Grain Belt Express Clean Line Files for Negotiated Rate Authority at FERC

One of the biggest questions plaguing Grain Belt Express opponents has at long last been answered... well, sorta, for now.

Who is supposed to pay for this $2 billion project?

By finally applying to the Federal Energy Regulatory Commission for authority to negotiate rates for transmission service with potential buyers and sellers of electricity, Grain Belt Express pretends that it intends to finance its own project.

Although, GBE has been telling other audiences that ratepayers in "states farther east" may be paying for its project:

Mr. Glotfelty also noted that there could be circumstances under which the Grain Belt Project could find it necessary to depart from the cost recovery model described and instead seek cost recovery through regional or inter-regional cost allocation mechanisms.

Mr. Berry testified that while Petitioner currently has no plans to seek cost recovery for this Project through regional cost  allocation, Petitioner is not in a position to make an irrevocable commitment not to seek cost allocation. He stated that such a  commitment would be premature and would potentially go against the public interest. If regulations change in the future, an irrevocable commitment not to recover costs in a certain manner may compromise the ability of Petitioner to complete the Project.

Do you think maybe GBE isn't being completely honest with FERC?  I do wonder how a situation that may compromise GBE is is against the public interest, if all project risk is being absorbed by GBE as a merchant transmission project?

GBE has presented an altered version of reality to FERC:

D. Public Outreach
Public outreach and active stakeholder involvement are key components of Applicant’s approach to development of the Project. Beginning in 2010, Grain Belt Express implemented an extensive, methodical, multi-level public outreach strategy across Kansas, Missouri, Illinois, and Indiana, which has resulted in more than 1,000 in-person meetings across the Project area as of November 2013. Grain Belt Express also has maintained an active presence online and through social media. The Project’s website, www.grainbeltexpresscleanline.com, has been actively updated since the beginning of the Project in 2010. Among other information, the website contains: a project video that describes the need for the Project and how Grain Belt Express will bring significant economic benefit to states through much-needed transmission expansion for new wind energy projects; an FAQ section for all stakeholders to learn greater details about the Project; a section on how local businesses can learn about opportunities to participate in the construction of the Project; and information regarding Project meetings, maps, studies, regulatory filings, and third-party resources. In addition, Grain Belt Express distributes a newsletter on a regular basis to hundreds of stakeholders. These newsletters provide information on Project milestones, recent events and meetings, as well as upcoming Project activities. The newsletter is available to anyone who is interested in receiving a copy. Applicant’s participation in multiple state regulatory proceedings also has publicized information regarding the Project.
E. Project Schedule
Applicant continues to work closely with land use and routing experts as well as landowners, local government officials, state and federal agencies, and other stakeholders in the areas where the Project will be built in order to gather input and determine the specific route for the transmission line in each state that it will traverse. Applicant is consulting experts on topics such as threatened and endangered species, archaeology, and cultural resources to ensure that appropriate considerations are taken into account in the routing decisions. Applicant expects to obtain all necessary authorizations from federal, state, and local governments and agencies for the Project by 2016.

I think I might know a few landowners who feel they have not been "closely worked with."  In fact, the affected landowners in Kansas were the LAST ones to find out about GBE's project.  Some of these landowners feel they were not properly notified under Kansas law, and even when they found out, they were denied effective participation in a matter that granted GBE the right to take their land by force.  GBE even admits that, according to their public outreach plan, landowners are the last to be notified, after environmental groups, business groups, elected officials, local governments, and potential suppliers.  It is only after Clean Line has drummed up support for its project by schmoozing and making dubious promises that it springs the project on affected landowners.  In this way, Clean Line hopes that landowner concerns will be smothered by the group of MIMPSYs it has created.

However, FERC has no jurisdiction to right any wrongs made in the state regulatory process because it has no authority over siting and permitting.  But, the dishonesty is galling.

GBE also tells FERC that it will shoulder all financial responsibility and risk for its project:

Applicant is assuming all market risk associated with the development and construction of the Project, and Applicant does not have and will not have any captive customers. Accordingly, Applicant has no ability to pass through the Project’s costs to captive ratepayers.

Well, not really.  GBE is passing some of its risk and cost associated with its project on to affected landowners and local governments who are expected to shoulder uncompensated project costs.  Such costs may include the expense of providing public safety services during construction and operation, use of roadways for construction and maintenance, reduction in tax base, lowered property values, interference with farming operations, health and safety risks of living and working in close proximity to the project, inverse condemnation takings, lowered farm operation income, and increased costs to farm around the project, and the list goes on.

GBE also mentions that there are other planned regional projects that will provide price competition.  These other projects that are ordered by RTOs are financed by, and guaranteed cost recovery from, ratepayers.  Ratepayers are assuming all risk of these other projects.  If GBE causes the competing projects to fail, ratepayers will end up financing the failed projects, for which they will never receive any benefit.

In addition, GBE is promising FERC that it will abide by the Commission's rules about honest and aboveboard negotiation with potential customers.  If landowners believe GBE has not been honest and aboveboard with them, how can FERC trust that GBE will keep promises made in this application?  Many believe that GBE has not developed a good reputation of honestly attempting to follow regulation in the public interest.  In fact, some believe that GBE's reputation is that of smart alec arrogance, always trying to manipulate regulation in order to advance its pecuniary goals.

For instance, after promising Kansas regulators 135 "operations" jobs in the state related to its project, GBE tells FERC the truth:

Once the Project is completed, Applicant will turn over operational control of the Project to an RTO, which will operate the line pursuant to a FERC-approved non-discriminatory rate schedule filed under the RTO’s OATT.

There is no RTO located in Kansas.

GBE also asks FERC for permission to use special selection criteria to evaluate offers.  Preference will be given to potential customers who are willing to make "deposits" and shoulder some of the cost burden.  In this way, GBE may be discriminating against customers who are not in a position to invest in its speculative project.  I'm not sure this is what FERC really had in mind as non-discriminatory.

Keep an eye on this one.  It's going to be interesting.