PJM Interconnection has completely screwed up its first competitive transmission project proposal process
. And now transmission developers and regulators are schooling PJM on what "constructability" really means (of course, for English language purists, "constructability" isn't even a real word, but some bastardized business buzz word).
While FERC's Order 1000 reforms were supposed to usher in a new wave of competition, pricing and cost allocation beneficial to consumers, nothing has changed except the window dressing. When push came to shove, PJM selected a project proposed by one of its favored incumbent transmission owners and kicked all the other proposals to the curb.
PJM staff has recommended that its Board of Managers approve its selection of PSE&G's "7K" project that will construct a new 500kV line parallel to an existing circuit. PJM staff has stated that the "constructability" of the PSE&G project, as evaluated by hired consultants, was the basis of its decision.
And then the letters from regulators, public interest groups, and competing transmission developers started rolling in...
Competing developer Atlantic Grid sums up the problems with PJM's over-managed RFP process quite nicely:
Lastly, this decision is risky as precedent for future RFPs that should encourage innovative, well-engineered proposals and rigorous competition. In a typical RFP, a problem in need of fixing is published and competitors are invited to submit proposed solutions. The customer (PJM in this case) evaluates the proposals, disqualifies the ones that don’t work, and makes a selection from the remaining qualified projects. But PJM’s RFP was more like a “call for ideas.” It appears that PJM took the proposals and then re-engineered a solution it liked best by mixing and matching pieces from different project proposals. The result is that PJM’s recommended 7K Project looks almost nothing like the original 7K proposal submitted by PSE&G. Unfortunately, if this RFP sets the pattern for the future, PJM will discourage participants from spending time, money and engineering resources to develop innovative, well-engineered RFP responses. And ratepayers will lose when the robust, competitive process PJM hoped for fails to develop.
Somebody needs to step in here and put PJM staff on a strict non-manipulation diet. I know it's really hard to step away from the buffet line when you've been gorging for years, but that kind of manipulation made the entire RFP worthless, and wasted the time of the independent developers who invested time and money in innovative proposals. Hey, who remembers Primary Power
and FERC's hope that Order No. 1000 would put a stop to that kind of favoritism? I'm thinking it didn't work.
Atlantic Grid points out PJM's "constructability" error:
For PJM it is risky because significant permitting hurdles mean that the project
has a high likelihood of being rejected at the state and/or federal levels and a
needed reliability solution will be substantially delayed because PJM has proceeded down a dead end. As discussed below, the New Jersey Board of Public Utilities (NJBPU) has submitted comments warning about the permitting risks of all of the preferred options, including the 7K Project, and pointing out that none of the preferred options took advantage of the opportunity to get a preliminary determination of permitting feasibility. The NJBPU warns that the protests, delays, and costs well above initial estimates for mitigation during construction that plagued the Susquehanna-Roseland project also may affect PJM’s recommended solution “especially given that a viable alternative exists.”
And what happens when PJM makes a "constructability" error? Sixty-some-odd-million consumers will end up paying for more failed projects
, and reliability will suffer.And that brings us to... the regulators.
The New Jersey Board of Public Utilities and the New Jersey Division of Rate Counsel sent a joint letter
to the Board of Managers, pointing out that the "constructability" of PJM's selected project will receive national, even international, opposition from environmental groups because of its unnecessary crossing of "wetlands of international importance." New Jersey regulators point to the LS Power proposal as a lesser cost and more environmentally friendly alternative.
Competitive developer LS Power not only called PJM on its heavy-handed, manipulative "evaluation" of competing proposals, but it also threw a bomb into the center of the room. LS Power has offered to cap its project cost at $171M, much less than the PSE&G project's $297M estimate.
Well, that's a first. A transmission project with a firm cost cap that requires the developer to actually perform during construction. This is exactly the kind of "performance-based" behavior Congress expected out of transmission developers when handing them very profitable incentives in Sec. 219 of the Energy Policy Act. Unfortunately, FERC didn't see it that way and chose to open the incentive buffet with absolutely no performance standards or cost caps on qualifying projects. The more it costs, the more they make!
