepayers in the 13-state PJM Interconnection region.  Under federal rate schemes, PSE&G is even allowed to earn a 12.9% return on the bribe as it slowly depreciates over the life of the transmission line.  In exchange for acting as the middleman and giving your crooked government cover for its outrageous abuse of the public trust, The Conservation Fund is allowed to skim generous "administrative fees" off the fund every year.  The Conservation Fund didn't "donate" anything, they just served as the nonprofit "purchaser" to so that these shady transactions may not shoulder their fair tax burden.

It's a lie and a scam of the highest order.  Addition of border properties to the park does not make the transmission line disappear out of the middle of the park.  Mitigation means your park assets are for sale to the highest bidder.  In this case, the highest bidder was YOU.  Why are the citizens paying to buy additional park property at the Delaware Water Gap NRA, and why is The Conservation Fund being allowed to claim it as a "donation" on its taxes?

The National Park Service ought to be ashamed of itself for lying to the public this way.
 
 
Like a persistent nightmare...
Richard and Kevin Gates say that they received this Notice of Release of Materials Obtained in Investigation late last week, and that it may suggest that Powhatan may receive an Order to Show Cause from the FERC later this week.

Tit for tat...

FERCLitigation.com is now back online after a month-long truce, and the Gates brothers are ready to talk to the media.  Looks like it's game on again.  Merry flippin' Christmas!
 
 
FirstEnergy is at it again.  Its affiliate JCP&L's "Montville-Whippany Reinforcement Project" not only gave the New Jersey towns of Parsippany and Montville the ol' bait and switch, it's deep into dividing and conquering both of the towns by throwing the focus on shoving the line off onto someone else and pitting neighbor against neighbor, instead of allowing BOTH towns to join forces and focus on the real enemy -- FirstEnemy... errr... Energy!

Last year JCP&L held "open house" sessions for a route through Parsippany.  The townsfolk jumped all over opposing the line, forming a grassroots opposition group and making a lot of noise. Last week, JCP&L held another series of open houses announcing they had selected a different route through neighboring Montville

Montville has already been ground zero for PSE&G's "Susquehanna Roseland" transmission project.  I guess the geniuses at JCP&L think transmission lines are like potato chips -- you can never have just one?  So, not only is Montville already an experienced transmission opposition warrior, but JCP&L had to go and enrage the town's leadership with its tired, old "open house" meeting format, which the mayor referred to as "the stations of the cross."
The Committee expected the mayor to give an opening statement and then JCP&L would give their presentation, followed by a question-and-answer period. A committee member said that it turned out to be a JCP&L public relations presentation, and the company made no effort to discuss the problems and possible solutions.
So, now the town will be holding its own public meeting, where residents and town leaders will make their own list of demands.  The town expects JCP&L will subsequently negotiate modifications to the plan that would lessen impact on residents.  Good luck, Montville, and remember, delay is your friend!  :-)

Will the utilities ever learn?  Their old routines no longer work on an increasingly educated and savvy public.  The "open house" is no longer effective in dividing and neutralizing potential opposition.  Heck, we use your stupid "open houses" as handy-dandy meet-n-greets to recruit new opposition.  It's cheaper and easier when you all do the mailings and media to get affected landowners to a centralized location where they can be recruited by opposition groups.

The only citizens who leave those meetings with a warm, fuzzy feeling are those who find out that their property is nowhere near the project.  The rest of them leave confused, shell-shocked... and angry.  And they form and join opposition groups that increase costs and delay projects, sometimes even causing the project to be abandoned.

The days of running over the public with stupid PR tricks in order to build overhead transmission
are over.  The public demands transparency, integrity and better solutions.

Time for a new schtick, FirstEnergy. 

 
 
Just when we were ready to make Kevin Gates an official member of the Sodom on the Potomac Super Hero Club, he's folded his tent and disappeared.

Pretty disappointing, after the terrific fight Kevin and his brother Rich have been putting up, claiming to have been wrongly accused and harassed by FERC for years.

Kevin says:
Powhatan Energy Fund has decided to take down its website at www.ferclitigation.com.  And, while the site is down, Powhatan will be declining all new requests to speak with the media and requests to present at conferences.
RTO Insider has a nice summary of the mystery here.

