Wow, what a shocker!  FirstEnergy's grid monkey, PJM Interconnection, has determined that the two coal-fired power plants the company recently announced for closure in October are necessary for reliability.  In order to keep the plants open until FirstEnergy can further add to its corporate coffers by making transmission upgrades to take the place of these two generators, PJM will offer the company what's known as reliability must run (RMR) contracts.  RMR contracts provide a big pay day for FirstEnergy in exchange for extending the closing date of Hatfield's Ferry and Mitchell and keeping the plants available to ensure reliability.  And, like every other dime PJM spends, the money for the RMR contracts is added to your electric bill.  How long will this last, how much will it cost consumers, and how much will FirstEnergy profit from its plant closure game?  Nobody knows.

PJM is an industry-run cartel.  How else can companies like FirstEnergy continue to play the same game over and over and get away with it?  According to PJM's rules, a generator must only give 90 days notice that it will close.  Can PJM build a replacement generator or make necessary transmission upgrades in 90 days?  Of course not.  Did this rule ever make any sense, or was it specifically set up to be gamed in this fashion and produce unearned profit for PJM utilities?  The only way you can prevent being gamed this way is to build your own generator by installing solar or another renewable resource on your home or business.

FirstEnergy's decision to close these plants, followed by a subsequent decision to keep them open indefinitely isn't fair to its workers either.  Closing the plants on short notice without providing a transition plan for the employees is bad enough, but now FirstEnergy prolongs their agony by dragging it out.  Maybe the company should use this reprieve to help their employees find or train for new jobs, but they won't.  FirstEnergy simply doesn't care.  Will FirstEnergy share its RMR windfall with these displaced workers to ease their transition to new jobs? Of course not, that extra money goes in Tony's pocket!  Workers are expendable to companies like FirstEnergy.

The only thing missing from this round of the FirstEnergy Plant Closure game so far is an artificial generation shortage that drives up capacity prices in the region.  Shall we expect that to happen at the next auction? 

How does this keep happening?  PJM and its silly rules and "markets" don't save you any money.

The PJM cartel likes to pat the stray consumer who ventures into its lair on the head and pretend that they are "stakeholders" who matter. Go ahead, pull up a chair, little consumer, our cartel is transparently open to all... except when its not.

The PJM cartel is a private club meant for the MWM (Members Who Matter - thanks, Bill!).  The rest of you "stakeholders" only have a role in ensuring that PJM's annual budget of $32M is adequately funded.  Other than that, PJM really doesn't care what you think.

Now, imagine the shock and horror of one bourgeois "stakeholder" who received the following email invitation to participate in PJM's Stakeholder Survey yesterday.

The funny part here is that the recipient of this email hasn't paid PJM one whit of attention for several years, has no clue what "organization" he is supposed to be representing, or how PJM even got his name and email address.  That's right, PJM, you managed to send your survey invitation to a common ratepayer!

They weren't lying about this survey taking 20 - 30 minutes.  It's quite extensive and if you've used any of PJM's "services" over the past year, it can expand endlessly like a window, inside a window, inside a window, ad finem.  But, it's the best look us plebeians are going to get at what the cartel club considers important.  Like royalty everywhere, PJM just doesn't realize how arrogant they come across.  Here are a select few survey questions:

PJM wants to know about its "corporate reputation" and how you would rate them on the following:

Being well-managed, trustworthy, innovative, an industry leader, attracting and retaining the best and brightest employees, having efficient processes, having required systems and infrastructure in place AND the most important:

Helping my company succeed and being easy to do business with, because the PJM cartel's first mission is to help its members make money!  What?  You thought PJM's mission was to keep the lights on?  Ha ha ha, you little prole, what a kidder!

PJM also wants to know how well they've done educating stakeholders and helping members work toward consensus of stakeholder issues. 

PJM also wants your opinion on their food and "making you feel valued."  What is this, a Chuck E. Cheese franchise, or a regional grid operator?  Who knew PJM was a vacation destination?

