In the NOI, Promoting Transmission Investment Through Pricing Reform, FERC is seeking comments about the effect of its incentives in promoting transmission. If you're going to comment, you need to understand what the incentives are, and what they are intended to do.
Accelerated depreciation is an incentive that allows the utility to recover its equity capital over a shorter period of time than normal. Normally, the costs are recovered over a period of time roughly representing the life of the facility. With this incentive, FERC gives an example of a quicker recovery period of 15 years or less. That would be really, really, really expensive! As anyone knows, the longer you have to pay for something, the cheaper the monthly payments are (although you will pay more in interest over the long run). Fortunately, this incentive is rarely requested. Of course not... the sheer cost of it alone would spur tons of unwanted opposition to the project! FERC wants your comments on this incentive. They ask no specific questions, therefore an appropriate answer could be... why doesn't FERC just do away with this incentive altogether?
The advanced technology incentive is where you should focus more effort. The use of advanced technology in a project can be considered for two different treatments. One is as part of the nexus test (we'll cover that in upcoming posts) and the second is with additional ROE adders (previously discussed).
Use of advanced technology is what Congress was envisioning when enacting the EPAct 2005, a section of which required FERC to "encourage, as appropriate, the deployment of advanced transmission technologies." This is where we should be heading! Advanced technologies wouldn't necessarily only apply to "new" transmission, but also to improving our existing, aging infrastructure. We need to make transmission more efficient, not just more of the same old dinosaur "technology" that's been in use for a hundred years. This is probably the only incentive that stands a chance of actually generating some benefit for the consumers, if it is applied correctly. One of the problems here though is that the 2005 legislation actually listed specific technologies as "advanced." I'm sure I don't have to tell any of you how fast technology moves! Perhaps some new ground rules are needed to ensure that this incentive actually serves its intended purpose.
In the NOI, beginning on page 36, FERC discusses the accelerated depreciation and advanced technology incentives and asks several specific questions regarding the advanced technology incentive. Now that you know what they are... go look at the questions and formulate your comments/suggestions for FERC. I'm sure you creative consumer "stakeholders" can make suggestions that the industry won't even ponder. The industry will be letting FERC know how they can and should sweeten the pot even further for them. It's up to you to provide balance with a little real world sanity.
Next we'll move onto the real fun stuff - such as the rebuttable presumption (PATH's has run away from home and they've been putting up signs all over town that say, "Lost - Rebuttable Presumption - Last Seen Feb. 28 at PJM. It's very small and weak, and it needs medication! Call PATH at 1-800-UT-OHHH if found".) We'll also cover the nexus test, as well as some other FERC mumbo jumbo (as Bill calls it.) Check in again for more updates on this topic.
If you found this helpful in crafting your comments, you are encouraged to browse the entire FERC Transmission NOI category at StopPATHwv.com for other useful material. You don't have to comment on all aspects of the NOI if that's too burdensome. In fact, if you want to concentrate in detail on just one aspect that interests you and about which you have strong feelings, that's a perfectly acceptable approach to producing effective comments.
Accelerated depreciation is an incentive that allows the utility to recover its equity capital over a shorter period of time than normal. Normally, the costs are recovered over a period of time roughly representing the life of the facility. With this incentive, FERC gives an example of a quicker recovery period of 15 years or less. That would be really, really, really expensive! As anyone knows, the longer you have to pay for something, the cheaper the monthly payments are (although you will pay more in interest over the long run). Fortunately, this incentive is rarely requested. Of course not... the sheer cost of it alone would spur tons of unwanted opposition to the project! FERC wants your comments on this incentive. They ask no specific questions, therefore an appropriate answer could be... why doesn't FERC just do away with this incentive altogether?
The advanced technology incentive is where you should focus more effort. The use of advanced technology in a project can be considered for two different treatments. One is as part of the nexus test (we'll cover that in upcoming posts) and the second is with additional ROE adders (previously discussed).
Use of advanced technology is what Congress was envisioning when enacting the EPAct 2005, a section of which required FERC to "encourage, as appropriate, the deployment of advanced transmission technologies." This is where we should be heading! Advanced technologies wouldn't necessarily only apply to "new" transmission, but also to improving our existing, aging infrastructure. We need to make transmission more efficient, not just more of the same old dinosaur "technology" that's been in use for a hundred years. This is probably the only incentive that stands a chance of actually generating some benefit for the consumers, if it is applied correctly. One of the problems here though is that the 2005 legislation actually listed specific technologies as "advanced." I'm sure I don't have to tell any of you how fast technology moves! Perhaps some new ground rules are needed to ensure that this incentive actually serves its intended purpose.
In the NOI, beginning on page 36, FERC discusses the accelerated depreciation and advanced technology incentives and asks several specific questions regarding the advanced technology incentive. Now that you know what they are... go look at the questions and formulate your comments/suggestions for FERC. I'm sure you creative consumer "stakeholders" can make suggestions that the industry won't even ponder. The industry will be letting FERC know how they can and should sweeten the pot even further for them. It's up to you to provide balance with a little real world sanity.
Next we'll move onto the real fun stuff - such as the rebuttable presumption (PATH's has run away from home and they've been putting up signs all over town that say, "Lost - Rebuttable Presumption - Last Seen Feb. 28 at PJM. It's very small and weak, and it needs medication! Call PATH at 1-800-UT-OHHH if found".) We'll also cover the nexus test, as well as some other FERC mumbo jumbo (as Bill calls it.) Check in again for more updates on this topic.
If you found this helpful in crafting your comments, you are encouraged to browse the entire FERC Transmission NOI category at StopPATHwv.com for other useful material. You don't have to comment on all aspects of the NOI if that's too burdensome. In fact, if you want to concentrate in detail on just one aspect that interests you and about which you have strong feelings, that's a perfectly acceptable approach to producing effective comments.
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