Only the greedy schemers at FirstEnergy could concoct a way to use a state renewable mandate to rip off their customers. 

"Ohio law requires utilities to generate a percentage of power through renewable energy or buy credits from people and organizations that do.
The cost of renewable-energy credits can be passed on to consumers, but fines cannot. Rather than pay fines, FirstEnergy bought credits at prices higher than anywhere in the country, before or since, an independent audit found."

So, why should you care about what happens in Ohio?  Because another of FirstEnergy's money-making schemes caused by Ohio's regulatory environment is going to cause huge rate increases for their West Virginia customers.  FirstEnergy is outta control.  The latest scheme involves dumping the liability of their Ohio subsidiary's ownership of several coal-fired generation plants into West Virginia's regulatory system through a "sale" of these assets to their West Virginia subsidiaries.  Pam Kasey at the State Journal does a fabulous job explaining this scam.  Bill Howley at The Power Line also has some rather bald criticisms about FirstEnergy's latest scam.  And to top it all off, FirstEnergy is merely copycatting AEP's earlier plan do the same thing with its Ohio subsidiary.  Once again, the consumers are the ones who get pelted with corporate dodge balls.

Just this year, FirstEnergy gamed PJM's capacity auction to increase their profits through strategic closing of coal plants to create capacity shortages and increase prices, force RMR contracts at plants it owns, and propose $1B of new transmission to move generation from its own plants into Cleveland.  FirstEnergy also gamed the market by failing to bid energy efficiency into the auction.  There's FirstEnergy again, manipulating a statute in order to squeeze money out of it and turn what should have been a consumer asset into a consumer liability.

Then came the silly TV commercial battle in Ohio over AEP's proposal to jack up capacity charges that its competitors would have to pay.  FirstEnergy focused on AEP's rate case to distract attention from its own, where the PUCO Santa Claus delivered everything on FirstEnergy's wish list.  In the end, PUCO cut AEP's requested capacity rate in half, but also granted FirstEnergy their wish to pay a much lower rate.  The difference between what AEP can charge and what FirstEnergy has to pay was, of course, added to consumers' bills.  This enables FirstEnergy to continue to offer lower rates that encourage AEP's customers to switch suppliers -- but the consumers end up paying the difference somewhere else, so the rates aren't really "lower."

Earlier this year, a "prairie fire" of public outrage caused PUCO to rescind its approval of AEP's rate case and start over.  Many accused PUCO of being biased toward AEP.  Nothing could be further from the truth -- PUCO is currently stacked with commissioners who are biased in favor of FirstEnergy.  FirstEnergy has set themselves up to do whatever they want in Ohio's regulatory system, and this means consumers will pay more.

So, what's the difference between FirstEnergy and AEP?  They're both shameless money grubbers, always seeking to increase their quarterly profits for the benefit of shareholders at the expense of the consumers they supposedly "serve."  Perhaps this article will provide a little insight into what makes FirstEnergy just a little more despicable. 

"AEP, based in Columbus, is quiet and careful, run by an electrical engineer. FirstEnergy, based in Akron, has a scrappy reputation and is run by a tough-talking lawyer."

“Historically, AEP always has been thought of as a very top-hat, well-managed company, and FirstEnergy did not have that reputation,” said OSU’s Jones.

But the past few years have been much more chaotic. FirstEnergy has shown itself to be nimble in a rapidly changing market, Mason said.

“Using a football analogy, (FirstEnergy) has learned to run the spread offense, and AEP is primarily a solid team with a big line and great running game,” he said."

It's an observation that was made 18 months ago in the first Formal Challenge to PATH's rates -- that Allegheny (now absorbed into the FirstEnergy empire) was the source of most of the accounting mistakes and imprudent expenses recovered from ratepayers in error.

