Late last week, PATH filed a Motion to Dismiss the Formal Challenge and Motions to Compel Filed by Keryn Newman and Alison Haverty.

I can't comment here right now, but stay tuned if you want to see how this one turns out.  The rest of you can comment your little fingers into bloody nubs, if you so choose.

If you're unaware of what's been happening at FERC, you can catch up on the filings here.  Change the date range to previous 5 months, and type in Docket No. "ER08-386" and separately "ER09-1256."  Different things have been filed on both dockets.

I'm going to be busy this week, but nothing I can't handle.  However, there may be a dearth of news here while I do other things, so go entertain yourselves at The Coalition for Reliable Power's Blog or The Power Line.  Or you could further amuse yourselves by totaling up the typos and errors in PATH's Motion.  First one to come up with the correct total wins bragging rights as StopPATH's frustrated wanna-be English teacher (well, unless you actually ARE an English teacher)!

Even PATH doesn't take itself seriously anymore, if today's 2012 PTRR "Open Meeting" is any indication.    The meeting was a total farce and they got so busy pushing each other in front of the speeding Interested Party Express Line bus that they didn't even stick to their make-believe "agenda."  They also cut the meeting short by pretending there were no more questions and hanging up real quick.

Scared much, fellas?  I could have sworn that at the beginning of the phone call we were told that there would be some additional presentations, and the agenda had an item called "closing comments," but PATH pushed the PANIC button instead and the operator announced there were no more questions, even though there were more questions in the queue (but somebody kept canceling them).  Comedy at it's finest!

On the call were PATH counsel Randy Palmer and Becky Bruner (well, at least Randy said she was there, but we never heard her say a word -- they should have tossed her under the bus once or twice, just to get something in return for that billable hour), Milo Pokrajac, who is apparently not the one holding PATH's bag any longer, and some new accounting patsy named Dave Griffing.

It started out bad when Patience Wait asked them if the $14.7M return (profit) on the PTRR was reflective of PATH's old 14.3% ROE, or their new, lower 12.4% ROE.  Of course it's based on the old one, because they haven't filed the revised PTRR for the new one yet.  They pretended that they had no idea what the new return amount would be.

Ali Haverty presented them with the dilemma of the amazing, un-depreciating rate base whereby PATH's "suspension" keeps the amount in the rate base stagnant and as a result PATH does nothing but collect a profit year after year.  *crickets*  I think this is where Dave and Milo threw Randy under the bus for a change.  Randy went blathering on about a whole bunch of nothing but basically alluding to the fact that abandonment of the PATH project is just around the corner.  No real shocker, right?  We all saw that coming.

Robin Huyett Thomas quizzed them about CWIP balances bouncing around like a yo-yo in 2012.  They keep trying to blame it on forfeited option payments that are being expensed, but really, they didn't make much sense.  Just another question they couldn't answer.

Continuing the theme, Steve Smith tried to get some detail out of them regarding the amount of depreciation showing in the rate template under "Overhead conductors and devices" (for a line that's not been constructed?).  Milo told him it was just a small amount that didn't really matter, however Steve countered that $8,500 bucks isn't chump change to him.

Debbie Royalty quizzed them about PATH's A&G expenses in 2012.  They're showing $2.4 million in expenses for a project that's sitting on a shelf.  Randy said that the $2.4M consisted of, "this call, the ongoing financial review process and 'those types of things.'"  Considering that Chorus Call cut the meeting off after the allotted, obligatory hour, maybe someone should ask Randy just how much they're paying him to put on his game face and pretend that PATH is following the Formula Rate Protocols, or that they give a crap at all anymore, $2,399,910.05?

In order to get any real answers to their questions, they were instructed to submit discovery questions (pssst... you don't get real answers that way either, but it's good for a giggle).

PATH also verified again that the piddling amount of land they have already purchased, some $30M of the rate base, would have NEVER depreciated.  That $30M only represents a handful of the thousands of properties PATH would have had to pay for, one way or another, if their project had been built.  The un-depreciating land just sits in the rate base, year after year, earning (now) 12.4% return (profit) for the PATH Companies.  This means you would have been stuck paying for PATH... for eternity.  So, thanks, victorious PATH opponents, for kicking this hole in everyone's wallet to the curb. 

Now, can't we just get to the flippin' abandonment already and quit torturing each other?  How about it, PATH?

