Last night he practiced his face for that moment.
At some point in the near future, Secretary of Energy Ernest Moniz will have to read and make a decision on Clean Line's "updated" application to utilize Sec. 1222 of the Energy Policy Act to forcibly take land from people in Oklahoma and Arkansas to build an unnecessary transmission line.
Last night he practiced his face for that moment.
0 Comments
So, Grain Belt Express announced the opening of its solicitation of bidders for its proposed transmission capacity yesterday. Big deal. Remember these three words: Utilities Hate Risk. The solicitation for commitments, expected to last about seven weeks, will be a gauge in determining the interest in using the line. GBE is soliciting customers in accordance with the plan it filed with FERC last year to negotiate rates in a fair and non-discriminatory manner that results in just and reasonable rates. Despite GBE's media push that FERC has "approved" its project, FERC has no jurisdiction to approve the siting and permitting of the project. What FERC does have an interest in is ensuring that the rates GBE charges to its customers are just and reasonable. FERC simply approved GBE's plan to undertake this process fairly. Once GBE completes the negotiation process and assigns capacity, it must make a compliance filing with FERC demonstrating that it complied with the plan as approved. That may be be the tricky part! Who wants to make a contractual commitment to purchase capacity on a transmission line that may or may not be permitted, and may or may not be built? It could be generators, that Clean Line admits have not yet been built. It could also be utilities, who commit to purchase the capacity. Or it could be no one at all. In the case of generators, the generators would need to have customers (utilities) that want to purchase their generation delivered to Indiana (and incur additional transmission costs on other systems to get the power to load). Since these generators have yet to be built, and the transmission to Indiana has yet to be built, committing to a purchase price for delivered power could be risky. Utilities hate risk. A utility seeking to add renewable generation to its portfolio has many options, including existing generators and transmission. Utilities plan their resources many years in advance as part of their obligation to provide a public service. They are obligated to seek the cheapest price. They want to know the resources they commit to purchase will actually be there when needed, not possibly unavailable at some later date, which would leave the utility scrambling to fill some hole in its plan at whatever price they can find. Utilities hate risk. Risk is costly. In the case of utilities purchasing capacity directly... more risk! Purchase of capacity on a transmission line that may or may not be there when needed, connected to unnamed generators that may or may not be there when needed, is risky. Utilities hate risk. I read an article long ago regarding Clean Line's business plan. Some panned the plan, saying there is no market for this kind of risk. So, I thought about it. If Clean Line's plan is such a sure thing, why aren't there hundreds of transmission companies building merchant lines outside the regional planning process? Utilities have transmission affiliates, and they like to make money, too. Maybe it's because experienced transmission developers know that there truly is no market for Clean Line's business plan? Last year, Clean Line opened a different FERC-jurisdictional solicitation process for another of its projects, the Plains and Eastern Clean Line. Regarding that process, Clean Line recently claimed: It was encouraged by the strong response to a solicitation of customers for another power line it plans to build to deliver wind energy from Oklahoma to Southern states. Encouraged? Strong response? If the response was strong and encouraging, Clean Line should have negotiated contracts with the respondents and made its compliance filing at FERC and announced to the world that it had committed customers for that project, right? What happened? From May through July of 2014, Clean Line conducted an open solicitation for transmission capacity on the Plains & Eastern Clean Line. 15 potential customers submitted more than 17,000 MW of requests for transmission service. Clean Line's negotiated rate authority for Plains & Eastern requires the company to: ... make a compliance filing disclosing the results of the capacity allocation process within 30 days after the close of the open solicitation process, as discussed in the body of this order. *crickets*
It's been 6 months. No compliance filing. No contracts. No customers. What happened? Is Clean Line still negotiating? Doesn't sound very strong and encouraging to me. What if the bids Clean Line received were unacceptably conditioned to manage risk, or not satisfactory to economically support the project? Remember, the bidding window has closed. Would Clean Line have to award capacity to the top bidders, no matter the conditions? If so, then perhaps it is busy evaluating the economic reality of its project. Or is Clean Line planning to reject the first round of bidders and open a second solicitation window, hoping for better bids? Would that be fair in FERC's eyes? Don't forget to get your bids in. ;-) Utilities hate risk. It's really not news, per se, but it's now been verified by economic data -- regulated utilities with cost of service rates have no incentive to minimize their costs that are passed on to ratepayers. In addition, state-regulated utilities may actually buy more expensive, in-state fuel to appease their political puppets. And they get away with it because our state regulatory