The Federal Energy Regulatory Commission (Commission) hereby gives notice
that members of the Commission and/or Commission staff may attend the following
North American Electric Reliability Corporation
Member Representatives Committee and Board of Trustees Meetings
Board of Trustees Corporate Governance and Human Resources
Committee, Finance and Audit Committee, Compliance Committee, and
Standards Oversight and Technology Committee Meetings
The Ritz Carlton Toronto
181 Wellington Street West
Toronto, ON M5V 3G7
You know it's a slow news day when...
The media is calling both the House and Senate energy bills "boring." The goal seems to be to pass an energy bill that doesn't do much of anything. For this, we pay these guys the big bucks!
Boring is much better than controversial, because honestly, these critters can get up to all kinds of hijinks when they're out of your sight in Washington, DC. Some of the more "controversial" stuff proposed earlier didn't make it into the bills that are currently being marked up, such as the "APPROVAL Act" bills introduced by the Arkansas delegation to neuter Section 1222 of the last energy policy act. Went nowhere. Nothing but hot air intended to appease angry voters. What a disappointment!
Anyhow, what IS in the bills that's of interest? Oh, there are a few things...
The House bill contains a section establishing an Office of Compliance Assistance and Public Participation within the Federal Energy Regulatory Commission. This figurehead shall:
SEC. 4211. FERC OFFICE OF COMPLIANCE ASSISTANCE AND PUBLIC PARTICIPATION.
What? Why isn't the Commission already doing these things? And more importantly, who does this Director report to? Sounds like he reports to Congress as their special FERC minion. Is this Director supposed to take the place of a consumer advocate at FERC, freeing up the resources of state consumer advocates to concentrate on consumer issues within their own states? If so, how come this Director has no real power, other than to issue reports and recommendations? How will this position be filled? Appointment? Hired by the Commissioners? Whose interests would this Director REALLY serve? Sounds like nothing but a feel-good figurehead sucking the taxpayer teat that produces nothing of use to consumers.
The Senate bill has a couple of items of interest, including a "Transmission Ombudsperson" who, unlike the House's FERC minion, serves only the industry, smoothing things over for companies who want to build transmission (or at least that's how the Senate thinks it will work).
If this Ombudsperson ever exists, put him on your speed dial and complain regularly! Although he'll probably just sit around, take long lunches and frequent vacations because the federal government has a very narrow responsibility to issue electric transmission infrastructure permits. It's up to you to wake him up occasionally! Another do-nothing on the taxpayer dime.
Hey, but wait, perhaps if the section codifying Obama's "Interagency Rapid Response Transmission Team" (RRTT or "er-tit" as we dubbed it) makes it through, Ombudsperson will have more to do! The er-tit is supposed to "expedite and improve the permitting process for electric transmission infrastructure on Federal land and non-Federal land." Again, very few federal transmission permits, but the er-tit is supposed to whip the federal agencies to approve the few permits they do have jurisdiction over faster, faster, faster! The er-tit consists of representatives from a laundry list of federal agencies, but has absolutely NOBODY watching out for the interests of consumers or landowners. Full-speed ahead for the er-tit and its industry flunkies! I shouldn't laugh... the original incarnation of the er-tit rammed through a federal process for the Susquehanna Roseland transmission line in Pennsylvania and New Jersey that cost ratepayers $60M, plus interest over the next 40 years, to pay off the demands of former Interior Secretary Salazar. Let's hope the new er-tit behaves better.
So, anything can happen in the Congressional energy world, as the busy little bees try to add things (bad things? good things?) into these energy bills before the recess. How come the consumers don't have a lobbyist working for their interests on Capitol Hill? It's up to you to babysit these Congress critters!
The only news story to leak out of the Illinois Commerce Commission's three public hearings on Clean Line's Grain Belt Express project presents an opinion that is not factual.
"To bring Illinois forward in clean energy, we need dedicated direct current lines here in our state," said Taylorville's Patty Rykhus.
"Dedicated?" Dedicated to what? If Patty thinks Grain Belt Express is "dedicated" to clean energy, she's mistaken. Electric transmission is "open access," and even though Clean Line asked the Federal Energy Regulatory Commission for permission to give preference to wind generators when assigning capacity on its project, the Commission denied their proposal. Clean Line cannot be "dedicated" to any form of energy.
