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Transource Shoots Itself In The Foot At Hearing

2/24/2019

Maybe it was just the thrill of getting a last minute piece of evidence admitted into the record that made Transource do it?

Citizens to Stop Transource reports LATE-NIGHT EVIDENCE SUBMISSION PUSHES AN ADDITIONAL $200M IN COST ON PENNSYLVANIANS. At hearing on Friday, Transource presented a brand new piece of evidence and then attempted to shoehorn it into the record. It's a pretty cheap trick. Evidence must be examined by all parties over a period of time that allows for discovery and consultation with experts. The impetus for this last minute evidence appears to be a recent FERC order that removes potential new generation from the market efficiency evaluation. Because PJM's new generation queue is chock full of possible new generators, and the vast majority of generators proposed never actually get built, FERC felt it was best to exclude these generators from market efficiency evaluations. And because exclusion of these proposed generators increases the supposed "benefit" to electric ratepayers in Washington, DC, and increases the IEC's cost-benefit ratio, Transource thought it was a good idea to get this info. into the record.

Where did you think you were on Friday, Transource? Did you think that your limo had dropped you off in Washington, DC?

I can see the confusion though, and I am completely sympathetic. I understand that utilities routinely arrive at regulatory hearings in black, chauffeured vehicles that also double as funeral conveyances, but if you were in DC you'd probably have been riding in a series of black Lincoln Town Cars. Pay attention, Transource! You were in Pennsylvania on Friday!

As Citizens shares, Transource's new exhibit increased electric rates for Pennsylvanians another $200M! (In order to translate the exhibit to match increased costs to the actual location of PJM "zones," you'll need this map also).

The new figures raise the projected electrical rate increase in Pennsylvania rates from $350M to over $500M (NPV over 15 years).

The new simulation projects $982M in electrical cost reductions for the DC market, but $969M in increases elsewhere, including over $514M in electric rate cost increases in Pennsylvania alone.

This also means that the actual amount of "benefit" to the PJM region as a whole (when both increases and decreases are averaged out) is just $12.5M. For a project that is going to cost ratepayers hundreds of millions! This is the stupidest thing ever!

If all benefits and costs were to be included, the total benefit of the project would be negative $439M NPV over the next 15 years.

That's a negative number, which means that instead of receiving a financial benefit, we're all going to be paying more! This is market efficiency?

At any rate, there Transource was in Pennsylvania, asking Pennsylvanians to take a look at it's sturdy new cost benefit ratio number! Look! It provides over $900M in benefits! Except a look at the worksheet clearly shows that only those zones that showed a benefit (cost decrease) were included in the calculation. For those zones that showed an increase in electric costs, Transource disregarded them and did not include in their "benefit" numbers.

Is it because Transource believes that the Pennsylvania PUC doesn't care about increased costs to Pennsylvanians and instead focuses on benefits for a handful of the most wealthy counties in the U.S. (not in Pennsylvania, BTW)?

Citizens to Stop Transource VP Barron Shaw stated: “Transource doubled-down on their bet that Pennsylvania would approve a project that effectively drains low-priced electricity from Pennsylvania in order to subsidize the wealthiest counties in the nation. This project was bad before, and it is even worse now. The PUC would be nuts to approve this project.”

Really stupid, Transource. Really stupid.

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American Electric Power Destroys Farmer's Land While He Attends Hearing To Save It

2/22/2019

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How low will you go, AEP? While farmers opposing its unneeded, uneconomic Transource transmission line were attending the first day of the Pennsylvania PUC administrative hearings to decide whether or not to permit the project, AEP sent its out-of-state contractors in for a joyride across their land. And this is the destruction they came home to yesterday...

And Transource agents lied, flat out lied, to the landowner and told him they would be out on a different day. This is no coincidence. Transource did its trespassing and destruction with full knowledge that the landowner would be elsewhere, trying to protect his property from exactly this.

How in the world can anyone (especially regulators) believe all this company's promises about taking care of the land it disturbs and paying for damages when this is what happens when simple core drilling to examine tower sites is done?

This is the reason a utility should never be permitted to trespass on private property before its project has been approved by regulators and it has a permit in hand. The destruction and safety issues will continue and get much worse. And for what? So ratepayers in Washington, DC can save 20 cents on their electric bill? This project will never be approved. American Electric Power lies to landowners and wantonly destroys their property. This isn't a company you'd want as a tenant on your land in perpetuity.

And one more thing... here's the landowners showing up at the PA PUC hearing yesterday in a rented school bus that they paid for.

And here's Transource, its high-priced lawyers, and AEP corporate stuffed suits arriving at the same hearing like movie stars in a Mercedes limo. I'm surprised there wasn't a red carpet, although maybe the driver just hadn't unfurled it yet. Who paid for that? I did. You did. Struggling electric consumers in numerous states paid for these clowns to ride in style.

This travesty simply has to end. We can't afford it.

Shame on you, American Electric Power!

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PJM's Got Nothing

2/12/2019

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In this last blog in the Transource Pennsylvania Surrebuttal Testimony series, let's take a look at the testimony filed by the three witnesses for the state Office of the Consumer Advocate.

The testimony of Scott Rubin was pretty quick. It sure looks like PJM's got nothing in the way of facts that challenges Mr. Rubin's testimony about the increase in costs to Pennsylvanians that would come with a Transource IEC project. What PJM's witness does is try to confuse allocation of project costs with economic benefit. It's all just smoke and mirrors and Rubin creates a great example demonstrating that alleviating "congestion" causes increased costs for customers on the unconstrained side of the congestion.