The Delaware Public Advocate's letter, on the other hand, supports PJM's choice of the 7K project. But, Delaware's support is not because 7K is a superior choice from a "constructability" angle, it's simply because Delaware will be allocated less total cost from the 500kV 7K project than from LS Power's cheaper 230kV solution due to PJM's new cost allocation methods. Well, if this isn't a walking advertisement for cost allocation issues causing short-sighted transmission choices...
Dominion's transmission company (because if you don't have your own independent transco in order to take advantage of extra FERC incentives, you're just not part of the "in" crowd these days) also takes issue with the way in which PJM evaluated projects and made its selection.
Exelon doesn't shill for its own losing project, but concentrates on the mess PJM made of its competitive process, and makes some suggestions for improvement.
Here's a suggestion Exelon didn't think of... why not remove any sponsor-identifying information from the proposals before evaluating their technical merits, costs, and "constructability"? Playing favorites among incumbents seems to be the most basic problem here. Maybe PJM can issue little blindfolds to their planning staff, because justice is blind and all, especially when she gets her eye poked out with the rod of favoritism.
And bringing up the rear of the letter flurry, New Jersey Sierra Club slaps PJM with a glove regarding the environmental issues with its selected project. This is pretty much a guarantee of a public opposition charlie foxtrot that PJM would do well to heed.
So, when is PJM's selection of new projects going to become a truly competitive, cost effective and forward-looking process that builds for the future? PJM has not improved its processes under Order No. 1000, and its ratepayers and consumers are going to be the ones to suffer poor "constructability" choices, short-sighted "minimum required for now" choices, and ineffective, but cheap solutions to reliability issues.
This is one giant FAIL.
Check out the collision of ideas in a recent edition of the Energy Law Journal
. Oh, it's really not as boring as it sounds, but the authors sure do know how to belabor a point. You'd think they were being paid by the word...
First, take a look at DOES DISRUPTIVE COMPETITION MEAN A DEATH SPIRAL FOR ELECTRIC UTILITIES? by Elisabeth Graffy and Steven Kihm. It's one more take on the idea that how we produce and use energy is moving on, and utilities that don't get ahead of the curve by offering products that consumers want are going to end up like streetcars, land line phones, and beanie babies.
Traditional utility response to the proliferation of widely distributed rooftop solar has thus far been limited to attempts to lock in a future revenue stream to pay for what may become a stranded investment in centralized generation and transmission. Early efforts in this regard have been soundly rebuffed, not only by the owners of these small-scale generators, but regulators as well.
Strenuous efforts to mitigate rather than innovate seem likely to increase vulnerabilities by generating public and customer backlash, motivating market competitors, and instigating potential legal challenges.
The article compares and contrasts the responses of two companies facing innovation/technology challenges in their respective industries. It examines how the cable TV industry remade itself when facing competition from satellite TV companies -- it began offering new products that increased its value to consumers by bundling TV with phone and internet service.
In contrast, much is made of the fate of Market Street Railway, a regulated streetcar company whose response to competition from buses and automobiles was to increase rates to cover its costs while relying on regulation to maintain its monopoly.
This story has significant implications for electric utilities facing increasing and especially disruptive competition that may shift their risk position from the zone in which regulation is effective to one in which it is not. That Market Street responded to disruptive competition by simply requesting rate increases from its regulator reveals denial that their economic woes were due to fundamentally changed circumstances that required new organizational strategy, not just regulatory intervention. Market Street, while fully understanding the existence of threats to its viability, showed no real signs of innovation or adaptation in this regard, but rather continued a reliance on conventional cost-accounting-based utility ratemaking practices to the bitter end.
And that's exactly what utilities seem hell bent on doing in the other ELJ article, REGULATORY FEDERALISM AND DEVELOPMENT OF ELECTRIC TRANSMISSION: A BREWING STORM?
