AEP announced the addition of several parties to its proposed settlement agreement in Oklahoma last week. The sycophantic trade press and other outlets duly reported this as regulatory progress. Lots of smoke and mirrors for something of relatively little value. It doesn't matter how many minor parties sign up to receive something of value to them when the major party who will pay for the project continues to oppose the settlement.
In the regulatory world, any party with an interest in the proceedings may become a party to the case. If some of these interests are purely selfish, it doesn't matter. All sorts of entities intervene in a regulatory proceeding in order to try to score a piece of the pie. Such was the case in Oklahoma when AEP filed its audacious plan to buy the country's biggest wind farm and build and own the world's biggest "generation tie line." The project fundamentally changes the nature of wind and other generation projects in Oklahoma and the gen tie line makes other transmission to export renewables obsolete. So, it's no surprise that a bunch of companies with interests in building generation and transmission in the state intervened in the case. They intervened because AEP's plan interferes with their own plans. If AEP builds its project, all these other companies may have to abandon some of their own plans. But what if they can intervene and negotiate with AEP to preserve some of their own plans and still make money? Everyone makes money, everyone's happy, right?
Except someone has to pay for all these companies to make their money. AEP suggests its customers in Oklahoma will pay for its project. If AEP adds guarantees that the intervening companies will also make money from their own projects, then that only adds to the cost burden for AEP's customers. And that's exactly what happened last week.
Intervening party Oneta Power received a power purchase agreement for 300MW of gas-fired generation, plus a commitment that AEP will issue an RFP for additional gas generation in the near future. Now maybe purchasing gas generation would be cheaper for Oklahoma consumers, but this purchase is in addition to, not instead of, AEP's purchase of a wind farm. It increases consumer costs, not reduces them. AEP says it was going to purchase this power anyhow, but that plan was originally tanked and replaced by Wind Catcher. Now all of a sudden, AEP needs both. If that doesn't smack of buying off a party with someone else's money, I'm not sure what does. AEP says that this agreement is "in the best interests" of its customers because it allows them to build Wind Catcher. It has no benefit of its own.
Other recent settling parties received similar goodie bags that also provide no benefit to AEP customers, such as agreements not to infringe upon the retail sales territory of another company, and to allow others the opportunity to build future additions to AEP's transmission system around the wind farm. None of that saves AEP customers any money. The customers are still hit with the full cost of the wind farm and transmission line.
And there are plenty more parties who probably want their own piece of the pie before this is done.
It doesn't matter how many pieces of pie AEP serves up to these parties if the parties representing AEP customers don't belly up to the buffet. The OK Attorney General and Public Utility Division of the Oklahoma Corporation Commission are the only parties to the case who could even remotely be said to represent the interests of AEP customers, and they're not budging. These parties have made their position quite clear when they filed their own settlement agreement containing terms they believe will protect consumers. AEP could agree to these conditions and settle the case, then go on to build its project. However, AEP has refused to do so. Instead it has gone around serving pie to all the other intervenors with selfish intent. Perhaps AEP thinks that if it gathers enough parties and generates enough smoke and mirrors that the public will believe they will benefit from the project and that will give the OCC Commissioners enough "cover" to approve the project against the "best interests" of AEP ratepayers in the state.
So why won't AEP agree to the Attorney General's settlement terms? Because they actually provide protections to AEP's customers who will pay for the project. AEP says its project will provide benefits to customers, but when the guarantee that it will do so is inked out in black and white on a legal agreement, AEP won't sign it. This can only mean that AEP's promises of customer benefit are fake. If providing the promised benefits interferes with AEP's profit, then there is no real benefit and the project should be cancelled or denied.
AEP has asked the Oklahoma Corporation Commission to approve its recovery of costs for Wind Catcher from its customers. The OCC can do this at any time. But if the benefits determined by the OCC in any approval don't happen, then the OCC is fully responsible for making a bad decision. And they must know it would be a bad decision because they haven't done it.
