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Beware the Hurtado! and Other "Clean" Fairy Tales

6/8/2014

Our friends at Clean Line have been as busy as a nasty nest of yellow jackets this past week, while I was tied up with other things. So, on this beautiful Sunday, let's hunker down around the campfire and catch up on some scary stories...

My multilingual, Arkansan friend, Doc, alerted me to an interesting discovery this week. Clean Line's project manager for its Plains & Eastern "Clean" Line, slated to plow through Arkansas like Godzilla on his way to Tokyo, is a Mr. Mario Hurtado. In the Spanish language, the word "hurtado" means "to steal." So, Clean Line is sending out some guy named "to steal" to... ummm... steal land from Arkansans. Brilliant! Perhaps Clean Line watches too many old movies and expected its opponents in Arkansas to behave like movie characters...

...and not like multilingual PhD's.

So... Arkansas... Beware the Hurtado!

My friend Doc says he looks like this:

Meanwhile, in other "Clean" news from Arkansas...
"Clean" Line has submitted a second application for negotiated rate authority from the Federal Energy Regulatory Commission.

I guess their first one wasn't good enough, since they didn't even bother to mention it in their new filing. So, inquiring minds want to know... is "Clean" Line just stupid, or are they trying to pull something on FERC?

Negotiated rate authority is no big thing, though. It simply bangs out a plan for the company to negotiate rates with potential customers in a fair and non-discriminatory fashion. It doesn't get them any customers. It is not an "approval" of the project. FERC's only authority over this project is ensuring its rate structure is fair. FERC has no authority over the siting and permitting of this project. Big deal, Mr. To Steal.

And, news from Missouri...

"Clean" Line has been quoting industry-influenced WHO studies as "proof" that their transmission projects will have no health effects on nearby residents. However, a well-respected, local physician has been compiling and reviewing medical research on the health risks of the proposed "Clean" Line. The Moberly Monitor did an indepth report about what Dr. Smith has found. Shocking and dangerous! Dr. Smith's findings are a MUST READ for every person in proximity to one of these "Clean" Lines.

Other news outlets have also picked up on Dr. Smith's EMF research, and the truth is spreading like wildfire! SeeABC News, the News Democrat, and about 18 other major news outlets.

"Clean" Line needs to finish watching the movie that they've been using as the basis for their arrogant expectations of the intelligence and cunning of their local opposition. They must not have watched far enough to see this scene yet:

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Gates Brothers Test Telekinesis at FERC Confirmation Hearing

5/21/2014

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RTO Insider has a special report about yesterday's Senate Energy and Natural Resources Committee hearing on the nominations of Cheryl LaFleur and Norman Bay to the Federal Energy Regulatory Commission.

Bay has been publicly criticized by twin investment fund managers Kevin and Richard Gates, who have been under investigation for market manipulation by Bay in his capacity as Director of FERC's Office of Enforcement, without being officially charged. The Gates have recently made their case public in an effort to stymie Bay's nomination.

In LaFleur Cruises, Bay Bruises in Confirmation Hearing, RTO Insider reports:

When Bay stood up to be sworn in, Richard and Kevin Gates — the twin hedge fund managers whose case Scherman cited as exhibit A — were sitting in the row behind him. Richard was on camera, over Bay’s shoulder, during the entire two-hour hearing.

There's even a photo. It looks to me like the Gates brothers attempted to make Bay slap himself during the hearing through the power of telekinesis. Go see the picture for yourself!

Meanwhile, West Virginia's Joe Manchin used his time to talk about his master, coal. I wonder what coal thinks about Norman Bay?

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Can Grain Belt Express Keep its Big Promises to FERC?

5/14/2014

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Clean Line Energy Partners is making a big deal out of FERC's conditional authorization of its proposal to negotiate rates for its Grain Belt Express project. Of course, this isn't surprising -- Clean Line has shown great expertise in "miscommunicating" the actual meaning of its regulatory activities in an effort to make it appear that regulators and other entities "approve" of its project, or require it to be built.

What is surprising is that Clean Line has chosen to further its "miscommunication" that its project capacity is only available for transmission of wind energy. You'd think they might be thankful to have dodged the discrimination bullet for the time being and show more decorum, but no, not Clean Line. It appears that the company has interpreted FERC's action of kicking the discrimination can down the road to mean that FERC won't enforce its own regulations later, or simply doesn't care.

Clean Line's press release claimed:

The Grain Belt Express Clean Line (Grain Belt Express) is an approximately 750-mile, overhead direct current transmission line that will connect wind energy from western Kansas with utilities and customers in Missouri, Illinois, Indiana and states farther east.