"The advertising, lobbying, and imprudent expenditures are all the more glaring when compared with the similar TrAIL project expenses.  Many of the same contractors and one of the same parent companies were involved in the TrAIL project.... Most of these same objectionable strategies began during the TrAIL project, under the management of one of PATH’s parent companies, Allegheny Energy.... a comparison helps to illustrate the manner in which this company has transgressed.... In fact, we now suspect that if this same process were to be embarked upon concerning TrAILCo.’s Formula Rate, substantially similar errors and imprudent expenditures
would quickly make themselves evident. We would urge the Commission to require a thorough review of all of Allegheny Energy’s rate recovery processes, as the party in common on both projects."

FirstEnergy is just a little more eager to tippy-toe along the borders of legality, hoping to get away with these continual consumer ripoffs.  It's risky business, because with each episode of questionable business practices, FirstEnergy makes a few new enemies.  When your closet is bulging with skeletons, a few are bound to come tumbling out at the most inopportune moments.  FirstEnergy's enemies are watching and waiting because the big scandal that FirstEnergy will be unable to recover from is coming.

While trying to participate in the U.S. Dept. of Energy's "consultation" process for development of their 2012 congestion study and national interest electric transmission corridor designation yesterday, I had to pick my chin up off the floor when DOE's answer man, David Meyer, told me that "offshore wind is experimental" in response to my question about how offshore wind potential will be modeled into the congestion study.  Meyer said that because "offshore wind is experimental" it will play no part in the congestion study and be given no consideration.

Really?  Maybe Meyer can let Europe know that offshore wind is only an experimental fantasy that doesn't deserve serious consideration.

"The European Commission anticipated, in its 2008 Communication on offshore wind energy (EC, 2008) that “offshore wind can and must make a substantial contribution to meeting the EU’s energy policy objectives through a very significant increase - in the order of 30-40 times by 2020 and 100 times by 2030 - in installed capacity compared to today.”

150 GW of offshore wind projects are already in various stages of planning.

A total of 1,503 offshore turbines are now installed and grid connected in European waters, bringing total installed capacity to 4,336MW, spread across 56 wind farms in ten European countries.

In the first six months of 2012, 132 new offshore wind turbines, totalling 523,2MW were fully grid connected (up 175MW or 50% compared to the same period last year). Overall 13 offshore wind farms were under construction during the period. Once completed, they will represent a total installed capacity of 3,762MW."

And maybe Meyer should also let the developers of numerous Atlantic offshore wind projects know that they can quit wasting their money on "experiments:"

Atlantic Wind Connection
Fisherman's Energy
Deepwater Wind

Just to name a few...

Perhaps what Meyer meant to say is that offshore wind is not a "preferred potential renewable resource" (page 8).  Although when I asked a question last week about who designates (or "prefers") certain renewable resources, he told me that DOE wouldn't be designating which resources are preferred.  But yesterday, he "preferred" onshore wind to offshore wind. 

Slippage!  Dr. Freud?  Paging Dr. Freud!  Is there a doctor in the house?

If the United States ever manages to develop its incredible offshore wind resources, it won't be with the support of the Department of Energy, but in spite of it.  How does this serve the taxpayers who fund DOE?

How many times can the trade press rehash the PATH cancellation story?  Answer:  As many times as necessary to ensure that they don't have to actually cover any REAL stories about ordinary citizens organizing and kicking PATH and other unneeded transmission projects to the curb.

Another version of AEP's "disappointment" showed up this morning in Energy Biz (For Leaders in the Global Power Industry!)

AEP:

“We put a lot of work into the PATH project,” a company spokesperson told Energy Central’s TransmissionHub Aug. 8. “Obviously, we’re disappointed that it’s not going to go forward, but we’ll turn our focus now onto other transmission projects that we have in other areas that are active projects.”

FirstEnergy:

"We remain responsive to what PJM recommends and we will focus on the projects that they do see necessary to strengthen the electric grid,” a FirstEnergy spokesperson told TransmissionHub Aug. 8. “In fact, we have a number of transmission projects at FirstEnergy that we are pursuing at this time that were recommended by PJM in its latest regional transmission plan, so we’ll be focusing our efforts on those projects, particularly projects in Ohio and New Jersey.”