But the project can still be approved without the OCC Commissioners taking responsibility for making a bad decision if a unanimous settlement is presented for approval. In a settlement, all the parties with an interest in the case have agreed on how to dispose of it through negotiation. Everyone gets something, and the applicant achieves its goal. Nobody could blame the OCC since the parties agreed that the settlement was in their own best interests. It sure seems like the OCC Commissioners are waiting for a settlement so they don't have to take responsibility for making a big mistake.
And AEP is trying mighty hard to come up with a settlement, but not hard enough to stand behind its own promises of customer benefit. A contested settlement, where one or more parties do not join the majority and continue to oppose, is unlikely in this instance. Approval of a contested settlement would be categorized as a bad decision that sticks to the OCC Commissioners. It's all about who the contesting parties are and why they are contesting. If a minor party, like Clean Line Energy Partners for instance, contested the settlement because AEP refused to buy its failed Plains & Eastern transmission project route, a contested settlement may be reasonable. However, if the Attorney General contests in the best interests of ratepayers, that's a whole different animal. In order to approve that kind of contested settlement, the OCC Commissioners would take it upon themselves to determine the best interests of the ratepayers against the better judgment of the Attorney General, and they would own every bit of fall out when AEP's promised benefits don't materialize.
Pretending that buying support from self-interested parties is progress is nothing more than smoke and mirrors.
And speaking of smoke, be sure not to miss this news story out of Bixby, Oklahoma last week. Bixby officials asked AEP to make a presentation about its project, and they went, like lambs to the slaughter. AEP sent its governmental schmoozer, some project rep, and Tim Gaul, its corporate siting guy. Some of you veteran transmission opponents may recognize that name. Gaul has shown up as the siting guy on many AEP transmission projects in the past, although he used to work for transmission siting contractor Louis Berger before he went through the transmission revolving door and earned himself a plum position at AEP. Gaul has been the guy who decided to place a transmission line in your back yard, although public accountability has been rare. Watch as an unnamed landowner gets in Gaul's face and berates him while pointing a finger. It gives me the warm fuzzies! The look on Gaul's face... hahahaha! Bravo, unnamed landowner, bravo! You spoke for a lot of people who never had such an opportunity!
At the end of the evening, Bixby officials voted to send written opposition to the project to the OCC. The people of Bixby have spoken. There's no purer truth in the transmission business than this...
In the regulatory world, any party with an interest in the proceedings may become a party to the case. If some of these interests are purely selfish, it doesn't matter. All sorts of entities intervene in a regulatory proceeding in order to try to score a piece of the pie. Such was the case in Oklahoma when AEP filed its audacious plan to buy the country's biggest wind farm and build and own the world's biggest "generation tie line." The project fundamentally changes the nature of wind and other generation projects in Oklahoma and the gen tie line makes other transmission to export renewables obsolete. So, it's no surprise that a bunch of companies with interests in building generation and transmission in the state intervened in the case. They intervened because AEP's plan interferes with their own plans. If AEP builds its project, all these other companies may have to abandon some of their own plans. But what if they can intervene and negotiate with AEP to preserve some of their own plans and still make money? Everyone makes money, everyone's happy, right?
Except someone has to pay for all these companies to make their money. AEP suggests its customers in Oklahoma will pay for its project. If AEP adds guarantees that the intervening companies will also make money from their own projects, then that only adds to the cost burden for AEP's customers. And that's exactly what happened last week.
Intervening party Oneta Power received a power purchase agreement for 300MW of gas-fired generation, plus a commitment that AEP will issue an RFP for additional gas generation in the near future. Now maybe purchasing gas generation would be cheaper for Oklahoma consumers, but this purchase is in addition to, not instead of, AEP's purchase of a wind farm. It increases consumer costs, not reduces them. AEP says it was going to purchase this power anyhow, but that plan was originally tanked and replaced by Wind Catcher. Now all of a sudden, AEP needs both. If that doesn't smack of buying off a party with someone else's money, I'm not sure what does. AEP says that this agreement is "in the best interests" of its customers because it allows them to build Wind Catcher. It has no benefit of its own.