Receiving this authority will allow Clean Line to sell transmission capacity to potential customers of the project, including utilities and other load serving entities or clean energy generators.

The Grain Belt Express is estimated to enable more than $7 billion of investment in new wind farms. Clean Line recently issued a Request for Information (RFI) to wind generators in the western Kansas
region, and results confirmed the need for transmission to access larger markets for renewable energy. Developers of wind projects totaling over 13,500 MW of potential capacity shared information on high
capacity factors and cost-competitive wind energy prices. The combined capacity of these wind projects under development could fill the Grain Belt Express line over three times.

So, what are you saying here, Clean Line? That "clean" wind energy will fill your project over three times before you allow any competition from other generators? Naughty, naughty!

Back in March, when GBE's FERC application was still pending, the Missouri Landowners Alliance filed a protest, informing the Commission that GBE had been soliciting interest in its project exclusively from wind generators in contravention of FERC's open access policies. FERC requires transmission owners to provide non-discriminatory transmission access to prevent gaming of electricity markets. A transmission owner is like the highway toll collector, and may not pick and choose which cars can use its road as that would allow the toll collector to give preference to the cars that increase its market share, profits, or any other criteria it values. Therefore, GBE must offer its capacity to ALL generators equally, not just those producing electricity at wind farms.

In response to the protest, FERC said:

We find that Landowners’ concerns are based on speculation as to Grain Belt Express’ solicitation efforts, which Grain Belt Express has not fully implemented. Grain Belt Express has not proposed in its application, and we do not approve, selection or ranking criteria based upon the type of generation that a potential transmission customer might seek to interconnect. That Grain Belt Express has posted an inquiry about potential wind development in Kansas does not prove that Grain Belt Express intends to exclude other resources, and it is premature to judge now the totality of its solicitation efforts. As Landowners have recognized, the Commission has previously disapproved of a proposal that would include a preference for renewable resources as part of a transmission owner’s open season criteria where the transmission owner did not justify such preference. [Rock Island Clean Line] As discussed elsewhere in this order, Grain Belt Express is required to make a filing after the conclusion of its solicitation process that demonstrates compliance with the commitments made in its application, and any concerns that Grain Belt Express has unduly discriminated against non-wind resources can be addressed in that proceeding.

FERC has merely kicked that can down the road for the time being. FERC's Order is only a conditional authorization for GBE to negotiate to sell capacity, contingent upon the company making the required compliance filing after it sells its capacity. In that filing GBE bears the burden of proving that it complied with its own plan to publish broad notice of its project to ALL generators, and that its selection of customers was non-discriminatory.

FERC's "approval" ain't no big thing. Any legal monkey could have concocted a "plan" to negotiate transmission rates using prior FERC orders. As more than one lawyer has told me, creating legal filings is mere mimicry of prior filings that were successful. The real "approval" from FERC may only come after GBE has properly conducted its negotiations as per the plan and made its compliance filing without attracting protests or complaints that GBE discriminated against certain customers. Good luck there, Clean Line ;-)

Of course, authorization to negotiate rates does not equate to the ability to do so. GBE still needs approval from every state in which it intends to build its project, including Missouri and Illinois. It needs to put a real price tag on the cost of its project so that the fantastical business plan can generate profits by selling its service. It needs some customers, either generators (that don't exist), or utilities wanting to buy power from the non-existent generators. It has none, and is not actively seeking any at this time.

“FERC’s jurisdiction is pretty much limited to making sure that the process of selling transmission rights is open and transparent and non-discriminatory,” said Mark Lawlor, director of development for Clean Line Energy. “To make sure we aren’t building lines to give some competitors an advantage that others don’t have access to.”
Company officials don’t expect the line to go into commercial operation until 2018, but with FERC approval the company can begin talks with potential customers, Lawlor said.
The exact method for selling capacity on the line or how it will be priced hasn’t been determined, he said.
In the meantime, the company continues to work its way through state regulatory processes, he said.

This is not a "federal approval" for GBE's project. Words on paper need to be followed through with actual deeds. Do you think Grain Belt Express will be able to deliver on its promise to FERC?

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Another FERC Nomination Battle Looms

5/14/2014

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It looks like there's a new wrinkle in Obama's latest nomination for FERC Chairman. Norman Bay, the current Director of FERC's Office of Enforcement, was nominated after last year's Binz bungle. The Senate will hold confirmation hearings on Bay's nomination this month.

Binz got raked over the coals *heh* by the Senate, and our dear Senator Manchin sided with his friend coal, effectively killing Binz's nomination. I wonder how Norman Bay feels about coal?