PJM also wants to know where you get your information about them (because propaganda is only useful if it is disseminated correctly): 
Inside Lines, committee emails, communication with PJM employees (ultra-secret meetings where unneeded transmission projects are propped up endlessly), communication with committee members, trade media, pjm.com, or a company representative.

PJM asks:  Have you read, seen or heard anything in the news media about PJM in the last six months? (In other words, are you Amish?)

What sources do you find useful for providing industry info.? (because PJM needs to make sure their propaganda reaches these markets):

Internet search engines such as Google or Bing, Industry-specific blogs, Internet news sites such as CNN.com, Blogs and/or online discussion groups, Twitter, Facebook, RSS feeds, YouTube or trade media, newsletters or news media.  For any you checked, be sure to now check them off your list of reliable sources in the future.

Perhaps PJM doesn't have the right kind of role model in Mother FERC, but the purpose of an RTO is supposed to be to ensure open access and non-discriminatory transmission services, the continued reliability of the system, and to operate wholesale electricity markets that provide electricity suppliers with more options for meeting consumer needs for power at the lowest possible cost.

It's really not all about providing a smokescreen for investor owned utility transmission building schemes, wining and dining utility executives, or helping investor owned utilities to succeed.  It's supposed to be about serving the electric consumer, or "stakeholder." 

Here's how PJM might go about doing a real "stakeholder" survey:  The following question, and a mechanism for every one of PJM's 60 million "stakeholders" to individually answer it, should be featured on every cable news channel and on the front page of USA Today:

Have you ever heard of PJM Interconnection and how it serves consumers?

Transmission's biggest cheerleaders met last month in San Diego to talk about a subject near and dear to their wallets.  During his presentation to his fellow speculators, Ray Wood, head of U.S. power and renewables at Bank of America Merrill Lynch said:

Wood wasn't just bragging, however, but trying to convince everyone that transmission needs big, double-digit rates of return in order to attract capital.

According to Wood, funds for transmission are readily available, however transmission is so risky that no one wants to invest in it until a project has been awarded a "notice to proceed."

This is a lie.  There is no risk involved in building transmission.  Transmission incentives awarded by FERC routinely place all risk on consumers.  One incentive awarded by FERC to all who ask is guaranteed recovery of 100% of prudently-incurred project cost.  Another is the ability to collect a return on investment during  the construction period (CWIP in rate base).  The investor cannot lose if he is guaranteed to receive his entire investment back, plus a generous return, even before the project is constructed.

What Wood is whining about is that brief period of time between the day some transmission owner rolls out of bed with the idea to build a transmission goldmine, and the day incentives and a formula rate are approved by FERC.  This is the only time when investment isn't earning a great big return.  After that, it's all $$$$$!

Wood pretends that there's some further risk during other necessary approvals, such as a state CPCN or an environmental review.  The investor is still earning during this time -- where's the risk?  The only "risk" is that a project may be abandoned if it cannot buy necessary approvals, therefore the "sky's the limit" amount of investment that it was possible to make actually constructing the project is curtailed, and the investor is left with a smaller investment that is still earning around 12%.  Oh, boo hoo.

And what about projects sponsored by transco spinoffs of gigantic investor owned utilities?  These companies often self-finance the early cost of a project by borrowing at the parent company level at extremely low rates, and then earning a 14.3% return on that investment.  In the case of the PATH project, the company never borrowed any money, however they still collected a 14.3 or 12.4 percent return on money they probably borrowed at 3 or 4%.

So, how do we fix this to make both Wood and electric consumers happy?  How about setting limits on incentive rate of return periods to coincide with the "risky" periods of a transmission project?  Transmission is only competing with other investments at the beginning.  Once the investment is made and the project constructed, all risk disappears.  So, what if incentive ROEs were gradually lowered over the life of the asset?  As well, incentive ROEs should not kick in until an actual investment in the project has been made by an entity other than the company or its parent.  Transmission owners are scamming us big time!

Don't you just love that headline?  Hopefully the first of many well-deserved slaps upside the head for this crooked company.