Other recent settling parties received similar goodie bags that also provide no benefit to AEP customers, such as agreements not to infringe upon the retail sales territory of another company, and to allow others the opportunity to build future additions to AEP's transmission system around the wind farm. None of that saves AEP customers any money. The customers are still hit with the full cost of the wind farm and transmission line.
And there are plenty more parties who probably want their own piece of the pie before this is done.
It doesn't matter how many pieces of pie AEP serves up to these parties if the parties representing AEP customers don't belly up to the buffet. The OK Attorney General and Public Utility Division of the Oklahoma Corporation Commission are the only parties to the case who could even remotely be said to represent the interests of AEP customers, and they're not budging. These parties have made their position quite clear when they filed their own settlement agreement containing terms they believe will protect consumers. AEP could agree to these conditions and settle the case, then go on to build its project. However, AEP has refused to do so. Instead it has gone around serving pie to all the other intervenors with selfish intent. Perhaps AEP thinks that if it gathers enough parties and generates enough smoke and mirrors that the public will believe they will benefit from the project and that will give the OCC Commissioners enough "cover" to approve the project against the "best interests" of AEP ratepayers in the state.
So why won't AEP agree to the Attorney General's settlement terms? Because they actually provide protections to AEP's customers who will pay for the project. AEP says its project will provide benefits to customers, but when the guarantee that it will do so is inked out in black and white on a legal agreement, AEP won't sign it. This can only mean that AEP's promises of customer benefit are fake. If providing the promised benefits interferes with AEP's profit, then there is no real benefit and the project should be cancelled or denied.
AEP has asked the Oklahoma Corporation Commission to approve its recovery of costs for Wind Catcher from its customers. The OCC can do this at any time. But if the benefits determined by the OCC in any approval don't happen, then the OCC is fully responsible for making a bad decision. And they must know it would be a bad decision because they haven't done it.
But the project can still be approved without the OCC Commissioners taking responsibility for making a bad decision if a unanimous settlement is presented for approval. In a settlement, all the parties with an interest in the case have agreed on how to dispose of it through negotiation. Everyone gets something, and the applicant achieves its goal. Nobody could blame the OCC since the parties agreed that the settlement was in their own best interests. It sure seems like the OCC Commissioners are waiting for a settlement so they don't have to take responsibility for making a big mistake.
And AEP is trying mighty hard to come up with a settlement, but not hard enough to stand behind its own promises of customer benefit. A contested settlement, where one or more parties do not join the majority and continue to oppose, is unlikely in this instance. Approval of a contested settlement would be categorized as a bad decision that sticks to the OCC Commissioners. It's all about who the contesting parties are and why they are contesting. If a minor party, like Clean Line Energy Partners for instance, contested the settlement because AEP refused to buy its failed Plains & Eastern transmission project route, a contested settlement may be reasonable. However, if the Attorney General contests in the best interests of ratepayers, that's a whole different animal. In order to approve that kind of contested settlement, the OCC Commissioners would take it upon themselves to determine the best interests of the ratepayers against the better judgment of the Attorney General, and they would own every bit of fall out when AEP's promised benefits don't materialize.
Pretending that buying support from self-interested parties is progress is nothing more than smoke and mirrors.
And speaking of smoke, be sure not to miss this news story out of Bixby, Oklahoma last week. Bixby officials asked AEP to make a presentation about its project, and they went, like lambs to the slaughter. AEP sent its governmental schmoozer, some project rep, and Tim Gaul, its corporate siting guy. Some of you veteran transmission opponents may recognize that name. Gaul has shown up as the siting guy on many AEP transmission projects in the past, although he used to work for transmission siting contractor Louis Berger before he went through the transmission revolving door and earned himself a plum position at AEP. Gaul has been the guy who decided to place a transmission line in your back yard, although public accountability has been rare. Watch as an unnamed landowner gets in Gaul's face and berates him while pointing a finger. It gives me the warm fuzzies! The look on Gaul's face... hahahaha! Bravo, unnamed landowner, bravo! You spoke for a lot of people who never had such an opportunity!
At the end of the evening, Bixby officials voted to send written opposition to the project to the OCC. The people of Bixby have spoken. There's no purer truth in the transmission business than this...
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