Is that the best these two corporations can do after wasting nearly a quarter billion dollars of electric consumers' money on a for-profit initiative that was never needed in the first place?  You guys just suck.

AEP & FE just don't care that their project failed because both companies have moved on to other profitable transmission ventures.  No big deal.  No apologies.

However, PATH used to be such a big deal that promoting it through propaganda and secret back room deals wasted millions of dollars of hard-working electric consumers' money.  And still PATH got soundly beaten in the all-important court of public opinion by a bunch of untrained nobodies (but we're quick learners, right?)

Also despite their current "no big deal" attitude, some of the PATH employees actually got angry at our humorous campaign to humanize a faceless corporation and make it less scary for us "little people."  While most had the smarts to laugh along with us, there were a couple who made our job more fun by reacting.  To the few who embarrassed themselves making faces at public meetings, posting filthy names on an internet blog, or wasting time and money continuing to fight us in regulatory venues -- thank you for making my job so much fun! 

You fellas might want to develop a sense of humor.  It helps.  So, good luck with your new transmission projects, AEP & FE, and hopefully our "paths" will never cross again. 

As mentioned in an earlier blog post, the investor-owned utilities are scared that consumer-owned, distributed generation is writing their obituary.

A new article in the San Diego Free Press, Power to the People or Power to the Corporations? provides an in-depth look at this fat-cat dilemma and exposes the lie of utility-scale renewables and investing billions of dollars in new transmission lines.

"A far better model is distributed generation.  Why not site the solar arrays close to where the energy is to be consumed? That way there is little or no energy lost in transmission.  Instead of putting solar panels in the Anza Borrego desert and trucking them to San Diego, a better solution is to put the solar panels on the rooftops of San Diego.  Large warehouses are a pretty good place, but suburban homes are pretty good too."

"In one sense, though, constructing a large national green energy system is sort of like buying organic food at the supermarket; it’s an improvement, in that the fields where it’s grown aren’t soaked in pesticides, but that produce is still traveling an enormous distance along vulnerable supply lines. And instead of building stronger local communities, the money you spend buying it just builds the bank accounts of a few huge firms.

With food, people are starting to understand the virtues of going not just green but local - and the same thing might be happening with energy. For two decades some farmers have built CSAs, or community-supported agriculture operations, where members pay an annual fee for a share of the produce. Now advocates like Greg Pahl are talking about CSE, or community-supported energy, and pointing at examples like the wind power associations and cooperatives that have built thriving facilities across Germany, Denmark, Holland, Sweden and Canada."

Go read the entire article.  You'll be glad you did (well, unless you're one of those power company lookie-loos, in which case you might want to take a few minutes to polish up the ol' resume)

It didn't take long for the peanut gallery to chime in with misguided and ignorant comments about the cancellation of PATH and MAPP.

Trade press suck-up Transmission Hub gathered the most benighted opinions it could find to create Potential PATH and MAPP cancellations unlikely to have cascading effects.  All of these sources are unfamiliar with the transmission projects and PJM's transmission planning process, and apparently PJM's reasons for canceling the projects as well.

PJM canceled the projects because demand has fallen and new generation has been planned closer to load.  This scenario isn't unique to PJM or the DC metro area.  It's happening all over the country because the way we produce and use energy is in a state of flux.  Consumers are becoming more energy efficient, which is a change that is permanent, despite PJM's posturing about "the economy."  Consumers are also investing in their own smart, power producing investments by deploying their own solar or other home-based renewable energy generation systems.  Small-scale, local renewables are being developed, which opens the door to a distributed generation future.  What is distributed generation?  It's the development of many small generators located as close to load as possible.  Distributed generation provides real reliability due to its ability to pull power from a network of local resources.  If one generator is down, it simply pulls from another located close by.  In contrast, interstate transmission lines rely on large-scale, centralized generation and the wheeling of power over long distances.  The greater the distance electricity must travel, the greater the risk of transmission failure.  Relying on just a few large, centralized generators is also risky.  Real reliability cannot be found in utility scale renewables shipped hundreds or thousands of miles from the point of generation.  This is why transmission projects are failing, and the cascade of failure will continue.

