One of PJM Interconnection's purposes is to provide reliable power at the lowest possible price. As part of its attempt to accomplish this goal, PJM plans for transmission "enhancement" and administers an artificial market construct that is supposed to foster competitiveness that will ensure market prices for electricity are "the lowest possible."
Although PJM can order new transmission to artificially adjust electricity markets, they cannot order new generation to shape the market. This unbalanced "market" is what set up the investor owned incumbent utility transmission feeding frenzy we've had to put up with over the past few years. Instead of ordering new economic generation near load, PJM orders expensive new transmission lines that source from existing generation farther from load. PJM believes that "the market" (that is the REAL economic market, not PJM's artificially constructed and controlled market) will stimulate new generation without interference. However, PJM will not rely on "the market" to drive transmission expansion. If they did, would the lights go out while we wait for "the market" to catch up? PJM thinks so.
Because PJM cannot order new generation, the states of New Jersey and Maryland took matters into their own hands and ordered new generation in their own states. This upset PJM, the Market Monitor, and the incumbent generators, who have been scheming to actually prevent new generation. So much for allowing "the market" to encourage new generation.
PJM "ordered" four new high capacity long distance transmission lines between 2006 and 2008 in order to increase the use of coal-fired resources. These lines were supposed to bring lower cost electricity to the east coast, instead of waiting for "the market" to encourage new east coast generation.
The lines were economic projects, designed to decrease the "congestion" on existing lines that prevented the import of additional coal fired generation to the east coast during peak load. However, PJM also floated these projects as reliability projects, insisting that eastern load would continue to attempt to draw cheap coal fired power from the west over congested lines until the lines simply overheated and failed, pitching the entire region into the dark. That would never have happened because the east coast had plenty of their own generation, albeit more expensive (at the time) gas fired generation, that would increase prices when relied on to support peak load.
In order to decrease prices on the east coast through the building of these new lines, the cost of the lines is shared by all consumers in the entire PJM region. The east coast only paid a fraction of the cost of the lines that lowered their prices. And, in fact, the lowering of prices on the east coast by building new transmission actually increased prices in the western region by providing new markets for previously constrained generation. Eliminating "congestion" serves to levelize prices between different markets.
But, something amazing happened between 2006 and 2012. Demand for electricity on the east coast tanked due to increased energy efficiency and demand side management. By shaving peak load, the east coast made great strides to solving the "problem" of not having access to cheaper, western coal fired generation. Something else happened during that time as well. Shale gas flooded the market, opening up a cheap, plentiful, new supply of natural gas that lowered the cost of previously expensive gas fired generation on the east coast and motivated new gas fired generation builds near east coast load.
The combination of decreased load and more economic east coast generation completely obviated PJM's "need" for the four new transmission lines. Unfortunately, TrAIL had already been built at enormous cost and personal sacrifice by the people of West Virginia. However, two other projects, PATH and MAPP, have finally been abandoned by PJM and won't be built. But, the PJM consumers will still pay for these abandoned projects they never wanted and no longer need. PJM's transmission planning has failed on a massively expensive scale.
But I've only accounted for three of the four projects thus far. The last one is PSEG & PPL's struggling Susquehanna Roseland project in Pennsylvania and New Jersey. Although there is no economic or reliability need for this project anymore either, the project owners and PJM continue to insist on constructing it at enormous cost to consumers, landowners and the citizens who own the Delaware Water Gap National Recreation Area.
PSEG & PPL read the economic writing on the wall over the past few years and stepped up their efforts to ramrod their project into reality by making it "too big to fail" even though the economic justification for it had evaporated. The companies still claim that S-R "will save consumers $200M per year in congestion costs," therefore it is urgently needed and justifies enormous cost that will raise electric prices, take land from property owners, force those living in close proximity to risk their health being bathed in the line's continuous EMF soup, and destroy a priceless and irreplaceable national park.