Does Patty think that HVDC lines bypassing Illinois will actually move "clean energy forward" in Illinois? Where might she have gotten that idea?
GBE spokespuppet Mark Lawlor tries to tell the reporter "In the first five years of this line being in operation it will reduce wholesale rates by $750M." Where's the proof of that, and why would he say such a thing?
First of all, the Missouri Public Service Commission recently examined the company's claim that the project would reduce wholesale rates in Missouri and rejected it.
The GBE production modeling studies do not support the GBE allegation that the Project would result in lower retail electric rates for consumers.
Let's hope the ICC does a similar evaluation. Lawlor goes on that way because the promise of lower wholesale rates is the ONLY reason the ICC granted the company a CPCN for their Rock Island Clean Line project last year. But the ICC did not find the project "needed," only that it might "...promote the development of an effectively competitive electricity market that operates efficiently...".
That still doesn't give Clean Line the eminent domain authority they seek in Illinois. Maybe Patty should educate herself before making statements on TV that aren't factual. And Lawlor should know better.
Dumping a whole bunch of "cheap" energy into a local market may have the initial effect of lowering prices through supply and demand, but Clean Line isn't selling electricity at wholesale. Its entire business model is based on power purchase agreements between generators in Kansas and east coast utilities. Lawlor leaves out quite a bit in his quest for the perfect (if not entirely factual) sound bite.
Big win for landowners in the story though. Landowner Clint Richter clearly articulates the problem of using eminent domain for purposes of enriching investors speculating in "clean" energy markets:
Shelby County landowner Clint Richter said that, "it's not that we're not for renewable energy, but we're against a private company coming in and taking land that's ours for their own private gain and I think that's what is really happening here."
That's what the viewers will take away from this story. Way to go, Block-GBE Illinois!
In response to "stakeholders" following the trail of breadcrumbs that lead to 888 First Street, N.E., Washington, DC, FERC's Office of Energy Projects has come out with a "Suggested Best Practices for Industry Outreach Programs for Stakeholders."
*sigh* Reads no better than any industry propaganda, beginning with its title. Was FERC really attempting to mollify the public and prove that it's acting in the public interest with this? FERC staff needs to take this brochure home to grandma and ask her if she thinks it was written in a conversational and informative manner. She'll probably buy you some gigantic, ugly, 1940's-style underwear next Christmas in response. Or knit you a suit jacket and pop into the office with cookies at random intervals to make sure you're wearing it.
FERC realizes that landowners are "stakeholders!" Yay! But it's all downhill from there. While FERC recommends involving "the public" early in the process on the first page, venturing further shows recommendation that the company involve local elected officials before landowners, in order to "sell" them on the project (while making campaign contributions?). In this way, the company can head off landowner concerns by indoctrinating the public's representatives in the "company way" so that when landowners find out about the project and turn to their local elected officials for help, there is none to be had. Of course, this is easily turned around with enough landowner (voter) pressure, making early elected official notification sort of useless.
There's also recommendations for a whole bunch of "stakeholder" meetings, where only selected "key stakeholders" are invited to participate. Landowners aren't invited to these, they only get to participate in public "open house" meetings, where they are presented with the project as a fait accompli. FERC supposes involving "key stakeholders" can "result in developing partnerships with special interest groups, municipalities, and community business organizations." Holy back room deal, Batman! Is FERC suggesting that a company buy cozy relationships with certain community groups that can benefit from the project so that they can throw the impacted landowners under the bus for their own profit, or for the simple benefit of making sure the project is not constructed in their own back yards, but in the back yards of others who are politically powerless or not participating in this process? Wrong approach!
This whole brochure fails because it's based on the "information deficit" model. It presumes that the only reason people oppose projects is because they lack enough information. It supposes that if a person is bombarded with enough "information" (propaganda) that they will acquiesce to having their lives turned upside down for benefit of others. It doesn't work. Never has. Never will. It actually increases the potential for entrenched opposition and local political battles.
