The Department of Energy has released it's record of Decision on Plains and Eastern. They have opted to participate in the project, however, there appear to be numerous conditions Clean Line will have to meet.
While we are disappointed with the the decision, there are numerous legal, procedural, and meritorious questions, raised by multiple parties, we believe are still unanswered. We have long felt the fate of the Plains and Eastern project will not be decided by the DOE or Clean Line, but rather in a court of law.
Going forward, our focus will be educating landowners about their rights, the process, the powers (or lack thereof) that have been granted to Clean Line, as well as the legal options available to them as we evaluate the contents of the Record of Decision and other documents.
Statement of Golden Bridge, LLC, an organization of landowners affected by Clean Line Energy Partner's proposed Plains & Eastern HVDC line to empower them to protect their rights.
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What's it going to be, America? Are you going to be part of the solution or part of the problem? In a New York Times feature article this week, the Gatrels of Cowgill, Missouri, are pitted against a stable of merchant transmission speculators and their lobbyists and beneficiaries. Jennifer Gatrel says, “We believe that the East Coast has access to abundant offshore wind and that any time you talk about green or clean, you should also be talking about local,” she said. “Unnecessary long-haul transmission lines are not our country’s future.” Gatrel grows the bulk of her family's food on their own cattle ranch. And, as the NYT reporter put it, "Why should they have to live beneath the high-voltage lines when there is plenty of wind in the East?" Why can't the coastal cities develop their own available renewables? The federal government has known about the potential of offshore wind for more than a decade. This map clearly shows that usable renewable resources exist along the coast to serve our population centers. Why, then, does our government and the transmission proponents quoted in the NYT article skip right over offshore wind resources like they don't exist? I think it's pretty plain after reading the article: All the transmission proponents stand to make money building a gigantic network of overhead transmission across the country. Their own personal profits come before science or common sense.
Get with it, America, you have the ability to make your own local energy! It's just not true that energy comes from "somewhere else." A "somewhere else" off in Appalachia, where they happily mine and burn coal to produce electricity for distant cities. Or now that coal is gauche, a "somewhere else" off in the Great Plains, where farmers sit on the porch and count their cash while happily watching windmills turn to produce electricity for distant cities. The citizens of "somewhere else" aren't profiting from their sacrifice! Instead, all the cash ends up in the pockets of the transmission companies, their "advisors" like Hoecker, and their pet landowner representatives like Wayne Wilcox. Go ahead, google Wilcox, he's got more miles on him than a vintage John Deere tractor. He's Clean Line's pet landowner, trotted out again and again when they need someone to represent "landowners" who approve of their plan. One landowner isn't a majority. It's one lonely landowner vs. the thousands of landowners who oppose the Grain Belt Express. And that's what's happened in Missouri. The Missouri Public Service Commission weighed the claimed benefits of the Grain Belt Express project against the burden on affected citizens, and Grain Belt Express came up short. The Commission found that the project wasn't necessary or convenient for the public service. It wasn't needed for Missouri utilities to meet their state-mandated renewable portfolio goals, and the project is not economically feasible. The PSC determined the project proponents did not prove it would lower wholesale electric prices, lower retail electric rates, or reduce the need to generate electricity from fossil-fueled power plants. The PSC also noted Grain Belt's failure to submit its project into the regional transmission planning process. "The Project is not needed for grid reliability because GBE did not submit the Project to the regional planning process, has not identified any existing deficiency or inadequacy in the grid that the project addresses, and has not shown that the project is the best or least-cost way to achieve more reliability." The Missouri Public Service Commission stands out as visionary -- the only state to say no to a badly-planned project and demand better solutions for its citizens. Like all the projects featured on the NYT-created map in the article, Grain Belt Express is a merchant transmission project. Merchant projects are conceived and proposed outside the established regional transmission planning process. Projects ordered needed through the regional planning process are financed by electric ratepayers in the region who receive benefits from them. In contrast, merchant projects are self-funded and rely on market-based need to support them financially. If it is economical to use a merchant project, then it shall develop a customer base to support it. That's all fine and good, until a merchant that fails to develop a customer base looks to the government to force a customer base to develop through conditional permits and the use of eminent domain to take land cheaply for the project. This is where the problems begin. In a truly market-based project scenario, a developer's cost to acquire necessary right-of-way is at the mercy of the market. The cost of right-of-way should be at whatever value is necessary to acquire land voluntarily. The use of eminent domain, however, forces landowners to involuntarily part with their land at a utility-determined "market value" that is not the product of free market negotiation. While Clean Line Energy Partners representative Michael Skelly says that his company "would compensate landowners for their sacrifice," he's not talking about a "share in the wealth" proposition where landowners become equal partners in the project and share in the profits. He's talking about a one-time "market value" payment for right-of-way that is