agencies are cozily captured by the entities they regulate. These were some of the findings of a recent study by Asst. Prof. Steve Cicala from the Energy Policy Institute at Chicago that was published in American Economic Review. The study, When Does Regulation Distort Costs? Lessons from Fuel Procurement in US Electricity Generation, was undertaken to study regulation to find the characteristics of "bad" regulation, instead of simply doing away with all regulation. This paper evaluates changes in fuel procurement practices by coal and gas-fired power plants in the United States following state-level legislation that ended cost-of-service regulation of electricity generation. I find that deregulated plants substantially reduce the price paid for coal (but not gas) and tend to employ less capital-intensive sulfur abatement techniques relative to matched plants that were not subject to any regulatory change. Deregulation also led to a shift toward more productive coal mines. I show how these results lend support to theories of asymmetric information, capital bias, and regulatory capture as important sources of regulatory distortion. The study looked at fuel deliveries to coal- & gas-fired electric power plants, to compare regulated to deregulated. He found that the deregulated plants combined save about $1 billion a year compared to those that remained regulated. This is because a lack of transparency, political influence and poorly designed reimbursement rates led the regulated plants to pursue inefficient strategies when purchasing coal. Deregulated plants paid 12% less for coal... because they have an economic interest in the cost to run the plant. Deregulated plants sell a product, and all their costs to produce that product are included in the cost of their product in a competitive market. In contrast, regulated plants sell a service at their cost, the supply of power. You will pay whatever it costs to produce the power, plus a guaranteed return. The higher the cost, the bigger the return. With ratepayers footing all the bills, these plants have absolutely no incentive to purchase the cheapest fuel available.
This is compounded by the "confidential," opaque nature of coal markets, where regulators may not compare prices to know when plant operators are paying too much for fuel. The same effect was not found in deregulated gas plants, and this was attributed to the transparent nature of natural gas markets. In addition, the study found that regulated plant owners are more likely to curry favor with state regulators by purchasing more expensive in-state fuel for their plants. With ratepayers picking up the tab, why not? This is how states like West Virginia continue to be ruled by a dying coal industry, and part of the WV PSC's basis for approving the "sale" of an uncompetitive deregulated coal-fired plant into West Virginia's regulated environment in 2013. The study also found that deregulated plants increase their purchase of low-sulphur coal from out-of-state mines as a cheaper way to meet environmental regulations. Regulated plants will choose installing expensive scrubbers, because ratepayers pick up the tab and the utilities collect a return on their investment. Although the study only concentrated on fuel costs of regulated v. deregulated generators, its findings can be liberally applied across the board to all aspects of regulated electric utilities, whose cost of service rates are padded with all sorts of uneconomic purchases. When faced with the cost of its own inefficiency, the utility will always find a cheaper way to get things done, but not when ratepayers are picking up the tab. FERC bad-boy Kevin Gates says he's going to create an animated monkey for his website that explains how to make money in PJM's badly-designed markets. Gates therefore said he stands by his earlier statement that FERC created a market "where a monkey could have made money that summer" by randomly picking nodes, MWs, congestion caps and hours. "We now have the data and I intend to prove it empirically," Gates added. "Once I'm done with the analysis, I intend to create an animated monkey to put on my website to present the results of my work and help explain the market that FERC created." But what kind of monkey? Will it be a nice monkey? Or will it be a naughty monkey? I suppose it's all in your perspective. And, speaking of perspective, that SNL Financial article puts some of FERC's "evidence" against Gates into perspective. For instance, staff said Chen and Powhatan's investors, including Gates, should have known that it was improper for Chen to submit trades in PJM's up-to congestion, or UTC, market on the funds' behalf just to maximize the rebates PJM gives market participants that use its transmission lines when it collects excess line-loss payments. To be fair, SNL Financial also did an article featuring FERC's perspective, but that one is behind a pay wall, so I guess nobody cares...
Personally, I'm looking forward to the animated monkey! I hope it's an evil monkey! They're ever so much more fun! Grassroots citizens’ group Block Grain Belt Express Illinois (Block GBE IL) is poised to host outreach and educational meetings in affected counties across the state prior to a second round of open houses by Clean Line Energy Partners (CLEP) in early February. The group is opposed to CLEP’s plan to construct the Grain Belt Express, a 750-mile long high voltage direct current (HVDC) transmission line, which would impact landowners in nine counties across Illinois, along with thousands of others in Kansas, Missouri and Indiana. The organization is quickly gaining momentum after launching earlier this month in response to CLEP’s first round of open house meetings.