Pictures from the PATH Breakfast Meeting Party -- more coming later, we're currently experiencing an "abeyance" of technical cohesion:

U.S. Energy Secretary Steven Chu declined today to pass DOE's authority to designate National Interest Electric Transmission Corridors to the Federal Energy Regulatory Commission.  A scheme for FERC to take over corridor designation was proposed by energy company lobbyists earlier this year and recently championed by FERC, the industry and certain "environmental" groups whose misguided enthusiasm for renewable energy turned them into the perfect patsies for championing new long distance transmission lines. Individual states, who have always had authority over transmission lines within their borders, along with a member of Congress and other environmental organizations who live in the real world, vehemently opposed the transfer of authority.

Don't kid yourself by thinking the battle is over.  DOE's statement says they "will work more closely with the FERC in reviewing proposed electric transmission projects under section 216 of the Federal Power Act (FPA), as an alternative to delegating additional authority to FERC."

So, in other words, instead of officially giving FERC the authority, DOE is just going to let FERC unofficially run the show.  FERC's plans included allowing transmission developers to designate corridors at will when proposing a new transmission project.  DOE's plan includes this as well.  In addition, DOE says they will:

• Begin immediately to identify targeted areas of congestion based on the evaluation of existing information and on comments submitted by stakeholders;
  
• Identify narrower areas of congestion than the broad areas previously studied; and
• Solicit statements of interest from transmission developers while considering what National Corridors to designate.

Just because a transmission developer wants to build a project does not mean "congestion" exists.  As well, transmission is probably the most expensive, most environmentally unfriendly, and least "reliable" solution to "congestion." 

At the same time, you've got FERC considering an update of their transmission incentives through a Notice of Inquiry.  Over a hundred sets of comments were submitted in that docket (RM11-26-000) and present a clear picture of what's driving development of new transmission development.  Money.  Transmission projects, whether they are "needed" or not, provide a tidy income for energy corporations and investors.  Since transmission projects are funded in their totality by electric consumers, the building of unnecessary transmission infrastructure has the potential to send electric rates skyrocketing.

Keep watching this one to see how much of FERC's original plan to anoint itself with federal transmission siting and permitting authority ends up being carried out in DOE's name.

This charlie foxtrot has reached critical mass.  Why are we still operating under 6 year old energy policy?  Six years ago, FERC, regional grid operator PJM, politicians and the energy industry thought expanded uses for coal fired resources was a good idea.  Energy and how we use it has come a long way since then.  The only smart solution is for Congress to develop new energy policy instead of observing and complaining while the energy industry, their lobbyists and the government political appointees manipulate bad policy to continue on this transmission highway to hell at electric consumer expense.

Radix malorum est cupiditas.

It's been a year in coming, but PATH's ROE Settlement was finally made public on Friday.  No more 14.3% ROE!

Here's a summary of what's in the Settlement (warning, gigantic file).

1. PATH's base ROE will change from 12.3% to 10.4%, effective January 1, 2011.  That was the only part of the ROE that was subject to change as per FERC order.  The 200 incentive points they were awarded back in 2008 (50 pts. for membership in PJM and 150 pts. for the "risks and challenges" of the project) will not change.  When the existing 200 pt. incentive ROE adders are added to the new base ROE, this brings PATH's ROE down to 12.4%.
2. PATH will pay the PJM ratepayers a lump sum refund of $2,741,000.55, which includes interest, on the difference between the 14.3% that has been collected since March 2008 and the new 12.4% ROE that was effective January 1, 2011.  This refund will be made in the next billing cycle after approval of the settlement by FERC.
3. Within 7 days of approval by FERC, PATH will file a Re-Revised 2011 Projected Transmission Revenue Requirement, which will include a refund of the difference between the 14.3% ROE they have collected thus far this year and the new 12.4% ROE.
4. Within 14 days of approval by FERC, PATH will file a Revised 2012 Projected Transmission Revenue Requirement reflecting the new, lower ROE.
5. PATH will also file a revision to their 2010 Actual Transmission Revenue Requirement within 14 days of approval.  The settlement states that this will change the refund of over recovered revenue to ratepayers from $4,899,780.42 to $4,597,741.90.  I'm not sure why PATH is now keeping $300K of the refund they owed to us, but the filing should tell us eventually.
6. None of the settling parties can request a change to PATH's base ROE or incentive adders for 4 years.  However, in the event PATH is cancelled, this will not affect the rights of any party to argue what ROE (if any) should be applied to abandoned plant costs.