determined by his company to be adequate. Take it or have your property condemned, with an ultimate value to be determined by the court long after the sacrifice begins. In this scenario, the landowner is forced to live with the obstruction in perpetuity in exchange for a small one-time payment for the land in the right-of-way only. Permanent obstructions lower the value of the entire parcel and constrain future land use possibilities. A one-time payment for land in the easement only is not adequate compensation. Where is the problem with this kind of project? Opposition. Opposition from landowners like the Gatrels results in costly delays in the permitting process, and can result in permit denials. But it doesn't have to be this way. Two of the featured merchant projects can be compared to show that avoiding opposition saves time and money and gets merchant projects built. The overhead Northern Pass transmission project proposed in New Hampshire has been stalled for years due to landowner opposition. However, the buried New England Clean Power Link has sailed through approvals with no opposition. What's the difference? Land use. The Clean Power link is buried underwater and in public rights-of-way. It's not proposed as a permanent obstruction on anyone's private property, therefore it has not generated opposition from affected landowners. Buried transmission lines are approximately twice as costly to construct as overhead lines, but when the cost and delays of opposition are factored in, is an overhead project really cheaper to construct, especially if opposition causes outright denial? Most merchant transmission projects, like Clean Line, are wrongly using the traditional business model for needed transmission lines ordered by regional planners and paid for by all ratepayers. It's like trying to fit a square peg into a round hole. A merchant project, because it's not needed, must make itself marketable by avoiding opposition, not by using the government to force opposition to accept a less appealing project in order to allow maximum profit for the merchant. Clean Line's continued attempts to force a market for its projects has electrified (heh, pun intended) massive, sustained opposition across the Midwest. This is how the projects featured in the NYT article are different than traditional projects, and why there is so much controversy about building them. This is what was left out of the article. Now, circling back to Jennifer Gatrel's point about the East Coast's failure to develop the incredible renewable potential available in its own backyard, why is that? When offshore wind projects have been proposed in the east, opposition has developed fueled by rich landowners who don't want wind turbines junking up their sea views. Not much different than Midwesterners not wanting wind turbines or transmission towers junking up their own pastoral views, you think? Wrong. The electricity produced offshore would be used by the very landowners complaining about its appearance, while the electricity produced in the Midwest would be used by the eastern landowners who don't want to look at infrastructure in their own backyard. One is refusing to sacrifice for the benefit of others, while the other is refusing to sacrifice for its own benefit. Who's selfish now? Renewable energy is right there near the population centers who want to use it. Get on with harvesting it, using it, and enjoying the economic benefits that come with a new industry. We're at an energy crossroads in this country. We don't have to continue to use old, centralized, energy creation and transportation paradigms that relied on harvesting and converting fossil fuels where they were abundant. Renewable energy is everywhere. The movement for fresh, locally grown food can be extended to fresh, local energy. This is the only way our energy use can become truly sustainable. This week, Bob Stevenson ruminates on what a contract between Clean Line Energy Partners and the City of Hannibal might look like. It looks like funny math to me. Bob tells the ratepayers that they have four options. But they really also have a fifth -- to tell Clean Line Energy Partners to go back to Houston and quit using Hannibal as a fattened pig to force approval by the Missouri Public Service Commission. It is not the duty of the PSC to save Hannibal from the financial consequences of its own bad energy choices. There's nothing Hannibal can do to cure the defects of the project upon which the PSC based its denial. It never was a simple problem of GBE not having customers in Missouri. The PSC found that GBE had not carried its evidentiary burden that the project is needed, economical, or that its benefits would outweigh the burden on affected landowners. Bob sitting up in the witness chair telling the PSC that he thinks GBE is needed isn't going to cut it. Bob wouldn't last two seconds under cross examination because he has a whole lot of personal opinion and little in the way of facts. Does he really want to embarrass himself that way? All Bob's options involve contracting with Clean Line Energy Partners at some point. Let's take a look:
Here's Option 5: Do nothing now. It's the only "free" option. Let Clean Line sink or swim on its own. When Hannibal is ready to write a contract for future energy, it can follow its purchasing procedures to write a Request for Proposals and accept sealed bids from companies wishing to supply Hannibal with energy. When companies compete, Hannibal ratepayers win! It makes no sense (and may not be quite legal) for Hannibal BPW to write contracts with a certain transmission company behind closed doors. The ratepayers of Hannibal deserve better -- they must demand that energy purchases follow established procedure to be evaluated through an open and competitive process.
When does the repainting of the water tower begin? Where are the warts, Bob? Where are the warts? Another week, another glowing review of the Grain Belt Express project from Bob Stevenson, where he tells people that GBE has no warts. Those are "beauty marks," right? In his first weekly testimonial, Bob promised to tell the people of Hannibal the truth about GBE "warts and all." When someone promises that, and then finds absolutely no warts to expose at all, it makes me suspicious that everything might be less than truthful.