Greene County will be first to host an educational meeting on January 14th at the Carrollton KC Hall at 7pm. Meetings will follow in other counties to raise awareness about the project and provide landowners with important information. Shelby County - Saturday, January 24th, 9am, Cowden Community Center Clark and Cumberland Counties – Sunday, January 25th, 1pm, Greenup Municipal Building Montgomery and Christian Counties – Thursday, January 29th, 6:30pm, Nokomis St. Louis Parish Center Macoupin County – Tuesday, January 27th, 7pm, Modesto Ashleigh Rockwell, the new Vice President of Block GBE IL, said “I encourage landowners and residents to unite and stand up for private property rights. It’s vital at this stage to get the information out there that GBE is not necessary or beneficial to Illinois, regardless of the final route chosen. We will spread the word and take action. Talk to your neighbors and get them to these meetings. Our support just keeps growing and we’re excited to get to each county to meet landowners and share information.” Block GBE IL recently held a successful launch meeting with an impressive turnout of landowners from across the state, along with assistance from three other BLOCK groups opposing Clean Line projects from Missouri, Iowa, and northern Illinois. A citizens’ board was elected, and two Illinois State Representatives were in attendance, both of whom oppose the GBE. Several county board members were also present. Megan Beeler, a Montgomery County board member, said, “Montgomery County has been offered what feels like “hush money” for awhile now, but as you can see, I’m not hushing!” Jennifer Gatrel from Block Grain Belt Express Missouri stated, " It was very exciting to be part of the launch meeting. I was thrilled that delegations from three other Clean Line opposition groups spanning three states were able to attend to help get this new organization on its feet. A family has been formed in a 6 state region, and we’re thousands strong! Together, we can and will stop the precedent from being set that a private company can seize private land for its own financial gain. I am grateful to be part of such an impressive team and have been amazed at the speed with which Block GBE Illinois has organized." A sub-group to represent landowners in the legal process at the Illinois Commerce Commission is already taking shape as well. Both groups will work in partnership to battle the GBE from all angles. “We have the odds in our favor by learning from what other states have successfully accomplished, and repeating that success. But we have to act now and we have to stick together,” adds Rockwell. For more information about any of the upcoming meetings or to learn more about Block GBE IL, please visit us on Facebook under Block Grain Belt Express Illinois or call 618-203-6909. Despite Clean Line's song and dance about how it has consulted with all stakeholders about its projects, it somehow missed the Cherokee Nation. Last week, The Cherokee Nation passed a Resolution “opposing the establishment of an energy line route by the Plains & Eastern Clean Line in Sequoyah County, Oklahoma located within the Cherokee Nation jurisdictional area.” A RESOLUTION OPPOSING THE ESTABLISHMENT OF AN ENERGY LINE ROUTE BY THE PLAINS AND EASTERN CLEAN LINE IN SEQUOYAH COUNTY, OKLAHOMA LOCATED WITHIN THE CHEROKEE NATION JURISDICTIONAL AREA Doesn't sound like the work of a Nation that's been working hand in glove with Clean Line and the DOE, does it? In fact, it sort of seems like the reaction of a Nation that has been blindsided by a project they knew nothing about. Janelle Fulbright, deputy speaker of the of the Cherokee Nation Tribal Council, who sponsored the resolution said: “There is no benefit to us in any way,” Fullbright said of the transmission line. “We’re just seen as the pass through for a monstrosity that will lower our property value. Even if the proposed routes didn’t go right along the Trail of Tears and through our ceremonial ground, I’d be against it because we like to live in the country and not see anything out our back door.” Three Arkansas County Quorum Courts (the local county government system) have also passed Resolutions opposing Clean Line. More to come.
Arkansas Congressman Steve Womack seems to be tired of being put off by the U.S. Department of Energy. On Thursday, the Congressman sent a letter to Secretary of Energy Moniz, demanding a meeting to get the answers about Clean Line and Section 1222 of the Energy Policy Act that he has been denied on two previous occasions. Secretary Moniz: Congress created Sec. 1222, Congress can take it away.