PATH got taken to the cleaners in this settlement!  Hats off to the other power companies who engineered this settlement while "our" state consumer advocates sat on their hands instead of protecting our interests.  PATH should have been paying attention to the enemies they were making when they insisted on keeping all the gold in their own pot way back when.

PATH's original award of incentives was completely ridiculous, and everyone's been aware of that for over three years.  PATH's 14.3% ROE was way outside of any other project's ROE.  So, let's see how PATH's ROE stacks up now when compared with its three sister Project Mountaineer projects, who were also awarded incentives in 2007 & 2008:

• Susquehanna-Roseland            12.93%
• MAPP                                      12.8%
• TrAIL                                       12.7%
• PATH                                       12.4%

How does it feel to go from the top of the heap to the bottom of the pile, PATH?

Look at it this way -- PATH's ROE fell by 1.9%, which nearly equals their 2% incentive adders and pretty much negates them in their entirety.  PATH isn't as profitable as it once was, so why doesn't AEP & FirstEnergy just take their ball and go home?   We all know this project is never going to happen.  However, until the project is officially "cancelled," they will continue to collect this ROE on the amount they have invested in the project.  The difference between ROEs is going to lower their yearly return (profit) by about a million bucks.

Here's how it works (which I was trying to explain in vain in Bill's comments over the weekend):

The amount of money PATH invests in project assets will be returned to them through depreciation over the life of the transmission line.  PATH has invested $138,773,015 in the project through the end of 2012.  In exchange for investing their capital in the transmission project, PATH will earn a return (profit or interest) on their money yearly.  The amount they earn each year is determined in their Formula Rate template and based on the incentives they were granted back in 2008.  PATH was granted a hypothetical capital structure of 50% equity and 50% debt.  This means that until the project is actually completed, no one knows how much of the cost will be equity (PATH's money) and how much they will have to borrow to finance it (debt).  FERC has set the percentages at 50-50.  This means every year PATH will now earn 12.4% on the hypothetical equity half of the amount in the rate base, and a much lower percentage on the half that is hypothetically debt, or borrowed money.  The debt percentages are 6.64% for the PATH-WV (AEP) half of the project and 6.76% for the PATH-Allegheny (FE) half of the project.  As shown on this redlined template sheet from PATH's settlement, the two different percentages are averaged and the resulting percentage is applied to the rate base and becomes PATH's yearly return, or profit, which is recovered along with all other yearly expenses (such as marketing, administrative costs, a share of PATH's parent company expenses, a portion of their start-up costs incurred prior to incentives being granted in 2008, taxes and depreciation) every year.  As a result of the settlement, PATH's yearly profit margin has dropped from 10.47% on PATH-WV's half and 10.53% on PATH-Allegheny's half to 9.52% for PATH-WV and 9.58% for PATH-Allegheny.

If you actually look at the new templates submitted as an attachment to the settlement, you will notice that PATH neglected to change these numbers in the template, however, mistakes like that seem to be par for the course for PATH and its team of crack accountants.

What some of us are wondering now is if the filing of another revised PTRR for 2011 and a revised ATRR for 2010 will extend the discovery period currently underway on previous filings.  Since PATH's Formula Rate Implementation Protocols sets out a 150 day discovery period for interested parties to request information, and another 30 days to file a Challenge, a whole bunch of new filings near or after the closing of discovery on the original filings leaves no time for interested parties to avail themselves of the procedures outlined in the protocols.  As we've found out over the past couple of years, when the protocols are put into practice they are quite inadequate as written, aren't they?  No one ever envisioned the sticky situations PATH has gotten itself into in the past couple of years, apparently.  Planning for the unexpected should have been a "best practice" when planning an unneeded transmission project.

Any questions?  Or is it still about as clear as mud?

The natives are getting restless!  In addition to Maryland and New Jersey going after PJM's jugular, the Attorneys General, Offices of Consumer Counsel, and Public Utilities Commissions of 6 New England states filed a formal complaint with FERC last Friday.