But, coal may be the least of his worries, as it appears he has a different group of folks opposing his nomination.

Did Obama's New FERC Nominee 'Criminalize' Energy Regulation? (Forbes)

Going Public: Powhatan Energy Fund’s "Insurance Policy" Regarding FERC Enforcement’s Non-Public Manipulation Investigation Into The Fund’s "High-Frequency" PJM Trading Activity (Mondaq)

With confirmation hearing set, Obama's pick to lead agency faces uncomfortable questions (E&E)

The Investors at War With Political Power:
How a once-obscure federal agency targeted two brothers, and what happened when they decided to fight back in the age of Obama (Wall Street Journal)

If You Have a FERC Problem, Maybe Don’t Hire a FERC Lawyer (AboveTheLaw)

FERC’s Prosecutorial Tactics (Cato Inst.)

Read more here.

Well... ut-oh.

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Attention "Stakeholders": Don't Miss PJM's Annual Cartel Cotillion This Week!

5/13/2014

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Remember, little ratepayer and property owner, you're a PJM "stakeholder," too, and you should be participating in the planning process that at some point in the future may require you to sacrifice a right of way through your private property, or pay for big, new transmission lines of questionable benefit to you.

It's another hot time at the expensive, luxury hotel for our "stakeholders," where market power players and their toadies will be turning out in their best "resort casual" wear to partake in free leisure activities sponsored by the corporations that make big profits from the cartel.

You are cordially invited to attend the 2014 PJM Annual Meeting of Members to be held at the Hyatt Regency Chesapeake Bay. Please note that the dress code is “Resort Casual”. The program will be similar to last year's event starting on Tuesday, May 13 with registration and an Opening Reception and ending on Thursday, May 15 with the Members Committee meeting and buffet luncheon.

On Wednesday, May 14 we will have the General Session followed by lunch and leisure activities. Thanks to the generosity of our sponsors, each attendee may select one leisure activity at no cost to themselves. The following leisure activity selections will be available for choosing onsite at the registration desk and will be filled on a first-come, first-serve basis.

Golf
Spa
St. Michael’s Winery/Tour
Fishing
Biking
Kayaking

They forgot to add extracting obscene profits from consumer pockets, but maybe that's not a leisure activity; instead it's one that requires hard work.

So, what do the PJM aristocracy do at these meetings, when they're not participating in leisure activities, receptions and luncheons?

They review the past year of incumbent electricity conglomerate rule. They "train" your Consumer Advocates. They eat dinner and hand out golf awards. Then they have entertainment night with desserts.* I think it would be pretty entertaining to give a couple of sponsor CEOs a pie in the face, but that's probably not what PJM has in mind. They also allow the well-funded environmental elite to perform a song and dance for the assembled dignitaries, but no one really pays any attention to it, although that never stops the "public interest group" PIGs from believing that this year's production will be the one that convinces everyone to pay even more for "clean" electricity.

So much glib self-congratulation at your expense, so little time. If your electric supplier is one of PJM's meeting sponsors, run (don't walk!) to sign up for one of the free leisure activities. You're probably paying for it in your electric bill anyhow, might as well enjoy.

And what are the worker bees doing at PJM while the lords and ladies play on Maryland's Eastern Shore? They're holding PJM's annual capacity market auction, where the prices consumers will pay to have generation resources available in 2017-2018 will be determined. Where prices may end up seems to be a matter of opinion. Incumbent generators have been plagued by low prices in previous auctions. PJM's market monitor says the capacity market is broken and has championed several changes that have been recently approved by FERC to raise prices.

PJM has instituted a limit on imported capacity that is supposed to stop the flood of bids from generators in other regions that have been gaming the market by receiving revenue for resources they can't deliver, or resources controlled by other regional operators (yes, big wind, they're talking about y-o-u). Oh, go ahead, read more about it here, but first a little mood music to help you prepare. Sorry about that, but it was actually a pretty concise explanation of PJM's reasoning for the CIL.

The other change is supposed to "result in the more efficient and flexible use of demand response," but will probably just drive some resources from the market altogether. Because demand response lowers overall demand at times of peak use by paying participants to reduce their load, this means that more actual generation capacity will be needed.

But some generators aren't optimistic that the changes will do much to raise prices enough to satisfy their greed and save their bacon. Some generators seem to want more.

And if you think all this capacity auction stuff is about as exciting as watching paint dry, you're not alone. This blogger so thoughtfully compares PJM's capacity markets to steroids in baseball so that we can understand it:

PJM admits that steroids are endemic to the game but then recalculates the final score of the game based on what they believe the outcome would have been if the players were not on steroids.

Maybe PJM should just be doing more of this, and less of this.