This week's offering talks about resource planning. Well, sort of. Bob talks about his great opportunity to cut the city's ties to "full requirements" contracts and replace them with what looks like some sort of amateur integrated resource plan where price (or is it a "potential" price?) is the most important factor, followed by having tons of resource diversity to lessen the effects of any one bad choice. Does Hannibal have a professionally developed integrated resource plan? Doesn't sound like it to me. Bob says the BPW has relied on full requirements contracts with Ameren, who currently performs this function for them. An integrated resource plan is a long range plan that looks at need and available options in order to determine the most cost effective and reliable plan to supply the need. However, like a brand new college student, Hannibal will soon be released from all the rules and oversight it had previously been forced to live under. Bob shares that now Hannibal can do whatever it wants -- buy however much power it wants from whoever it wants to buy it from. Who needs a plan? Bob explains that Hannibal has already put 56% of its eggs in the Prairie State basket. Ameren didn't obligate Hannibal to buy that. Hannibal thought it was a good idea, so they did it. And Prairie State has been a financial disaster. Even Bob admits Prairie State's prices haven't meet expectations and it "is the most expensive power in Hannibal's portfolio today." That means that Hannibal's first attempt to independently purchase a resource was a financial and planning failure. He also shares that BPW made a much more economical recent purchase for summer peak power through a competitive bidding process. Let's hope it doesn't develop any Prairie State warts. What are the chances? The remainder of Hannibal's power will be purchased through MISO's power market, and turns out to be the lowest-priced option in Bob's little portfolio. Why is that? Because MISO's market is professionally run and managed, and power markets are at historic lows right now. MISO does the hard work to supply the most economical options for purchase by Hannibal. Bob compares his little "integrated resource plan" to retirement investing. It's so easy, anyone can do it! Who needs a professional investment planner? And why would Hannibal need a professional integrated resource planner, when they have Bob? Bob is a registered professional engineer with over 15 years of experience. Except engineers aren't financial planners, are they? At the end of this week's column, Bob starts talking about how GBE "holds the potential to connect us to a very low cost future energy source." My bedroom held the potential for flying fuschia elephants over the weekend, too. But then I realized I wasn't being told the truth by the 104 degree fever and influenza particles who'd recently shown up on my doorstep promising me the most amazing adventure. The elephants weren't real, but they were way more fun to watch than anything on television. GBE is nothing but a "potential" future energy highway for a "potential" future energy source. Two layers of potential there. And GBE has proposed that Hannibal invest $12.5M of its ratepayers' money in its "potential" energy highway. If the "potential" energy source or energy highway doesn't happen, Hannibal's money disappears completely. All of it. Why would Hannibal want to pay millions for a "potential" energy source? "Potential" doesn't turn the lights on. Bob loves Kansas wind generators! He relates that they are currently signing 25-year contracts with purchasers for less than 2 cents/kwh! But Bob is completely wrong when he says, "this energy is not available to us due to limitations of the existing high voltage transmission system." If Bob wanted to sign up to purchase Kansas wind, he certainly could. These generators are currently signing contracts with customers, right, Bob? How is that happening if the existing high voltage transmission system is so limited, Bob? This doesn't sound like a fact. It sounds like something Bob made up to try to create a "need" for Clean Line. In fact, Clean Line presented Bob with a "wind option" for Hannibal that included Kansas wind, delivered over the existing transmission system, for 3.27 cents/kwh (or less)! Is Bob not paying attention? And where's the competitive process, Bob? After sharing that his most recent contract purchase was the result of a competitive bid process, Bob wants to sign a contract with GBE without any competitive process at all. This should never happen. A power option that can't stand up to competition is one that isn't worth purchasing. And don't miss next week's column... Bob will be discussing the potential benefits of Hannibal becoming a customer and advocate for Clean Line Energy. Becoming an advocate? You mean that hasn't already happened? Will advocacy for Clean Line keep Hannibal homes warm next winter? Bob's only fooling himself. There's warts all over this thing. Warning... this is going to be a long one. Like a terrifying octopus, this issue has tentacles going in all directions. Hopefully I can follow them all, so that you, little consumer, can follow along and perhaps act in your own interests down the road. Let's start with the good news -- FERC has approved ratepayer funding for the Consumer Advocates of the PJM States (CAPS) to participate in PJM matters. This is good news for consumers in the PJM region who don't have time or inclination to participate in PJM's countless stakeholder proceedings. CAPS is made up of "state advocate offices designated by the laws of their respective jurisdictions to represent the interests of utility consumers within the service territory of PJM...". These state consumer advocates are overworked and underfunded for all they do on behalf of residential electric customers. One caveat in the Order, however, says that CAPS funding may only be used for "staffing and travel costs for state consumer advocates to participate in in-person meetings and other proceedings at PJM as well as to pay professional staff and operation of the CAPS organization." This also includes "participation in other Commission activities, such as responding to Notices of Proposed Rulemakings and participating in Technical Conferences." CAPS funding may not be used for "(1) activities related to proceedings of state agencies; (2) proceedings at federal agencies other than the Commission; (3) litigation of matters at the Commission arising from the filing of Tariff or Operating Agreement changes by PJM including the filing of interventions or protests or participation in hearings or settlements; or (4) the hiring of counsel or expert witnesses to support the filings of other parties." However, Commissioner Tony Clark dissented, stating: This Commission has not before endorsed the policy that the activities of non-decisional Commissioner Clark said that this Order "cracks open Pandora's box," and before the ink was even dry on the Order and the Dissent, that's exactly what happened. Clark wondered: My public policy concern is that there is little that meaningfully differentiates these Which brings us to... Monday, when the very PIGs (Public Interest Groups) Commissioner Clark was concerned about filed a rulemaking petition looking for their own piece of the pie. It's no secret that Public Citizen has been harping on FERC for years to set up the Office of Public Participation which