The Federal Energy Regulatory Commission (Commission) hereby gives notice
that members of the Commission and/or Commission staff may attend the following
meetings:
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... Honestly, I don't how they expect to attract anyone to this meeting without golf outings, winery tours, massages, and hookers and blow in the Hospitality Suite. And then the heavies from FERC show up. Way to ruin the party!
2 Comments
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!
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 wait... 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. 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. ... and this one goes to Sprouse! We're still living in America, where money apparently can't buy everything. And that's a cheery thought! The Kansas City Star continues its excellent coverage of the Grain Belt Express debacle in the wake of yesterday's denial of the project by the Missouri Public Service Commission. The Star focuses on impacted Missouri landowner Loren Sprouse, who, along with his brothers, operates a farm in Caldwell County. Read the article and watch the video here. A week before the vote, Loren Sprouse — along with two brothers, he farms land in Caldwell County that’s been in the family since 1919 — said of Grain Belt: “This is a giant land grab by a huge company. They (Clean Line) are a private, for-profit company trying to masquerade as a public utility.” The Missouri PSC's Order denying Grain Belt's application mentioned: Clean Line Investor Corp. is a subsidiary of ZAM Ventures, L.P., which is one The Order stopped short of revealing how much of this particular $500M chunk their multi-billion dollar fortune the Ziffs have invested in Clean Line's struggling projects, but Clean Line's recent application to the Illinois Commerce Commission revealed it's in the neighborhood of $70M. That's nearly 1/5 of ZAM's fortune tied up in Clean Line with no hope of recovery if the projects fail. Maybe this will give the Ziffs some empathy for the Sprouse brothers, who stand to lose a huge chunk of their investment if the project is built. And let's think about that for a second... how much potential profit is in these projects for the Ziffs if they're willing to invest such a huge chunk of their fortune? Will they recoup their entire investment if only one of Clean Line's five projects gets built? So, who watched the Missouri PSC meeting yesterday? It was lovely of Mike Skelly and Mark Lawlor to choose seats that put them within range of the streaming video camera. Everyone got to watch them lose! Here's what it looked like: Schadenfreude? You betcha! Skelly originally took his classic "arms folded" defiant pose while Lawlor awkwardly stood in the doorway with a hang dog expression. I guess someone told them that their body language was unbecoming for the occasion, because Skelly switched to the "hands tightly clasped between his knees" pose and Lawlor sat down to take notes. Although, in this shot, it looks like Lawlor is about to bolt from his seat and run screaming from the room. So, what did Clean Line have to say afterwards? It took forever for them to issue a press release (because the victory one they probably had prepared ended up in the shredder). Clean Line says: ...there appears to be some confusion at the Missouri Public Service Commission about how the project will benefit Missourians. Confusion? Hardly. The MO PSC's Order was clear as a bell. It weighed the evidence and made a decision that actual benefits to the general public from the Project are outweighed by the burdens on affected landowners. Who does that Clean Line? Who calls a state regulatory board "confused" when they don't get their way? This isn't boding well for another application down the road... The profit-seeking needs of the Ziff Brothers were outweighed by the burden the project proposed to the Sprouse Brothers. What a great thought as we celebrate America this weekend! And let's end with a final photo of Mike and Mark, who finally managed to have a word with each other as the meeting was ending. What do you suppose they said? The Beckley Register-Herald published a spot on editorial last week regarding the captive West Virginia PSC's continual rubber stamping of utility rate increases. CHA-CHING! The editorial lambasted the PSC for not even bothering to act like they care to listen to public commentary. At a hearing last week in Beckley, one citizen clearly believed the PSC acts more as a rubber stamp for the utilities than an advocate for the people. His notion was not hindered by a PSC staffer who was perceived to be texting or playing with her phone throughout the meeting. The editorial points out that at some point, the continued advancement of utility bill increases are going to meet the immovable object of consumer ability to pay.
In the past, the PSC has shown little concern about consumers, except to scam them with "consumer rate relief bonds" designed to simply hide huge rate increases with slick PR campaigns and additional financing fees. The WV PSC must balance the interests of consumers with those of utilities. Simply denying a rate increase needed to keep the utility solvent isn't an option. What's a regulator to do? Break those utility chains that bind you, Commissioners! Instead of being lead around by the utilities like a monkey on a leash, how about leading for a change? We're only going to get a handle on utility rate increases when regulators start acting like regulators and stop acting like utility sycophants. Only when regulators use their authority to lead utilities can true balance happen. Perhaps our Governor should start appointing Commissioners with the proper skills, instead of appointing his cronies to the PSC as political favors. Did you think I've been on vacation for the past couple of weeks? Hardly. But I've been having so much fun it sort of felt like a vacation.
Today was the filing deadline for initial briefs in the consolidated FERC proceeding dealing with the formal challenges to PATH's 2009, 2010 and 2011 rates and the recovery of PATH's capital investment in the cancelled PATH project. The briefs summarize the evidence and positions of the parties. You can download them here: Newman-Haverty Initial Brief (deals with formal challenge only) 66 pages FERC Trial Staff Initial Brief (deals with formal challenge and abandonment) 99 pages Joint Consumer Advocates Brief (deals with abandonment only) 268 pages PATH Brief (deals with formal challenge and abandonment) 168 pages Happy reading! They're much shorter than War and Peace. I think. Why do they call them briefs? Is this some sort of sick joke? Holding this proceeding in abeyance and allowing the Company to obtain such additional information and to work with Staff to develop additional production cost models would prejudice no one. They also claim it would be "in the public interest" to allow the application to languish in limbo until Grain Belt Express can actually provide the information the Commission asked for back in February.
"The public" has been inconvenienced and financially harmed by Grain Belt Express every day of the past 2 years this thing has been an active threat to their lives and livelihood. Targeted landowners have been living in stasis, afraid to invest in their properties, unable to sell their properties without disclosing the possible intrusion of a gigantic power line that will lower its value. Thousands have been spent legally defending their rights. There has been many a sleepless night, an uneaten meal, and way too much family time foregone in favor of meetings, hearings, and other related events. These folks have been put through the wringer, but they have persevered. Now, when denial of Clean Line's application is imminent, the company suddenly wants the Commission to slow down, after urging it to hurry up all these months it thought it was on the way to victory. The Commission has given GBE way too many chances already. A full evidentiary hearing was held. The record was closed. But, the Commission gave GBE a second chance to supplement the record months after the record had closed. Clean Line couldn't be bothered to provide the necessary information or evidence. Now GBE wants a third chance to get it right, and for thousands of affected landowners to continue to live in suspended animation for however long it takes GBE to get its act together. Obviously Lawlor's threats to march right to the U.S. DOE to revive his application for federal eminent domain authority under Sec. 1222 of the U.S. Energy Policy Act was a big, fat bluff. He's not going anywhere, except to drop to his knees right there in Missouri and beg for a third chance. "Do overs" are best left on the playground. Release the landowners from this corporate game-playing purgatory. Deny the application. |
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. About
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