I agree with Mr. Herling that if a project can be devised to cost-effectively eliminate the transmission constraint, the entire cost of that project should be borne by customers in Town B. As a matter of cost allocation, that is the fairest way to allocate the cost.

Where PJM and Transource are incorrect, however, is in ignoring the increase in costs in unconstrained areas when determining the benefits of a project. By using only the decrease in costs on the constrained side of the congestion point to determine the benefits of a project, PJM and Transource greatly inflate the benefits of the project, making an uneconomical project look economical.

There are no "special people" who deserve to have their rates lowered by raising them elsewhere, but that seems to be what Mr. Herling believes. By looking only at cost decreases in the Washington, DC-metro area, and ignoring cost increases to Pennsylvania and other zones, PJM picks winners and losers in the electric rates game. Cost increases should balance out cost decreases when determining "benefit" to the whole region PJM serves.

And speaking of the whole region, Mr. Rubin confirms Barron Shaw's testimony that if the IEC were a regional project, it would not come anywhere near meeting PJM's cost-benefit threshold of 1.25:1.

Mr. Rubin also corrects Mr. Herling's $866.2M estimated savings number, which it appears Mr. Herling plucked from thin air.

The most recent information provided by Transource shows that using PJM’s incorrect assessment of benefits (that is, looking solely at zones that would have reduced power costs) results in reduced congestion costs with a net present value of $707.29 million over 15 years. Moreover, as I explained in my direct testimony and as that same schedule shows, the total benefit to PJM (the sum of zones with reduced power costs and those with increased power costs) is only $17.05 million over 15 years.

And Mr. Horger's number is even worse.

In other words, a project with a 15-year cost of almost $500 million would produce just $260 million of system-wide production cost savings over that same time period. This is a further indication that the Project is not economical and should not be constructed.

Mr. Horger should have quit while he was ahead.

Under PJM’s methodology for higher-voltage market-efficiency projects, system level production cost savings would receive a 50% weighting in determining the project’s benefits. The other 50% would be made up of savings in the benefiting zones. If that methodology were used for this project, it would result in the Project’s 15-year discounted “benefits” being calculated to be: (50% x $260.13 million) + (50% x $707.29 million) = $483.71 million. This is less than the Project’s 15-year discounted cost of $498 million, meaning that the Project would fail to provide a benefit-cost ratio of 1.0, let alone PJM’s required ratio of 1.25 or higher. Thus, if system-level production cost savings were considered, as Mr. Horger posits, PJM’s own methodology would result in the project failing the benefit-cost test.

Are the judges supposed to be impressed by PJM's magic math? Or will they instead be swayed by simple, logical explanations they can follow?

And then there's Mr. Cawley, who opines that Pennsylvanians are not "entitled" to benefit from transmission congestion and that their increased costs should be ignored. He even goes so far as to call notice of increased costs "self-interested parochialism."

As if the decreased costs for Washington, DC at the expense of Pennsylvania ratepayers isn't "self-interested parochialism" in its own right?

And this is testimony in the Pennsylvania PUC proceeding. End of story.

OCA Witness Geoffrey Crandall seems to have the same problem as other witnesses where PJM "misunderstood" and misstated his testimony, and then attempted to respond to things Mr. Crandall never said. Does this trick never get old with PJM (or maybe it's AEP, the source of all PJM's testimony)? Fact: PJM never considered non-transmission alternatives to the IEC, although they exist in plenitude right in the back yards of the ratepayers experiencing the congestion costs.

And then we get to OCA witness Peter Lanzalotta, who also seems to have been victim to PJM's "misunderstanding" game.

Mr. Weber appears to state that my testimony recommends that the Eastern portion of the Project should be replaced either i) by new lines in existing transmission ROWs or ii) by additional circuits on lines already owned by PPL. The first part of this contention is completely incorrect. My direct testimony addresses the use of additional circuits on lines already owned by PPL. It does not address the installation of new transmission lines on new towers along existing ROW. My direct testimony points out that PJM did not evaluate the use of additional circuit positions already available on transmission towers owned by PPL. I do not develop an alternative to the facilities in the eastern portion of Project 9A. I only present the recommendation that use of additional circuits on transmission towers already owned by PPL be evaluated as part of an alternative to the proposed facilities in the eastern portion of Project 9A.

And PJM tries to defend its broken competitive planning process by sharing that it doesn't keep an inventory of existing circuits with room to add new, and besides it can only select an option from those that were submitted in its project window. Poor, poor PJM, trapped and prevented from doing logical, cost effective planning. *sniff, sniffle, wahhh*

PJM is so busted... PPL submitted testimony with multiple options for using existing lines. Maybe it's time for PJM to pull its head out of the sand?

After reading all this testimony, I can only conclude that PJM has nothing with which to prop up the Independence Energy Connection in the face of the simple, logical testimony of its opponents. Trying to muddy the waters and confuse the judges just isn't working. I have every confidence in the PA OCA and the Stop Transource folks to continue their excellent work and prevail at the evidentiary hearings beginning next week.

The IEC has been nothing but a huge waste of time and money. Let's stop the bleeding.

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Unapproved Transource Invades Private Property

2/11/2019

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The Transource Independence Energy Connection is still in the regulatory process and has not been approved by Pennsylvania, nor Maryland. In fact, Transource is barely limping along at state regulatory commissions and I'm pretty certain it will not be approved.