was authorized by Congress back in 1978. That's 38 years ago, folks. And Public Citizen just now thought about filing a Petition for Rulemaking? That's some stellar FERC work right there! Thirty eight years ago, a leisure-suited Congress authorized such an office, along with a funding stream to compensate "persons under this subsection" through the year 1981. What is new is that Public Citizen now wants its piece of the "person" pie! And Public Citizen has brought along an entire herd of hungry PIGs to gobble up what it believes should now be a $6.5M yearly pie. The petition was signed by 31 self-appointed PIG "advocates" for consumers and the environment, and not a state advocate office designated by the laws of their respective jurisdictions to represent the interests of utility consumers in the bunch. The hungry PIGs are a hodge-podge of "consumer interest" groups you've never heard of, environmental organizations, "coalitions," "projects," "centers," "councils," "institutes," "partnerships," and an "investment corporation." I've never seen many of these groups doing much of anything at FERC, and I haven't seen them litigating actual rate cases that save consumers real money. The few I have seen poking their stick into the FERC lion cage are more interested in policy issues, such as championing environmental interests before the Commission. These organizations are already very well funded through grants and gifts to advocate for the environment. Do they deserve public money for carrying out their political goals? These aren't public interest groups, they're specialty interest groups. Let's look at just a couple on the list. Public Citizen describes its climate and energy program as: "Public Citizen's energy and climate program advocates for affordable, clean and sustainable energy. We safeguard families by promoting the strong regulation of energy markets, educate the public on the dangers of continued reliance on dirty energy sources, help solve climate change by promoting localized clean energy alternatives and hold large energy corporations accountable by exposing wrongdoing." The group's Form 990s available here and here describe their Energy Program as: "Provides information to the public on the threat of catastrophic climate change, the dangers of nuclear and fossil fuels, and the opportunities available to advance energy efficiency and develop renewable energy solutions." And they show a whole lot of income from mysteriously unnamed donors, and grants to clean energy programs. And they also show that Public Citizen has its fingers in a whole lot of political issue pies, not just energy. Their "Accomplishments" page is devoid of any victories at FERC. I'm not convinced that Public Citizen is substantially contributing to important issues at the Commission, or that any participation by Public Citizen presents a "financial hardship" for their "person." At the other end of the PIG roll, A World Institute for a Sustainable Humanity describes itself as: "A World Institute for a Sustainable Humanity (A W.I.S.H.) is an international nonprofit organization whose mission is to provide models and support for life sustaining activities that integrate solutions to poverty and the environment while fostering self-reliance. It was founded in March of 1995 and is registered as an NGO in fourteen countries and states." A search of FERC's eLibrary for this organization brings up nada. I'm not convinced they have ever done anything at FERC that contributed to any substantial issues. This seems more like a "build the funding and they will come" pipe dream. So, what does the 1978 law say, anyhow? (a) So, any funding to "persons" is contingent upon the participation substantially contributing the approval of that person's position. This is not an advance funding free-for-all for PIGs to suddenly access funds to create their own offices to participate in FERC ratemaking. Funding only comes AFTER a "person" wins a case. The proceeding also must be "significant," whatever FERC wants to presume that to be. Such "person's" participation must also present a "financial hardship." That's a conundrum. If a person can only collect funding after their position is approved by the Commission, then said "person" would have already spent the money to participate, without knowing in advance if they will prevail, or whether the proceeding is "significant." If the money has been spent without promise of funding, then how could the "person" then make a case of financial hardship? If it's a true financial hardship, they'd never be able to participate in the first place. For real people, every dollar they spend on lawyers and experts is one dollar less they can spend on hot dogs and tickets to the ball game. Public Citizen then goes on to quote the Congressional Record from 1978, which makes clear that Congress intended this public participation to come from "electric consumers," or "individuals." I don't see anything in there about PIGs. After all, any "person" could declare that their efforts were "for consumers," and attempt to score some public funding for participating at the Commission, even utilities, or utility industry coalitions or associations, such as EEI. Who knows what will pop out of Pandora's box? Case in point... after blathering on about how the idea for the Office of Public Participation was based on public participation by electric ratepayers, in ratemaking, Public Citizen says this: The Office of Public Participation is also needed to provide support to communities involved with FERC-jurisdictional hydro and natural gas infrastructure proposals. Funny that. The Delaware Riverkeeper Network also used FERC's failure to create the Office of Public Participation and fund intervenor costs as an example of FERC's "bias" in its recent lawsuit filed against the Commission in U.S. District Court. While I have the utmost sympathy for individuals personally affected by fracking and pipelines, I have no respect for the environmental groups who use these folks as battering rams to accomplish their environmental goals. That lawsuit was painful to read and I can't imagine a court wasting much time on it. Just because funding for FERC's gas program comes from gas companies does not create bias. The annual costs for the program are allocated to gas companies based on their usage. The Commission would be funded whether or not they approved new pipeline applications, because gas will continue to flow. Adding new pipelines to the stable simply spreads out the costs among a larger herd. It does not increase FERC's "take," nor pay dividends to FERC employees to approve pipelines. The continual attacks on FERC (both judicial and in person at the facility) aren't helping the cause. About the only good argument in the whole lawsuit relates to requests for rehearing, and FERC has already handled that. And that's oftentime the problem with environmental and other group participation that comes from "outside" FERC's little specialty practice arena. It can be clueless about process, laws, and even FERC's jurisdiction to act in the first place. I'm not sure adding more misinformed voices to the shuffle is prudent or helpful. If you want to participate at FERC, make it meaningful. Don't just carry on at monthly meetings, interrupting every other hearing underway in the building, because you're angry and unsatisfied with your own ignorance of the process. Educate yourself!