Too bad, Kevin.. SotPSHC is a very exclusive club!

 
 
"It's evident that the mandatory capacity markets are not delivering benefits to electricity customers. They are not even markets," said APPA President and CEO Sue Kelly. "Billions of dollars are flowing from the pockets of bill-paying customers to generators and capacity providers, and our study shows that the vast majority of these dollars are being spent to prop up a market structure that does not work. At some point, we just have to stop the music."
APPA has been issuing reports for years attacking the capacity markets in PJM, and other east coast RTOs.

The capacity market makes payments to generators to ensure their availability to meet demand.  It's supposed to supplement the earnings of generators to act as an incentive to build new generation to supply a robustly competitive market that saves consumers money.

Capacity payments are a part of your electric bill, albeit a small part, but collectively they cost consumers millions.

Regional transmission organizations cannot order new generation to be built in order to supply needed capacity.  Instead, they created this screwball market that is supposed to provide financial incentive for new generation to develop where electricity prices are high.  It doesn't work, says APPA.
The APPA study underscores a central flaw in the mandatory capacity markets -- they do not support the stable long-term financial arrangements required to build new power plants. As the electricity industry faces new challenges from environmental regulations, baseload retirements, and an increased reliance on natural gas, it is crucial that the RTOs and the Federal Energy Regulatory Commission (FERC) revisit the mandatory capacity markets paradigm, APPA says.
So, are capacity markets just a consumer funded give-away to for-profit generators?

Look at what happened when an oversupply of cheap gas generation flooded PJM's market.  Capacity prices tumbled and a lot of old, inefficient generators were retired because they could no longer compete.  Some plants that couldn't compete were "sold" into the generator's regulated affiliate distribution companies, such as FirstEnergy's Harrison or AEP's Mitchell, where ratepayers will pick up the tab for the plant's operating costs and become speculators in PJM's capacity market.  In the Harrison case, the WV PSC conditioned its approval on the market price of Harrison's excess capacity being high enough to cover the merger acquisition premium being charged to customers in West Virginia.

PJM pretends its capacity market encourages development of sufficient generation but hedges that bet by ordering new transmission lines to supply electricity to constrained or expensive load pockets long before local generation even has a chance to develop.

So, what's APPA's solution?
APPA encourages approaches to resource development that incorporate long-term planning, bilateral contracting, utility ownership, and demand-side approaches, and continues to advocate that the FERC mandate a transition from mandatory capacity markets to voluntary residual markets, where states and local public power and cooperative utilities will be able to procure the capacity they need through bilateral contracts -- allowing states and utilities to determine the optimal mix of resources and structure their portfolios to lower costs, maximize reliability and be good environmental stewards.
Not sure how I feel about all that, but it's gotta be better than this.
 
 
I've been away for the past week.  No emails, no blog posts, no piles of electronic files, no transmission whatsoever.  So, what has transmission being doing while I wasn't paying attention?  Same old, same old.

SNAFU

A browse of news I missed:

The Sierra Club is still trying to plan the transmission grid and getting it wrong.

PJM despot Steven Herling sent a nasty-gram to NJ Sierra Club's Jeff Tittel, claiming that he was spreading misinformation.

The chief planning official for PJM Interconnection Inc., the grid operator, said in a letter to New Jersey Sierra Club director Jeff Tittel that continued operations of the B.L. England power station in Cape May County would not create reliability problems, but that the plant's shutdown would.

"Recent media statements attributed to you about reliability and cost impacts associated with the B.L. England generating units' remaining in service are based on a misunderstanding of PJM Interconnection's planning process," Steven R. Herling, PJM's vice president of planning, wrote Thursday to Tittel.

"Our transmission-planning process is very complex, dynamic, and - as a consequence - can be misunderstood," Herling said in his letter to Tittel. "I would have been very happy to explain the process and underlying facts to help you avoid confusion, and would be willing to clarify PJM's study results at any time."