In order to do so, PSEG & PPL bribed towns and landowners with "mitigation" payments and began a lobbying program that reached all the way to the White House with the goal of obtaining the approval of the National Park Service. The cost of all this, of course, will be borne by all consumers in PJM.
Last week, I watched FERC Commissioner Moeller extoll the virtues of new transmission while disparaging the efforts to hinder Susquehanna Roseland, a project that "would save consumers $200M a year in congestion costs," according to Commissioner Moeller.
So, where did that congestion figure come from? PJM and the project owners floated it at the time the project was approved, many years ago. Does that figure still bear any resemblance to reality? No. The "congestion" driving S-R has evaporated. The building of S-R will actually cost consumers more than any subset of consumers will ever save on their electric bills. Whether or not there is a "reliability" need for this project I really can't say, but if there is one, a simple rebuild of the existing line may suffice to fill that void. S-R as planned is overkill.
Every quarter PJM's Market Monitor publishes a "State of the Market" report. The one for the third quarter of 2012 was released the other day. The report has a section about "congestion." If S-R was still going to save consumers "$200M per year" that information would show up in the report. It does not.
The SOM report says, "The AP South interface was the largest contributor to congestion costs in the first nine months of 2012. With $50.9 million in total congestion costs, it accounted for 12.0 percent of the total PJM congestion costs in the first nine months of 2012.
The top five constraints in terms of congestion costs together contributed $112.5 million, or 26.5 percent, of the total PJM congestion costs in the first nine months of 2012. The top five constraints were the AP South interface, Graceton – Raphael Road transmission line, Woodstock flowgate, Belvidere – Woodstock line and Clover transformer."
None of these congestion contributors is located anywhere near the Susquehanna Roseland project area. And the biggest contributor to congestion costs is $50.9M per year, not $200M.
The SOM report also provides a nifty map on page 221 that shows congestion points. There's no congestion showing up in the geographic area where S-R is being constructed.
Need and justification for Susquehanna-Roseland have completely evaporated. If the project is abandoned now, or reconfigured to more closely align with any actual need, the cost to consumers will be dramatically lowered. Stop constructing this project now. Just stop. Consumers can't afford PJM's artificial markets and planning failures any longer. Stop it.
Although PJM can order new transmission to artificially adjust electricity markets, they cannot order new generation to shape the market. This unbalanced "market" is what set up the investor owned incumbent utility transmission feeding frenzy we've had to put up with over the past few years. Instead of ordering new economic generation near load, PJM orders expensive new transmission lines that source from existing generation farther from load. PJM believes that "the market" (that is the REAL economic market, not PJM's artificially constructed and controlled market) will stimulate new generation without interference. However, PJM will not rely on "the market" to drive transmission expansion. If they did, would the lights go out while we wait for "the market" to catch up? PJM thinks so.
Because PJM cannot order new generation, the states of New Jersey and Maryland took matters into their own hands and ordered new generation in their own states. This upset PJM, the Market Monitor, and the incumbent generators, who have been scheming to actually prevent new generation. So much for allowing "the market" to encourage new generation.
PJM "ordered" four new high capacity long distance transmission lines between 2006 and 2008 in order to increase the use of coal-fired resources. These lines were supposed to bring lower cost electricity to the east coast, instead of waiting for "the market" to encourage new east coast generation.
The lines were economic projects, designed to decrease the "congestion" on existing lines that prevented the import of additional coal fired generation to the east coast during peak load. However, PJM also floated these projects as reliability projects, insisting that eastern load would continue to attempt to draw cheap coal fired power from the west over congested lines until the lines simply overheated and failed, pitching the entire region into the dark. That would never have happened because the east coast had plenty of their own generation, albeit more expensive (at the time) gas fired generation, that would increase prices when relied on to support peak load.
In order to decrease prices on the east coast through the building of these new lines, the cost of the lines is shared by all consumers in the entire PJM region. The east coast only paid a fraction of the cost of the lines that lowered their prices. And, in fact, the lowering of prices on the east coast by building new transmission actually increased prices in the western region by providing new markets for previously constrained generation. Eliminating "congestion" serves to levelize prices between different markets.