And be careful what you wish for. In discussions with grassroots groups in states with a mechanism for intervenor funding for participation in public utility cases, the same complaint comes up over and over. They allege that well-heeled and well-connected PIGs are always first in line at the funding trough, and there is precious little left over for the folks who are actually on the front lines of energy projects and rate increases. Oftentimes the PIGs use their funding to weigh in on the side of the utilities, especially to enable construction of renewable energy infrastructure. PIGs don't care about you, little ratepayer or landowner. They really don't. Funding PIGs to carry on in a nonsensical manner at FERC is a bad idea. Let's see if FERC actually notices a proposed rulemaking on this issue, or simply bats it aside as more PIG mischief. Bob Stevenson is at it again. Yesterday, dear Bob penned his weekly Clean Line sales pitch in the Hannibal Courier-Post, just like clockwork. And guess what? Also like clockwork, Bob gets the facts wrong again! Bob's premise this week attempts to rely on the Missouri Public Service Commission Order denying the application of Grain Belt Express. All 27 pages! Bob also thinks the dissents of a minority of the Commissioners have some relevance. But, remember, they are the minority opinion and only good for appeals, which never happened. Bob says: With its disapproval last July, the Public Service Commission (PSC) invited CLE to correct some serious deficiencies in their application and re-apply. The most serious deficiency noted by the PSC was that CLE had no specific electric customers in the state. I'm thinking that Bob never actually read the MO PSC Order at all, because it doesn't say that. Not even close! Likewise, the dissents Bob touts don't say that either. In a tiny footnote at the bottom of the Order, the PSC notes: As some parties have recently noted, GBE has the option to file a new application for a CCN at any point if it eventually gathers information it feels would make a better case for this project or a new project. See Staff’s Response to the Recommendation of Grain Belt Express Clean Line LLC, EFIS No. 544, and Response of the Missouri Landowners Alliance to Recommendation of Grain Belt Express to Hold Case in Abeyance, EFIS No. 540. This is merely an indication of a denial without prejudice. It is not a guarantee that if GBE files a new application, it will be successful. It would be exceedingly rare if a Commission issued a denial with prejudice, which would mean the company could not reapply. GBE is free to apply as many times as its budget will allow. And it does NOT indicate what information GBE should gather to make a better case for its project, such as tossing the eviscerated bodies of a few Missouri municipalities on the table. It means curing all the deficiencies the PSC noted, such as: GBE has failed to meet, by a preponderance of the evidence, its burden of proof to demonstrate that the Project as described in its application for a certificate of convenience and necessity is necessary or convenient for the public service. Nope. Nothing in there about "the most serious deficiency noted by the PSC was that CLE had no specific electric customers in the state." Nothing about having electric customers in the state at all. There is a plethora of issues GBE must cure in a second application, and having customers in Missouri is not one of them.
Having customers in Missouri appears to be a creation of GBE. Instead of curing its real deficiencies, GBE seems to be of the mind that if it produces some customers, or merely "good witnesses," that all the other deficiencies will go away. That's rather naive. Perhaps GBE thinks that it can use Missouri municipalities as hostages in a future PSC case? If GBE can coerce municipalities to heedlessly "invest" in its project, then perhaps it may base a future case on the financial harm that would come to the municipalities' ratepayers if the project isn't approved by the PSC. GBE certainly can't be thinking that producing a municipal witness like Bob can cure all the deficiencies in the Order, can they? I don't believe that Bob's "expertise" in utility matters could outweigh that of other witnesses to cure the defects. I'm guessing Bob would only serve as a fattened pig for slaughter at the PSC. The evidence is in this Order. Bob's continued denial of the facts, and reliance on his own wishful thinking to support GBE, is harmful to the ratepayers it is his duty to serve. Bob's first allegiance should be to provide economic electric service to the citizens of Hannibal. To deny the expert determination of the MO PSC, and even Clean Line's own presentation that showed MISO wind as a comparable option to its project, Bob certainly can't be serving the ratepayers. Who does Bob serve? If Egyptology suddenly came into fashion in Oregon, and enthusiasts convinced the state to use its ratemaking powers to advance the cause, utilities would gladly build a pyramid in Portland, and they would make money doing so. That's how cost of service utility rates work. the more money utilities invest in their systems, the more money they make. That's because every dollar they spend is returned to them by ratepayers, plus interest, over the usable life of the asset (often 40 years or more). It works just like your home mortgage -- the bank invests in your house, and you pay them a small amount of principal every month, along with interest on the remaining balance, until the debt is exhausted. But while your interest rate may be somewhere between 3 - 5%, utilities earn interest on their investments at a rate between 9 - 12%, or more. Utilities and their regulators insist that these kind of interest rates are necessary to attract investment in utility infrastructure.