However, Transource is in a big hurry to spend money on its project that will have to be reimbursed by all electric customers in the region. With a guarantee granted by the Federal Energy Regulatory Commission, Transource can apply to have all its prudent costs reimbursed by electric consumers, plus 10.4% interest, in the likelihood that the project is eventually abandoned and never built. Transource is all about spending as much as possible as quickly as possible.

Today, Transource's Texas-based construction company entered private property under court order to drill giant holes for soil samples. The idea is to investigate the possibility of erecting a 130-ft. tall transmission tower right there, in the middle of this cornfield.

Transource asked landowners for permission to enter their properties to do testing, cut vegetation, and do core drilling. Landowners refused to grant permission voluntarily. Transource took landowners to court to get an order permitting them to enter private property to do this preliminary work. Testing and surveying has taken place without landowner permission. And now the drilling starts. Construction workers have entered private property with their tracked drilling rig and vehicles (and from the looks of it, made a mess in the process) and gone about their business, under police guard no less.

But not without notice. Not without protest. Today, dozens of landowners showed up at the Transource drilling site on very short notice, and in bad weather to boot, to stage a peaceful protest to this unwarranted destruction of their community. It looked like this.

How alarming is it that these landowners are being invaded by an out-of-state company, having their fields disturbed and damaged, without receiving any compensation for their trouble? And for an electric transmission project that is not approved and most likely will never be built.

To stand with these landowners and to get more information, including live video of today's protest, visit them on Facebook at Citizens to STOP Transource - York.

These landowners are not giving up and not giving in, but will resist Transource at every juncture. Bravo!

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PPL Says It Can Use Existing Lines To Avoid New Transource Project

2/8/2019

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Bravo to PPL for speaking out against its master (at least in this instance)! PPL's Surrebuttal Testimony of Shadab Ali in the Pennsylvania PUC Transource proceeding disagrees with the testimony of PJM's Steve Herling, who said using existing PPL facilities could potentially violate NERC reliability standards.

I'm guessing PPL didn't get the memo and has fallen out of line with PJM's mandate that the Transource project is the only option to increase capacity. This is rare in the world of PJM's dysfunctional family, where utilities dare not speak out against PJM for fear of punishment doled out somewhere down the line.

But yet PPL did.

Witness Herling testified that PJM evaluated new proposed second circuits on Furnace Run - Conastone 230kV and Furnace Run - Graceton 230kV and found that these alternatives could potentially violate NERC Reliability standards. It is unclear exactly what PJM modeled here with regard to existing PPL EU-owned facilities because "the Furnace Run - Conastone 230 kV circuit towers and the Furnace Run - Graceton 230 kV circuit towers" are not PPL EU-owned facilities (and indeed have not yet been constructed).

Whoopsie, Mr. Herling! I hope you didn't make that mistake on your own, but had help from Transource to accomplish it. Otherwise, how can anyone believe anything you say?

Here's the reality:

Transource 9A proposes a new circuit from Furnace Run to Conastone. This parallels an existing Otter Creek-Conastone 230 kV line jointly owned by PPL EU and BGE. The PPL EU owned section of the line is designed to accommodate a second circuit without acquiring new Right of Way. PPL EU's Otter Creek 230 kV substation is built next to the TMI-Peach Bottom 500 kV line and can be connected to the line through 500-230 kV transformers. Thus, adding 500-230 kV transformation at the existing Otter Creek
substation, adding a second high capacity 230 kV circuit and replacing the current circuit with a higher capacity circuit on the existing Otter Creek-Conastone 230 kV line may provide similar economic benefits as the proposed new Furnace Run substation and a new double circuit line between Furnace Run and Conastone substation. Furthermore, there is another PPL EU-BGE jointly owned line (Manor-Graceton 230 kV) in the area that can be utilized to add a second 230 kV circuit from north to south.

And if you don't like that solution, here's another suggested by PPL:

...it does not appear that PJM ever considered adding a new 500 kV circuit from the existing TMI-Peach Bottom 500 kV line (utilizing a new 500 kV substation at Otter Creek) to the 500 kV Conastone substation, utilizing PPL EU owned right of way on the Otter Creek- Conastone 230 kV line.

In fact, a new 500 kV circuit utilizing PPL EU's existing Right of Way between a new Otter Creek 500 kV substation (to be built by expanding PPL EU Otter Creek 230 kV substation) and the existing Conastone 500 kV substation will provide more capacity than the total capacity of the proposed Transource 9A project, which only adds a new double circuit 230 kV connection between the Furnace Run and Conastone substations.

It looks like there are a number of workable solutions to solve the Transource problem that don't require new rights-of-way across preserved farmland. What were you thinking, PJM? This clearly demonstrates that PJM does nothing to select and plan projects that utilize existing resources. No wonder most of PJM's transmission ideas end up being shot down by state utility commissions.

PJM needs to change for the better in order to serve the ratepayers who pay for its bloated bureaucracy.

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How PJM Puts Its Thumb On The Scale For Transmission

2/7/2019

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When transmission companies draw their proposals as a line on a map, they randomly intersect with all sorts of people. Some intersections are good for the company, some are bad, and some are truly horrible. Gotta wonder if Transource's pencil broke, or its pen ran out of ink, when it tried to draw a line over Shaw Orchards? Barron Shaw is someone Transource probably wishes they'd avoided. He's maybe not the common fruit farmer they expected...

