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PJM's Fallacious Logic and Flimsy Excuses

6/11/2012

5 Comments

 
PJM has filed an answer to the complaint of Primary Power at FERC.  If you'll remember, Primary Power filed a complaint after PJM reassigned SVC projects Primary Power had spent 5 years and $5M developing to incumbent transmission owners Dominion and FirstEnergy.

PJM says they based their decision on three factors:

1.    The fact that the incumbents already owned land (their substations) on which to site the projects.

2.    The fact that the incumbents wouldn't need a CPCN because they would merely be "upgrading" existing transmission.

3.    Cost.

Wow!  That's it?  The crappy lawyering doesn't stop with the IOUs after all, but apparently also extends to RTOs as well.  1. & 2. are situations in which the incumbent will always prevail, effectively shutting the door on any independent projects and FERC's intent to encourage independent transmission ownership.  What a joke! 

But who said the projects won't need a CPCN or run into a siting buzzsaw in West Virginia if the incumbents construct them?  That's a lot of fallacious logic on PJM's part.  As I recall, somewhere in one of Primary Power's documents they said something about already having secured needed land, but I'm not going on a fishing expedition to find it.

And as far a 3. goes...  While Primary Power had a real cost estimate based on facts and figures, FirstEnergy and Dominion had back of the envelope guesses at cost.  PJM never did any independent cost evaluation to compare the alternatives.  Just like the PATH Project, the incumbent gets a free pass to underbid any competitors with estimates they pull out of thin air.  One of my favorite parts of PATH's fictitious cost estimate was demonstrated when the $1.8B project was reconfigured from twin 500kV lines from Bedington to Kemptown to a single 765kV line from a new  Welton Springs substation to Kemptown... and the $1.8B price tag remained exactly the same.  This proved that PATH's cost estimates were completely invented.

A plethora of parties have intervened in the Primary Power complaint at FERC.  Predictably, a bunch of PJM's favored incumbents protested the complaint and sided with PJM.  However, there was an equal number of independent transmission developers who intervened to support Primary Power's complaint.  If you want to browse through the filings, go here and enter Docket No. EL12-69.  Lots of good reading, but I'm not going to upload a whole bunch of them here.

The only party who can even claim some semblance of independence here is the Pennsylvania PUC, and guess who they sided with?  You'll have to read it to find out...

But what do I know about any of this... let's ask the PJM Magic 8 Ball if FERC is going to grab PJM by the scruff of its incumbent-lovin' neck and swat them with a rolled up newspaper...  take it away 8 Ball... "Outlook Good!"
5 Comments
bh link
6/11/2012 11:59:42 pm

Yup. We've seen it all before in the PATH fight. PJM gives its cartel partners a wink and a nod, but any independent companies are evaluated on an entirely different scale.

cartel -2 : a combination of independent commercial or industrial enterprises designed to limit competition or fix prices — from Merriam-Webster Online Dictionary

Reply
Keryn
6/12/2012 02:23:26 am

This is also interesting from a PATH train wreck perspective. Need for the SVCs really got rolling when major "backbone" transmission projects were suspended (i.e. PATH). Was PJM trying to hand FE a consolation prize, or is all this controversy just some posturing intended to delay the SVC installation so PJM can find a "need" for PATH again? Ya know, I really doubt they're that strategically smart, but remember all the subterfuge PJM pulled trying to delay the MSD rebuild?

Reply
bh link
6/12/2012 01:30:41 pm

Actually, the SVCs are needed to control voltage and reactive power. PJM pulled this voltage regulation issue out of their hind ends in 2009 to include with all the problems that PATH was going to solve. Expert Hyde Merrill testified in East Virginia that instead of spending over $2 billion on PATH, PJM could achieve the same results with about $200 million in SVCs. That's exactly what they have done. I'm very happy that they took Mr. Merrill's excellent advice.

Reply
Keryn
6/13/2012 02:08:57 am

Well, sure, it's great that PJM went through the motions... but nothing has been done and is unlikely to get done because of PJM's cartel behavior. I'll send you PJM's answer (it's long and has all kinds of PJM goodies in it that I had not seen before) and you'll see what I mean. I was sort of surprised at PJM's reasoning for their selection of incumbents... it's so baldly unsupportable it made me laugh. This is a big loser for PJM, some egg on their cartel face. But it's way past time that PJM's choke-hold on competition be remedied. If this is what it takes, so be it. The more the PJM cartel got away with, the bolder they became. We've discussed PJM's building to a crisis that requires intensive house cleaning before. I think we're almost there.

Reply
Keryn
6/13/2012 02:17:41 am

And in that "it's all related" vein again, PJM supposedly made their decision based on cost. Primary Power pointed out that FirstEnergy's (Allegheny) last SVC project was approved at something like $60M but ended up costing $90M. And there we are at the transmission incentives problem where cost overruns are allowed to earn incentive ROEs with no limit and with no performance standards. It's like handing them a blank check... the more they spend, the more they earn! And this provides a clear demonstration that PJM's approval based on cost is not done in a fair and open manner or even on apples to apples comparisons. They're not even trying here when evaluating costs of competing projects. So, how is this going to move forward in light of new cost allocation principles of O1000 and the contentious postage stamp cost allocations? It just keeps getting more muddled instead of clearer. At this rate, nothing is going to get built, ever, and the "risks" of building transmission just keep getting more and more expensive for consumers.

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    About the Author

    Keryn Newman blogs here at StopPATH WV about energy issues, transmission policy, misguided regulation, our greedy energy companies and their corporate spin.
    In 2008, AEP & Allegheny Energy's PATH joint venture used their transmission line routing etch-a-sketch to draw a 765kV line across the street from her house. Oooops! And the rest is history.

    About
    StopPATH Blog

    StopPATH Blog began as a forum for information and opinion about the PATH transmission project.  The PATH project was abandoned in 2012, however, this blog was not.

    StopPATH Blog continues to bring you energy policy news and opinion from a consumer's point of view.  If it's sometimes snarky and oftentimes irreverent, just remember that the truth isn't pretty.  People come here because they want the truth, instead of the usual dreadful lies this industry continues to tell itself.  If you keep reading, I'll keep writing.


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