So, what's this about a green pyramid? A recent op-ed in the Wall Street Journal by NARUC president Travis Kavulla tells How Utilities are Teaming Up with Greens Against Consumers.* Mr. Kavulla ought to know -- the National Association of Regulatory Utility Commissioners is a trade group for state utility commissioners. Mr. Kavulla points out how big green is driving state policy to hasten the switch to renewables, and many utilities are going along for the ride because it's profitable for them. What you may think is great environmental policy may be costing you a lot more. The environmental groups behind this legislation that urge you to support it usually fail to tell you the whole story. When they claim to have wrestled a utility giant to the floor to get environmental concessions, the truth is that the utility only went along because there was more profit in it for them then they could make from resisting. And who pays the bill? You do! In addition to Mr. Kavulla's excellent example, consider the Sierra Club's proposed "settlement" agreement with utility giant AEP in Ohio. Sierra Club told the public that they scored big by "forcing" AEP to agree to repower with natural gas (or close) some of its coal plants 15 years from now, and to "commit" to develop 500 megawatts of wind energy and 400 megawatts of solar energy. In exchange, Sierra Club agreed to allow AEP to rip off Ohio consumers by making them pay to financially prop up power plants that are uneconomic for the company. Ratepayers will foot the bill to repower or close the coal plants, plus the cost of developing the renewables, plus the cost of the rate increase AEP wanted in the first place. Sierra Club wins! AEP wins! Electric ratepayers lose! While saving the environment may have been an admirable goal at one time, it's gone way, way beyond that in recent years. Big green is outta control! They're no longer funded by their members and therefore responsive to their needs. Now they're funded by enough foundations, dummy organizations, and front groups to give the Koch brothers wet dreams. It's all secretly funded by what I like to call "the environmental 1%," a bunch of filthy rich guys who want to control energy policy for their own gain. How do they gain? They invest in renewable energy. No different than the hated Koch critters. Their big green organizations are now bought and paid for through grants and contributions. They're not a consumer's friend any more. It's no longer about protecting the environment... the game plan has changed. Big green doesn't care how much it costs you... and the utilities are raking in their own kind of green. But don't worry, little ratepayer, when you can no longer afford to pay your electric bill, you can always warm your tootsies at your town's green pyramid. *If you're not a WSJ subscriber, copy and paste the headline into google and click through to read the article for free. Hannibal Board of Public Works General Manager Bob Stevenson's weekly sales pitches for Clean Line Energy Partners are getting sillier. This week's offering accuses investor owned utility Ameren of keeping its transmission lines "overloaded" in order to maximize profit. In order to get there, Bob completely overlooks the efforts of the Midcontinent Independent System Operator (MISO) to plan and operate the regional transmission system. Bob supposes that Ameren manipulates its transmission lines to increase economic congestion and that only a non-MISO transmission proposal can fix it. Impossible! Here's what MISO, a federally regulated regional transmission system operator, does:
Bob's accusations against Ameren are unfounded. Moreover, they simply couldn't happen because of all the things MISO does.
If Ameren creates economic congestion (which, in simplest terms, means that the cheapest generation cannot reach every community), then MISO would order a new transmission line to decrease congestion and lower prices. However, it isn't always economic or desirable to eliminate all congestion. Congestion will always exist and even the most careful planning may do nothing but shift it around. When eliminating certain congestion will provide more benefit than cost, MISO will order transmission to eliminate it. MISO did not create a Clean Line in its regional transmission plan, nor order it to be built! Clean Line could have presented its transmission plan to MISO and requested it be studied to solve existing or anticipated reliability, economic or public policy purposes, and whether it passed a cost/benefit analysis. If MISO had agreed that a Clean Line served some purpose, it would have included it in its plan, ordered it to be built, with the costs allocated to regional electric ratepayers. Instead, Clean Line chose to proceed with its project outside MISO's planning process. Therefore, there is no documented need for a Clean Line. It is completely extraneous -- a market-based proposition that will succeed or fail based on market need for such a project. In short, MISO has not found a need for Clean Line. Not to "accommodate new wind farms." Not to "redesign and expand the transmission system." Not to alleviate economic congestion. Not to prevent Ameren from exercising market power. Not for any reason. Moreover, Clean Line's own presentation to Hannibal detailing "wind options" for the city showed several economically-comparable options that most likely used Ameren-owned transmission lines (at transmission prices much, much less than the purported price of transmission via a Clean Line). Our transmission system is perfectly adequate for its intended purpose. That's what MISO does. MISO does not sit around watching the transmission system rot while waiting for foreign investors to propose extraneous transmission projects to meet need. That's ridiculous! That's Bob! For this week! Have you heard or seen one of FirstEnergy's vomitrocious "The Switch is On" ads recently? I heard one on the radio the other night, although it could have been directed at other FirstEnergy distribution customers in surrounding states. At any rate, FirstEnergy is launching its first major advertising campaign in 19 years! And you're the beneficiary (also the financier -- every time you see or hear an ad, someone adds money to your electric bill, and maybe kills a puppy, but I'm not sure about that last part). What's this campaign about? It's about FirstEnergy's environmental stewardship. FirstEnergy wants you to know what it has done to protect the environment:
Here's what FirstEnergy promises to do in the future, now that their switch is on:
That's it! Now don't you feel much more educated about FirstEnergy's environmental stewardship than you did 10 minutes ago? No? Not much of a plan, is it? It is worth the millions of dollars this campaign is costing you? And why would you care about what's going on with FirstEnergy's Ohio rate case? My radio gets some funky stations from time-to-time, but none from Ohio. So I'll assume there are some other benefits West Virginians are getting for their advertising dollar. Maybe this video of CEO Chatty Chuck Jones explaining his company's environmental stewardship will do it? WAKE UP!!! Did Chatty Chuck put you to sleep, too? Sorry about that. Engaging TV personality he's not. Wait? Did Chatty Chuck say, "We've supported energy efficiency throughout our 5-state region?" What five states would those be... let's see... Ohio, New Jersey, Pennsylvania, Maryland and... not West Virginia? He can't mean to include West Virginia in that, can he? Why, just this morning I read an article about how FirstEnergy is blocking an important energy efficiency bill at the West Virginia Legislature! SB 370 has been sent to "purgatory" in the Rules Committee because FirstEnergy has "come forward with a potential problem" with the bill. In other words, FirstEnergy does not support energy efficiency in West Virginia. The bill would "allow local governments to adopt energy efficiency partnerships with commercial building owners to help finance energy efficiency improvements on the property." Isn't that energy efficiency, Chuck? It doesn't sound like you're supporting it. In fact, your corporate motormouth, Toad Meyers, says: “FirstEnergy already offers low-income customer and commercial lighting programs in West Virginia, and we are on track to achieve our 0.5 percent energy savings target by the end of 2016,” Todd Meyers, a First Energy spokesman, said in a statement. “We strongly believe that these and any future energy-efficiency programs are best managed by the utilities as overseen by the Public Service Commission of West Virginia, which balances the needs of both customers and the utilities. What is up with that? What is up, Chuck? (My lunch, after watching your video, but I digress). You'd better grab Toad by his power cord and reprogram him, Chuck! He's turning you into a liar! Worse than that, Toad has managed to contradict himself in just a few short paragraphs. After stating that "FirstEnergy already offers low-income customer and commercial lighting programs in West Virginia," Toad also says, "there has been significant pushback over the years from businesses and residents in states with mandatory programs who don’t like paying the costs every month to subsidize other customers’ appliance purchases and other rebates." But isn't that exactly what the majority of West Virginia's ratepayers do? Residential ratepayers pay monthly energy efficiency fees to support programs that are only available to low-income and commercial lighting programs! Like, duh, Toad!
So, FirstEnergy is not supporting energy efficiency in West Virginia. They're also belittling West Virginia's local governments, presuming them too stupid to govern anything to do with energy. Because that's best handled by utilities (so they can make sure nothing a local government does harms their greedy bottom line). Ain't that right, Chuck? And what's that you say about being most proud about your employees? I will agree that your front line employees are your ONLY redeeming asset. But why is it that you want to harm them with "Right to Work" legislation, cutting benefits, and union-busting? The way you treat your employees is shameful. Proud my ass. Just remember, without them, you are nothing. When's the last time you hiked your bulk up a utility pole, Chuck? I fear you're not contributing to keeping my lights on! And how come there were no little video clips of your corporate employees, like Toad mouthing off to reporters and contradicting himself? Aren't you proud of him, too? I didn't see one corporate stuffed suit in that whole video, except for yours, Chuck. Maybe it's because that snooze-fest was "Produced by the Communications and Marketing Department?" While I'm thrilled you didn't waste any of my money hiring a real advertising firm to create an engaging and entertaining campaign, tell your Communications and Marketing Department not to quit their day jobs. Even Charles Ryan could have done a better job than that. Like maybe they could have given you a banana phone for a prop, Chuck, or perhaps even a clown hat? Everybody loves a clown! And wouldn't it have been fun to subject a cute puppy to your filthy environmental practices, and then show him still alive (but a bit dirty and singed around the edges) after 30 days? Doesn't that just tug on the heart strings? The switch is on.... but nobody's home! Clean Line has been "developing" its numerous transmission projects for 7 years now. Seven years! And not one of the projects is approved and ready for prime time. As a "merchant" transmission company, Clean Line has no captive customers from which to collect its costs. Clean Line must shoulder all financial risk of its own projects. Unlike other transmission projects ordered by regional planning authorities that collect their costs from regional ratepayers, Clean Line may only collect its costs from customers who sign contracts to use its project capacity through negotiated rates. This means that even if Clean Line gets a project approved, it still must find customers to financially support its construction and operation. Initially, Clean Line's business plan depended on big utilities to sign contracts to use its capacity. In the past, Clean Line made much of a Memorandum of Understanding it signed with government power marketing authority Tennessee Valley Authority. Clean Line liked to pretend this MOU meant TVA was a confirmed customer. However, the MOU simply indicated that TVA might be interested in using the project in the future. It was not a contract. But it was an indication that Clean Line was depending on large utilities in "states farther east" to buy huge chunks, or the entire amount, of its capacity. "We think we can provide green power at an attractive, fixed-rate price for TVA and other utilities in the region," said Jimmy Glotfelty, executive vice president for Clean Line Energy. Clean Line's initial efforts to secure customers focused on big utilities.