Barron has quickly mastered the world of electric transmission. Transource and PJM aren't pulling anything over on him. Much of what transmission owners say, and pretty much all of what PJM says, is intended to befuddle. If a regulator isn't sure what the witnesses are saying, they can do one of two things: 1) Admit they have no idea what the witness is talking about and risk looking stupid; or 2) Just presume the witness is right and nod their head sagely. One happens rarely, two happens a lot, in fact PJM counts on two happening pretty much all the time. As a self-designated grid oracle, PJM shall not be questioned. And then some miscreant drew a line over Barron's property.

The Surrebuttal Testimony of Barron Shaw makes several stunning observations about how Transource parent company AEP has been in cahoots with PJM to manipulate process in order to create a false benefit-cost ratio and "need" for the Independence Energy Connection project.

But first Barron tackles another instance of PJM trying to change his testimony by "misunderstanding" it and then restating it incorrectly. These witnesses attempt to claim that PJM has some magic authority over transmission that is so divine that it need not be re-examined by state utility commissions. Instead, they seem to suggest that the regulators simply rubber stamp whatever PJM proposes and bow to its superiority. Barron reminds that the Pennsylvania PUC is solely responsible for its own energy policy, as well as transmission siting and permitting.

Barron then launches into a detailed discussion of the way PJM changed procedures over a number of years (and was cheered on by AEP while it did so) in order to set up the "perfect storm" market efficiency project. Barron has taken the bits and pieces of information provided by PJM and Transource and aligned them with other pieces of the puzzle to determine that the true benefit cost ratio for the IEC is only 0.74, far below PJM's 1.25-1 threshold for a market efficiency project.

PJM proposed a change to the way market efficiency projects are evaluated. PJM members were frustrated by the fact that few large projects were passing the metrics of their old formula. So they proposed relaxing the rules so that more projects would pass.

First PJM changed the way it calculated "benefits" for market efficiency projects to filter out any consideration of cost increases to net out cost decreases in the calculation. If a market efficiency project causes costs to increase in certain zones, those increases are ignored. The only number that matters in PJM's calculation is the decreased costs in select zones. Of course this skews the benefits calculation enormously. PJM also changed its rules to include a whole bunch of proposed generation that may never be built in its calculation, which made it look like there would be more benefit than there actually will be.

PJM's changes also made the benefit calculation dependent upon the voltage of the project, with lower voltage "local" projects relying on numbers that don't include cost increases, while higher voltage "regional" projects could include a percentage of cost increases in their benefit calculation.

The implications of these changes are the primary reasons that this project is still being proposed by PJM today. Before this change, the benefit side of the B/C ratio was 75% based on the benefit across the entire PJM footprint (PJM uses the word “socialized.”) If a proposed project, such as the IEC, resulted in lower-rate “winners” and higher-rate “victims”, 75% of the calculation was made on the basis of netting the winners against the victims. After the change, 100% of the calculation for Lower Voltage projects, and 50% of the calculation for Regional projects, is based solely on the savings to the “winners”, without consideration to the higher rates incurred by the “victims.”

And is IEC a regional project or a lower voltage project? It supposedly qualifies as a "lower voltage" project because it is not double circuit 345kV or above. IEC is a double circuit 230kV project, supposedly a lower voltage project that wouldn't include any cost increases in its "benefit" number. However, Barron discovered IEC would actually carry more power than a double circuit 345-kV line and therefore is actually a regional project whose "benefit" should include zonal cost increases that net out cost decreases.

Both the IEC-East and IEC-West are able to carry more power than a Regional 345kV line, and taken together, move more power than many Regional double-circuit 500kV lines, a configuration that forms the backbone of the electrical grid.

Based upon the amount of capacity in those lines, the IEC clearly qualifies as a Regional project, as Regional was initially intended.

So PJM and Transource have basically stuffed 10 pounds of electricity in a 5-pound bag, in order to call it 5 pounds of electricity and exclude cost increases from its benefit calculation.

I call that cheating. If I wanted to be nice, I'd say PJM has put its thumb on the scale for Transource's IEC. Is this really a good idea, from both an engineering standpoint, as well as taking into consideration possible future upgrades and rebuilds?

Then Barron recalculates the benefit cost ratio for IEC as the regional project it truly is:

IF THE IEC WERE CLASSIFIED AS A “REGIONAL” PROJECT, HOW WOULD THE B/C CHANGE?
The benefits of the project would be subject to a 50/50 weighting of overall production cost to load energy payment. The $707M benefit that currently is weighted at 100%, would shrink to $353.5M. The other 50% of the weighting would be based on net production cost changes, a number that includes production cost increases as well as decreases. I have not been able to identify this value in the non-confidential public discovery record, and discovery is still pending. However, we know from OCA filings (SJR-3, p2), that many zones saw significant cost increases, and that the net change in load payment over 15 years was just over $-17M. Net production cost could not have decreased much more than that, or the savings would have been passed on to the customers who saw increased rates. Even assuming a generous $50M savings (which approximates the estimate in the optimistic 2015 14 RTEP presentation) would yield a benefit of only $353.5+(0.5*50)=$378.5M, far less than the $505M cost of the project, yielding a B/C ratio of 0.74.

Barron also proves that he's much smarter than AEP's witness, and the PJM guys as well, when he schools them on probabilistic decision making versus PJM's current "sensitivities" scheme. It's heady stuff... wade in if you dare ;-)

These guys are probably just lucky that Barron chooses to operate an orchard on land that's been in his family for generations, instead of trying to reform PJM. PJM and Transource would do well to leave him alone, and if they're lucky, Barron will leave them alone in the future.

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Maryland Agency Asks For Dismissal of Transource Application

1/4/2019

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Merry Christmas, Transource opponents! The Power Plant Research Program of the Maryland Department of Natural Resources (PPRP) filed a Motion to Dismiss the Transource application on December 20.