FERC obviously doesn't notice that it has placed itself squarely in the corporate camp. Maybe they didn't intend to, but this brochure reveals who FERC identifies with... and it's not landowners. FERC presumes a proposed project must be built as proposed. FERC could use a crash course in how and why opposition develops. Come out of your ivory (city soot coated) tower! There's much to be learned!
Presenting the public with a project as a fait accompli is the first crucial mistake. Nobody likes to learn that a company, or their elected officials, or the Sierra Club, or the Chamber of Commerce, or the "good ol' boys" in their town (or even FERC... especially FERC) have been secretly developing a project that takes their property. People's property is sacred to them. You might as well show up with a plan to conscript our children. You'd never do that, right? But it's the exact same punch in the gut feeling when a landowner learns others have been conspiring to take what belongs to him.
If you really want impacted landowners to get on board with a project, you need to involve them in the decision making from the start. Instead of saying, "we need to build this," how about saying, "we have a problem and here are several ways to solve it, but we're open to suggestion"?
Only when the public gets some ownership of the decisions made are they likely to work cooperatively toward a solution. This is a still a democracy, right?
As if it's not bad enough that investor owned utility regional transmission organization cartels decide which of their members get to profit from building new transmission of questionable worth, now ITC thinks these cartels should take over transmission ratemaking from the Federal Energy Regulatory Commission.
In a Petition for Declaratory Order filed yesterday, ITC wants the Commission to rule:
1) that binding revenue requirement bids selected as the result of Commission-approved, Order No. 1000-compliant, and demonstrably competitive transmission project selection processes will be deemed just and reasonable when filed at the Commission as a stated rate pursuant to Federal Power Act (“FPA”) Section 205; and 2) that such binding bids are entitled to protection under the Mobile-Sierra standard, and may not subsequently be changed by means of a complaint filed under FPA Section 206 unless required by the public interest.
FERC's Order No. 1000 was supposed to open the doors to competition in order to make transmission cost competitive. RTOs are now supposed to consider costs when deciding who gets to build a project. Some, like PJM, require bidders to submit a total project cost with their bid. It is not subject to accuracy checks, so a company can submit a low bid to win the project, and then recover cost overruns. This makes the cost bid worthless. Other RTOs, such as MISO and SPP, require the bidder to submit yearly revenue requirements for the life of the project (40 years). Unlike a "total project cost" estimate of a project's total capital investment, a revenue requirement also includes the utility's return, Operations and Maintenance costs, taxes, and other costs to more accurately represent a ratepayer's actual cost. Of course, these revenue requirements are just estimates, actual rates may differ.
On top of that, competition has inspired transmission companies to offer not to exceed "cost caps," where a transmission company eats any overages. This serves to make cost bids more accurate and encourages the company to actually perform, instead of its usual apathy to cost concerns because the company is simply passing its costs into rates that someone else pays.
Good idea, right? Except when a cost cap and company performance actually makes the project come in under budget, ratepayers can reap the benefits of even lower rates. ITC wants that to stop. It wants to recover the full amount of its cost cap, even if it spends less. How rickety will transmission become once corporate greed and shareholder returns enter the picture? How many equipment cost and construction practice corners will be cut to decrease costs and increase profits?
Here's a better idea: Dangle a fixed reward of a percentage of cost underruns for the economical company when a project is successfully constructed, instead of encouraging them to adopt a culture of greed by proposing an endless cycle of cost cutting to increase profits. ITC's proposal is crap.
First of all, RTOs don't know diddly doo about rates and ratemaking and care even less. RTOs are NOT regulators in the public interest. They operate in the interest of their investor owned members. There is no real public involvement in any of their decisions, and more importantly, no due process for ratepayers to participate in examination of the rates proposed in the cost cap "revenue requirements" that ITC wants to lock in at the RTO level.
There's a whole lot that goes into ratemaking aside from known costs, such as the company's rate of return. How is an RTO supposed to decide that? In addition, only the Commission has jurisdiction over transmission rate incentives that can increase return. Does ITC propose that the RTO take over this process in order to set the return at a "competitive" rate decided through the bidding process? And what about incentives that don't have anything to do with rates, such as guaranteed recovery in the case of abandonment? Would those still be the domain of the Commission, or shall they delegate those to RTOs as well?
Message unclear. Ask again later.