This article, by James Hoecker, advisor to WIRES, the "Voice of the Electric Transmission Industry!!!" wanders on for 29 pages of transmission building advocacy. Build, build, build! It doesn't seem to matter whether there will be any consumers left to pay for it all, as long as the federal government takes control of electric transmission permitting and siting today by "collaborating" with states in order to usurp their authority. It even goes so far as to push the CSG's interstate siting compact bad idea.
So, what will it be? Transmission or innovation?
Building more traditional transmission using eminent domain to acquire new rights of way will NOT work. The public has had enough! Transmission opposition has become increasingly sophisticated and its methods are becoming more effective at cancelling and delaying most new proposals. This pitched battle has both sides spinning its wheels, but delay is the opposition's friend. And the more the industry nibbles away at state authority, the closer it pushes state regulators toward permit denial.
Does this mean that we can stop building transmission altogether? No, but we can stop building transmission stupidly. Smart transmission uses existing rights of way to rebuild existing lines to increase their capacity. In some instances, the public actually welcomes a responsibly managed rebuild, especially when presented as an alternative to new transmission. In other instances, the public welcomes smartly designed new transmission projects, like Atlantic Grid's New Jersey Energy Link. This project is buried for its entire length, avoiding the expense and time delays of opposition to traditional overhead transmission projects. But perhaps its best selling feature is that it is designed to be useful long into the future -- moving conventionally generated power to markets that need it today, but also there to move offshore wind to load as it is developed. If only they get rid of that insulting "NIMBY" word...
But old habits die hard for the big energy conglomerates, who wish to continue operating their streetcar named De$ire. Instead of creating an exciting and profitable new market for themselves, Ohio's Tweedledum and Tweedledee have hung their hopes (and plopped their "transmission spend") on investing in more transmission.
You can lead a company to knowledge, but that doesn't necessarily make it any smarter.
Oooooh! Shiny object!
In the end, the electric utility as an institutional form has not exhausted its relevance. Claims that utilities are in a certain death spiral seem premature. However, those predictions seem disturbingly grounded in tacit assumptions that utilities are too hidebound by their past to be able to adapt in a timely or agile way to rapidly changing conditions. If so, utilities will find themselves to be brittle rather than resilient when confronting disruptive competition in a sector that is central to social, economic, security, and environmental necessities and, therefore, cannot remain static. All signs point to the reality that utilities must change. The open question is whether they will change by embracing and, indeed, leading value creation or be changed by others in the market who embrace it first and more firmly.
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.
Nearly 10 years ago, PJM's management made a very poor choice approving Project Mountaineer
, a scheme to build more than $3B worth of new transmission in order to increase the transfer of 5,000MW of coal-fired generation to the east coast. Project Mountaineer caused PJM to approve four new high-voltage transmission projects and add them to its RTEP: TrAIL, Susquehanna Roseland, PATH and MAPP. Only two of these highly controversial projects were ever built, and at a very high cost. The other two were abandoned without ever turning a shovel of dirt.
PATH was re-routed within months of being introduced to the public, because PJM's approved plan for it called for "twin" 500kV circuits through densely populated, high-growth areas of West Virginia's eastern panhandle, northern Virginia, and Maryland's Washington, D.C. suburbs. It just wasn't physically and politically possible to construct the project. PJM's determination of the "constructability" of PATH was wrong. Even its second choice of a single 765kV line through the area failed.
And PJM hasn't gotten any smarter about constructability since. Its first major transmission project since the PATH/MAPP failure is also destined to "constructability" failure. PJM recently selected PSE&G's proposal for a new 500kV line to parallel an existing line in Salem County, New Jersey to solve its Artificial Island problem. PJM claimed its decision was based on the "constructability" of PSE&G's project.
So, what standard did PJM use? PJM hired a company that does work for the companies bidding on this project to do a "Constructability Study."
