Just like the ENEC case filed mid-August, this rate increase is simply the result of more bad decision-making by the WV PSC. The vegetation management program (VMP) has already been ordered and the company has already spent this money. They will recover it. What remains to be seen is how much.
According to FirstEnergy's filing, the Commission decided to cover the cost of the VMP with an additional surcharge, instead of including it in base rates. However, the surcharge didn't go into effect until 2015, so now FirstEnergy wants to collect all the money it spent before the surcharge, the amount of the surcharge it undercollected to date, and the amount of the surcharge it is predicted to undercollect in 2016 and 2017 if the surcharge rate remains unchanged. Total for you: $75.8M.
So, what's in this filing, and what are you getting for your money?
FirstEnergy says its program has increased your reliability by demonstrating "a remarkable decline in the
customers affected per mile from tree-related outages."
And it demonstrates with a evidentiary slide show of some before and after photos of its tree hacking prowess. Here's just one example of the work FirstEnergy did on its unfortunately named circuit "Hacker Valley." Indeed!
Prior to the VMP surcharge, the company recovered its cost of maintaining rights-of-way through its base rates. Base rates are determined in periodic filings, where the company demonstrates its costs. A fixed rate is set allowing the company to recover the costs. The rate is not changed until the company files another base rate case at their own prerogative. In between base rate cases, nobody is minding that the company is actually spending its base rates on what it said it was spending them on. Therefore, a company can cut services, while still recovering the cost of them, and increase its profits.
So, you may be asking yourself... how did the rights-of-way get so overgrown that they were seriously affecting reliability? What in the hell was the company doing with all the tree-trimming money it was collecting in base rates? Obviously, not trimming trees.
Instead of asking this question, the PSC acted proactively to fix the problem by making ratepayers responsible for the cost of all this unperformed maintenance. FirstEnergy got off scott-free in terms of financially owning up to its years of neglect. However, the PSC, in removing VMP costs to a surcharge, are now going to be monitoring that your money is actually spent on tree-trimming. Hurray! So now you will notice how much it actually costs.
How much does it cost? Customers have reported, "...they cut HEALTHY trees for no reason on our driveway. Some sat in the truck hidden back on the power lines for hour at a time waiting for quitting time." Yup, plenty of job milking going on by the tree contractors. In addition, FirstEnergy says that their costs to begin this program were high because it needed to double its work force in order to actually do something, and it was in competition with rival power company Appalachian Power to find new workers for this new program. Because of that, FirstEnergy needed to import tree hackers from out-of-state and pay them travel costs and per diem. Also, the company had been paying its contractors on a time & materials basis, instead of a firm bid, job-based contract.
But don't you worry, little hack-ee, FirstEnergy has been looking out for your interests by finding ways to reduce the cost of the VMP. They have now switched to 70% firm bid contracts, have managed to train all the new employees (and supervisors, you know, those guys who sit in the truck and sleep) and are diligently looking for ways to cut costs.
And if you believe that, I've got a bridge to sell you. That's because the cost of the VMP is projected to be split almost evenly between captial costs and operations and maintenance costs. An O&M cost is reimbursed dollar for dollar as incurred. However, capital costs are depreciated over the life of the line trimmed, taking many years to pay off. And guess what? Capital costs will earn FirstEnergy 8.19 percent interest yearly! The more "capital" they spend, the more profit they make! Who's minding the capital and expense split? Nobody.
FirstEnergy also says they will cut costs by increasing the amount of herbicide spraying they do vs. manual clearing. Get ready for lots more dead, brown, right-of-way strips and overspray killing adjacent vegetation and polluting your water supply. But don't worry, your government would NEVER let a company use chemicals that could harm you.
FirstEnergy has also changed its tree hacking game plan, to include many new trees outside its right-of-way that could fall on the line... maybe... if the stars align... or something. So this means they're widening their rights-of-way without paying the property owners for this additional taking. Tsk, tsk!
As of June 15, the company has trimmed over 1.8 million trees, removing over 400,000 trees and
controlling/clearing over 19,000 acres of rights of way. To provide some perspective, the 19,308 acres of right of way cleared and sprayed during the 14 month Review Period is the equivalent of the size of 19,000 football fields, since a football field approximates one acre in size.
I think the trees are screaming! Can you hear them?
So, what should you do about all this? Participate in any upcoming opportunities for public comment!
You also need to support your underfunded Consumer Advocate, who is run ragged trying to protect consumer interests in all these smaller, frequent rate increases.
But that effort was criticized by the Consumer Advocates Division, which said the move set a bad precedent and weakened the traditional rate making policies of the PSC, where nearly all facets of a utility’s business were considered in a single rate case.
At that time, Jackie Roberts, the CAD director, said allowing electric companies to assess additional surcharges to customers’ bills for tree trimming programs was just the most recent step in a trend toward companies filing a number of smaller rate cases.
According First Energy’s testimony, the company is expected to receive an 8.19 percent return on the cash expenditures under the program before taxes.
In these cases, Roberts said the commission needs to weigh what is needed for the utility to provide safe and reliable service against the customers interest in having reasonable rates.
“On its face, it certainly appears this filing would fail that test,” she said.
Just hand over your wallets, little ratepayer, and nobody gets hurt. Except when they can't pay their electric bill...
Will enough ever be enough for FirstEnergy?