The for-profit utilities are scared.  A distributed generation future means their old business model (and their companies, unless they adapt to change) will die.   They are currently engaged in a scheme to secure a new foothold in centralized generation and re-purpose themselves as energy traders by investing in a new web of unneeded transmission lines, ostensibly to transport "wind" from the central part of the country to both coasts where the majority of the load is located.  The Transmission Hub article tells these silly utilities what they want to hear, and not the truth they need to hear.  Let's take a look at some of the stupidity behind the opinions in the article.

Jimmy Glotfelty, executive vice president of external affairs for Clean Line Energy, tries to greenwash the PATH project and re-purpose it to transport the "wind" his company intends to move from the Midwest via a series of merchant HVDC lines that total thousands of miles and will cost billions of dollars.

“At least one of these lines would be beneficial for satisfying state public policy goals, moving renewable energy from west to east,” Glotfelty said.

He was joined in his preposterous pity party by Jolly Hayden, mouthpiece for land-based wind's front group.

"He added that it would make sense for PJM to delay a decision on the PATH and MAPP lines until after the compliance filing, in order to take into consideration states' public policy goals.

If PJM's board of managers does ultimately approve the staff's recommendation and shelve the projects, MAPP and PATH may nevertheless need to be revisited, Glotfelty and Hayden said.

“I don't believe for a second that these projects will never be built,” Glotfelty said. “I believe they'll be back on the board – at least one of them will be – in the near future. The question is why should an RTO have it in a transmission plan for a couple of years and then pull it? If it's going to get put back in or if there's a likelihood it's going to be back in, shouldn’t you just get on with it now?”

Furthermore, as conditions within PJM have changed to the potential detriment of PATH and MAPP, they may change later in favor of the projects.

“In the end, this is why entities like PJM were created – to look at the big picture, on a regional basis, and decide what infrastructure is needed at the moment,” Hayden said. “Certainly, PJM should not shut the door on these projects for good. Moving forward, the need to enhance our transmission system is still very much there.”

Let's examine Glotfelty's "clean" line business model.  These transmission projects will be privately funded by investors and rely on there being an economic need to transport the product.  Merchant lines are purely speculative ventures.  They build a transmission line and then sell "subscriptions" to generators on one end and load serving entities on the other.  In order to sell the electricity, the product would have to be cheaper than competing sources at load.  Glotfelty is pushing a "clean" wind-only product, however, when one of his projects recently asked FERC if they could give preference to "renewable" generation subscribers, FERC denied their request.

"We do not approve, however, Rock Island’s request to apply a preference for energy from renewable resources in its open season. Rock Island argues generally that public policy considerations and its need to attract support from stakeholders such as environmental organizations justify such a renewable energy preference. We find that Rock Island’s general arguments do not sufficiently explain how distinctions between renewable energy resources and other types of generators justify its requested preferential treatment in an open season for initial transmission capacity. The Commission has not previously approved the inclusion of a preference for energy from renewable resources in a transmission owner’s open season criteria, and Rock Island has failed to provide sufficient justification to do so here."

So, how can Glotfelty guarantee a "clean" product that will meet state public policy goals at the load end of the line and would justify the higher price of electricity transported by these "clean" lines?  Answer - he can't.  The "clean" lines will be subscribed by cheaper coal-fired generation strategically located near the Powder River Basin, and deliver it to the big cities at a higher cost than dirty electricity sourced from more localized coal-fired generators.  Glotfelty believes that PJM should either continue to hold the PATH project in suspension, or just go ahead and build it anyhow, so that it will be there in the future to serve as a convenient highway to transport his dirty product to Maryland.  However, Glotfelty's "clean" line is a dirty lie, and "Clean" Line Energy's business model is an impossible dream that will never become reality.  Wake up, Jimmy, PATH is not needed, for your projects that will never become reality, or for any other reason.