The study accounts for environmental permitting, historical commission review, federal environmental review, and a host of other "risks." It gave little moment to state utility commission review and permitting, and paid absolutely no attention to possible public opposition and its impact on permits necessary from local government.
I guess PJM and GAI Consultants have already forgotten what killed the PATH project they both had a hand in. GAI opines that paralleling existing transmission lines will dampen opposition because there's no need to involve "new" landowners. Right... because transmission lines are like potato chips... one is never enough!
The routing study and mapping shows urban and residential areas being crossed, and at one point the line runs practically right over top of a school. Although all projects needed to acquire new right of way adjacent to the current one, GAI and PJM reason that PSE&G has an advantage here because of some old agreement over ownership of transmission assets. I just don't see this agreement being helpful convincing landowners to agree to expand the current right of way. Maybe PJM has forgotten what happened when TrAILCo attempted to utilize old right of way in Pennsylvania? In that instance, trying to force old agreements on new landowners using unscrupulous land agents blew up in TrAILCo's face and most likely contributed to its eventual denial by the PA PUC. In the end, TrAILCo had to abandon that old right of way and give it back to the landowners.
The selected project also proposes an overhead river crossing in a very busy shipping lane, instead of the submarine crossing proposed by other projects.
This is a public opposition bonfire in the making!
So, what else could PJM have done here? What other projects were in the running? Projects choosing a route through Delaware were evaluated for "constructability" by a different company that actually considered public opposition, and none of that was very encouraging. All projects will garner public opposition, some more than others. DUH.
Damned if you do, damned if you don't.
But, wait a tick here. There's one project on PJM's bid list that doesn't seem to have been evaluated in either "constructability" report. I guess PJM batted it aside instantly, like a distasteful mint.
Atlantic Grid (yes, the ones who have been patiently trying to construct an offshore backbone transmission line to gather offshore wind generation and funnel it to shore at strategic locations) submitted something called the Garden State Reliability Project. It looks like this project was going to do something entirely different than the rest of the contenders.
The Artificial Island-related challenges to grid reliability and operational flexibility that PJM describes in its Problem Statement can be solved with the Garden State Reliability Project (GSRP), a proposed voltage source converter (VSC) high voltage direct current (HVDC) transmission system that connects Artificial Island to the Cardiff AC Substation near Atlantic City, New Jersey. GSRP has the capacity to controllably transmit 1,000 MW of power on its approximately 60-mile underground circuit. GSRP also incorporates static VAR compensator (SVC) facilities. The project is estimated to cost $1,012 million and to be in service by December 31, 2018.
Not only was this project going to fix PJM's little Artificial Island problem, it was also going to tie into Atlantic Grid's New Jersey Energy Link to provide a way to move nuclear power into the congested northern New Jersey load zone. It would also provide backup, baseload power to balance the eventual offshore wind generation's variability.
But, Atlantic Grid's GSRP was proposed to cost 4 times as much as PJM's favored project. However, GSRP provided many other benefits the other project didn't, such as black start capability for Artificial Island, and it was designed to meet future needs, instead of simply fixing today's little problem. Low cost may be the easy choice for today, but sometimes it's just not as efficient.
PJM's "low cost" choices presume that a select set of landowners must be forced to sacrifice their private property for the good of society. When is the rest of society going to make a sacrifice for its own good? Adequately compensating landowners and/or building higher cost projects that don't require as much sacrifice from host landowners should be a sacrifice society is willing to make for its own good! Want cleaner power? Want your lights to stay on? You need to pay for it, not some other landowners miles away who are not benefiting from the project.
And you know what was really innovative about Atlantic Grid's project? It was completely underground and routed along road rights of way! Minimal sacrifice for host landowners, minimal public opposition, minimal risk, minimal time to complete.