Transmission developers held their "public input" open house dog & pony shows on lines they want to build.  The "public" showed up en masse to participate, but the real decisions have already been made.  Here's one example from Wisconsin, where ATC plays coy about its preferred route, hoping to foment discord among community groups that wish to foist the transmission line on someone else.  The media helps out by framing its story as a NIMBY issue, and failing to examine the need issue.
“I have no doubt, in the long run, we need power and we need power transmission lines, and they’re going to go somewhere,” said Don McKay, general manager of Tyrol Basin Ski and Snowboard Area.

“Nothing here is very negotiable,” said McKay, who also is a Vermont town supervisor.

Robert and Danuta Pyzalski said it was too preliminary to get answers about their town of Middleton home, in the study area.

“My concern is how close the lines would be to residential areas,” Robert Pyzalski said. “To say there would be no danger would be naive.”
Dominion has begun blowing smoke up the behinds of communities in Virginia, pretending to pioneer new ways to work with communities to site transmission lines.
Members of a new resident-led work group created to grapple with Dominion Virginia Power’s plans to run a transmission line through Alexandria did not mince words following the utility’s first presentation on the project.

“I’m just looking at statements here with nothing to back them up.”

Both officials and work group members are growing more suspicious as Dominion’s application date creeps closer.

“There’s some healthy skepticism,” Smedberg said. “While Dominion says they don’t know what a final route would be, many people in the community find that a little hard to believe. They know exactly what they want to do and have known for a while.”
Use of the Delphi technique really isn't new, Dominion! 
Energy companies fight over building new transmission to import power to a big city vs. building new centralized generation in or near the city itself.  How about you folks in Houston cutting back on your conspicuous consumption and slapping some solar panels on a roof or two?  That would certainly be cheaper for the poor ratepayers these companies pretend to care about.  Energy efficiency and local renewables are within reach.

Same stuff, different day.  Energy company greed to invest capital for big returns never changes.  The only thing that has changed in this scenario is the opposition of the people to big energy projects.  It's getting more organized, more knowledgeable and more successful.  Try building big energy anything anywhere and there's guaranteed opposition that increases costs and delays projects.  Finding new ways to neutralize the NIMBYs is a losing game.

But, what if there were no NIMBYs?  Underwater and underground transmission lines are sailing through approvals with little to no opposition.  The Champlain Hudson Power Express project is a go, and the New England Clean Power Link isn't far behind.  If you're going to build new transmission, this is the way to do it.
With permits to build an underwater and underground power line from the Canadian border to New York City all but fully in hand, the developer is turning its attention to a similar proposal for a 1,000-megawatt power line that would run down Lake Champlain and then across Vermont to feed the New England electric grid.

Once out of the water all the cable will be laid in public rights of way and the company TDI New England has been working with the state of Vermont and local communities along the route on the minutiae: Everything from how to be sure the under-road conduits don’t worsen spring frost heaves to how the cables cross beneath bridges or how to ensure that once the cables are buried they aren’t disturbed.

Benson Selectboard member Sue Janssen said TDI New England has worked hard to meet the concerns of her community of just over 1,000. They are even paying a lawyer of the town’s choosing to represent the community in the detailed discussions that are coming.

“I have the impression if we’d said we wanted our dirt roads painted pink they’d have done it,” she said.

So far there has been no significant opposition to TDI New England’s major electrical infrastructure project such as has faced plans to build ridge-top industrial wind projects, extend a natural gas power line from the Burlington area to Rutland or build a 180-mile above-ground power line between the Canadian border and northern New Hampshire.

“I think that one of the key differentiators of other proposed projects is that we are all buried,” said TDI New England CEO Donald Jessome.
That's right... people can support transmission projects proposed by companies willing to work with communities to lessen a project's impact.

Opposition has a cost.


Meanwhile, as more buried projects are proposed, traditional overhead transmission builders are whining about the cost of buried lines.  Funny position for companies that make money on transmission investments -- the more they spend, the more they make.  Why not bury the projects?  Oh, right, they don't know how.  They're still living in the horse and buggy days, telling the same lies about how the technology doesn't exist to bury lines, or that the cost will be 10 or 20 times an overhead line.  That just isn't true.
Matt Valle’s solution to energy shortages in Eastern Massachusetts eschews the usual approach of running miles of new transmission lines on unsightly towers. Instead, Valle proposes to bury 50 miles of high-power cable in the ocean floor, using an underwater robot that resembles a lunar rover.

