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FERC Orders $7M Refund of PATH Advertising, Lobbying and Front Group Costs

1/20/2017

5 Comments

 
On January 21, 2011, Ali Haverty and I filed a "Formal Challenge to Potomac-Appalachian Transmission Highline, LLC 2010 Formula Rate Annual Update." This was after several months of rather frustrating information requests to an active and threatening PATH transmission project.  We had no expertise or legal help, we simply did the best we could with available processes.

Now, nearly 6 years later, the Federal Energy Regulatory Commission has confirmed our contentions that PATH should not have collected from ratepayers the costs of its reliable power coalitions (West Virginians for Reliable Power, Marylanders for Reliable Power and Virginians for Reliable Energy), its PATH Education Awareness Team (or "PEAT"), its memberships in civic and social groups, its lobbying for release of a conservation easement in Loudoun County, Virginia, its hiring of a well-connected lobbyist in West Virginia, its cost of public opinion polling and focus groups in West Virginia, Virginia and Maryland, and the cost of all of PATH's television, radio and print advertising promoting its project in all three states.  The Commission has ordered PATH to refund these costs (plus unearned return and interest) to millions of ratepayers in PJM's 13-state region.
It truly was no bed of roses.  We combed through hundreds of thousands of documents, learned FERC's accounting rules, learned how to write and file all sorts of legal pleadings, made dozens of trips to FERC's offices in DC, and suffered through some middle of the nighters in order to meet deadlines.  We've spent the past 6 years jumping one hurdle after another to get to this point.

And we're still friends.  Never once did we consider giving up or splitting our team.  No matter how heavy the burden, we kept our eyes on the prize.

Opinion No. 554
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The Commission also ordered accounting transactions to remove an additional $1.1M of public relations & advertising expenses PATH booked to its asset account in 2008, before Ali and I began to challenge PATH's annual rate filings.  This $1.1M of cost has been sitting neatly in an account where it earned 14.3% (and then 10.4%) return on equity for the PATH companies every year since.  Not only will PATH have to deduct those costs from its ultimate recovery, it has also been ordered to make a compliance filing to essentially correct and replace each of its annual accounting filings for the past 8 years.  This approach allows crediting of that undue return to ratepayers.  So, while the total disallowance to PATH is more than $7.1M, the total ratepayer credit effected will be much more.

We appreciate the Commission's order, and our overall experience at FERC.  In an era where the agency has been kicked around by protestors and the media, we can honestly say that we were treated well by FERC staff, judges, and commissioners.  We never felt dismissed or marginalized.  We felt that our concerns were heard.

We wouldn't change a thing.
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5 Comments

Pavlov's Energy Markets

12/6/2016

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What's the difference between a generator over-forecasting its output in order to collect DAMAP payments from MISO when their day-ahead schedule is higher than their actual real-time output, and an electricity market trader making trades designed to collect MLSA transmission credit payments from PJM?

It sure looks like it's based on pre-conceived notions of the "goodness" of the recipient of the regional transmission organization payments.

A recent article in RTO Insider details a report to MISO's market subcommittee by Market Monitor David Patton, which revealed "
some wind generators appear to be deliberately over-forecasting their output to inflate their revenues."
Two-thirds of MISO’s $7.5 million in DAMAP payments to wind resources in 2015 and 2016 was because of over-forecasting and only $2.5 million was spent on curtailment, Patton said. “Most of our wind DAMAP payments are unjustified,” he said.
DAMAP payments are described like this:
The purpose of DAMAP is to provide an incentive for Market Participants to be flexible in their offers in the real-time market.

The DAMAP compensates suppliers when (i) the real-time dispatch of a resource is reduced below the day-ahead schedule's level, and (ii) the market participant would have been financially better off in real-time had it operated at its day-ahead schedule.

Read the whole article for an explanation of how DAMAP can and is being manipulated by wind generators to receive higher compensation payments. 