*Update! PJM has changed its agenda today. It no longer says "Entertainment night with desserts." Now it says "Dessert Reception and Lawn Games." I guess FirstEnergy showed up with the

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Rock Island Clean Line Could Lock Chicago Area Residents into Paying More for Dirty Energy

4/21/2014

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That's the headline the Chicago Sun Times should have used on its recent article about Clean Line's Rock Island project. Instead, the Sun Times reporter took the lazy way out by printing the unverified and grandiose claims of RICL developer Hans Detweiler as if they were facts.

The correct information was right there for the reporter's perusal on the Illinois Commerce Commission docket, or she could have looked at some of the testimony quotes on BlockRICL's website. BlockRICL doesn't have to rely on spurious sound bites to spin the media, only the truth of the testimony at the ICC.

So, let's take a look at where the Sun Times reporter resorted to lazy "journalism":

Within three years, some Chicago area residents could be saving money on their electric bills, thanks to power generated 500 miles away.

Adding wind energy to the grid should push wholesale electricity prices down, Detweiler said. He thinks Illinois consumers could save about $320 million after the line’s first year.

“Wind is stranded because of a lack of transmission lines,” said David Kolata, executive director of the Citizens Utility Board, which represents the interests of utility customers in Illinois.

The Clean Line, he added, “has the potential to bring in a lot of low-cost power.”

The savings suggested by Detweiler are an estimate, but “there’s no question that it would reduce prices in Illinois,” Kolata said.

Rock Island Clean Line has no generators and no contracts. There's absolutely nothing to back up all these statements about "low-cost power." None of the people quoted have any idea how much the electricity RICL proposes to import to Chicago will cost. The only thing that's certain is that the power will have the cost of building the transmission line added to its price. RICL has estimated that its line will add $25 MWh to the delivered generation cost at its proposed injection point south of Chicago. Additional transmission charges will be added from that point to ultimate end users. RICL doesn't care if its delivered price is higher than other available sources in the Chicago market because that market isn't RICL's real target. RICL is aiming to be competitive in east coast electricity markets, where electricity is much more expensive than in either Illinois or Iowa.

When there is a glut of power in a constrained market, prices remain low because generators must compete with each other to serve a smaller load. However, when new pipelines are opened from the cheap, constrained market for power to flow to higher priced markets, it has the effect of levelizing prices between the two markets. While the recipients of RICL's load on the east coast could see a reduction (and even that is doubtful), the markets on the source side of the transmission lines will see their energy prices go up as local load must now compete with the higher priced markets to the east. RICL will absolutely increase electricity prices that would exist in Iowa without the project, and since Chicago is not RICL's intended market, but only a pit stop to inject power into the PJM grid, RICL will also raise prices in Illinois.

Note also that the Citizens Utility Board guy isn't even a party to the RICL case at the ICC. His "unquestionable" claims about prices aren't based on evidence. The actual ICC evidence shredded Detweiler's cost savings claims.

The $2 billion Rock Island Clean Line would take 3,500 megawatts of power created by thousands of wind turbines in Iowa and deliver it to Illinois. The project could be completed by 2017.

“As a nation [we] are moving toward renewable energy resources. We need a grid that reflects where those energy sources are found,” said Hans Detweiler, director of development for the project.

Wind-generated electricity could help Illinois meet renewable energy standards. By law, one-fourth of the energy used in Illinois must come from renewable sources by 2025.

And there is demand for renewable energy sources. Some Chicago suburbs seek out green energy through a process called “aggregation,” in which the suburb buys green energy in bulk for the community and passes along the savings, if any.

In Evanston, aggregation saved the average household $264 in its first year, said Jonathan Nieuwsma, vice president of Citizens for Greener Evanston.

There is no guarantee that RICL will deliver even one electron of renewable power. Under federal open access transmission rules, RICL must offer capacity on its transmission line to all generators. RICL is assuming that wind generation will be built in the resource area, and in such quantities that wind generation can supply a constant 3500 MW of energy. RICL plans to sell capacity on its line to wind generators, who may only use a fraction of their purchased capacity due to the variable output of wind generators. This will create a secondary market for transmission capacity that may be purchased by steadier, base load fossil fuel-generated electricity, even if RICL sells all available capacity to these as yet unbuilt wind farms. Will these wind farms actually get built? Without government subsidies, who knows? Every time the PTC expires, so does the desire to build a wind farm.

Clean Line's claims that its project will deliver renewable electricity are just as spurious as their claims that the project will lower prices. In fact, Clean Line's renewable power fan dance is under protest at FERC.