The PPRP says that Transource and PJM failed to carry out an analysis of alternatives required by Maryland §7-209 of the Public Utilities Article. This statute requires an analysis of the use of existing transmission in lieu of installing new transmission on new right of way.

PPRP also notes the applicant's changing "need" for the Independence Energy Connection.

In addition, given its responses to data requests and Transource’s filings in the Pennsylvania proceeding, it appears that Transource is modifying its position as to the need for and benefits of the Project from a straightforward purpose of lowering some customers’ electricity costs as a “market efficiency project” to now asserting other benefits associated with emerging reliability concerns. However, if PJM has now determined that there are reliability concerns and an associated need for transmission system enhancements, it would be more appropriate to first investigate reasonable alternatives within the relevant PJM processes rather than latching solutions on to this discretionary market efficiency project.

Bingo! It sure appears that PJM and Transource are changing horses in midstream after the one they were riding came up lame. And who can actually believe anything these two say anymore when their story changes like that? Besides, this isn't the way PJM evaluates transmission to serve reliability needs. PJM is simply making it up at they go along.

PJM's process for evaluating and ordering market efficiency projects does not comport with Maryland statute.

Furthermore, even though PJM’s market efficiency processes do not incorporate Maryland statutes, it is incumbent on the Applicant to meet the State’s requirements for a CPCN by presenting alternatives to the Project that use existing lines. The PJM process is not a substitute for Maryland’s statutory requirements and its determination that a project is the most effective solution should not allow that project to circumvent Maryland’s comprehensive siting process.

BOOM! Maryland isn't buying PJM's assertion that it is some omnipotent grid oracle who must be obeyed. The real oracle here is the State of Maryland. PJM's role is that of a planner who suggests transmission. Maryland has the role of deciding whether or not the transmission proposed is a good idea.

PJM never seriously considered using existing transmission to meet the supposed "need" for the IEC. PJM purports that such an examination is not part of its process. PJM pretends it is prisoner to projects proposed by its members and cannot require (or even think about) modifying proposals to reduce impacts by using existing transmission to solve the "need." Well, guess what, PJM? Your process is incorrect and needs modification! PJM's process is more in love with the idea of competitive transmission proposals than it is with promoting efficiency and reduced impacts. That needs to change. And if the IEC changes to include the use of existing transmission, it would be much more efficient and cost effective to award the project to the incumbents who own the existing transmission in question. Where's the cost effectiveness of awarding the project to some third party who must pay the incumbent for use of its right of way and towers? That's adding unnecessary cost to the project, when market efficiency projects are supposed to be all about lowering costs. And we know it's just not possible for PJM to force the incumbents to allow free use of their infrastructure to a third party. IEC is a failure on so many levels!

PJM is also a failure. PJM's insistence on the necessity for this badly planned project is failing the electric consumers PJM supposedly serves. And it's costing them a lot of money to continue to entertain this bad idea. What's it going to take to make PJM give up this charade? An order from the Federal Energy Regulatory Commission to change its competitive transmission process? It not only prevents unnecessary spending, it also makes great common sense for PJM to incorporate an analysis of existing transmission use and a real "constructability analysis" into its planning. The IEC is a dead dog. Stop the bleeding and fall on your sword, PJM, this project is dead. It will never be approved by the states, and the states have final authority on whether or not it will be built. Quit wasting my money tilting at the windmills of inevitability that this project is going to be denied. There are a multitude of options available to PJM to cancel or suspend the IEC right now.

However, the Maryland PSC has set a deadline for responses to the Motion to Dismiss of January 7. After that, the Commission will make a decision. Let's hope it's a sensible one!

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PJM Risks Reliability With Continued Support of Transource

11/26/2018

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Oh, PJM, don't you know that when you lie down with dogs you get up with fleas? PJM has killed its credibility with a recently issued "white paper" that purports to show the Transource Independence Energy Connection is still "needed." Guess what? Nobody believes you, PJM! In fact, it looks like the only one who paid any attention to your white paper was RTO Insider, and even they balanced their story with opposition claims that PJM's recent re-evaluation was rigged.

I'm not even sure what the purpose of that white paper was supposed to be -- was it a publicity stunt? Was it PJM's answer to expert testimony filed in Pennsylvania that showed how costly the project would be to ratepayers in that state, without any corresponding benefit? If this is PJM's feeble attempt to step outside its cartel headquarters and interact with the hoi polloi, it failed miserably.

We've been hearing for more than two months that PJM thinks the IEC is needed "for reliability," but there has been no actual data shown to back up this claim. There's still no public data, just vague assertions that "power flow results" indicate overloads on other transmission facilities that produce instability. Without the actual results, this claim is baseless. In fact, it looks like PJM is just making this stuff up as they go along. But now the potentially overloaded lines (and a transformer) have been identified. PJM claims that without the IEC, a TMI transformer, the Peach Bottom-Conastone, Hunterstown-Lincoln, Lincoln Tap-Lincoln, and Lincoln-Straban lines will overload in 2023. If these are actual, real overloads, PJM had better get cracking on solutions other than the IEC, because the IEC is not going to be approved by the states. PJM has no Plan B. If we believe PJM, then the lights are going to go out in 2023 if the IEC isn't constructed. What have you been doing with your time, PJM? Isn't it your job to keep the lights on? PJM claims, "A solution and estimated cost for a violation of this scope are typically non-trivial." Typically? Is that how PJM devises solutions to reliability issues? By making "typical" determinations? So there's absolutely no science to PJM transmission planning? It's just a bunch of guys pontificating at the snack bar about "typical" things? Doesn't PJM "typically" issue a problem statement on projected reliability violations and solicit competitive solutions? Absent that, doesn't PJM look to the incumbent owners of the problem assets to devise solutions to overloads? That's what "typically" happens. It's not "typical" to re-package a failed market efficiency project as a solution to a developing reliability issue. Perhaps other transmission owners could devise a solution to the reliability issue that is less costly and less invasive than the IEC, presuming a reliability issue actually exists. But since PJM isn't making the "power flow results" that show a reliability issue public, it is subverting competition to the detriment of consumers. Based on the evidence in this "white paper," I'm going to conclude that the purported "reliability" issue doesn't exist.