Having the utility design its own rates in a "competitive" manner would do nothing but encourage collusion that results in rates that are not just and reasonable. No rate should ever be bullet proof.
Today was the deadline for reply briefs in the matter of the Formal Challenges to PATH's rates as well as PATH's recovery of abandoned plant, which was heard by the Federal Energy Regulatory Commission back in March and April.
Here's what turned up:
Reply Brief of Keryn Newman and Alison Haverty
Reply brief of FERC Trial Staff
Reply Brief of the Joint Consumer Advocates
Reply Brief of PATH
Th... tha.... that's all folks! Now we wait for the Presiding Judge to issue his initial decision on September 14. The Judge's decision must then go before the Commission for approval. Possibly more briefs (and replies) on exception at that time.
Now go enjoy summer! I'm going to!
Ask a transmission developer proposing a new transmission line and you'll get an answer in the neighborhood of 10 times the cost of an overhead line. (Example: $1B overhead = $10B buried)
Ask an engineer for a company proposing an underground project and you get an estimate that burial would double the cost of a similar overhead line.
(Example: $1B overhead - $2B buried)
I've been told both of these things. So, who to believe? Who might be exaggerating to serve their own purposes?
Apparently it only does "almost double" costs to bury HVDC transmission. That's what the Department of Energy concluded in its recently released draft environmental impact statement on the ill-fated Northern Pass project.
A complete burial of the Northern Pass transmission line would nearly double the project’s cost, but reduce potential negative impacts on the environment, tourism and local property values, according to a draft report released by the U.S. Department of Energy Tuesday.
But nowhere near a magnitude of 10 times the cost. Liar, liar, pants on fire!
In addition, a buried line provides significant benefits over its aerial cousin.
The visual impact, which includes “large industrial-appearing lattice structures,” could negatively impact New Hampshire’s tourism and recreation, the report says. And the proposed overhead route likely would cause the largest drop in residential property values and have the least economic tax benefit to host communities.
But, the report says, blasting during construction would generate more noise than putting the lines overhead. And burial of the line would increase the potential for erosion.
Really? That's the only drawback? Noise from blasting? So, how much "blasting" would Clean Line need to do to bury its proposed transmission lines across Midwest farmland? Little to none? What if much of the additional cost of burial was tied to blasting up the "Granite State" to create trenches? And erosion? I think that could probably be handled. Once buried, out of site, out of mind, right?
C'mon, Clean Line, get with the program and re-engineer your projects as underground lines! How much have you spent (and moreover how much will you have to spend in the future) trying to get your lines permitted? It would have been much cheaper (in terms of both money and time) to have done the smart thing and proposed your projects as buried lines in the first damned place!
And don't give me any of that crap about how its technologically impossible to bury long lines. The engineer who gave me the spot on double cost estimate also told me there is no mileage limit. He's got a lot more cred than you do at this point...
How much does opposition cost? How much does buying support cost? How much does lobbying to change laws cost? How much are a whole bunch of contested eminent domain cases going to cost? How much do repeat or additional approval processes cost?
Clean Line says its currently proposed transmission line will only add something like 2.5 cents per kw hour to the 2.5 cent cost of wind energy. So, even doubling the project costs, it's still possible to deliver at 7.5 cents/kwh, right? Well, unless Clean Line has been lying about the delivered price of wind via its projects...
Maybe Clean Line's projects won't be "economic" enough to provide big returns to their investors without foisting some of its costs off onto bypassed landowners by taking land as cheaply as possible through condemnation and eminent domain?
We all know that the public's appetite for "green" energy only stretches so far as their wallet. When faced with increased electric bills for "green" energy, the majority of the public will snap their wallet shut and oppose it. So, why would this same public expect that Midwest landowners should accept economic sacrifice and burden to keep urban electric bills low? It's only appealing when its been greenwashed and politicized, and none of that nasty infrastructure gets planted in THEIR backyard!
And... this question bubbles up... why does the DOE's draft EIS for the Northern Pass include multiple routing options that require underground lines when DOE's draft EIS for the Clean Line Plains & Eastern project proposed NO underground options? Are the people and environment of Oklahoma and Arkansas worth less than those in New Hampshire? Or is it just that Northern Pass has gotten bigger, politically-connected, push back and top-notch legal help?