In their complaint, they allege that the Base ROE FERC set for all New England ISO transmission owners in 2007 is much too high.  The 11.14% ROE was based on a very different 2004 - 2006 pre-recession market.  The complainants provide expert testimony whereby a more reasonable 9.2% is arrived at through an updated DCF analysis.  This Base ROE is the rate of return (or interest) transmission owners will earn on their investment in new transmission projects.  The Base ROE is exclusive of any transmission incentive adders, which were dealt with separately in a joint filing in the transmission NOI.  It wasn't lost on me that the same law firm, Spiegel McDiarmid, seems to be behind both filings.  As I mentioned last month when all the NOI comments began flooding in, pay particular attention to the comments Spiegel McDiarmid wrote for various clients.  They really get it.

Therefore, ratepayers in New England are being overcharged.  How much?

"The Complainants calculate that, assuming a forecasted 2011 investment base of $6.309 billion, New England electric consumers would be required to overcompensate New England Transmission Owners by $113 million annually under the current 11.14 percent Base ROE, compared to rates using the recommended ROE of 9.2 percent.  With New England’s Pool Transmission Facility investment base expected to increase to approximately $11.474 billion by 2015, that overpayment would increase to $206 million annually."

Here's a copy of the complaint.  For the sake of file size efficiency, I have stripped off the exhibits.  If your idea of fun is reading the supporting DCF analysis, get yourself on over to FERC's e-library and search for Docket EL11-66 and download the whole complaint.

If you've read and understand FERC's PATH decisions, you'll appreciate all the snide little references to PATH in the complaint, which were used to bolster the case.  PATH will live in on infamy for a long, long, long time in FERC's legal world.

While one could argue that this complaint is collateral damage resulting from FERC's Transmission Incentives NOI, it also represents another symptom of a bigger problem.  FERC's favored RTO model and its attendant bias toward the interests of a particular RTO's most powerful members, to the detriment of smaller industry players and consumers, is coming under increasing scrutiny.  Yet to be factored into the larger argument is the way FERC is stomping on state authority with its end run around Congress in an attempt to claim federal transmission siting authority.  Retaliatory complaints and other issues related to FERC's power grab haven't even begun yet.

This complaint is another concrete example that the transmission party is over for FERC, the RTOs and the industry players who have been making a bundle of cash at ratepayer expense.  There ARE cheaper, easier and smarter non-transmission alternatives that will ultimately be deployed, and that's where the energy policy train is now heading.  All aboard!!!

In 2010, the New Jersey Board of Public Utilities approved PSE&G's Susquehanna Roseland 500kV transmission project.  That approval is currently being appealed.

Susquehanna Roseland is one of four transmission lines dreamed up as part of PJM Interconnection's 2005 Project Mountaineer, a scheme to transport 5000 MW of coal-fired electric generation from the Ohio Valley to the Eastern Seaboard.  This plan was a money-making conspiracy between coal companies, coal-dependent generators such as Allegheny Energy (now FirstEnergy) and American Electric Power, PJM Interconnection, and West Virginia Governor (now Senator) Joe Manchin, along with other politicians, and FERC officials.

The New Jersey BPU and Attorney General filed comments last week on FERC's Promoting Transmission Investment Through Pricing Reform.  In their comments, they finally admit the truth, which opponents of Susquehanna Roseland and other Project Mountaineer transmission lines have been contending from the beginning:

"The NJ BPU, however, is concerned that while
new transmission lines delivering mostly coal-powered electricity from older plants may reduce
the delivered cost of power, they do so at the cost of increased air emissions from these older,
less efficient plants."

And now New Jersey wants to get tough:

"Coal plants produce a significant portion of the greenhouse gas emissions that impact New Jersey. While coal plants have historically provided reliable electrical service and have balanced the technology mix of generation resources in New Jersey, coal is a major source of CO2 emissions and, therefore, New Jersey will no longer accept dirty coal as a new source of power for the State."

The NJ BPU finally sees the light:

"The NJBPU submits that building clean generation can eliminate or lessen the need for new transmission lines and upgrades, and therefore, on March 29, 2011, the Board awarded contracts under its Long Term Capacity Agreement Pilot Program ("LCAPP") to three CC  generators."

However, the coal-dependent generators, PJM and FERC are fighting them all the way.  This is because a self-reliant New Jersey power market cuts into the profit margins of FirstEnergy and American Electric Power.

New Jersey finally realizes that its captivity to the industry-favoring decisions of FERC-endorsed PJM are what keeps electricity prices artificially high for their consumers.  PJM is a transmission planner, therefore all "problems" have transmission solutions, even when cheaper, smarter solutions are readily at hand.