Something fishy is going on here... maybe it's time to start an official investigation into the way DOE has been handling the Clean Line matter. I'd start by asking them why the "Management Committee" as described in section 8a of Contract No. 1 between Clean Line Energy and the DOE, the Advance Funding and Development Agreement Plains and Eastern Clean Line Transmission Project, has not been meeting quarterly as stipulated in the agreement. Will the U.S. ever get an offshore wind industry started? One step forward, two steps back. Just when Cape Wind might finally lay oar to the water, the utilities that signed power purchase agreements to purchase it have canceled their contracts, saying that Cape Wind failed to meet its obligations under the contract. Cape Wind says the contracts are still valid, citing force majeure. The companies are further squawking because they were "forced" to sign the power purchase agreements to get the state of Massachusetts to approve their merger. The article forgot to mention that the company has made a $40M investment in hundreds of miles of transmission lines for onshore wind since the power purchase agreement was signed in 2010. Did National Grid cancel its contract with Cape Wind in order to stifle competition to its investment in Midwest wind? Offshore wind continues to struggle, while Midwest wind is trying to court the U.S. Department of Energy to invoke an as yet untested section of the Energy Policy Act to "participate" in the Clean Line projects in order to usurp state authority to site and permit them, and use federal eminent domain to take land Clean Line was denied by the states. Clean Line's projects have not been reviewed or approved in any regional transmission planning process under FERC's Order No. 1000's competitive transmission scheme. The proposed action of the DOE would not only put the federal government in the business of transmission planning, it would also actively interfere with electric markets, two areas where the DOE does not have jurisdiction or expertise. Why is Midwest wind a bad idea? Because it's located too far away and building overland transmission simply to ship electricity to the east coast is expensive, time consuming, and unfair to landowners crossed, who will receive none of the benefits, but all of the burden. Why is offshore wind a good idea? Responsibly developed offshore wind power offers a golden opportunity to meet our coastal energy needs with a clean, local resource that will spur investments in local economies - creating unparalleled job growth and avoiding the need to export hard-earned energy dollars outside the region. Or so says a mid-2014 report from the environmental community, Catching the Wind. But yet, some of the same groups who touted the benefits of offshore wind in this report were simultaneously intervening in Midwestern wind transmission line cases and telling state utility commissions that there's a "need" for Midwestern wind on the East coast. So, which is it? Or is the Sierra Club just a bunch of hypocrites? I'm leaning toward that hypothesis, since the Sierra Club is all over the map on the issue of eminent domain for energy projects, as pointed out by an Arkansas landowner. The eminent domain issue has become a key point of contention between Pilgrim and the Sierra Club. An attorney for the Sierra Club has said that Pilgrim has no rights of eminent domain because it is a private company and not formally designated as a utility by the Board of Public Utilities. But yet, the Sierra Club thinks that Clean Line, a private company not formally designated as a public utility in Arkansas, should use eminent domain as "the middle ground" to take the rights of way it finds necessary through the state. On the other side are landowners who see the power lines marching across their land as more big government intrusion into their lifestyles and even interfering with their livelihoods. I think the Sierra Club is an opportunist, using whatever arguments it thinks will delay or alter energy plans it does not like (those involving fossil fuels). Sierra Club has no qualms about using landowners as pawns to further its environmental agenda and has shown it will jump on board even the worst energy projects, if they are only cloaked in "clean" labels. Sierra Club needs to develop a rational and coherent energy policy and stick with it because people are abandoning the club in droves. Maybe Sierra Club thinks that's okay, since it can more than make up for the members it loses with more grant money from big, mysterious, "environmental" funds. However, true grassroots integrity shall remain elusive. Let's get on with the offshore wind, shall we? If the East coast wants "clean" power, they need to make it in their own backyard. Once they get over the initial direct cost shock (as opposed to the hidden incremental cost increase of building new transmission lines across the country -- they're not going to avoid the costs), they may realize that being clean and green and responsible for their own environmental footprint provides other social and economic benefits as well.
In setting national environmental policy to improve and coordinate Federal plans, functions, and programs, Congress recognized that each person should enjoy a healthful environment and that each person has a responsibility to contribute to the preservation and enhancement of the environment. The policies and goals of National Environmental Policy (42 U.S.C. § 4331, Congressional declaration of national environmental policy) are intended to: (1) fulfill the responsibilities of each generation as trustee of the environment for succeeding generations; The intent of Congress seems to have been lost in the creation of the Plains & Eastern Draft Environmental Impact Statement. Consideration of these goals should be evident, but the closest the Statement comes to evaluating these issues is in Chapter 3, Section 3.5, Environmental Justice. However, that section simply consists of bureaucratic “box checking” with its tables of racial and economic statistics and finding of “no significant impacts.”