But, something amazing happened between 2006 and 2012. Demand for electricity on the east coast tanked due to increased energy efficiency and demand side management. By shaving peak load, the east coast made great strides to solving the "problem" of not having access to cheaper, western coal fired generation. Something else happened during that time as well. Shale gas flooded the market, opening up a cheap, plentiful, new supply of natural gas that lowered the cost of previously expensive gas fired generation on the east coast and motivated new gas fired generation builds near east coast load.
The combination of decreased load and more economic east coast generation completely obviated PJM's "need" for the four new transmission lines. Unfortunately, TrAIL had already been built at enormous cost and personal sacrifice by the people of West Virginia. However, two other projects, PATH and MAPP, have finally been abandoned by PJM and won't be built. But, the PJM consumers will still pay for these abandoned projects they never wanted and no longer need. PJM's transmission planning has failed on a massively expensive scale.
But I've only accounted for three of the four projects thus far. The last one is PSEG & PPL's struggling Susquehanna Roseland project in Pennsylvania and New Jersey. Although there is no economic or reliability need for this project anymore either, the project owners and PJM continue to insist on constructing it at enormous cost to consumers, landowners and the citizens who own the Delaware Water Gap National Recreation Area.
PSEG & PPL read the economic writing on the wall over the past few years and stepped up their efforts to ramrod their project into reality by making it "too big to fail" even though the economic justification for it had evaporated. The companies still claim that S-R "will save consumers $200M per year in congestion costs," therefore it is urgently needed and justifies enormous cost that will raise electric prices, take land from property owners, force those living in close proximity to risk their health being bathed in the line's continuous EMF soup, and destroy a priceless and irreplaceable national park.
In order to do so, PSEG & PPL bribed towns and landowners with "mitigation" payments and began a lobbying program that reached all the way to the White House with the goal of obtaining the approval of the National Park Service. The cost of all this, of course, will be borne by all consumers in PJM.
Last week, I watched FERC Commissioner Moeller extoll the virtues of new transmission while disparaging the efforts to hinder Susquehanna Roseland, a project that "would save consumers $200M a year in congestion costs," according to Commissioner Moeller.
So, where did that congestion figure come from? PJM and the project owners floated it at the time the project was approved, many years ago. Does that figure still bear any resemblance to reality? No. The "congestion" driving S-R has evaporated. The building of S-R will actually cost consumers more than any subset of consumers will ever save on their electric bills. Whether or not there is a "reliability" need for this project I really can't say, but if there is one, a simple rebuild of the existing line may suffice to fill that void. S-R as planned is overkill.
Every quarter PJM's Market Monitor publishes a "State of the Market" report. The one for the third quarter of 2012 was released the other day. The report has a section about "congestion." If S-R was still going to save consumers "$200M per year" that information would show up in the report. It does not.
The SOM report says, "The AP South interface was the largest contributor to congestion costs in the first nine months of 2012. With $50.9 million in total congestion costs, it accounted for 12.0 percent of the total PJM congestion costs in the first nine months of 2012.
The top five constraints in terms of congestion costs together contributed $112.5 million, or 26.5 percent, of the total PJM congestion costs in the first nine months of 2012. The top five constraints were the AP South interface, Graceton – Raphael Road transmission line, Woodstock flowgate, Belvidere – Woodstock line and Clover transformer."
None of these congestion contributors is located anywhere near the Susquehanna Roseland project area. And the biggest contributor to congestion costs is $50.9M per year, not $200M.
The SOM report also provides a nifty map on page 221 that shows congestion points. There's no congestion showing up in the geographic area where S-R is being constructed.
Need and justification for Susquehanna-Roseland have completely evaporated. If the project is abandoned now, or reconfigured to more closely align with any actual need, the cost to consumers will be dramatically lowered. Stop constructing this project now. Just stop. Consumers can't afford PJM's artificial markets and planning failures any longer. Stop it.
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