PJM is layering other transmission projects on IEC being built that may cause false reliability violations. Approving new projects that require a transmission project that is not approved by the states and will not be built is a planning failure. In addition, building IEC does nothing to update old transmission lines to increase their capacity. The old lines will still exist. Perhaps the entire AP South issue only exists because PJM refuses to update existing lines to increase their capacity. It wasn't too many years ago when the rebuilding of one of the AP South lines to increase its capacity obviated the new $2.1B PATH transmission project. PJM has learned nothing and continues to waste ratepayer cash on new projects while allowing existing lines to rot and fail. Rebuilds, PJM, rebuilds! Quit wasting our money and putting reliability at risk!

PJM also manages to confirm the testimony of Pennsylvania OCA's witness who says the "benefits" figure excludes the increases in costs to other zones. PJM says:

New production cost simulations based on these updated parameters results yielded a $600.73 million present value of net load payment benefit (for zones where payments decreased).

For zones where payments decreased -- this means that any zones where payments increased were left out of the equation. To calculate an actual benefit, PJM should have included all the zone payments, including those that increased. That's the benefit number that should be used in the benefit/cost ratio analysis. Instead, PJM used an artificially high benefit number devised only from zones that showed a decrease. This is crap, PJM! Even a third grader could see where you screwed up your math. When the decrease is balanced with the increase elsewhere, the benefit for the entire region is nominal.

And speaking of nominal, PJM says it used "Nominal Project Cost" in its evaluation. What's a "nominal" project cost? Nominal is an adjective.

(of a price or amount of money) very small; far below the real value or cost

So PJM used a project cost value far below the real cost and described it as "nominal."

We've got an artificially high "benefit" number compared to an artificially low "cost" number. This is magic math. It's not credible. PJM's benefit/cost ratio is artificially manipulated to fit guidelines. PJM's evaluation of benefit/cost has lost all credibility.

And speaking of costs, PJM says that it performed the required "independent cost evaluation" on the IEC several years ago as evidence that the current "nominal" costs are accurate. An evaluation of a prior cost estimate does not magically make all new cost estimates valid. If the costs change, then a new evaluation should be performed. From the PJM manual:

For new economic enhancements or expansions with costs in excess of $50 million, an independent review of such costs shall be performed to assure both consistency of estimating practices and that the scope of the new Economic-based Enhancements or Expansions is consistent with the new Economic-based Enhancements or Expansions as recommended in the market efficiency analysis.

Uh huh. "New" enhancements (transmission). When does a market efficiency project become "new" and when does it become "old." Wouldn't it be "new" until it's actually built? Or does PJM's manual purport that a project becomes "old" after the initial evaluation? That makes no sense when cost estimates can change, along with the method by which they are calculated. A "new" cost figure requires a new evaluation. Did any "independent" review of Transource's recently revised cost estimates occur? Because it sure looks like Transource used magic math to devise an estimate that would compare favorably with PJM's recently revised "benefit" number. Transource's cost estimate has no credibility. A new review is warranted. Without it, PJM's credibility is zero.

And one last thing... how about a nice bowl of alphabet soup? PJM says that IEC will increase CETL for the BGE LDA. But that's mere gold-plating. Increasing CETL for any LDA (zone) is not necessary (if it were, it would be a reliability issue). CETL stands for Capacity Emergency Transfer Limit. It's the maximum amount of energy that can be transferred into a zone on existing transmission lines. Sure, IEC may increase the amount of energy that can be imported to BGE (Baltimore Gas & Electric), but increased imports are not needed for reliability purposes. They are "needed" to import lower cost electricity into BGE, instead of using higher-priced electricity available in BGE. And doesn't PJM's white paper say this already? The addition of CETL does nothing to increase need for IEC from a reliability standpoint, and that's the purpose of CETL. EMERGENCY, right? BGE needs to have enough capacity to import energy in an emergency to keep the lights on. Price is not an emergency! There's plenty of power in BGE to keep the lights on in an emergency without the addition of IEC. Therefore I can only conclude that PJM's introduction and use of CETL in its white paper is nothing more than an effort to confuse people with technical mumbo-jumbo that they don't understand. Maybe that works with the average consumer, but it's not going to work on the regulators who are evaluating this project.

So, since PJM likes alphabet soup so much, here's what I found in my bowl to describe PJM's recent efforts to bolster IEC:

FUBAR
SNAFU
SUSFU
TARFU
FUBU
BOHICA

Go ahead, look it up. Here's a link.

I guess it's all in how you stir your soup!

PJM's Transource IEC white paper is a complete and utter waste of time. Reading it was like sipping a big cup of dumb.