This is complicated stuff!  Regional energy markets are extremely complicated, to the point that they are nearly incomprehensible to the regular folks who fund millions of dollars in "market compensation" payments every year in their electric bills.  But don't feel too bad, it appears that energy markets are also complicated for the experts who create and police them to try to prevent manipulation by traders and other participants.  Every regional electric market would be well-served by a couple of whip-smart analysts whose only job is to continually test the market by attempting to find ways to manipulate it for profit.  Obviously the creators and monitors of these markets are completely blind to the opportunities they create that allow participants to unwittingly "push the money button" and be rewarded by compensation payments.  To expect Pavlov's dogs to immediately report the unexpected reward they received, instead of continuing to push the button and feast at will, is unnatural.  If the creators and monitors of energy markets expect an unnatural response, they need to provide a compensatory reward for it.  In lieu of having staff dedicated to and capable of rooting out flaws, market monitors should look at providing the stimulus necessary to find volunteers within the market participants.

So, how did the MISO Market Monitor propose to solve this problem, once discovered?  He proposed changes to the market, instead of punishing the wind energy dogs who had been pushing the money button that brought it to his attention.  He chose to stop ringing the bell.

But how did the PJM Market Monitor propose to solve a similar "money button" problem that developed in his own market?  He worked with FERC to punish the traders who pushed the button and brought it to his attention.  He beat the dog.  In fact, FERC has proposed fining the traders somewhere in the neighborhood of $35M.

Why the disparate treatment?  Is it because the general public looks disparagingly upon "Wall Street" (and therefore traders big and small) as the root of all evil?  Is it because wind energy is looked upon by the same public as a "clean" and "good" struggling industry?  I've got news for you, general public.  Big wind is a hugely profitable industry whose greed knows no bounds!  What may have started out as a cottage industry predicated upon selfless environmental gains has morphed into a gigantic subsidy- and compensation-gobbling monster that fills the pockets of foreign investors with your gold.  Years of environmental propaganda has conditioned you to behave just like Pavlov's dogs when you hear the words "clean energy."  You may believe anything with a "green" label must be "good" and therefore more valuable, without examining any actual benefits to you.

Energy markets will only work if they are consistent.  Allowing one group of participants to escape the punishment heaped upon another group isn't consistent.  What kind of bell are they trying to ring?

Oh, and big wind is ripping you off... big time!
0 Comments

FERC Ordered to Pay Legal Fees in FOIA Dispute

10/7/2016

3 Comments

 
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Lawyers and their document games!  Lawyers often resemble broody hens when documents are requested, and they have any number of tricks to play when finally placed in the broody cage by a judge.

This week, U.S. District Judge John Bates ordered FERC to pay over $60K in legal fees to STS Energy Partners to reimburse them for their cost of suing the Commission to force the release of documents requested through FOIA.  Although the lawsuit eventually inspired FERC to cough up the requested documents, Judge Bates found that FERC's document games should have been solved without STS Energy having to resort to filing a lawsuit and incurring legal fees.
FERC did show some recalcitrance and at least “appeared” to “withhold” the segregable portions of requested documents “merely to avoid embarrassment or frustrate the requester,” or simply to avoid the time-consuming work of separating information that could be properly withheld from information that could not.
 According to the decision, the story goes like this:

STS Energy submitted two FOIA requests to FERC "seeking to 'shin[e] light on FERC’s recent and punitive efforts against small power market traders for engaging in legal and ubiquitous activity in the PJM Interconnection (“PJM”) wholesale electricity market'."  FERC withheld some responsive documents.  STS filed suit to seek release of the withheld documents, and eventually FERC settled with STS to release the information.  However, attorneys for STS had to spend over $60K in legal fees to get to that point.

FOIA laws provide for the recovery of legal fees when the complainant prevails in a FOIA suit.  The court examined whether STS was eligible to recover legal fees.   The standard for the court is: 
The D.C. Circuit has instructed this court “to consider at least four criteria in determining whether a substantially prevailing FOIA litigant is entitled to attorney’s fees: (1) the public benefit derived from the case; (2) the commercial benefit to the plaintiff; (3) the nature of the plaintiff’s interest in the records; and (4) the reasonableness of the agency’s withholding.”
On the first factor, FERC claimed that there was minimal public value in releasing the documents, that they represented "provincial concerns not shared by the public at large."  However, the court found that media and Congressional interest in the information, even if drummed up by the litigants themselves, demonstrated significant public interest in the action.