"The NJ BPU notes that federal incentives to encourage
the development and construction of new transmission facilities to address reliability issues that utilize state-of-the art technologies is encouraged by and acceptable to the Commission, but, efforts to encourage the development of new state-of-the-art, efficient, environmentally friendly gas-fired generation to address reliability needs through incentives has been thwarted and impeded by the Commission by its recent ruling on the Minimum Offer Pricing Rule ("MOPR"),which specifically discriminates against this technology.

"There are, however, other ways besides simply building new transmission lines to address these potential reliability issues and the related congestion costs created by load pockets."

Looks like the state of New Jersey has finally had enough of the PJM cartel's heavy-handed, self-interested control of their energy future.  Will Susquehanna Roseland's approval be overturned on appeal?  Denial of a new coal-fired electric transmission line into New Jersey in favor of new, in-state, gas-fired generation solutions would be just desserts for FE, AEP, PJM and FERC.  It would also put New Jersey back in the driver's seat in setting their own smart energy policy, lower electricity prices for New Jersey consumers and give a nod toward a cleaner environment.

American Electric Power, FirstEnergy, PJM Interconnection and FERC ought to be embarrassed by the boldness of their Project Mountaineer conspiracy, which is on record as a FERC technical conference held on May 13, 2005 in Charleston, West Virginia.

Maybe other states will wake up and join New Jersey in their insurrection against the FERC-endorsed stranglehold of PJM on their energy markets.  FERC's recent federal transmission siting power grab certainly isn't making them any friends at the state level.

According to this article in Platts, Congressman Bingaman has sent a letter to the Dept. of Energy stating that Congress specifically separated authority by giving NIETC designation to DOE and backstop permitting authority to FERC.  Wellinghoff (and industry lobbyist Kelliher) are WRONG when they posit that having all authority with one agency was the intent of Congress.

Bingaman strongly cautions FERC against their recent scheme to have DOE designate their authority to FERC for siting NIETC corridors.  FERC's plan even takes it one step further and intends to let transmission owners designate NIETCs.  The end result will be the industry essentially "regulating" itself and calling all the shots about siting and paying for new transmission lines.  FERC is just a little too close to the industry it supposedly regulates.  This costs consumers higher electric rates resulting from the financial goodies FERC keeps handing to its favored industry pets.

Bingaman says:

"The Commission papers appear to be based upon, or at least inspired by, a third paper prepared by former FERC Chairman Joseph Kelliher.  In his paper, Mr. Kelliher asserts that section 216 “was not well conceived or well drafted,” that it “unnecessarily bifurcated the federal role between” the Department and the Commission, and that this “bifurcation of the federal role between two agencies was a mistake.”  Congress’s legislative mistake, he suggests, can be fixed by administrative “re-implementation” of the law."

FERC's mission is to ensure just and reasonable utility rates in the public interest.  Since when is taking direction from industry lobbyists like Kelliher in the public interest?

Although Bingaman is a big fan of federal transmission siting authority and a bunch of other things that aren't good for the public, he at least has the decency to tell FERC and DOE that doing this would be a BIG mistake.

"Rewriting section 216 under the guise of reinterpreting it, as the Commission proposes, is extremely ill-advised.  It would do serious harm to our efforts to strengthen the federal siting role through legislation."

So, now we have a Congressman who worked on Sec. 216, numerous states, the National Association of Regulatory Commissioners, Piedmont Environmental Council and the public telling Wellinghoff to scrap this stupid idea and save face.  However, the industry is whining in his other ear about how they "need" new transmission to make a bundle of money at the expense of the public.  Give up, FERC, you've been had.

As so often happens in the political world, your "friends" are also your enemies.  This paragraph of Bingaman's letter should give everyone the willies:

"As one of the principal authors of section 216, I am writing to express my serious concerns with the Commission’s proposal.  I do so as one who has long supported giving the Commission greater authority to site electric transmission facilities.  I agree that section 216 is flawed and has proved ineffective.  I wish Congress had gone further than it did when it enacted section 216, and I have authored legislation, which has yet to be enacted, to strengthen section 216 and correct many of its shortcomings."

I've just spent way too much time I didn't have to waste trying to find any current legislation, but I continually came up empty handed.  There's plenty of old, failed attempts by Bingaman on record, but nothing recent.  If anyone can find this referenced legislation "which has yet to be enacted," send it over.