It's about time to recognize that the public will no longer accept the burden of overhead lines. Anywhere. There's a better way. "Green" energy costs more. Deal with it.
Illinois Commerce Commission Advises Grain Belt Express Public Hearings Are For Directly Affected Citizens
The ICC's press release about the upcoming Grain Belt Express public hearings makes clear who should attend the hearings:
The hearings are set in communities in the western, central and eastern portions of the state in order to reach out to Illinoisans who would be directly affected by the proposed transmission line. As proposed, the line would run through Pike, Scott, Greene, Macoupin, Montgomery, Christian, Shelby, Cumberland and Clark counties.
Hear that, Clean Line? The hearings are for ILLINOISANS WHO ARE DIRECTLY AFFECTED BY THE TRANSMISSION LINES. They are not for bussed in, hungry, college students (which are at a premium during the summer months anyhow), and they are not for flown in company executives who stand to profit from supplying components for the project. They're probably not even for vans full of out-of-work union guys who have no specialized skills in building HVDC transmission lines.
So, there will be none of this:
And certainly none of this:
So, for those folks who ARE ILLINOISANS DIRECTLY AFFECTED BY THE TRANSMISSION LINES, this hearing "forum" is for you!
The forums will have two parts; the first part of the forum will be an opportunity for the public to provide oral and/or written comments into the record. This portion will last for 90 minutes and each speaker will have a 3-minute time limit. After the public comment portion, ICC staff will conduct an informal question and answer session.
Don't let Clean Line steal YOUR seat at the forum! Arrive early, sign in with the clerk if you wish to speak, and take a seat.
Note to Clean Line: Don't embarrass yourself again. Just.Don't.Do.It.
Well, isn't that cute? FirstEnergy has mated with itself and given birth to MAIT, Mid-Atlantic Interstate Transmission, LLC. Who thinks up these stupid names? This one rolls off the tongue with as much excitement and pleasure as the phrase "hand over your wallet and nobody gets hurt," or perhaps the descriptive "hot turd."
So, FirstEnergy needs to create another "independent" transco in order to energize its balance sheet by creating the world's sweetest investment account that will pay lucrative double-digit returns for many decades to come? Well, that's good for everyone, right? No, it's not.
FirstEnergy proposes that its "eastern" retail distribution companies "sell" their transmission assets to the newly formed "MAIT" in exchange for a backseat interest in the company and annual "lease" payments for right-of-way and other real estate interests that the retail companies will continue to own (along with the tax liability). Will the "lease payments" be enough to cover all the liabilities of owning the real estate? Or will the retail distribution customers end up financing a portion of that to make the "lease" cheaper for MAIT? Who's going to be supervising that to make sure it's an arm's length transaction?
FirstEnergy says they need to do this because it is consistent with the public interest. You know, you "public" are supposed to benefit from it. So, what are the benefits?
MAIT will not result in cross-subsidization of a non-utility associate company or the pledge or encumbrance of utility assets for the benefit of an associate company.
It supposedly won't have an adverse impact on competition, rates, or regulation.
FirstEnergy commits to hold customers harmless from transaction costs. (oh, like they did in the FirstEnergy/Allegheny Energy merger?)
So, "the public" won't be harmed? Even if we believe that, it's not a "benefit." It's "do no harm."
But, wait, there's more!!
MAIT results in the creation of a stand-alone transmission company, which provides a number of
benefits to customers and the PJM region!
Tell us more, Rod Roddy....
FirstEnergy is in the midst of a major investment cycle in transmission infrastructure. In 2014, FirstEnergy commenced its EtF initiative, which is intended to identify the need for, and facilitate the investment in, improvements to the security, resiliency, efficiency, and operational flexibility of its transmission systems. EtF projects include building and re-conductoring transmission lines; building and enhancing substations; modernizing transmission
Oh bull...oney, FirstEnergy! You forgot to mention FERC's extra special .5% ROE adder for transmission only companies, or "transcos." And, hey, if MAIT joins PJM, you can get another .5%!! You also forgot to mention in that breath that you do plan to immediately make a section 205 filing to set up a formula rate for MAIT that provides a lot of financial goodies that you can't get through a stated rate. Are you also going to be applying for all the other FERC transmission incentives? I bet you are, you coy little company!