On the second and third factors, FERC claimed that STS Energy, while not technically the subject of records requested, was “deeply intertwined with the entities that FERC is investigating,” including Powhatan Energy Fund, LLC.  FERC reasoned that because STS Energy was "intertwined" with the Powhatan, the subject of one of its market manipulation investigations, the firm had a private interest in the disclosure of the records.  FERC believed that the requests by STS were part of Powhatan's litigation strategy and that the company "used FOIA requests to circumvent the fact it has not been entitled to obtain discovery from FERC in the pending litigation."  That's right, Powhatan was not entitled to any discovery while FERC was conducting its investigation.  The first opportunity for discovery may have come after the investigation was completed, if the company had elected to try the matter before a FERC administrative law judge.  Instead, Powhatan elected to try its case in court.  Once at court, FERC claimed that the court was restricted to simply reviewing FERC's decision, and that Powhatan was not entitled to discovery or adjudication of the facts leading to FERC's assessment of penalty for market manipulation.  That matter is still pending.  However, back to the case at hand, where the court found that the two firms were "intertwined" and that there was a "private interest" in requesting the records. 

On the final factor, the court found that FERC didn't have sufficient reason for withholding the documents.  FERC defended its conduct in withholding as "good faith" because it eventually released the records without a court order.  However, FERC did not release the records before legal fees were incurred.

This left the court with weighing four factors, two for, and two against.  The court ultimately determined that the fourth factor carried the greatest weight.  It was FERC's game playing trying to avoid release that caught them in the end.

Lawyers that go all broody over documents rarely win.  And now it's going to cost FERC $60,168.19.
3 Comments

How Many Clean Line Supporters Are Actually Dead?

9/18/2016

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The Consumer Energy Alliance recently got caught sending fake letters of support for a pipeline project to the Federal Energy Regulatory Commission.  One of the letter writers has been dead since 1998.

Hmm... Consumer Energy Alliance.... where have we heard that name before?  I know!  The Consumer Energy Alliance was behind the "EDJ Alliance" that was used in a lame attempt to drum up support for Clean Line's Plains and Eastern project in Oklahoma, Arkansas and Tennessee last year.  Since then, it has been suspiciously quiet... almost like it is dead itself.  And the Consumer Energy Alliance also pretended to speak in favor of Clean Line's Rock Island project at an Illinois Commerce Commission public hearing in 2013.  Clean Line is a "member" of the Consumer Energy Alliance, although it (along with all the other "members") aren't "consumers" at all.  The CEA represents "consumers" in name only, while it really represents the interests of its paying industry members.  That's what's called a "front group."
A front group is an organization that purports to represent one agenda while in reality it serves some other party or interest whose sponsorship is hidden or rarely mentioned.
In the recent pipeline case, attorneys for opposition groups have asked the U.S. Postal Service to investigate the CEA for mail fraud, since it stupidly mailed its fake support letters to the Federal Energy Regulatory Commission to be placed on the pipeline docket.  The attorneys have also asked FERC to
...immediately convene an independent audit of all public comment statements submitted to docket of Case No. CP16-22 since the opening of the comment period for the Draft Environmental Impact Statement; that the Commission strike Intervenors’ Exhibits A through O from the docket and grant leave to any intervenors to this proceeding to submit
further pleadings relating to striking other public comment statements from the docket; finally, that the Commission make a referral to its Division of Investigations, the U.S. Department of Energy Office of Inspector-General, the U.S. Environmental Protection Agency Office of Inspector-General, and the U.S. Postal Inspection Service.
The opposition groups claim "someone appears to have undertaken widespread criminal fraud to influence the outcome of this federal pipeline certificate proceeding." And have produced evidence that at least 15 of the letters submitted to FERC by the CEA were done so without the knowledge or permission of the purported authors.