The reporter did no analysis on whether or not RICL is needed to meet Illinois renewable portfolio standards, nor whether it is the cheapest renewable resource available. In fact, Clean Line is looking hungrily at RPS in east coast states, where it believes its product may be cost competitive. While Clean Line may have played with the numbers to make it look like this was true several years ago, the reality is that more renewables are coming online in the east, and renewable prices are falling. And what happens if RICL is no longer economic when it comes time to sign power purchase agreements? The company won't build it. But yet, the company is asking Illinois regulators to ORDER it to build the project so that it may take land from the people of Illinois at cheap prices. The cheaper RICL's land purchases, the lower its delivered price will be. RICL is asking the state to take from its citizens in order to make a private investment company profitable. That's not the intent of eminent domain authority for utilities.

Aggregation is just a fancy word for deregulated electricity markets, where political subdivisions can use their collective buying power to negotiate lower prices from competitive suppliers. Aggregation may have saved consumers money overall, but more expensive renewable energy had nothing to do with that.

The Sun Times article also contrasts the opinions of two landowners who will be affected by the project... without ever using the words "eminent domain." And that's the biggest sticking point of this proposed project. It intends to keep its development cost low by taking land through eminent domain at ultra-low prices. One landowner "thinks" he will be treated fairly, but he hasn't seen "the numbers" yet. While visions of dollar bills dance in that landowner's head, hundreds of others have instead become educated and have fully participated in opposing the project at the ICC, such as landowner Paul Marshall.

Marshall and the Illinois Landowners Alliance have chosen to make their case in the proper legal venue, while RICL seems to prefer to try its case in the court of public opinion, hoping against hope that its misinformation will be enough to fool the ICC into approving its project. The Sun Times ought to be embarrassed at how they were used by fast-talking wind lobbyists.

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Another Bullshit Argument

3/26/2014

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That's what former Secretary of Energy Steven Chu had to say about claims that distributed solar was making the grid unstable.

“That’s another bullshit argument,” said Chu, a Nobel Prize winning physicist who served as energy secretary from 2009 to April, 2013. Solar installations don’t threaten grid stability until they approach 20 percent of the customer base, Chu said.

Finally released from officialdom, Chu is no longer telling utilities what they want to hear, but what they need to hear. Feels, good, doesn't it, Dr. Chu?

Chu has some sage advice for utilities: To ward off the inevitable "death spiral," they need to get into the rooftop solar business.

Chu said his advice has been met by utilities one of three ways:

“Tell us what to do.”
“Deer in the headlights.”
“We’re going to fight this.”

What was your utility's response?

Isn't it refreshing that former high ranking energy officials are loosening up and telling the truth now that they can? Former FERC Chairman Jon Wellinghoff is also under fire for giving away energy industry "secrets" about the vulnerability of our centralized electric generation and transmission system.

This isn't just some random crackpot who overdosed on the Metamucil, but two guys who had their finger on the pulse of our electric system for years. It's rather telling that the industry and governmental officials are screaming foul when two of their own finally break rank and spill. The regulated and the regulator are way too cozy in this country. Denying the advice of those who know the system best, when they are finally free to give it, is a head in the sand approach to disaster.

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FirstEnergy Solutions Sticks It To Customers With "Polar Vortex" Surcharge

3/25/2014

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Customers in the deregulated states of Illinois and Ohio are up in arms about FirstEnergy's plan to stick it to them with a $5 - $15 one-time charge to pay for what it says are "unexpected costs incurred during the polar vortex."

"FirstEnergy Solutions is preparing to bill about 2 million of its 2.7 million retail customers a surcharge for expenses the company will soon have to pay for reserve power it needed when temperatures plummeted below zero." 2,000,000 x $15 = $30M

That's $30M being transferred from consumers pockets into the pockets of FirstEnergy. A company spokeswoman opined, “We consider that pretty nominal.”

I wonder if she also considers CEO Tony Alexander's annual $23M compensation "nominal." If the big guy took a pay cut, it would almost cover the cost of the "polar vortex," wouldn't it?

Crain's described the reason for the charge like this:

"The company confirmed that it will impose a one-time charge of between $5 and $15 on customer bills in June to recover a portion of its power-purchasing costs made through PJM Interconnection LLC's regional grid, which serves 61 million people in all or part of 13 states from northern Illinois to the Mid-Atlantic, as well as Washington. In January, PJM — which acts as a market referee for power generators — lifted caps on the price natural gas-fired power plant operators could charge as the cost of gas soared due to record demand, and electricity consumption likewise spiked."

The Plain Dealer described the reason for the charge like this:

"When the arctic blast hit the region in early January, demand for electricity spiked - and simultaneously dozens of power plants failed because of the weather, mechanical problems or because of fuel problems.