So the real benefits here are for FirstEnergy, not "the public." Since the public is not receiving a benefit, and if we believe FirstEnergy that this won't increase rates (and profits), then why in the hell would FirstEnergy want to do this and shell out the "transaction costs" it can't pass to ratepayers? Do you really expect us to believe there's nothing in it for Y-O-U, FirstEnergy? I mean, you guys are kind of stupid, but I didn't think you were complete idiots.
And I do believe you are attempting to remove a whole bunch of transmission from state regulatory oversight so that you can plow your "transmission spend" into making "investments" of questionable worth in your lower voltage transmission lines that aren't part of any PJM transmission plan.
So, does anyone care? Apparently not much. The only parties to intervene in this docket are competitor PSEG and FERC settlement gadflies AMP and ODEC.
Remember, these companies are regulated to protect you. Except there's nobody minding the store on your behalf.
A little birdie told me that the U.S. Department of Energy is shopping for experienced legal counsel from the world of white shoe, D.C. energy firms to "help" them with their statutory review of Section 1222 of the Energy Policy Act and their review of Clean Line's application.
The successful contractor shall:
Provide specialized legal advice and expertise in the following practice areas: corporate;
This work shall be under the supervision of:
Partner – Project Manager. This individual is an expert in project finance and development and related issues with special expertise in multi-state, high voltage electric transmission matters. This individual must have experience representing clients in public private
No, you shouldn't all rush to bid. The response date came and went back at the beginning of June. Looks like the DOE had this plan in the works much earlier, perhaps when they announced the statutory review period back in April. How come nobody knew about this?
So, what does this mean? It means that the DOE is intending to smoke any challenges to its authority from country bumpkins and legal counsel from outside the beltway. The DC energy legal community is quite adept at creating any reality that its paying client desires. If you're not one of them, good luck to ya! Does this mean that challengers to DOE's authority need to secure their own seat inside the DC legal fence? Probably. It's going to get complicated.
But what I really want to know is... who's paying for this? Is Clean Line going to get the bill? Or, since it's all about making Section 1222 legally bullet-proof, and any utility can technically apply under the statute, will the U.S. taxpayers end up financing it? How much is this going to cost when these types of lawyers can come with price tags of $1000/hr., not to mention the cost of all their associates and underlings who do the real work.
So, we can probably look forward to some high-level legal buggery, such as use of CITIZENS AND LANDOWNERS AGAINST THE MILES CITY/NEW UNDERWOOD POWERLINE v. DOE, where the 8th Circuit found that the complaint of the landowners and their organization is barred by the doctrine of laches and that, contrary to the contentions of the Commission, the appellees need not obtain a state permit to construct the powerline. The Court also found that "contrary to the contentions of the Commission, the appellees need not obtain a state permit as required by the South Dakota siting law." I'm not going to spend any more time analyzing this, other than to mention it's a case that has yet to rear its ugly head in any legal arguments related to Sec. 1222. Go read it and do your own analysis.
I wonder if DOE's counsel will recognize that under 42 U.S. Code § 7191(b), if the Secretary determines that a substantial issue of fact or law exists or that such rule, regulation, or order is likely to have a substantial impact on the Nation’s economy or large numbers of individuals or businesses, an opportunity for oral presentation of views, data, and arguments shall be provided? Or would it even matter, since nobody has "made a showing pursuant to paragraph 2" i.e. "Any person, who would be adversely affected by the implementation of any proposed rule, regulation, or order who desires an opportunity for oral presentation of views, data, and arguments, may submit material supporting the existence of such substantial issues or such impact." Only those inside the federal fence seem to recognize such things...
It's going to get interesting. Really interesting.
And expensive. Really, really expensive.
And ugly. Really, really, really ugly.
About the Author
Keryn Newman blogs here at StopPATH WV about energy issues, transmission policy, misguided regulation, our greedy energy companies and their corporate spin.
In 2008, AEP & Allegheny Energy's PATH joint venture used their transmission line routing etch-a-sketch to draw a 765kV line across the street from her house. Oooops! And the rest is history.