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Market Monitor Says PJM needs to reevaluate its rules governing cost benefit analysis and cost allocation for economic projects

11/9/2018

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Ut-oh, PJM! Trouble in paradise! The independent monitor (MMU) of your activities thinks your "market efficiency" process isn't so efficient. And it's probably costing electric consumers in the PJM region money in their electric bills.

In its recently released Quarterly State of the Market Report, the MMU recommended:

The MMU recommends that PJM reevaluate the rules governing cost benefit analysis and cost allocation for economic projects. (Priority: Medium. New recommendation. Status: Not adopted.)

This is a new recommendation of medium priority. Time to get hopping, PJM, as if you ever take constructive criticism well.

Let's combine this with one of MMU's long standing recommendations:

The MMU recommends the creation of a mechanism to permit a direct comparison, or competition, between transmission and generation alternatives, including which alternative is less costly and who bears the risks associated with each alternative. (Priority: Low. First reported 2013. Status: Not adopted.)

This all adds up to fail. PJM is failing to properly plan market efficiency transmission projects. In PJM's world, the road to new market efficiency transmission projects is long. However, the congestion to be alleviated by new transmission is fleeting and short-lived. PJM knee-jerked when implementing FERC's competitive transmission Order 1000 to open a project window to alleviate congestion on its AP South Interface in 2014. That's four years ago and counting. By the time PJM got around to selecting and ordering a project to alleviate the congestion, the congestion had alleviated itself. But PJM kept on with the project, believing that it is captive to its own bloated processes. The project PJM ordered is the Transource Independence Energy Connection, and it's no longer needed.

But because Transource was granted an "incentive" to build its project by the Federal Energy Regulatory Commission that allows the company to recover all its sunk costs on the project (plus 10.4% return on its equity), no harm will come to Transource or PJM if they continue this unneeded project. All the cost and risk is borne by electric consumers.

How unneeded is this project? A look at the MMU's Congestion and Marginal Losses report section informs that congestion is now elsewhere. The AP South Interface is a minor issue.

Differences in CLMP among eastern, southern and western control zones in PJM were primarily a result of congestion on the AEP - DOM Interface, the Cloverdale Transformer, the Tanners Creek - Miami Fort Flowgate, the Graceton - Safe Harbor Line, and the 5004/5005 Interface.
The AEP - DOM Interface was the largest contributor to congestion costs in the first nine months of 2018. With $120.4 million in total congestion costs, it accounted for 10.8 percent of the total PJM congestion costs in the first nine months of 2018.

Get that, PJM? Congestion has shifted. AP South no longer has a serious congestion issue. In fact, it's minor. In fact, it only contributes 1.8% of total congestion in PJM.

PJM could spend our money better chasing the 9 constraints that cause more congestion than AP South. Of course, if they do, by the time they select and order transmission projects to alleviate this congestion, the congestion will have moved on elsewhere. PJM is chasing its own tail planning market efficiency projects. And this is why it needs to reform its rules on market efficiency transmission planning.

Once a project is approved and ordered, PJM will never admit failure. Instead, PJM will continue to prop up unneeded market efficiency projects and throw good money (OUR money) after bad through questionable cost benefit analyses that keep the project (barely) alive.

There's no amount of magic math that will make the Transource IEC economically beneficial. It's time to let this project go. PJM has had plenty of opportunity to fall gracefully on its sword and stop the ratepayer bleeding. Its recent re-evaluation of IEC was rigged, and even then IEC barely jumped the threshold. Another opportunity arose when Transource recently adjusted its in-service date ahead 5 months. PJM's Designated Entity Agreement with Transource required the project to be in-service by June 2020. PJM could have cancelled the project instead of allowing the in-service shift. The failure to meet milestone dates in the DEA is a breach of contract, and in that event PJM (the Transmission Operator) can default on the DEA. Over and done.

Instead, PJM keeps wasting our money on its bad idea. PJM is failing consumers. Not only that, now it's been called out on its failure by its Market Monitor. It's time to cancel the Independence Energy Connection.

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What's Transource IEC Going To Look Like?

11/5/2018

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I would have used the headline "Fun With Photoshop," except I used that one years ago. Transource, bless it's blackened money-grubbing heart, is still trying to convince the communities that its transmission project will be an asset. It's not working. There's pretty much nothing Transource can say or do at this point to ameliorate the wide-spread, entrenched opposition to the project. Telling further lies that contradict past lies isn't a magic wand.

For some reason, Transource sent out a "Project Update" on Friday that was akin to kicking itself in the ass. Way to go, Transource! Among the lies and half-truths were some images depicting what the project would look like if built. Even though the pictures were incredibly tiny and presented an extremely long range view, they still managed to convey the awfulness of the Transource project. I've often wondered why transmission companies do this to themselves... why do they send out photoshopped images of what their project would look like? Do they try to make these images as horrid and frightening as possible? It wouldn't be logical to create photoshopped images that look worse than reality. Instead, we can probably discern that these images use all sorts of eye-tricking perspective and shading tricks to make the new lines as unobtrusive as possible. Reality will probably be worse. Much worse. And still, Transource's photo simulations of its proposed project are a trainwreck.

How about this beautiful view?

I'm told that a group of artists was on location painting this stunning vista last week. I'm sure they won't mind altering their paintings to look like the "after" photo. Why, you can hardly notice the new power line stretching across the horizon! (Except you can actually see the shadow of the lines from the "after" photo on the "before" photo.)

Even trying to make the line as light and blurred as possible, it's still beyond awful. And where are the birds who will roost there and poop all over the crops grown below? The photoshopper seems to have left some things out. Also notice how the "after" picture is from farther away and includes a wider view? These are not "before" and "after" of the same photo.