The robot would dig a trench 4 to 6 feet deep in an arc from Salisbury to Lynn for a power line that would bring 520 megawatts of electricity from the Seabrook generating station into Greater Boston.

If approved, the so-called SeaLink line would be the first underwater transmission line in Massachusetts, and Valle argued that it would be more reliable than high-voltage lines that are exposed to New England weather.

“It’s a buried system. It is protected against extreme weather — high winds, flooding, icing,” said Valle, president of New Hampshire Transmission, a subsidiary of NextEra Energy, one of the country’s largest power companies.

But there is one major drawback: With a price tag of more than $1 billion, SeaLink looks on paper to cost about $350 million more than a competing project, which includes a new 25-mile transmission line running from Londonderry, N.H., to Tewksbury, as well as upgrades to the existing high-voltage power network.

“Ours is the most cost-effective solution. That’s a fact,” said Rudy Wynter, president of the transmission business at National Grid, which is partnering with Northeast Utilities on the project. It would feature a combination of high-voltage 115 kV lines and extra-high-voltage 345 kV lines constructed on rights of way that are already held by the two companies.
SNAFU.

Is it really all about the cost to ratepayers?  Anyone thought of asking ratepayers if it's worth a few extra cents in their power bill to bury high-tech transmission projects in order to make them more reliable?  I think the people would overwhelmingly support buried lines from a reliability standpoint alone.  A majority would also probably support more expensive buried lines in order to get lines built quicker and with less burden on host landowners, viewsheds and the environment. 
 
 
They're not fooling Len Chidester of Montrose, West Virginia.  He's heard some nasty rumors about the shoddy way FirstEnergy treats its linemen, neglects maintenance of equipment, and fails to read electric meters.  Apparently this is all being done under the mandate of some company named PJ+M. 

Mr. Chidester believes PJ+M is in bed with FirstEnergy.  If they breed, the child would probably behave a lot like this one:
Mr. Chidester concludes that FirstEnergy bought Mon Power and Potomac Edison.  FirstEnergy is bleeding these companies for every nickel they can squeeze by their phoney meter reading process, doing minimal repairs, and who knows what other practices.  And he advises that a very major investigation be launched into exactly what the power companies, FirstEnergy, Mon Power, Potomac Edison and the company PJ+M have been and are continuing to do.

He's exactly right!
 
 
Where do investor owned utilities get their silly project names?  PJM gives transmission projects alpha-numeric names.  Sometimes companies name their projects for the substations they connect (i.e. Susquehanna Roseland).  But sometimes a company proposes a project so big, so expensive, and so outrageous that it needs its own cutsie-poo name, like some sort of fire-breathing, money-eating dragon (i.e. PATH, TrAIL, MAPP).

Behold, Project Compass!
PPL proposed this monster last week in conjunction with its 2nd quarter earnings call.  Maybe it was just some elaborate distraction for investment analysts?  A poorly executed joke?

At any rate, here's the motivation for this ambitious and bodacious "investment" in new transmission:
The strong year-to-date increase in ongoing earnings was driven in part by a combined $69 million from our domestic utilities, driven by returns on additional transmission investments in Pennsylvania...
Well, shoot, if you can make a little money "investing" in transmission, why not go big and make a LOT of money, right?
Also this morning, we announced a PPL Electric Utilities proposal to PJM, as part of the competitive solicitation process under FERC Order 1000. As currently proposed, the 500 kV transmission line would run about 725 miles from Western Pennsylvania into New York and New Jersey, and also south into Maryland. The project is in the preliminary planning stages. The new line would improve electric service reliability, enhance grid security and enable the development of new gas-fired power plants in the shale gas regions of Northern Pennsylvania. The proposal would create savings for millions of electric customers by delivering lower cost electricity into the region and reducing grid-congesting cost. According to preliminary estimates, the cost of the project, which is not yet included in our CapEx projections, would be between $4 billion and $6 billion. Because of the magnitude of this proposal, there is a good chance we may enter into partnerships to develop and build the project. The preliminary timeline envisions completion of the project by 2023 to 2025, assuming all necessary approvals are received and construction begins in 2017. Approvals are needed from various regulatory and regional planning entities. We'll keep you posted on any further developments.
But it doesn't sound like the analysts shared PPL's enthusiasm and confidence in Project Compass:
Daniel L. Eggers - Crédit Suisse AG, Research Division
Bill, can you maybe get a little bit more into this transmission project today? I guess, kind of how the process works from announcing, looking at something to where we'll see action. What kind of dollars you have to spend upfront? And then, if you look at the challenges you guys had with Roseland and other folks have had in the past, trying to build these new Pennsylvania East type of transmission lines, how you guys think you're going to approach it to make it a higher chance of success?