The CEA answered the opposition complaint, requesting "... that the Commission decline to address Neighbors’ protest (the “Protest”) as its contentions are false and have no merit."  CEA goes on to claim that it has records to prove that the authors of the letters gave permission to CEA to create and mail the letters to FERC.  The authors claim otherwise in numerous affidavits.  In one instance, the author has been dead since 1998.  In another, a relative of an author claims she could not give permission because she has dementia.  Another author  interviewed by Newsnet5 said, "I’ve never said none of those words. I don’t have a typewriter, I don’t have a computer to make a letter as such.”

Here's how CEA explained this "misunderstanding."

As an energy consumer advocacy organization, CEA has developed a process of gathering grassroots support for affordable, reliable energy projects. As part of that widely accepted business process, CEA conducts automated telephone surveys with selected individuals. When an automated call is placed, and consistent with accepted industry practice, the call is directed to the individual listed in phone company records. The individual who participates in the survey is asked a series of questions from a scripted questionnaire to which he or she is requested to answer by pressing on the phone’s keyboard “1” for “yes” and “2” for “no”. But, it is the nature of automated surveys that the questions are not asked by a live person and there is no process to identify and confirm who answers the phone and responds to the question.

The survey used here began with an introductory statement telling the respondent that the Commission is considering whether or not to grant a permit to build the NEXUS pipeline and explaining the benefits of the pipeline, including creation of jobs in the region and reduction of energy costs for manufacturers and consumers. The survey continued with the express question on whether or not the respondent would give his or her permission to relay to the Commission his support for the pipeline. If the respondent replied with “no”, the survey would ask another question reiterating the importance of the Project and again ask the respondent if he or she would support the pipeline and authorize CEA to pass that view on to the Commission. On behalf of those respondents who indicated their support for the project and authorized CEA to forward that viewpoint to the Commission, CEA then generated the letter for the 347 individuals that were filed.

Moreover, it is implicit in the nature of any automated phone survey that from time to time there will be instances where the person who answers the phone and responds to the survey is not the person listed in the telephone company’s records as the householder. This would explain the inadvertent error that can occur when a supporting letter is generated in the name of the person listed as householder, but someone else actually answers the phone. So, even though the householder – in whose name the support letter was generated – may not be competent or even in agreement, the person who answered did respond affirmatively and authorize support for the Project. Similarly, in some instances the respondent may not fully understand the presented question, unintentionally answer it in the wrong way and later change his or her mind. Or, in some cases, the respondent may forget that the survey even took place, let alone that he or she gave the authorization for his comments to be filed with the Commission. CEA regrets any such misunderstanding or miscommunication that may have occurred.
So, CEA robocalls people and asks them to push a number on their phone and that constitutes permission to create and mail a letter in their name to the federal government?  One news account says that CEA robocalled 25,000 households, and from that it found only 347 people supposedly gullible enough to push the right button to give permission?  And even then, many deny ever getting the phone call in the first place.

I guess we can assume that the other 24,653 people contacted by the CEA did NOT support the pipeline, although CEA didn't bother generating a letter from those consumers expressing their opposition to the project.

CEA doesn't represent consumers.  CEA represents its paying industry members.  One of those members is Clean Line Energy Partners.

So, if you're a live person in relatively good health, you'd better get your comments opposing the various Clean Line projects filed with regulators now.  Otherwise, the CEA may submit comments supporting Clean Line to regulators using your name. 

What a bunch of dirty, cheating tricksters!
0 Comments

Kangaroos Barred From FERC Enforcement Judicial Reviews

7/30/2016

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Imagine you're accused of stealing from your employer.  After a lengthy investigation by your employer, during which you were required to produce evidence and submit to exhaustive questioning, you were given two choices of how the case would proceed next.