Bill also posted this thoughts about a New York Times article that was published yesterday.  This article is the first time that information about FERC's power grab from the states has been made available to the general public.  As Bill and the article point out, "...the new strategy was spearheaded by NextEra Energy, North America's largest wind and solar power developer. NextEra Executive Vice President Joseph Kelliher, a former FERC chairman, is leading the campaign for the new strategy."

When policy change which results from FERC conspiracy with industry lobbyists is hidden from other "stakeholders" and only revealed publicly two days before the deadline to submit comments, one wonders what they're trying to hide.

According to comments filed by NARUC (National Association of Regulatory Utility Commissioners), they weren't notified of the proposal until just before a meeting in mid-August.

"Given that our members remain the primary transmission siting authorities, we are disappointed that we were not privy to the details or even informal conversations about this proposal prior to the above-referenced meeting, especially since the proposal has been under discussion since June and was vetted with industry stakeholders long before it was even revealed to us."

Apparently FERC and the industry have been discussing the best way to ram this through since June, but it was only recently that FERC began a series of conference calls with other "stakeholders" such as states and environmental groups.  And, of course, they NEVER consulted the most important "stakeholder" of all -- you!  As an electric consumer, property owner and citizen, YOU will be the ones who pay for new transmission, sacrifice your property and well-being to new transmission line rights-of-way, and must live with the consequences of FERC and industry's heavy-handed determination of where renewable energy will develop.  This will ensure that development of renewables will only occur at utility scale and be concentrated in a handful of Midwestern States.  Instead of each individual state getting a piece of the economic/jobs boom expected to result from renewable resources and developing their own local renewables to meet their own in-state goals, they will be forced to buy high-priced renewables from other states.  Still other states will be forced to live with new transmission lines crossing their state which are intended to deliver renewables to their neighboring states, without receiving ANY benefit from the transmission line project.  This should concern another group of "stakeholders" who were not consulted:  your local and state elected officials.  Give them a call and make sure they know!

The root of this problem is a couple of greedy energy corporations and a few Midwestern states who are trying to corner the renewable energy markets of the entire U.S. before other, perhaps more viable, resources have a chance to fully develop.  Earlier this year, FERC granted incentives to a company to develop an offshore backbone intended to support development of wind farms along the Atlantic coast.  These offshore wind farms are ideally sited to provide renewables to the huge load centers along the coast, with a minimum of new transmission capacity required.  Earlier reports said that no new land based transmission will be required.  This would make offshore wind a cheaper resource for the East Coast.

Take a look at these maps from a recent PJM planning document.  They show two different scenarios regarding integration of different amounts of offshore wind into the transmission system.  The first slide shows improvements they think will be needed if they base planning on 20GW of offshore wind.  Those fat, orange lines on the coast are new 500kV transmission lines.  For some inexplicable reason, it looks like they intend to bring back the MAPP project to transport wind power from the coast to the Washington, DC area.  MAPP's original purpose was to transport power produced in Virginia and Maryland to New Jersey.  PJM is desperately trying to find a "need" for MAPP.  Since MAPP was not designed to distribute offshore wind power, it's probably not the most efficient or cost-effective way to do so.  PJM is just throwing Pepco a bone here.  If we're going to invest $5B in an offshore backbone, PJM needs to scrap all old projects and go back to the drawing board and create the most efficient and cost effective method of injecting this new generation into the existing grid.  Look at the map.  Does that even make sense?  Maryland and Delaware don't need any of that transmission.  The second slide shows what happens when the amount of integrated offshore wind drops to 4GW.  All the new transmission lines are in the western PJM region, with no new transmission lines needed on the coast.  This is because all the wind will be coming from the west, instead of the east.  This is what FERC and their industry pets want to see happen.  Most of those 765kV lines aren't even in PJM territory (indicated by the gray shaded areas).  So, who do you suppose will be able to lobby and influence PJM to embrace their particular version of where PJM renewables will come from?  Remember, it's not about planning or regulation or what's good for the grid, it's about who has the most influential lobbyists.

Now that FERC's scheme with the industry has been publicly exposed, the battle lines are being drawn.  On the DOE's website dedicated to this proposal, which was just recently constructed, you can read comments from industry (for the proposal) and from state regulators (against the proposal).  In addition, there are some comments from a couple of environmental groups who are inexplicably in favor of the proposal.  In their quest for renewable power at any cost, they are being duped into going along with a plan that hurts consumers and citizens and subverts states' rights.