Another key GSRP project objective was to demonstrate timely constructability with a practical right of way (ROW) approach and low construction and environmental impact. GSRP is distinguished from high voltage AC line solutions to the grid reliability and operating issues at Artificial Island because GSRP has a more predictable in-service date. GSRP’s HVDC cable system would be buried underground in state and local road ROW, rather than being constructed as an overhead transmission line. Accordingly, building GSRP requires simple rights of access to existing road ROW granted by public entities. In comparison, AC overhead transmission solutions will require new or expanded ROW acquisition involving tree and brush clearing, high towers, aesthetic and environmental impacts, public opposition and litigation. All of these challenges associated with overhead lines cause less predictability and greater cost.
Instead, PJM seems to prefer continuing its old status quo of selecting projects proposed by its incumbents that are environmental, permitting and public opposition nightmares. And we all pay for PJM's mistakes.
I came across an interesting FERC filing
the other day. It's about something called "unreserved use," which is kind of a geeky, complicated subject, but the real issue here seems to be FERC's deference to one of its regional transmission operator pets, and a contradiction about whether specific information should be public or privileged.
Now where else has FERC had issues with that lately?
Unreserved use is failing to reserve transmission before utilizing it, so planners cannot account for the usage until they see it in real time, some call it "leaning on the system." In most tariffs, a company gets a 200% penalty for the extra stuff it puts on the system. FERC has asked that RTOs annually account for those penalties. FERC also wants the RTO to distribute the penalty amounts to non-offending customers, so it's a two-pronged incentive to follow the rules.
In FERCenese, here's how it's supposed to work:
In Order No. 890, the Commission required each transmission provider to report its operational penalty assessments and distributions in an annual informational filing. The annual filing must contain the following information: (1) a summary of penalty revenue credits by transmission customer; (2) total penalty revenues collected from affiliates; (3) total penalty revenues collected from non-affiliates; (4) a description of the costs incurred as a result of the offending behavior; and (5) a summary of the portion of the unreserved penalty revenue retained by the transmission provider. Each transmission provider must report on its penalty assessments and distributions in an annual compliance report submitted on or before the deadline for submitting its FERC Form No. 1.
Sounds rather routine, right? Except that some RTOs make their compliance filing as a public filing, but MISO has decided that its compliance filing is privileged because:
MISO contends that this type of information could be used by other "MISO market participants to discern trading patterns, and even trading strategies, adopted by other MISO market participants.
Well, yee-haw, cowboys! SPP files this information publicly! Cue the crooked traders.... And PJM has NEVER even made a compliance filing. FERC has so many clear rules it doesn't try to enforce, yet sticks its nose into the murky but headline grabbing world of supposed market manipulation where it doesn't even know its own rules.
Just what IS it about MISO's unreserved use filing that can't stand public scrutiny, anyhow? Something doesn't add up here...
PJM officials said that while this solution was comparable to other projects based on such factors as cost, schedule and the ability to address the reliability concerns, the Hope Creek-Red Lion 500-kV line was superior in terms of constructability.
Seriously, PJM? Who's giving you advice about "constructability?" The same geniuses who thought PATH and MAPP were good ideas? Those two projects turned out not to be so "constructable" after all, and have left PJM ratepayers footing a bill for more than $350M for projects that never even put a shovel in the ground!
The New Jersey Board of Public Utilities said PJM’s analysis of the 500-kV option underestimated likely public opposition.
Ya think? Just because the new transmission line parallels an existing one does NOT mean that affected landowners will welcome it with open arms. In fact, these landowners already know what it's like to live with a transmission line across their land, and feel they have already made the ultimate sacrifice for "the public good." They will NOT want another one, and will fight tooth and nail to kill this project.
And, guess what? They'll have plenty of help from other transmission opposition groups that have perfected the art of public opposition. After all, we've had some of the best teachers in the world to show us all the ins and outs of transmission project strategy, and we like to "pay it forward."
So, if you're a landowner in Salem County, New Jersey, who already has a 500kV transmission line in your backyard, check out the map at RTO Insider to see if you're one of "the chosen." I am looking forward to meeting you!