Your first option is to elect an administrative hearing run by your employer, with the head of HR acting as an impartial judge.  During this process, you would be allowed to ask your employer for documents, question them,  cross examine their witnesses, and present your own evidence and witnesses.  Afterwards, the head of HR would make a decision that would have to be further approved by the CEO of the company.  If that decision didn't clear your name, you could appeal to the court system.  But the judge in that matter would only be able to examine the CEO's decision to decide if it comported with the law.  The judge would give the CEO a huge amount of deference for his expertise in deciding things of a business nature. 

Your second option is to forego the corporate kangaroo court and ask the CEO to just make a decision, based on the company's evidence, to make you give back what it thinks you stole and to levy what he feels is an appropriate fine for punitive damages.  You'd have the opportunity to present your own evidence to the CEO, but would not be allowed to ask the company for documents or question their witnesses.  After the CEO makes his decision, the company would have to take action against you in court to enforce the decision of the CEO to collect its goods and penalties.  In this course, you would ultimately be trying your case before an impartial judge and jury, instead of the head of HR or the CEO, and would be permitted all the same due process allowed in the foregone administrative hearing, such as discovery, depositions, cross examination, presentation of your own witnesses.

Which option would you choose?

You'd choose the second option, wouldn't you?  But what if your employer told the judge you had no due process rights in court and that he must decide the case based only on the decision of the CEO and the evidence collected by your employer?  There would be no jury.  You'd be crazy to select that option, and furthermore it would turn the court process into a one-sided kangaroo court.

But that's how FERC has interpreted the two choices available to defendants accused of market manipulation under the Federal Power Act.  FERC believes a defendant choosing the court option has chosen to forego his due process rights.
However, a federal court judge has recently decided that the defendants of FERC's market manipulation probes are entitled to due process when electing to have FERC's penalties reviewed by a court.

In FERC v. Maxim Power Corp., et al.,
... the U.S. District Court for the District of Massachusetts ("District Court") determined that review of a FERC-issued penalty for alleged market manipulation must be treated as an "ordinary civil action" requiring de novo review and finding against FERC's arguments to the contrary. The District Court further ordered in its decision, FERC v. Maxim Power Corp., et al., that in the corresponding civil action—to determine whether to affirm FERC's prior penalty assessment against the owners and operators of a power plant in Pittsfield, Massachusetts ("Maxim") and one of their employees (together, "Respondents")—the Respondents will be entitled to the full discovery of an ordinary civil case, and the proceeding can be decided by a jury, if necessary.
This doesn't mean that market manipulators can skip away without penalty, it simply means that court review of FERC's multi-million dollar penalties against alleged market manipulators will be subject to the ordinary due process allowed to everyone accused of a crime.

That's fair.
0 Comments

Martha Peine:  Artist or Retired Hippie?

6/28/2016

5 Comments

 
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Only a community of "artists and retired hippies" would laugh about being characterized as such in a news story.  I asked Martha which one she was last night, and she said she was a "wannabe" of both.

It must have been the retired hippie who became an activist for a town threatened by a transmission project that was later determined to be unnecessary.  But it was definitely the artist who negotiated a $4.2M transmission rate refund from "behemoth" energy company American Electric Power.

RTO Insider is running a story today that may be the finish line for Martha's media victory lap.

Against All Odds: Ratepayer Wins $4.2M Refund from AEP chronicles Martha as remarkable, and I'd have to agree.  She waded through hell and high water, and jumped every hurdle erected in her path, to right the wrongs in AEP's transmission rate filings.  And she persevered to victory.  She's one in more than 18 million... the only ratepayer in the Southwest Power Pool who took the time and invested the effort to challenge AEP's rates.

While RTO Insider's coverage may be the final story, it's not my favorite.  While attempting to wade into the technical weeds, the reporter got some things wrong (but, hey, at least Ali's name got spelled right this time!)

A story in a retired hippie and artist newspaper, The Eureka Springs Independent, did a great job with accurate coverage.  Local woman wins $4.2 million settlement for power users says Martha will now "relax into the Eureka Springs tempo for the time being."