William H. Spence - Chairman, Chief Executive Officer, President and Chairman of Executive Committee
Sure. So the processes itself is one that's not been well traveled in the past, as you know. It's a relatively new process. So we'll continue to work with all the stakeholders to make sure that we do everything in our power to make sure that we get this approved on a -- as timely a basis as we can. Maybe I'll ask Greg to take you through kind of what we understand to be some of the key milestones and processes we have to do to make this a reality, so, Greg?

Gregory N. Dudkin - Principal Executive Officer, President and Director
Yes, thanks. So first off is the filings. So PJM had a window that just closed recently. So this project, Project Compass, was filed as part of that window. As far as the approvals are concerned, so this project not only is part of PJM, but also goes into the New York ISO, still need approvals from both entities. Also we'll need state approvals, as well as utility commission approvals. So for me, what increases the probability of success is just the compelling nature of this project. When you think about what's happened in the industry over the past year, the polar vortex, substation security being a big issue, coal retirements being a big issue. This project really pulls all those issues together and provides significant benefits to the consumers in the region. So I think it's the compelling nature of the benefits of this project that will help the project move forward. We are putting together an outreach plan. In fact, I've started this morning to get people that will be involved in the project, up to speed and be looking to work with others to make sure that this is a success.

Daniel L. Eggers - Crédit Suisse AG, Research Division
Okay. So we should -- this will be, I guess, probably a little quiet from our perspective for -- in a period of time, while you get your ducks in a row. Is that kind of how we should think about it?

Gregory N. Dudkin - Principal Executive Officer, President and Director
Yes, I would say so. Because of all the entities we have to work with my sense is that we have a better idea about the timeline as far as approvals probably by the end of this year. But it should be fairly quiet from your perspective.

Daniel L. Eggers - Crédit Suisse AG, Research Division
And then the money you guys are putting into it now, is there a route for recovery if this is not successful or is this money you guys are burying on PPL for the time being?

Gregory N. Dudkin - Principal Executive Officer, President and Director
Yes, this is something that is not recoverable. So we'll -- if it doesn't go forward, then we'll just had to eat that.
Eat.  Eat.  Eat.

There's nothing "compelling" about this project.  It's uninspired, unrealistic overbuild in its purest form.  Why should ratepayers shell out billions to "fix" a bunch of minor problems?
Neel Mitra - Tudor, Pickering, Holt & Co. Securities, Inc., Research Division
Question on the transmission project. It looks like the map you provided, the starting points are really kind of where the new CCGTs, that are announced for PJM in '16 and '17, are being built. Is the -- is kind of the economic reason for the project that some of those gas plants that are going to be built right on top of the shales, they just don't have enough transmission capacity to get to where they need to, to provide reliability? Or is there another real economic benefit that I'm not seeing?

William H. Spence - Chairman, Chief Executive Officer, President and Chairman of Executive Committee
Well, there's a number of potential benefits, and I'll let Greg describe some of those. But that clearly could be one of them, but there are others as well.

Gregory N. Dudkin - Principal Executive Officer, President and Director
Got it. And so, I would say when we are -- when potential generators come to us, one of the issues is they need to obviously connect to our transmission. And in some cases, that can be very, very high cost. So part of the thinking on the economics is if we sited through the region, the cost to connect for those generators would be much less. So again with potential coal retirements, we think there's economic advantage for that on a going-forward basis. And we use pretty conservative assumptions around generation retirements. But beyond that, there are reliability benefits. Again, we talked about substation security. There are benefits that, actually, we didn't really factor in the economics. But I think there'll be a significant economic benefit there, reduced congestion. So all that, when you factor all those together, it is a significant positive economic benefit to the consumers.
Oh, right, we're supposed to spend billions to make it cheaper for new merchant generators to sell their electricity in a "competitive" market.  If these new generators can't afford to compete in the market by paying their own way to existing transmission connections, then they're not profitable and competitive and shouldn't be built.