About 20 percent of the PJM region's power plant capacity went down, he said, threatening the stability of grid. And because the cold was widespread and lasted many days, PJM grid operators found that they could not import power from other areas.

Wholesale power prices then skyrocketed. PJM reduced voltages by 5 percent, asked for voluntary conservation and even briefly considered rolling brownouts to avoid a grid collapse and blackout.

But PJM also ordered more expensive power plants to begin generating, just to keep the system stable, he said."

But here's another reason:

FERC compounded the problem by lifting a $1000 price cap and allowing these greedy corporate entities to further game PJM's malfunctioning markets. FERC has allowed generators to charge whatever they want, and is in denial about any "harm" that may result:

"FERC said PJM's proposal met the commission's criteria for approving waivers, as doing so would remedy a 'concrete problem,' would not harm third parties and would be limited in scope."

It's really not sounding very "limited in scope," is it?

In addition, FirstEnergy ended up purchasing so much expensive power because many of its generation plants were out of service. Where does FirstEnergy's fault in that end and the consumer's responsibility for the charges begin?

Not all electric companies are passing these "polar vortex" charges on to their customers, however. But, FirstEnergy is shuckin' and jivin' like a champ on a "special website" the company has set up to serve you some koolaid, as well as in the media:

"Francis of FirstEnergy Solutions declined to say how much her company has been billed by PJM, except to describe the amount as unprecedented. She said the company is passing on only a portion of the charge to customers."

FirstEnergy also said the company has no idea how much it will have to pay.

"Ms. Francis declined to say how much in unanticipated vortex-related costs FirstEnergy Solutions must pay, saying that figure was confidential. FirstEnergy will know next month precisely how much the surcharge will be, she said."

Yes, it seems that the real cost to FirstEnergy is going to remain a deep, dark secret, not even revealed to the company's investors.

That's because:

"We thought it was necessary to pass through these costs to customers where contracts allow,” FirstEnergy spokeswoman Diane Francis said."

Necessary? FirstEnergy thought using the fine print in its contracts to stick it to customers in deregulated states was so very funny during its last earnings call.

Steve Fleishman - Wolfe
Yeah. Hi, good afternoon.

Tony Alexander - President & CEO
Hi, Steve.

Steve Fleishman - Wolfe
Hi, Tony. I guess this question might be for Leila. I think you mention the PJM ancillary cost that some of those get pass through the customers?

Leila Vespoli - EVP, Markets, and Chief Legal Officer
Yes.

Steve Fleishman - Wolfe
Is that just in certain states or how does that work? How do we know which areas get pass through or not?

Leila Vespoli - EVP, Markets, and Chief Legal Officer
It is pursuant to contract in a specific language within the contract so it is not a state by state kind of thing, Steve.

Steve Fleishman - Wolfe
Okay. So it is certain types of your customer classes?

Leila Vespoli - EVP, Markets, and Chief Legal Officer
In?

Steve Fleishman - Wolfe
In a retail business?

Leila Vespoli - EVP, Markets, and Chief Legal Officer
It is not even the same throughout particular classes.

Steve Fleishman - Wolfe
Okay.

Leila Vespoli - EVP, Markets, and Chief Legal Officer
It is as that contract language was developed for that particular customer or grouping of customer. So there is no way I can even give it to you by segment.

Steve Fleishman - Wolfe
Okay. So some of the cause when you get this data come up will be cause that you absorb but some of those would be available to essentially pass through your contracts to the customers?

Leila Vespoli - EVP, Markets, and Chief Legal Officer
Correct.

Steve Fleishman - Wolfe
And in the future, do most of your contracts have that clause, so new ones do or not older ones or vice versa?

Leila Vespoli - EVP, Markets, and Chief Legal Officer
I think it would be safe to say that we are going to be adding that language where we can in the future.

Steve Fleishman - Wolfe
Got it. Okay. Thank you. Just want to clarify that.

Leila Vespoli - EVP, Markets, and Chief Legal Officer
Okay.

So, if you don't want to get stuck with these kind of charges in your deregulated electric bill again, do like the City of Rockford and look for a new supplier ASAP.

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D.C. Circuit Court of Appeals Hears FERC Order No. 1000 Arguments

3/22/2014

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Opponents of FERC's Order No. 1000 made oral arguments before the D.C. Circuit Court of Appeals last Thursday.

Order No. 1000 requires interregional transmission planning and broad cost allocation, introduces competition to build transmission, and mandates "consideration" of state renewable energy goals to allow regional planning authorities to interpret and decide how such goals may be accomplished with long distance transmission, instead of in-state resources. And they wonder why there's been a run on repeal of state RPS laws this year?