Looking forward to joining her later this summer!  I'll bring my tie-dye duds and my sketch pad... and a case of Raging Bitch!

Congratulations, Martha, it's been a gift to meet you and call you friend.
5 Comments

Can State Utility Commissions Be Free From Political Influence?

6/21/2016

1 Comment

 
Last week, outgoing FERC Commissioner Tony Clark said there is a "need to insulate state utility regulators from political pressure."

I agree.

But what's really interesting is that Clark actually said those words out loud.  If you were to ask any state regulatory commission whether their decisions were politically influenced, you'd most likely get a denial.

But how could their decisions NOT be politically influenced, when the Commissioners themselves are political appointees?  In the majority of states, regulatory commissioners are appointed by the Governor, or "elected" by the state's legislature.  In twelve states, regulatory commissioners are elected by the voters in a general election.  In all instances, politics loom large in a Commissioner stepping into the job, and,  more importantly, keeping that job for additional terms.

In West Virginia, appointments to the Public Service Commission are treated like political favors, and the Governor has been known to let Commissioners continue to sit for years after their appointment expires, without naming a successor.  In that instance, the Commissioner's day-to-day employment is subject to the whims of the Governor, who can appoint a successor at any time the sitting Commissioner displeases him.

Political influence over commission decisions is the norm, and utilities have become expert at shaping and using that political influence to get their projects approved.  Utilities spend big bucks to shape political dialogue, and buy the support of the right political influences, to smooth project approvals.

Baldly stated, a utility commission currently makes its decision to approve or deny a project based on politics.  It then picks and chooses evidence from the record that best supports its decision.  This is a complete reversal of how it's supposed to work:  The Commission should examine and weigh evidence to reach an impartial decision based on facts.  The evidentiary record is supposed to shape the decision, not the other way around.

I'm not sure that Clark provided a suggestion on how to reform state commissions to foster independence, but he had plenty to say about why our current model isn't working.
Another challenge facing the industry is the need to insulate state utility regulators from political pressure.

In instances around the country, he said, "you're seeing the confluence of politics challenging that independent regulatory model."

It's a reason the California Public Utilities Commission was located in San Francisco instead of Sacramento back in the 1800s when it was the California Railroad Commission, to protect regulators from the political influence of the powerful monopoly railroads.

Clark cited the Nevada Public Utilities Commission decision late last year in which regulators posted fixed charges for NV Energy customers with solar energy systems and slashed rates for compensation for excess energy put back on the grid (ClimateWire, Jan. 11).

He quoted a solar industry executive who told reporters that Republican Gov. Brian Sandoval should "get control of his appointees."

The comment, Clark said, "drives home that large segments of the public -- and sometimes fairly sophisticated people that operate in this space -- view regulatory commissions as just another extension of politics."
But at least he's acknowledged the elephant in the room.

How do we assure that political appointees (or elected officials) are actually able to act independently once they assume their seats?  Limit them to one term, so that future appointments or elections become irrelevant?  If commissioners were limited to one term, would quality regulators even show an interest in the positions?  What are other possible solutions?
1 Comment

How Much Does a "Clean" Line Cost?

6/19/2016

1 Comment

 
At the beginning of the month, Clean Line issued a press release touting a "contract," or "agreement" with some Missouri municipal electric providers.  But Clean Line neglected to share this wonderful agreement.

Here it is.

What's in the agreement?

Up to 200 MW of transmission service from Clean Line's proposed southwestern Kansas converter station to a proposed DC/AC converter station in Ralls County, Missouri, available in 2 separate, differently priced 100 MW tranches.  Or even any other amount of transmission between 0 and 200 MW.  That's right, zero.  Because this isn't a firm contract at all.  Customer (MJMEUC) can change its mind at any time up to 60 days before "the date on which the Project begins commercial
operations and is capable of providing [...] Transmission Service" and elect not to purchase any transmission at all.  None.  Zero.