Reliability?  Where's the driver for that?  Or are we going to put the cart before the horse again and create the "opportunity" for transmission before creating the "reliability" issue it is intended to fix?

Substation security?  How do existing substations get made safer by building new ones?  Is it because we're going to increase the number of possible targets to water down interest in just a few crucial points?

Didn't factor in the economics... but I'm sure they can make something up!


Wow, pretty weak reasoning there, Greg!
Paul Patterson - Glenrock Associates LLC
A lot of my questions have been answered. But just -- and I know it's some way off in the future here, but when the transmission line is built, what do you expect it to do to the market? Is there any basis differential or any sort of impact you could sort of suggest, that sort of in the ballpark, that would happen as a result of these major projects.

William H. Spence - Chairman, Chief Executive Officer, President and Chairman of Executive Committee
Yes, as you can imagine, because it is so far out and there's so many moving pieces, coal retirements, how many new gas pipelines may be built to move shale gas away from the constrained areas, and so forth, that we really don't have a forecast that we could point you to suggest which way prices would move as a result of this transmission project.

Paul Patterson - Glenrock Associates LLC
Okay. And no part of the project is going to be really done before 2023, is that correct?

William H. Spence - Chairman, Chief Executive Officer, President and Chairman of Executive Committee
That's our target. So with it, the earliest would be 2023.
See question above... they didn't factor in the economics, they're going to make that part up later!
Rajeev Lalwani - Morgan Stanley, Research Division
My first question is on the transmission project that you announced. Can you provide some insight on any competing projects that PJM is also looking at?

William H. Spence - Chairman, Chief Executive Officer, President and Chairman of Executive Committee
At the moment, we're not aware of any competing projects. This is a very unique project, that I'm very proud of the team here that came up with the concept and the forward thinking to put something of this nature in front of PJM. So we're not aware of any competing projects. And the requests that PJM have had, have been smaller projects to basically address some relatively small reliability concerns. I think there 4 or 5 of them. And this project and I response to some of those, but it goes well beyond that. Again with something that we think is very unique and compelling from a stakeholder process -- perspective.
Because, ya know, when the only tool you have is a hammer, everything looks like a nail.

Obviously there is no need for a new transmission project of this magnitude, but PPL thinks they can "compel" PJM into agreeing to this massive boondoggle without any competition developing.  This is exactly how PJM got into trouble on Project Mountaineer.  When it's not about reliability or economics, it's greed, not need.
Angie Storozynski - Macquarie Research
Okay. And lastly on the transmission project, I know it's many years out, but just looking at how the Susquehanna-Roseland went and the 3-year delay to cross, what, a 3-mile stretch through the Delaware Water Gap even though there was an existing right of away. I mean, obviously, we don't see exactly how this proposed line goes, but should we expect similar issues with siting of the transmission line?

William H. Spence - Chairman, Chief Executive Officer, President and Chairman of Executive Committee
Greg, do want to take one?

Gregory N. Dudkin - Principal Executive Officer, President and Director
Sure. Thanks. So certainly, when you're talking about a 725 mile line, siting is going to be a big issue. So we will work with all the stakeholders. We've had success, actually Susquehanna-Roseland is a great example. So it took us a while, but we were building through a national park. And I think it had been very successful. I think the folks there appreciate the care we took of the park, and so I think our reputation is good in that area and that's why I think we'll be successful.

Angie Storozynski - Macquarie Research
So this proposed line doesn't go through any national parks or any environmental -- that shouldn't face any environmental issues?

Gregory N. Dudkin - Principal Executive Officer, President and Director
No national parks.
No, no national parks.  Their last escapade in a national park cost the ratepayers $60M in hush money to the Department of Interior. 

ALL the stakeholders?  Landowners and ratepayers, grab your stakes, we're heading out!
 
 
W T
PPL?
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 was land 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.