But when TVA studied the Clean Line proposal in its Integrated Resource Plan, it found it did not need Clean Line's transmission capacity to provide its customers with the most economic and reliable energy in the immediate future. And Clean Line stopped talking about the TVA. In addition, no other big eastern utilities signed up or showed much interest in the capacity Clean Line is selling. Next, Clean Line advertised two of its projects in an "Open Season" in order to find potential customers with which to negotiate rates. All interest in its projects came from wind generation companies in Midwestern states at the source ends of the lines. Clean Line's secondary efforts to secure customers focused on wind generators. But none of these wind generators had customers to buy the power they generated, therefore, they could not sign contracts for Clean Line capacity. The wind generators were speculative -- as yet unbuilt -- and the generators need customers to raise money to build their projects. However, no user utilities showed interest in buying generation from non-existent generators. How do you price something like that? How do you set delivery amounts and dates? It's a fungible commodity. Depending on generators to buy its capacity, Clean Line stands at one end of a string of dominoes that may or may not topple in line. Too much uncertainty and too much risk for utilities, who can instead purchase a known quantity of renewable generation, at a set price, with a set delivery date, from an existing generator and shipped via existing transmission lines. The price just isn't that good to take on Clean Line's kind of risk, if it's even possible to sign a contract to purchase energy from a non-existent generator delivered via a non-existent transmission line that may or may not ever be built. Clean Line is not an energy generator. It can't sell energy. It is only the extension cord proposed to bring future generation to customers at a set price. It's an extension cord that isn't plugged into anything. Buying capacity on Clean Line commits utilities to purchasing energy from future generators in a set geographic area at an unknown price. If the generators aren't built, or their generation costs are higher than anticipated, the purchaser of Clean Line capacity would be locked into purchasing energy at whatever price is offered by the generators. The generators would have market power over the captive customers to charge whatever they want. If a captive utility customer chooses not to buy energy after all, it's still on the hook to pay for the capacity on Clean Line's extension cord, whether it uses it or not. So, we've yet to see any contracts for Clean Line's capacity from wind generators. Clean Line's latest quest for customers focuses on municipal public power entities that provide power at cost to their own cities and towns. These are much smaller chunks of each Clean Line's 3500 MW capacity, coming in at 25 or 50 MW each. It's going to take a whole lot of municipal customers to make a Clean Line financially feasible. But not only is Clean Line trying to sell municipalities on future energy prices it cannot guarantee, it's also "offering" the municipalities the "opportunity" to invest municipally-astounding sums of money into its project and take on the risk of losing the municipality's investment in the project in its entirety if the project is never built. Clean Line's proposals are being reviewed by municipal power employees that may not understand its merchant transmission business model and wrongly believe their investment would be "guaranteed" to produce a return, or be refunded if the project goes belly up. It just can't happen -- Clean Line has no customer base from which to produce a return on equity, and no bond in place to guarantee a refund of investment if the project doesn't pan out. In addition, the municipal contracts must be approved by city council or other elected officials who have no knowledge base about electricity or power purchases. Whatever Clean Line tells the city about its proposal could be bought hook, line and sinker, without independent expert review. So far, Clean Line has convinced the City of Tallahassee to "buy up to 50 MW of wind power from its wind transmission project." I highly doubt that. The only thing Clean Line can sell is capacity on its proposed transmission line, not energy. If the City of Tallahassee thinks it's bought a certain amount of wind power from Clean Line, delivered on a certain date at a certain price, it needs to think again. Who knows what Tallahassee committed to do -- the actual agreement hasn't been published, and the press release was obviously less than honest. Clean Line has also attempted to sell the City of Hannibal energy at a quoted price, or an investment in its project. The City has tabled the issue for the time being, but municipal power employees vow to come back with the plan at a later date. Word is that Clean Line is courting numerous municipal power agencies to sign up for similar deals. What Clean Line is doing is essentially transferring its project risk onto the backs of struggling municipalities by signing them up for capacity commitments or "investments" in its projects. If the project is never approved and built, the cities end up holding the bag. Clean Line's whole business plan is based on transferring its corporate risk of project failure onto the backs of potential customers. First, it was big utilities. The utilities, no strangers to the power purchase game, did not become customers. Next, it was future wind generators, who would, in theory, sign up to purchase capacity which they would wrap into their delivered price of energy. That didn't pan out because the generators had no customers upon whom to transfer the risk. Now it's municipalities, who struggle to find economic and reliable energy sources for their citizens. If the big utilities and the energy generators didn't want to shoulder Clean Line's brand of risk, why would a municipality want to carry the company's water? I think it's because they don't know any better. And that makes me sad. So, in Clean Line's honor, I'm going out this afternoon to give $20 to the first panhandler I see. Maybe he'll offer to sell me some energy at a mind blowing price! |
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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