Price for transmission service from Kansas to Ralls County, MO: 
$1,167 per MW/month, escalating at 2 percent (2%) annually beginning as of the  Commencement Date for the first 100 MW tranche.

$1,667 per MW/month, escalating at 2 percent (2%) annually beginning as of the Commencement Date for the second 100 MW tranche.
That's $1.167 per kwh, and $1.667 per kwh.  Per month.  With a guaranteed 2% price increase each year.

But that's not all the contract proposes to sell to MJMEUC, if its future "Notice of Decision" is to proceed with the contract.

The contract also proposes that MJMEUC will purchase up to 50 MW of transmission service between Ralls County, Missouri, and Clean Line's proposed converter station in Sullivan, Indiana (in the PJM RTO electricity market).  What is MJMEUC going to be loading onto this "clean" line to sell to customers in PJM?  Will it be "clean" electrons? 

Price for transmission service from Ralls County, MO to PJM:
$2,500 per MW /month.  For the first two years, after which time the contract may be extended for a period up to 26 years.
The contract also requires MJMEUC "to file an
intervention and comments supporting FERC's acceptance of Transmission Provider's FERC [compliance] filing without modification or condition."

As well
the Parties shall cooperate with
each other to obtain all Governmental Approvals that are required for Transmission Provider to construct and operate the Project and put this Agreement fully into effect, including making any filing in support of another Party's application for any such approval as requested by the Party
seeking such approval. From and after the Execution Date, the Parties shall not take any action, or seek any relief, before any other Governmental Authority that is inconsistent with the terms and conditions of this Agreement.
Be a good witness.

So how much would it cost to transmit electricity all the way from Kansas to PJM on a "clean" line?

Add it up.

There is no actual electricity priced in this contract.  Customer shall enter into a separate power purchase agreement with a third party vendor at some future date.  Clean Line cannot sell electricity.
1 Comment

Ratepayer Complaint Nets $4.2 Million Refund for Arkansas Electric Customers

6/14/2016

5 Comments

 
Eureka Springs, Arkansas – Martha Peine, a local electric customer and non-practicing attorney, went to the Federal Energy Regulatory Commission to challenge the transmission rates of a large, regional electric supplier.  After lengthy negotiations and two trips to Washington, D.C., by Ms. Peine, regional electric customers can now expect a $4.2M refund.
 
In 2013, Ms. Peine decided to learn how Southwestern Electric Power Company (SWEPCO) makes money from its transmission business. Using the transparent, but complicated, processes in place to review transmission rates, Ms. Peine set to work. 
 
After examining the expenses SWEPCO recovered in its 2013 and 2014 FERC-filed formula rate updates, Ms. Peine filed a legal challenge to SWEPCO’s recovery of certain expenses, including what she claimed were improperly recovered charitable and lobbying items. Last August, the Commission determined her challenges raised material issues and set the complaint for hearing. 
 
As Ms. Peine and the other parties prepared for a hearing before a FERC Administrative Law Judge, discussions about settling the case were also taking place.  These negotiations among Ms. Peine, SWEPCO, and FERC lawyers eventually proved successful.
 
On Monday, June 13, 2016, without the necessity of a hearing, Ms. Peine and American Electric Power Service Corporation (AEP), on behalf of its subsidiaries SWEPCO and the Public Service Company of Oklahoma, filed a settlement agreement with the Commission that includes a $4.2 million refund to ratepayers in the region. The agreement also limits the amount of litigation expenses related to Ms. Peine’s challenges, and clarifies that certain expenses, including charitable and lobbying related expenses, cannot be charged to ratepayers by SWEPCO in the future.
 
“While the end result in my case is a win for ratepayers, I will always wonder what mistakes there may be in the years to come,” said Ms. Peine. “The review process is complicated and time consuming. There is no person, entity, or agency that meaningfully reviews the rate updates on a regular basis, so there is always the potential for significant overcharges.”
 
”On behalf of Save the Ozarks, we congratulate Martha for her accomplishment,” said Pat Costner, STO Director. “Every SWEPCO electric customer owes a debt of gratitude to this remarkable woman, who has shown us that one person can make a big difference.”
 