Well, they've finally done it. The cost of electric capacity is now the same in Washington, D.C. as it is in the poor, southern West Virginia coal fields. This is what PJM's markets have been shooting for -- to make everyone pay the same price for energy, no matter which community shoulders the biggest burden to produce it.
PJM looks at it as sufficient generating capacity being available where it's needed, whether through physical location or with the help of new high voltage transmission.
PJM shared the results of its annual base residual auction for 2017/18 on Friday. The annual auction secures needed capacity three years in the future and determines the price winning generators will receive just for existing. Bids are stacked by price until the capacity target is reached, and the highest bid in the stack is the common price all winning generators will be paid.
New this year is a common RTO-wide price, except for the PSEG zone in New Jersey, which is still "constrained" and must run higher priced generators to meet capacity. For many years, other east coast locations also separated at a higher price because they were "constrained" and "needed" to import "cheaper" generation from places like West Virginia.
The RTO-wide price for 2017/18 is $120 MW-day, and the PSEG price is $215 MW-day. The PSEG price really didn't change from the prior year, but the RTO-wide price doubled. So now most of the RTO can pay more.
I'm not going to hyperventilate over incumbent generator manipulation of the market with new regulation in order to raise prices. I think that part has been covered elsewhere, ad nauseam. Big deal.
Most of this report is about as exciting as watching paint dry. I did find it interesting that PJM applied a capacity factor of only 13% to land-based wind resources bid into the auction. That means wind is counted on to actually generate when called at a rate of 13% of its maximum available capacity. How many wind farms would be needed to produce a reliable, base load resource when they can only be counted on at 13% of their name plate capacity? Big wind is not the answer.
Solar fared much better, with a 38% capacity factor. *hint, hint*
Blah, blah, blah.
Oh, but wait.... The DC Appeals Court dropped a turd in PJM's punchbowl on Friday, vacating a FERC Order regulating demand response. Demand response was one of the capacity resources that cleared in PJM's auction.
*PJM is evaluating a May 23 appeals court ruling vacating FERC Order 745 in its entirety. This ruling could affect how demand response resources are able to participate in PJM’s markets in the future. Since the court has not issued a mandate requiring FERC to take action pending appeal of its ruling, there are no immediate impacts on the current base residual auction results.
Well, ut-oh. Just one more day in the regulatory cesspool.
Remember, little ratepayer and property owner, you're a PJM "stakeholder," too, and you should be participating
in the planning process that at some point in the future may require you to sacrifice a right of way through your private property, or pay for big, new transmission lines of questionable benefit to you.
It's another hot time at the expensive, luxury hotel for our "stakeholders," where market power players and their toadies will be turning out in their best "resort casual" wear to partake in free leisure activities sponsored by the corporations that make big profits from the cartel.
You are cordially invited to attend the 2014 PJM Annual Meeting of Members to be held at the Hyatt Regency Chesapeake Bay. Please note that the dress code is “Resort Casual”. The program will be similar to last year's event starting on Tuesday, May 13 with registration and an Opening Reception and ending on Thursday, May 15 with the Members Committee meeting and buffet luncheon.
On Wednesday, May 14 we will have the General Session followed by lunch and leisure activities. Thanks to the generosity of our sponsors, each attendee may select one leisure activity at no cost to themselves. The following leisure activity selections will be available for choosing onsite at the registration desk and will be filled on a first-come, first-serve basis.
St. Michael’s Winery/Tour
They forgot to add extracting obscene profits from consumer pockets, but maybe that's not a leisure activity; instead it's one that requires hard work.
So, what do the PJM aristocracy do at these meetings, when they're not participating in leisure activities, receptions and luncheons?