Yesterday, the Public Utilities Commission of Ohio (PUCO) ordered that FirstEnergy refund $43.3M to its Ohio distribution affiliates' customers within 60 days.  The PUCO found that Ohio Edison Company, The    Cleveland Electric Illuminating Company, and The    Toledo Edison Company had grossly overpaid for renewable energy credits purchased from their own FirstEnergy Solutions affiliate and then recovered these exorbitant costs from consumers.  In other words, FirstEnergy bought something from itself that was overpriced.

That's the good news.  Now for the bad news.

FirstEnergy has vowed to appeal the decision.  Any refunds due to customers will thus be held until the appeals process has exhausted itself.  FirstEnergy intends to continue to pour millions into avoiding refunds due to struggling electric consumers, and if they are successful, consumers will end up footing the bill for the cost of that too, adding insult to injury.  How long will FirstEnergy deny the consumers their refund?  Maybe forever.

This whole thing smacks of a badly executed bit of play acting by PUCO and FirstEnergy executives.  Everyone knows that FirstEnergy has stacked PUCO with its bought and paid for "yes" men.

This investigation has been going on for years.  A decision was expected last week, but PUCO delayed it a week "to allow time to fine tune an order addressing whether the Akron-based utility overpaid for renewable energy credits and passed those excess costs on to customers."  Fine tuning my eye, the decision was delayed until AFTER FirstEnergy's 2Q Earnings Call on Tuesday so that FirstEnergy's executives wouldn't have to suffer through questions about it, and so it wouldn't drag down FirstEnergy's already disappointing financial results for the quarter.  So, FirstEnergy, where are you going to get the money to pay back this $43.3M that you stole from your customers?  Inquiring minds want to know...

PUCO ruled that all the financial information related to its decision must be kept secret.  This prevents the public from doing its own independent calculation of just how much they were ripped off.  Other parties in the case contend that the theft from consumers actually amounted to more like $130M.

So, if FirstEnergy profited by selling RECs to itself in the amount of $130M, a refund of $43M is a small price to pay.  FirstEnergy still comes out ahead by $87M.  The company has actually been rewarded for stealing from its customers.  What PUCO should really be looking into is FirstEnergy's corporate separation issues.  The company is selling things to itself at outrageous prices because ratepayers are paying the bill.   "Arm's length negotiation" means nothing when Tony's left arm is shaking hands with Tony's right arm, just before plunging both arms into YOUR pocket.

It's well known that PUCO is stacked with bought and paid for FirstEnergy puppets.  This decision and its timing evokes imagination of the negotiations that must have occurred between FirstEnergy and PUCO to set it up to look like FirstEnergy was punished, when it was actually rewarded for stealing from the customers PUCO is sworn to protect.

Read about it here.

Meanwhile, FirstEnergy has attacked Ohio's Renewable Energy and Energy Efficiency standards as "too expensive for consumers."  Maybe someone needs to look into all FirstEnergy's programs to find out why they are "too expensive."  Is FirstEnergy cheating on EE recovery too?

And the bad juju continues to build...

WIRES, the voice of the electric transmission industry, has been as busy as a nasty, venomous, little bee trying to preserve its members’ ability to harvest buckets of ratepayer cash building new transmission of dubious necessity.

On another prong of its diabolical pitchfork, WIRES takes on the problem of recent FERC return on equity complaints alleging that transmission ROEs based on market conditions prior to the big crash are set too high.  One such complaint was ruled on yesterday, when a FERC administrative law judge found that the 11.14% base ROE for New England transmission owners was unjust and unreasonable and recommended that it be reduced to 9.7%.  The ALJ found that FERC’s ROE “zone of reasonableness” determined by the prior DCF analyses was inappropriate because there has been so much economic change.

With that in mind, we can approach WIRES’ petition to FERC requesting that it revamp or replace its current DCF process for setting returns, deny any future rate of return complaints under sec. 206 of the FPA as long as the ROE still falls safely within the zone of reasonableness, and that the “benefits” of a transmission project be considered as a factor worthy of a higher ROE than would ordinarily be found to be just and reasonable.   

“Petitioner asks the Commission to explore methodological options that will reduce or eliminate the uncertainties and risks to investors and to customers and avoid potential reductions in investment in needed transmission facilities, higher costs, project delays, and disruption to infrastructure planning and growth.”