What our federal government failed to consider in its study are the very real impacts the Plains & Eastern project (P&E) will impose on one segment of society for the sole benefit of another. That the beneficiaries of the Plains & Eastern project are intended to be economically advantaged and politically influential eastern cities with a “green” conscience, and that the ones who must make the social and economic sacrifice to meet this need are rural landowners without political clout does not seem to have been of moment in the study. Rural landowners and farmers have been fulfilling their responsibilities as trustees of the land that feeds us all for generations. P&E will interfere with their responsibilities. In addition, P&E will also interfere with their ability to make a living, bisecting small farms that provide income and/or real estate investment wealth to those who depend on their land for economic purposes. P&E will preclude the ability of rural landowners in Oklahoma and Arkansas to live in safe, healthful, productive, and esthetically and culturally pleasing surroundings as unsightly, gigantic transmission lines may endanger their well-being and interfere with their productivity and sense of place. P&E is not without environmental effect. Weighing the destruction of one part of the environment to benefit another is not a matter of simple trade offs when there are other options available that are not as damaging to the environment. P&E has not been determined needed to meet any identified public policy goal by any authority tasked with planning the electric grid. P&E has no customers. Other options exist for eastern cities, such as offshore wind, local solar, or other local and regional renewable energy projects that provide local jobs and economic stimulation. Americans are not being given a choice, where market forces determine their best option. Participation in P&E by the Department of Energy is a top-down, government-forced “solution” to a problem that does not exist. P&E will affect the historic, cultural and natural aspects of the rural environment, causing rural landowners to sacrifice for the needs of eastern cities. There is no balance here, all the sacrifice is coming from one segment of society, while all the benefits flow to the other. What are eastern cities willing to sacrifice for their “green” conscience? Atlantic offshore wind has been struggling to be built for years, but rejected time and again for esthetic or cost reasons. When eastern cities are faced with having to live with the infrastructure that supports their habits, they reject it in favor of other solutions. When those solutions remove the sacrifice, but not the benefits, to rural landowners in other states, the intent of national environmental policy is forgotten. This paradigm has existed for decades, where Ohio Valley residents have sacrificed their health, environment and economic interests to mine and burn coal that is turned into electricity and transmitted to eastern cities. P&E is just more of the same sacrifice of one segment of society for the needs of another. There is no balance to be found between population and resource when the needs of the many continually override the needs of the few. No Americans are disposable at the whim of others, no matter the color of their skin or their economic position. Wide sharing of life’s amenities requires that each person accept responsibility for their own needs. If eastern cities require cleaner energy, they have the ability to create it themselves, and in fact, many already are doing so. Top down government solutions, such as P&E, are inconsistent with individual choice. Rural America is a finite resource that is fast disappearing and must receive careful consideration in DOE's EIS. I believe the underlying mission of the federal government has been forgotten in the preparation of the EIS and, instead, a blinders-clad bureaucracy has simply proceeded through the motions of preparing it without considering its purpose. P&E is asking the federal government to wield the sledgehammer of eminent domain to force its project on a rural America that has rejected P&E. Integral to the big picture is the fact that P&E is nothing more than a business plan, an idea for profit, and does not fulfill any identified reliability, economic or public policy need. There is no amount of sacrifice that is acceptable for the pecuniary interests of private investors. Don't forget to file your EIS comments here! Deadline is March 19! Isn't that amazing? FirstEnergy has learned to work faster for shale clients. Remember that next time you want some service... pretend you're a shale gas company. And here's another amazing fact: Their promise and rapid pace of development happen to coincide with the Akron-based electricity company’s recent focus on making its transmission segment the lead revenue growth generator for FirstEnergy, where Mr. Bridenbaugh serves as vice president of transmission. Serendipity, right? So, who pays to supply electricity to new shale gas companies? You do. Most of the time, when the company upgrades a transmission line or builds a substation to service a new gas processing plant, the investment is recovered from the utilities that benefit from the upgrade. Utilities. Got that? Not shale gas companies. How much will you pay? ...the company has said it wants to retrench in its utility and transmission businesses, both of which provide a guaranteed rate of return. For transmission projects, the return is often in the double digits. Lots. Why are you paying? Because the new shale gas companies make the existing grid unreliable, and you need reliability! (which came first? the chicken or the egg?) Because the new, shale-related loads are springing up in rural areas with older or nonexistent infrastructure, the new pull on the lines often presents a reliability risk for other customers drawing electricity in the area. Therefore, many such projects end up going before PJM Interconnection, a Valley Forge-based organization that manages the nation’s largest grid, servicing 13 states in the northeast including Pennsylvania. Hmm... I wonder if regional utilities want to pay half my electric bill this month? Because, you know, I could jump up from my chair and turn on every electric appliance and light in the house right now. And that might hurt regional reliability... right?
|
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
|