The refund will show up as a one-time credit on ratepayers’ electric bills within 90 days of the Commission’s approval of the settlement, which should be a routine matter.  A copy of the settlement can be downloaded from the Commission’s website here.
 
Background:  The transmission of electricity in interstate commerce is nationally regulated by the Federal Energy Regulatory Commission.  FERC allows regulated transmission companies to utilize what are known as “Formula Rates” to recover their cost of service from electric consumers.  A Formula Rate is a mathematical formula for calculating a rate from yearly expense totals.  While the formula stays the same year after year, the rate changes depending on how much a company spends.  Not all company expenses are recoverable from ratepayers.  FERC regulations and legal precedent prohibit the recovery of charitable contributions, as well as the cost of lobbying to influence the decisions of public officials.  Formula Rate updates are informational filings.  FERC does not review them for accuracy, but relies on those who pay the rates to raise the red flag if it is not calculated correctly.
5 Comments

One Protest Too Far

5/23/2016

2 Comments

 
Last Thursday, FERC took the historic step of closing its monthly "open meeting" to the public.  It did so in the interest of safety, both for its staff and any members of the public who might attend one of its meetings simply to observe.  It didn't do it because it agrees there's some "bias" afoot, and closing its open meeting isn't a form of progress for transparency.  So, what was accomplished?  The public had one of its rights removed because of the over the top actions of a few.

Stop it!  Just stop it!  This isn't the way to increase public transparency or make FERC stop approving pipelines.  It only succeeds to make FERC and the rest of society more inclined to dismiss public participation in FERC processes as ignorant and pointless bullying.

The refusal of a handful of gas pipeline protestors to engage in constructive advocacy, and instead simply make pests of themselves, doesn't accomplish anything.  Interrupting the monthly meetings (and every other activity underway in the general vicinity) does not make FERC less likely to approve pipelines.  Sure, maybe it feels good to the ones doing it for a few minutes.  Everyone should join a non-violent protest at least once in life, the crowd-speak high is exhilarating, but that feeling is never shared by the folks on the receiving end.  If you want change, create it!  It can't be created by a couple hours of non-committal "fun."  It takes years of actual education, work, and commitment to a goal to effect constructive change.  It can't be accomplished quicker by ignorant mass action.  What may have started out as a good idea to urge the public to become involved in the process as a way to effect change has gone too far.

Last week, FERC's fan club went too far with their "week of action."  In addition to the usual protests outside the building, these folks cranked it up on a personal level to "camp out" outside the homes of the FERC Commissioners.  And they announced that they would send people into the open meeting to interrupt it.  And what was the result?  A webcast open meeting.  Instead of expanding transparency, it actually had the opposite effect.

If you think FERC's rules are designed to give advantage to pipeline companies, change the rules.  There's a civilized process in place to do just that.  Trying to bully FERC to operate outside the existing rules can only fail.

According to the rules, pipeline opponents may intervene in the established process in order to make their case for disapproval.  And thousands of ordinary folks have been encouraged to do so, and have intervened.  But it seems to stop there, when it shouldn't.  Simply intervening, without actually participating in the legal process, doesn't accomplish anything.  No matter how many people passively intervene, the pipeline company will actively participate -- and that may be the only voice FERC hears.

A week?  Is that all the commitment these folks have to effecting change?  Change is a long-term commitment, not a night on the sidewalk harassing a regulator who is following existing rules.  Don't let your message get lost on the messenger.
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    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
    StopPATH Blog

    StopPATH Blog began as a forum for information and opinion about the PATH transmission project.  The PATH project was abandoned in 2012, however, this blog was not.

    StopPATH Blog continues to bring you energy policy news and opinion from a consumer's point of view.  If it's sometimes snarky and oftentimes irreverent, just remember that the truth isn't pretty.  People come here because they want the truth, instead of the usual dreadful lies this industry continues to tell itself.  If you keep reading, I'll keep writing.


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