WIRES intends to provide electricity consumers with greater stability and predictability regarding regulated rates of return on equity (or “ROE”) for existing and future investments in high voltage electric transmission infrastructure.  Well, gee, thanks, WIRES, I know that dilemma keeps everyone up at night… NOT.  Are you sure you’ve really got the welfare of electricity consumers in mind?  Who designated you as our representative anyhow?  WIRES does NOT speak for electric consumers.

WIRES is simply stamping its gold-plated feet because the usurious ROEs it had gotten used to have come to an end.  Now they want FERC to shore things up for them, and do it in a big hurry and in a way that shuts the consumers who will end up paying for it all out of the process.  WIRES is frightened by all the recent section 206 complaints that are eating into transmission profit margins, and that’s because the complaints are well-founded.

Rah!  Rah!  Rah!  Who loves transmission?  Gimme a W, gimme an I, gimme an R, gimme an E, gimme an S… what does that spell?  An expensive, unneeded transmission line in everyone’s back yard!  Hooooooo-rayyyyyyyy!

WIRES says it’s all FERC’s fault for making the transmission biz just so gosh darn lucrative:

“…a major and substantial impetus for new investment was supplied by federal regulatory initiatives promoting regionally competitive power markets and transmission open access. It is no accident that modernization and expansion of the nation’s transmission system has coincided with implementation of the Energy Policy Act of 2005 and its directive to the Commission to provide “incentive-based rate treatments” for jurisdictional public utility transmission projects, including “a return on equity that attracts new investment in transmission facilities (including related transmission technologies).”

And therefore, it is FERC’s responsibility to continue to champion more transmission because transmission owners now depend on it as a profit center:

“Despite the continuing challenges to its planning and siting, transmission is the “critical link” between generation and customers, and its vitality is key to FERC’s bulk power market policy objectives. The industry’s principal game-changing developments of the last two decades -- open access and comparability requirements, regional wholesale power markets, accelerating network integration, the arrival of non-utility transmission investors as well as utility diversification into commercial transmission, deployment of digital monitoring and control technologies, and new forms of renewable energy -- depend significantly on the adequacy and efficiency of the grid. In recognition of that fact, transmission has emerged as a separate business and profit center, even for many incumbent transmission providers whose transmission investments were historically the by-product of service to native load.”

Well, someone has worked quite punctiliously on a strategy to dig in a foothold for  transmission at a time when the composition of future energy generation and delivery is enormously uncertain, haven’t they?  I don’t think this is a wise strategy for consumers, who may end up holding a gigantic bill for infrastructure that is not useful or economic.  Instead of rushing headlong into $300B of new transmission intended to support more centralized generation and foster larger and costlier deregulated electricity markets, we should first be tackling the question of necessity.  Even WIRES agrees with this point.

“Micro-grids, distributed generation, and energy storage technologies represent new and potentially important competition for investors’ resources.”

WIRES’ petition makes all sorts of spurious claims that all begin with a version of  “once upon a time”:

“WIRES believes there is a binding norm obtained through rulemaking that would do more to ensure consistency than a policy statement. However, the need to address this particular matter within a short period of time and the familiarity of Commission staff and industry parties with the issues argue for a short comment period, followed by a Statement of Policy. Such action would shed light on the Commission’s intentions going forward while preserving its flexibility in the face of changing facts and events.”

Translation:  "Let’s hurry up and get this done before someone notices!"

“Petitioner believes the investment community is, or will soon become, apprehensive about the prospect of declining transmission-related ROEs and other regulatory uncertainties.”

Translation:  “Wah!  You’re impeding our profits!”

“Petitioner believes that, even the most substantial increases in regulated transmission investment would rarely, if ever, result in transmission being more than one-fifth of retail rates regionally. Of course, the rate impact of regulated transmission investment on individual customers is reduced, perhaps dramatically, in relation to how broadly costs are shared. Moreover, adequate transmission enables more efficient use of generation resources; those savings will tend to offset, at least in part, any increases in transmission rates.”