A few oral argument summaries have popped up online that seem to agree that the Court pretty much gave the authority and ROFR arguments the hand. Reporters also agreed that opponents' cost allocation arguments fared better.

Read the RTO Insider summary.

Read an E&E summary.

Cost arguments drone on about eliminating "free ridership" whereby some electric consumers may receive benefit from an interregional transmission project but not have to pay for it.

That same argument could be used for the "free ridership" of some electric consumers who receive benefit from new transmission lines but don't have to sacrifice their land, homes, businesses, and health for the "good" of others. There are a multitude of unrecognized "costs" of transmission that aren't monetary and cannot be sufficiently compensated by one-time right of way payments. But I don't think anyone bothered to stick up for sacrificial landowners at the D.C. Circuit.

Unless the Court reins in FERC's heavy-handed transmission exuberance, the arguments will continue. This will tie the matter up in the courts forever and result in nothing of substance getting built.

Utilities and groups also contend that FERC is infringing on states’ rights because several states already regulate transmission planning. FERC countered that the order would not interfere with state authority, and if the state vetoed a project, it wouldn’t be built.

States will continue to exercise their authority over siting and permitting, denying projects that provide no local benefits. And the feds will continue trying to usurp state authority through Secs. 1221 and 1222 of the Energy Policy Act. Isn't this where we've been stuck for years now?

When are the needs of consumers going to be considered? Consumers aren't buying the specious arguments that billions of dollars of new transmission provide benefit to them. In fact, more and more consumers are taking steps to check out of the grid and invest in their own onsite generators. Only then will these ridiculous and expensive arguments end. Meanwhile, fight on fellas.

You can listen to a recording of the 3-hour oral argument here, if someone's paying you gobs of money to stay awake and pretend you care (or if they're not, you can do it anyhow if you have a 3-hour supply of tasty alcohol on hand, and a twisted sense of humor).

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Missouri Landowners Alliance Files FERC Protest and Missouri PSC Complaint Against Grain Belt Express

3/20/2014

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The Missouri Landowners Alliance has retained excellent counsel to defend its interests against the intrusion of Texas-based Grain Belt Express.

After a long career with a big utility, attorney Paul Agathen brings a wealth of experience to the Alliance's legal team. Paul has gone on the offensive with a Protest of the Grain Belt Express Application for Negotiated Rate Authority at the Federal Energy Regulatory Commission and a Formal Complaint before the Missouri Public Service Commission alleging that Grain Belt Express has violated and continues to violate the Commission's rules regarding ex parte communications.

First, let's take a look at the FERC Protest. As a merchant (self-funded) transmission project, Grain Belt Express must concoct its own rate scheme to recover its cost of building and operating its proposed transmission line from customers. GBE's rate scheme is under the jurisdiction of the FERC and must adhere to FERC's rules, including its non-discriminatory open access transmission rules. GBE's rate scheme proposes that the company be allowed to negotiate rates with willing transmission customers in a open and non-discriminatory bidding process. FERC's job is to review and approve GBE's proposed negotiation process BEFORE it occurs.

And, according to the protest, that's just the problem. Although GBE hasn't "officially" initiated its "open season" for potential customers, GBE has already started soliciting interest from its preferred customers via a "Request for Information" directed solely toward wind project developers in Kansas. Directing its solicitation to only wind developers discriminates against other forms of electric generation, such as solar or gas, that could potentially bid for capacity on GBE's transmission line. This discrimination violates FERC's open access transmission rules.

GBE has been doing an elaborate fan dance with FERC, promising to provide access to all forms of generation, while touting its project as a "wind only" transmission line and soliciting interest from wind developers.

The Alliance's Protest asks that the Commission determine that GBE's proposed solicitation of customers is unduly discriminatory and dismiss GBE's application for negotiated rates.

Without negotiated rate authority from FERC, GBE will have no way to collect its cost of service. No money, no GBE.

Moving on to the Missouri PSC Complaint, the Alliance alleges that GBE has been violating the Commission's ex parte rules. Ex parte means "one side only" and refers to communication between the decisional authority and only one of two (or more) parties in a case. It's like one person getting to have a private conversation with the judge in order to sway his opinion against the other person.

But that's not exactly the way the Alliance alleges GBE has violated this rule. The ex parte rules state:

It is improper for any person interested in a case before the commission to attempt to sway the judgment of the commission by undertaking, directly or indirectly, outside the hearing process to bring pressure or influence to bear upon the commission, its employees, or the presiding officer assigned to the proceedings.