The TrAILCo gravy train seems to have run off the rails for a couple of the project's contractors, and they've engaged in a court brawl over who gets to keep money that resulted from overcharging ratepayers for actual project costs.  TrAILCo has also been named as a defendant. 

Honestly, I couldn't make this stuff up!

See Central Contracting, Inc. Vs. Kenny Construction Co et al.

Central claims:

"Central alleges that Kenny breached the Subcontract by failing and refusing to pay $5,723,852.80 that Kenny owed Central under the Subcontract. Further, Central alleges that TrailCo was unjustly enriched by
Central’s improvement of TrailCo’s property."

Kenny claims:

"In its Counterclaim, Kenny alleges that payment under the Subcontract was based upon the time and
equipment expenses of the work plus a fee for the expenses Central incurred on the project.  Because many of Central’s workers had to travel away from their homes during the project, the Subcontract provided that Kenny would pay Central the necessary per diem expenses incurred by the project workers."

But wait, the plot sickens:

"Kenny asserts that during a financial audit of Central, it discovered that it had paid $4,910,056.00 to Central in per diem expenses, but Central passed along only $1,501,790 to its employees.  Kenny also allegedly discovered an irregularity with respect to labor rates during the financial audit–namely, that Central charged Kenny for increased labor rates but did not pass
those increases along to its workers.  Kenny asserts
that it overpaid $923,572.00 relating to increased labor costs. This dispute, however, is not relevant to Kenny’s motion."

And it gets worse.  Apparently Kenny was in cahoots with Central to bilk the ratepayers who financed the construction of TrAIL out of millions:

"Notably, Central argues that discovery will show that Kenny waived the “necessarily incurred” language in the
Subcontract because it “knew exactly how Central was treating the per diem allowance as early as February,
2009; concurred in that treatment, and in fact, directed it; and continued to make payments to Central for over two years with full knowledge of how Central was handling the per diem allowance and acquiesced in it.”

"Central intends to seek, for example, information regarding a February 20, 2009 meeting between Kenny and Central, during which Central contends Kenny’s representatives directed it to invoice for per diems for each day its field labor employees worked on the project, regardless of how Central ultimately  compensated those employees."

So, exactly how much unearned expense did TrAILCo and its contractors bilk ratepayers out of?

Someone should string them all up by their ankles and shake them until all the ill-gotten booty rattles out of their pockets, and then return it to the consumers who struggle to pay their electric bill every month.

I am truly amazed at the depths to which corporations will stoop when there's a buck on the table.  Disgusting.

Today, Patience and I celebrated our fourth, and hopefully last, "PATHaversary."  It's been four years now since we walked into our first PATH "Open House," soon figured out not only was the project incredibly destructive, but that the "green-shirted goon" staff were callous and untruthful.  And we made a game plan to stop PATH.  So, this afternoon we hoisted a couple Raging Bitch Ales and bid PATH adieu.

We've learned a lot in the last four years.  Unfortunately, we can't unlearn it again.  We're not the same people we were four years ago and our work will continue.

One of the many news stories about PATH's cancellation drew some comments complaining that the real story had been missed, and it has.  The real story is that David has beaten the corporate Goliath.  Ordinary citizens coming together and fully participating in our democratic processes were more powerful than corporate greed in the end.  You can fight corporate power and win, folks!  If we'd individually concentrated on only our own backyards and let PATH intimidate us (oh, and how they tried!) the $2.1B, completely unnecessary, PATH project would be built by now.  However, because of all of us, PATH has finally been chucked into the great scrap heap of stupid ideas that will never become reality, where it always rightfully belonged.

We developed new and effective methods of successfully fighting transmission lines, and we won.  Our "best practices" will now be carried forward and applied elsewhere.

PATH didn't build a high voltage transmission line, instead we built something much more powerful.  We built new friendships, both within our own immediate neighborhoods, as well as with others across the state, and even across the country.  We began and continue to build a grassroots movement of citizens and consumers who are fed up with business as usual energy policy that benefits the few at the expense of the many, and are determined to change it for the better.  We have a voice, and it roars!