Since you weren't given a chance to express your views, the states and organizations like NARUC are fighting for your interests.

"Siting is inherently a local issue that impacts local environments, local landowners, local businesses and local communities. The best decisions come after complete due process where every interested neighbor, farmer and businessperson has an opportunity to be heard. People who know the landscape must be able to participate in the transmission siting processes to minimize negative environmental and economic impacts. Federal siting authority makes local participation less accessible, more expensive, and therefore less likely. State siting processes that enable local engagement may take time (although often less time than the combined pre-filing and filing processes at FERC), but they do not conflict with regional or national interests. On the contrary, local processes are essential to accomplish those interests, and the federal government should not create a short cut around local engagement."

NARUC wants to know what the "problem" is:

"...we would appreciate a specific articulation of the problem the delegation intends to solve and how the delegation will solve the problem identified."

This "if it ain't broke, don't fix it" theme is prevalent in all the comments from state regulators as well.  The same question was repeatedly asked of Chairman Wellinghoff during one of those "stakeholder" calls this week.  He never answered it.  I guess nothing's broke afterall.

This is setting up to be an epic battle involving states, Congress and the courts, and it's root cause is industry lobbying influence on an agency that is supposed to regulate them.  FERC is on the road to disaster and is going to end up strangling "the precious" that it's sticking its neck out to protect -- new transmission.  NARUC sums it up well:

"To the extent that this proposal is motivated by a desire to reduce barriers to transmission, it fails. It relies on a tortured reading of the statute that would cause uncertainty, litigation, damage to State and federal relations, and delays in transmission development."

FERC is attempting to enable the building of billions of dollars worth of new high voltage transmission lines to transport utility scale renewables from the Midwest to both coasts in order to fulfill individual state renewable portfolio standard goals.  They are doing this through a regulatory framework they simply don't have the authority to construct.  Two years ago, Congress said "no" to their ideas for federal transmission planning, cost allocation and permitting.  Now FERC is sneaking in the back door and creating new regulatory processes that they hope will enable their end goal.  FERC Order No. 1000 set up the planning and cost allocation, and now FERC wants to take over DOE's NIETC designation authority in order to make new use of the "backstop authority" FERC was granted in concert with DOE's designation of corridors.  FERC envisions its desired NIETC designation and backstop authority overruling state denial of a transmission line project and utilizing the Commerce Clause to overturn Piedmont Environmental Council vs. FERC.  While this power grab is a bad idea because it usurps state authority to site transmission lines, it's also a bad idea from an economic standpoint.

The idea of transporting renewable energy hundreds of miles is uneconomic.  It also makes decisions for individual states about where the renewable energy that meets their state goals is produced.  When states set their renewable portfolio goals, the idea was to foster their own economic growth with in-state renewable energy projects providing jobs and economic growth within their own borders.  Now FERC wants to decide for them how their RPS goals will be met with renewable resources from other states, and force them to pay for the privilege.  FERC wants to pick winners and losers in the renewable energy business and thereby decide where renewable energy economic development will occur.

But, what if states insist on sticking with their original plans to develop renewable resources within their own borders to meet their own goals?  That's what's happening in California, much to the chagrin of Nevada, who thought they were going to make a bundle exporting renewable energy to California to meet its RPS goals.  In fact, California is looking at a potential surplus themselves and wants to export excess renewables to other states.  This great Midwestern transmission building renaissance FERC is envisioning enabling has no market!

While FERC proceeds merrily along with their enabling of new transmission lines, they fail to objectively consider the costs of this new infrastructure, which is going to be enormous (hundreds of billions of dollars).  In Texas, a huge grid build out to transport renewable energy from wind has far exceeded its original estimated cost and maybe isn't so economical after all.  Electric consumers are going to be left holding the bag on hundreds of billions of dollars of debt for a transmission line build out from which they'll never derive any benefit.

The states need to give FERC a wake-up call before this disaster gets underway and the debt starts piling up.

The Coalition for Reliable Power filed their comments on FERC's Promoting Transmission Investment Through Pricing Reform Notice of Inquiry on Friday.

Click here to read the Coalition's comments.  These comments center on how FERC can utilize existing state transmission project approval processes to assist them in evaluating projects when granting incentives.  It's too bad FERC is considering usurping state authority and making transmission project siting a federal process because they could make great use of the state processes already in place, which are the result of many years of experience in evaluating and siting transmission projects.