The Complaint alleges that GBE violated this rule through its extensive public relations campaign intended to influence public opinion through statements on its websites, the gathering of boiler plate letters of support for its project, public statements and media interviews, and meetings with local government officials.

The Alliance is not objecting to GBE providing legitimate information to the public:

The Alliance is not objecting here to everything on the two Grain Belt websites.
It recognizes, for example, that it is perfectly acceptable for Grain Belt to provide nonargumentative factual descriptions of the Line and its supporting towers; to include maps of the alternative routes of the Line; to provide information for potential suppliers of
component parts for the line; and to address any other matter which is not likely to be a
contested issue at the forthcoming Commission hearings.

The Alliance is objecting to GBE's elaborate public relations campaign:

As is apparent from all of the above, Grain Belt has engaged and continues to engage in an elaborate PR campaign designed to sway public opinion on matters which it will litigate in the forthcoming Commission proceedings. Their campaign is extensive, it is expensive, and it is professionally managed in all of its various aspects. They have even incorporated Facebook and Twitter into their PR arsenal, and added links in their website to a number of video presentations.

For example, it its Application to the FERC for approvals regarding the proposed Line, Grain Belt refers to their video "that describes the need for the Project and how Grain Belt Express will bring significant economic benefit to states through much-needed transmission expansion for new wind energy projects .... " (Exh. 23, p. 8).

This description of the Grain Belt PR efforts is not intended in the pejorative sense at all. The Grain Belt publicity campaign is undoubtedly effective, and will no doubt accomplishing two of its principal goals: to sway public opinion on the Line in Grain Belt's favor, and to thereby convince members of the public to sign on to the computer-generated letters of support which Grain Belt will file with the Commission.

The letters may have no effect at all with the Commission. However, the ultimate impact of Grain Belt's efforts should not be the deciding question here. If Grain Belt has violated the Commission's ex parte rules, their conduct should not be excused by some sort of "no harm, no foul" escape clause.

We may never know how many people in Missouri were exposed to and influenced by Grain Belt's one-sided presentation on issues which they themselves will raise later at the Commission. Nor could the Alliance ever hope to present its own position to all of the people reached by Grain Belt. Grain Belt has been waging an extensive PR campaign for about four years, and will likely win that battle.

Just how Grain Belt has gone about doing so is illustrated in materials presented at a recent conference in Houston, where participants spent two days learning various techniques for "selling" a transmission project to the public.
A copy of the initial brochure for that conference is attached here as Exhibit 18.
As noted on the first page, the conference was held this past January, and was to be hosted by Grain Belt's parent company- Clean Line. As noted at page 3 of that brochure, the keynote speaker at the conference was to be the Executive Vice-President of Clean Line.

According to the brochure, this is a sample of what those involved with building and siting transmission lines were to learn in Houston:

• How best to utilize social media to "engage the public", including who you can expect to reach, and how to go about doing it. (Exh. 18, p. 4) Not surprisingly, an expert in social media from Clean Line was to be one of the two speakers on this subject.
• How to deal with people disparagingly referred to as "NIMBYs" and "BANANAs". Ironically, the audience at that session was also told that a driving force behind the emergence of community-based opposition groups has been the push to build more infrastructure to support more renewable energy. (Exh. 18, p. 4).
• In "Marketing to Mayberry" the attendees would learn, among other things, how to talk down to people in small town, rural America, by communicating with them "in a conversational tone rather than corporate tone ... " Presumably, these techniques were designed with the citizens of rural northern Missouri in mind.
• "How to frame and 'sell' infrastructure projects ... ", and how to use "effective
strategies and tactics, and share in critique of on-camera training ... "
• How to deal with the media, including: "Getting into a reporter's head"; "How to answer questions you don't want to be asked"; and how to "position" your message to the media. (Exh. 18, p. 6)
• Finally, the Executive Vice President from Clean Line was to explain "how to ensure that our stakeholders feel they are informed and part of the process". (emphasis added). Apparently, it is not important to Clean Line that stakeholders actually be informed, or actually be involved in the process, so long as they are somehow made to feel that they are.

The Complaint asks the Commission to find that GBE violated the ex parte rules, order it to revise its websites to conform to the rules, "that the letters of support included by Grain Belt with its Application for
Commission approval of the Line constitute the fruit of a poisonous website, and be therefore stricken from the record in that case," and other just and reasonable relief.

Everyone needs to read this Complaint. The uneven playing field on which transmission owners and the public who oppose them do battle has been clearly defined as unfair. This is the new normal of transmission opposition, so transmission developers may as well get used to it and turn over a new leaf to play fair.

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