Part of the mission of the Federal Energy Regulatory Commission (FERC) is to:  Ensure that rates, terms and conditions are just, reasonable and not unduly discriminatory or preferential. 

Interstate transmission rates, such as PATH's, are under FERC's jurisdiction.  FERC oversees PATH's formula rate administered under PJM's Open Access Transmission Tariff. 

A formula rate is the filed rate charged to customers, although it begins as a blank template into which the company inserts different numbers each year.  This allows the actual rate to change every year in accordance with the amount the company spends.  A formula rate enables a company to continuously collect its rate without filing periodic rate cases.  However, rate cases serve to provide for a review and challenge of the proposed rates by those who are forced to pay them.  Because a formula rate allows rates to be set without the big production of a rate case, a formula rate is governed by protocols that allow (but do not require) those affected by the rate to review and challenge it if they believe it is unjust and unreasonable or unduly discriminatory or preferential.

When PATH's expenses were challenged at the WV Public Service Commission, PATH complained (and the PSC agreed) that the state had no jurisdiction over PATH's rates and therefore the PSC's hands were tied and it could not interfere or order PATH not to charge certain expenses to WV's consumers.  The PSC has no jurisdiction because of the filed rate doctrine, which has been in place for decades.  To make the filed rate doctrine as simple to understand as possible:  a rate must be challenged in the venue in which it is set.  A person cannot ask a regulator without jurisdiction to set a rate initially to modify it later.  FERC has jurisdiction over interstate electric transmission rates, therefore, any challenge to the amount you are charged for transmission must come under FERC's exclusive jurisdiction.  Otherwise, individual states could refuse to allow a transmission customer to recover a rate it must pay that is set by FERC, and the transmission customer would be unable to pass the rate it is required to pay for transmission on to its customers and would be stuck with an expense it could not recover.

Therefore, if a consumer wants to examine or challenge a transmission rate, they must do it in the venue in which it is set, which would be at FERC.  This review and challenge of rates is what Keryn and Ali and some other consumers have been participating in for the last three years.

The first year, PATH welcomed the consumers to its review process and provided information requested by Ali and Keryn.  PATH did this, not because they're such nice people, but because it was required to do so by its formula rate protocols because consumers are "interested parties" as defined in the protocols.

This consumer participation was quite unusual.  Consumers had never reviewed rates or challenged them before.  States and utilities would seem to be better equipped to do the review on behalf of their consumers or customers, however these entities were not reviewing rates with any real effort because it is too complicated, time consuming and expensive.  Therefore, NOBODY was reviewing PATH's rates, which enabled PATH to charge whatever it alone determined was just and reasonable.  FERC does not routinely review formula rates.  FERC relies on the persons who pay these rates to raise the red flag if something is amiss with a rate.

Ali and Keryn filed a challenge to PATH's rate at FERC at the end of the first review process.  When the second year's review process began, PATH carried out a series of ridiculous shenanigans that were intended to intimidate Ali and Keryn and prevent them from obtaining information under the protocols.  After all, if they couldn't examine the rate, they couldn't challenge it, right?  Wrong.  A second challenge was filed at the end of the second review period.  On June 1, 2012, the third year review process opened.  PATH has refused to provide any information at all this year, and has even tried to ban consumers from an informational meeting about its rate.

One of the tactics PATH tried to utilize last year to make consumers go away was to change the definition of "interested party" in its protocols.  Although the Commission granted the change (to read "any entity with standing under Sec. 206 of the FPA), it also informed PATH that consumers have a direct interest in the rates they are charged that are under FERC's jurisdiction (because, remember, the state does not have jurisdiction here, FERC is the only available venue for consumers).

On July 18, Keryn filed a complaint at FERC alleging that PATH had violated its formula rate protocols by refusing to provide information requested by an interested party.