Here's another.

Lovely barn with a distribution line crossing the view. I wonder how many photos and angles they had to sort through to find one that looked like that. Now here's what happens "after."

Look, a whole bunch of new wires that aren't connected to anything! No towers at all! Or maybe they're connected to some of those special rusty towers that blend in so well they can't be seen? They're pretty saggy, too. I'm betting they're going to be much higher in reality. And why is the sky in the vicinity of the new lines so much grayer than the rest of the sky? It's all about that contrast!

And these are the photo simulations Transource wanted you to see! Reality will be much different, but not in a good way.

Visual simulations are based on the level of design available at this time. Moderate changes in structure height and location may occur following subsequent engineering and design refinements and minor modification of the alignment.

In other words, they're going to be taller and towers will be visible. You're not doing yourselves any favors here, Transource.

I've heard that Transource has lots more of these photo-fibbed simulations for its entire route. Maybe you should ask your friendly neighborhood land agent to show them to you? Just so he knows why you object and perhaps will quit stopping by...

Barron Shaw from Citizens to Stop Transource took on a whole bunch of the other lies contained in Transource's email update. You can read the facts here.

I'm only going to touch on a couple more things here, the first of which is Transource's insinuation that its failure to update its project costs before PJM recalculated benefits is the fault of landowners.

Why didn’t Transource have updated costs at the time of PJM’s annual cost / benefit analysis?
Transource is following a planning and engineering process that requires a variety of data. For example, land surveys provide Transource valuable data needed for construction bids. Since winter 2017, the company has been working with landowners to access properties to be able to complete that work. The survey information is one example of information that was part of the bid package provided to potential suppliers.

In other words, Transource says it would have had its costs updated last year if landowners had fully cooperated with surveying, cutting and drilling on their properties for a proposed project that has not been approved. Working with landowners? Whaddya mean, Transource? You were working with lawyers, judges and the courts to force entry onto private property. You live a rich fantasy life! The real reason Transource waited until after PJM recalculated the benefits is so that it could estimate its costs at a made-up number that scaled the necessary benefit/cost ratio of 1.25. Magic math! Reality is that there is no cost cap for Transource's project. It can and will spend whatever it wants and when its actual costs don't meet the benefit/cost ratio it will be too late. Ratepayers will be locked in to paying for it. The best we can do right now is rely on the expert testimony that has been filed which correctly pegs the Transource project at returning 3 cents for every dollar poured into the project. Ratepayers lose 97 cents of every dollar they spend on this project. What an outrage!

Here's another I take issue with:

Landowners are encouraged to work with right-of-way agents now, during the design phase of the project, to best incorporate property owner desires into the final placement of the facilities.

Final placement of the facilities? You mean in the trash? Because that's where the idea for this project is going to end up after state regulators fail to approve it. I'm sure landowners may have other desired locations for the "placement of facilities." Check your back, Transource! Doesn't that statement seem a little, well, coercive to you? Transource tries to make believe that this project will be approved and it's only a matter of where to put it. No, the issue is whether to build it at all and that's far from being decided. The way things stand now, it's not looking good for Transource, therefore landowners should continue to resist. And hey now, didn't Transource say their cost update was delayed by not being able to design the project because of resistant landowners? And now they have an updated cost, so we'll assume they're done "designing" it. If there was a magic "design" window, it's already closed.

And then, there's this:

Transource has not filed condemnation on anyone

Except in its last "project update" in September, Transource said this:

The PUC process requires utilities to submit a condemnation filing during the application process. This filing includes property owners with whom the company has not yet secured a signed option to grant an easement agreement. Transource provided written notice and information explaining the process to landowners before filing the report in May.

Transource made a "condemnation filing." Except they have not filed condemnation on anyone. Which is it? Is Transource lying now, or where they lying then? Or are they simply lying all the time?

Like this:

Regions where IEC is proposed to be built — Franklin County, Pennsylvania, and Washington and Harford counties, Maryland — are located in benefiting power zones, as identified by PJM.

Where's York County? Isn't something like 12 miles of this proposed project in York County? That's right... York County will receive no benefit. That's zero benefit. Did Transource think nobody would notice their "clever" omission?

And finally, Transource thinks it knows better than Pennsylvania Administrative Law Judges:

Does Pennsylvania Act 45 of 2018 apply to IEC?
Transource PA has been granted utility status by the PA PUC. Act 45 excludes “public utility facilities” from the required approval and has no effect on this project's proceedings.

The judges reviewing this project have already made the determination that Act 45 does apply. They did it months ago! And in this scenario, their opinion is the only one that matters.

And speaking of the PUC judges' opinion, take a few steps back when you read the latest "project update." Why, it reads like a rebuttal to the expert testimony recently filed by the PA Consumer Advocate, doesn't it? Is this what Transource's rebuttal testimony is going to consist of? Photoshopped awfulness and carefully worded half-truths? Good luck with that, Transource. You've got nothing.

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Transource Shoots Itself In The Foot At Hearing

American Electric Power Destroys Farmer's Land While He Attends Hearing To Save It

PJM's Got Nothing

Unapproved Transource Invades Private Property

PPL Says It Can Use Existing Lines To Avoid New Transource Project

How PJM Puts Its Thumb On The Scale For Transmission

Maryland Agency Asks For Dismissal of Transource Application

PJM Risks Reliability With Continued Support of Transource

Market Monitor Says PJM needs to reevaluate its rules governing cost benefit analysis and cost allocation for economic projects

What's Transource IEC Going To Look Like?

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