They review the past year of incumbent electricity conglomerate rule. They "train" your Consumer Advocates. They eat dinner and hand out golf awards. Then they have entertainment night with desserts.* I think it would be pretty entertaining to give a couple of sponsor CEOs a pie in the face, but that's probably not what PJM has in mind. They also allow the well-funded environmental elite to perform a song and dance for the assembled dignitaries, but no one really pays any attention to it, although that never stops the "public interest group" PIGs from believing that this year's production will be the one that convinces everyone to pay even more for "clean" electricity.
So much glib self-congratulation at your expense, so little time. If your electric supplier is one of PJM's meeting sponsors, run (don't walk!) to sign up for one of the free leisure activities. You're probably paying for it in your electric bill anyhow, might as well enjoy.
And what are the worker bees doing at PJM while the lords and ladies play on Maryland's Eastern Shore? They're holding PJM's annual capacity market auction, where the prices consumers will pay to have generation resources available in 2017-2018 will be determined. Where prices may end up seems to be a matter of opinion. Incumbent generators have been plagued by low prices in previous auctions. PJM's market monitor says the capacity market is broken and has championed several changes that have been recently approved by FERC to raise prices.
PJM has instituted a limit on imported capacity that is supposed to stop the flood of bids from generators in other regions that have been gaming the market by receiving revenue for resources they can't deliver, or resources controlled by other regional operators (yes, big wind, they're talking about y-o-u). Oh, go ahead, read more about it here, but first a little mood music to help you prepare. Sorry about that, but it was actually a pretty concise explanation of PJM's reasoning for the CIL.
The other change is supposed to "result in the more efficient and flexible use of demand response," but will probably just drive some resources from the market altogether. Because demand response lowers overall demand at times of peak use by paying participants to reduce their load, this means that more actual generation capacity will be needed.
But some generators aren't optimistic that the changes will do much to raise prices enough to satisfy their greed and save their bacon. Some generators seem to want more.
And if you think all this capacity auction stuff is about as exciting as watching paint dry, you're not alone. This blogger so thoughtfully compares PJM's capacity markets to steroids in baseball so that we can understand it:
PJM admits that steroids are endemic to the game but then recalculates the final score of the game based on what they believe the outcome would have been if the players were not on steroids.
Maybe PJM should just be doing more of this
, and less of this.
*Update! PJM has changed its agenda today. It no longer says "Entertainment night with desserts." Now it says "Dessert Reception and Lawn Games." I guess FirstEnergy showed up with the
FirstEnergy got sucked into its own vortex of, well, sucking today. The company announced that it was capitulating on its intention to charge two million residential customers a one-time $5 - $15 fee as a "polar vortex" surcharge.
FirstEnergy says that the company will still charge a fee to its commercial and industrial customers that amounts to 1 to 3 percent of their annual electric costs, though.
You don't think that FirstEnergy actually intends to absorb this foregone cost, do you? Of course not. The sucky thieves at FirstEnergy will just find other, sneakier, ways to cheat its customers... a penny here, a nickel there... and before you know it FirstEnergy has managed to SUCK the money out of you anyhow without any of that nasty, messy bad publicity that came with being up front about how much the company sucks.
Or so they think.
After FirstEnergy made its sucky announcement last month, state public utility commissions and consumer advocates in affected states scurried toward opening investigations into the company's practice of adding the additional fees to what consumers thought were fixed rate contracts. Just a little taste of FirstEnergy's sucky legal buggery, which everyone is getting mighty sick of about now.
Does FirstEnergy think it's all better now? The damage has already been done! Everyone hates FirstEnergy! The few who didn't before, do now, and they're going to get as far away from this mismanaged, money-grubbing, charlie foxtrot corporation as possible. As Columbus Business First notes:
And the company still thinks is has the ability to charge extra fees to its customers, even if they have fixed-rate contracts, based on comments from FirstEnergy Solutions President Donald R. Schneider.
“It was a very difficult winter, particularly for residential customers, and hopefully waiving the surcharge will make it somewhat easier,” he said in a release. “Even though our contracts allow us to pass through surcharges, we have decided we won’t seek reimbursement from residential customers for the added costs.”
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...