The deadline for interventions and comments was Aug. 7.

Here's what turned up at FERC:

PSE&G, a utility from New Jersey, filed a doc-less motion to intervene, which merely preserves its right to participate in the case.  PSE&G had no comments.

Patience Wait filed a motion to intervene and comments.

Alison Haverty filed a motion to intervene and comments.

PATH filed an answer to the complaint.

Keryn Newman filed a response to PATH's answer.

Will consumer rights be protected by FERC?  Or will PATH manage to disenfranchise the consumers who pay its rates, and leave the consumers with no recourse other than to pay?

PJM held a press briefing this afternoon to explain their decision to recommend that their Board of Managers cancel the PATH and MAPP projects at their upcoming August 24 meeting.  PJM blamed the cancellation on "the economy."  Nothing could be further from the truth.

Here are the REAL reasons why the projects were canceled:

PATH and MAPP (and Susquehanna-Roseland and TrAIL) were first and foremost parts of PJM's Project Mountaineer initiative.  Project Mountaineer was the 2005 brainchild of PJM's then President, Karl Pfirrmann.  Project Mountaineer was a plan to increase the transfer of coal-fired generation from Western PJM (the Ohio Valley) to Eastern PJM (the East Coast load centers) by 5,000 MW.  The plan was born out of an idea to "promote regional transmission planning and expansion to facilitate fuel diversity including expanded uses of coal-fired resources."  FERC held a technical conference on this subject in Charleston, WV on May 13, 2005, that was well attended by coal companies and electric utilities, as well as their political and regulatory cheerleaders, and Pfirrmann unveiled Project Mountaineer at this conference.

I'm not sure how "fuel diversity" was going to be "facilitated" by adding more "coal-fired resources" back in 2005, since coal has historically held the lion's share of the "resources" that produce electricity in this country.  Don't try to make sense out of the transcript.  It only holds entertainment value anymore.  Do a "find" in the document for the words "laughter" and "penguin" and you'll see what I mean.  It was a real riot, apparently.

Project Mountaineer was the opportunity to burn more coal and build very profitable transmission projects to transport it to new markets, and PJM's Regional Transmission Expansion Plan (RTEP) was proposed as the vehicle that would allow it to happen.

The coal-fired generators created projects designed to take advantage of the opportunity.  Allegheny Energy proposed the TrAIL Project.  AEP proposed its "I-765 Project."  PJM broke TrAIL down and combined part of this opportunity with part of AEP's I-765 Project to create the combined opportunity known as the PATH Project. 

That's right, the power companies created the opportunities before PJM had refined the exact vehicle.  PJM had yet to create a "need" for these opportunities that would act as the vehicle.  PJM went looking for, and "found," voltage violations, congestion, and reliability problems that would cause "brownouts and blackouts" if these opportunities were not built.  Instead of allowing a problem to present itself before designing a solution, PJM identified the solution first and then created a problem for it to fix.

As far back as 2007, opponents to new coal-by-wire high voltage transmission lines had produced testimony by experts that questioned PJM's determination of "need," and proposed that increased energy efficiency, demand management and the building of new generation closer to East Coast loads would solve the problem quicker, cheaper and more reliably than building billions of dollars worth of new long-distance transmission lines.

Today, PJM claimed that the reasons for PATH and MAPP's demise were:  "...reduced growth rate in customer load over the past years [energy efficiency]. We've seen a general increase in particular in eastern PJM in the amount of demand response that is available to us and most recently, earlier this year, we've seen a number of new generation additions in eastern PJM clearing through our capacity market."

These are the very same solutions that experts predicted would solve the problem without the building of new transmission lines FIVE YEARS AGO!

PJM claimed that they have been continuously re-evaluating these projects over the past five years, however their re-evaluations always continued to find a need for PATH.  It was only after the Virginia State Corporation Commission got tired of PATH's obfuscations and delays and ordered new supplemental analyses of the PATH project that it suddenly became clear that there were fatal flaws in PJM's "need" determination for PATH.  The analyses ordered by the VA-SCC were what put PATH into "suspension," where it has languished for the past year and a half.

Why did it take PJM five years and more than $225M (cost of PATH Project only) to find the solutions that had been freely handed to them in 2007?

The real reason PATH and MAPP were canceled is because they were never needed in the first place.  This unconscionable waste of time and money was caused by corporate greed and a massive planning failure by the PJM transmission cartel that these same greedy corporations control.

If you ever need a handy, dandy road map of corporate scheming, look no further than quarterly earnings calls.  Tony the Trickster and his merry band of profiteering pirates tried to put a big smiley face on their poor performance for investors during FirstEnergy's Q2 2012 earnings call on Tuesday.

You can read the transcript of the call here.

Here's a couple of items to look for as you read:

1.    FirstEnergy's "derecho" storm costs will be at least $130M.  70% of that amount will be capital expense that they will recover within existing regulatory mechanisms.  The other 30% will be "deferred."  This simply means the company will create a debt that they will recover from ratepayers at a later date (with carrying costs!)  FE says they will file a request in West Virginia in the 3rd quarter to set up the deferral.  They already have the regulatory structure in place to do this in the other states.  FE says that WV took the worst damage hit, so I'll assume WV will also get the lion's share of the repair cost.

2.    FirstEnergy's finance guy is pretending that the company has no idea why residential demand is still dropping.  He thinks it's due to the economy and unemployment.  Mark Clark thinks people without jobs sit home in the dark and don't use electricity because they can't afford to pay the bill.  Can any of you tell me why residential demand may still be falling?  Any kindergarteners reading this blog that are smarter than overpaid electric company bigwigs?  Apparently a light bulb (it was most definitely a CFL) finally went on over the head of Donny the Gregarious, who pondered whether energy efficiency was having a "dampening effect" on residential consumption.  Ya think?


3.    Lower operating costs due to "merger synergies" (most overused corporate buzzword, ever) and lower storm repair costs (remember this was before the "derecho") were an earnings driver for the quarter.

4.      Picture this...  Tony the Trickster reassured the analysts by telling them that his staff presented him with a weekly win/lose customer switching report.  See?  Being a CEO who makes millions every year really is as simple as sitting around, smoking cigars, and looking at pictures!

5.    FirstEnergy mentioned that transmission drives their profit... over and over again, in many different ways.  Has FirstEnergy told you lately that transmission is where they're hanging their hat to meet next year's "guidance"?  Yes, it's true, FirstEnergy needs to "accelerate" that $1B in "transmission spend" and push it up to 2012 or 2013, instead of later years.  Here's why:  Transmission spending earns a bigger return, 12.7% for their TrAILCo affiliate's projects.  Once they've spent capital on transmission assets, it begins earning in the world's sweetest investment account with absolutely NO RISK involved!  The quicker they can "deposit" their "transmission spend" in their own little investment account, the sooner it can start earning big profits that will enable even bigger earnings.  There's just one little problem -- sometimes Tony can't "accelerate" his "transmission spend" fast enough and get his transmission projects ramrodded through with enough alacrity to satisfy his financial needs.  Whatever could it be that might get in Tony's way?

"The real issue I see in terms of being able to get many of those transmission facilities in place, will not necessarily be driven by the construction schedule, but will be more affected by our ability to acquire rights of way, abilities to get outside crews in to support it, and doing that and getting the permits necessary to complete that amount of work in the timeframe that we’ve laid out in front of us.

So, we have some work to do, there’s a lot involved in the process, we’re in the early stages now, we’re preparing environmental impact statements and all of the other parts, pieces and parts that will require regulatory approval, primarily from siting organizations, and as we move in that timeframe, we’ll be better able to predict when we will have the particular parts of those projects in place. Because this is not just one project, there are a number of things that are going to be done. Substations are going to be enhanced, additional ones are going to be built, new lines are going to be brought in to serve those."


Delay might not be Tony's friend, but it can be a transmission opponent's BFF!