Translation:  “Those pesky consumers won’t notice the disgustingly high profits we’re making if we can socialize the costs broadly enough.”  Again… who appointed WIRES to speak for consumers?

“Petitioner believes that the subjective judgments and evolving standards associated with application of DCF in litigated cases will significantly affect investor behavior and, if left to evolve solely through litigation, will add greater regulatory risk and uncertainty to the recognizable barriers that transmission development already faces.”

Translation:  “If FERC doesn’t put a stop to  ROE complaints, the investors are going to find other investments that pay higher returns, well, if they can find any that pay more than 12 – 14%, which they can’t.”

“In WIRES’ view, one key to sustaining transmission investment is rational application of the DCF methodology or such other methodologies as may appropriately fit the financial environment and Commission objectives.”

Translation:  “And only high ROEs are rational, so therefore, show us the money!”

“Petitioner contends that challenges to existing or proposed rates of return need not be resolved simply on the basis of a mechanical application of the DCF model. Regulation should maintain a reasonable relationship between a project’s (or group of projects’) long-term benefits, including those that planners and regulators expect and those that flow from evolving grid operations, and the costs customers pay for securing those benefits through new transmission facilities or upgrades.  Transmission benefits should therefore be part of any consideration of whether customers have been, or are likely to be, harmed by an existing allowed return.”

Translation:  “We’ll make up new “benefits” for consumers if you just let us keep robbing them!”

“We are not suggesting a performance-based regulatory regime, as that is necessarily beyond the scope of the brief generic reassessment that this Petition recommends.”

Translation:  “But let’s not be hasty here!  Even though Congress expressly ordered that transmission incentives be subject to performance standards, FERC has failed to hold us to any standards, and that’s the way we like it!”

FERC simply cannot continue to reward failure and poor planning with unjust and unreasonable rates.  If you’d like to read responses to this ridiculous and dangerous petition and/or follow this docket, you may find it here by searching for Docket No. RM13-18.

All this smoke and thunder signifies the wrath of a dying industry.  Change or die, fellas, the future is here!

FirstEnergy got their quarterly grilling this afternoon, after releasing second quarter financial results that were less than impressive.

FirstEnergy's net profits were a minus 39 cents per share. 

FirstEnergy has been slashing operating costs, such as the cost of reading customer meters in West Virginia, Maryland and Pennsylvania, but now even that's not enough.  Won't it be interesting to see Potomac Edison try to pull its corporate keister out of the fire while cutting spending on meter services even further?  Maybe they ought to leave one of those open positions available... the one titled "Regulatory Magician."

In order to make up for his own poor management, useless figurehead Tony the Trickster has decided to cut employee benefits like health insurance and pensions, in addition to laying off hundreds of employees.  I didn't hear him making any personal sacrifices though.  Our pal Tony will still rake in $23M in compensation in 2013, to include company-paid financial planning and tax preparation services; personal use of the corporate jet; annual compensation and performance awards.  So while you're struggling to make ends meet or pay your badly estimated electric bill, just remember that the Alexander household feels your pain (in a vague, annoying sort of way kind of like the pain you might feel when getting a fish pedicure).

Despite earlier regulatory puffery where FirstEnergy threatened to back out of the Harrison plant sale unless it got everything it wanted at full price, apparently the company is now involved in settlement talks.

"Briefs and reply briefs were filed by the parties in July and with the conclusion of the regulatory proceeding, the commission may issue an order at any time. We are however, currently in active settlement discussions with all parties in this case, and we are very hopeful that we can reach an resolution through this process."

Going back on your word so soon, FirstEnergy?  I was really looking forward to watching you struggle with that "great asset" after your proposal was denied by the WV PSC.  A settlement would just ruin my fun.  :-( 

More later...

Last week, PATH held its "Open Meeting" to discuss its 2012 transmission revenue requirement true up and answer questions from interested parties.  Well, at least that's what the meeting notice said...

However, PATH couldn't (or wouldn't) answer questions, instead PATH made crap up.  Randy's never going to learn, is he?

Emboldened by a question from one participant about the cost of legal counsel to defend the formal challenges, Randy answered a question about how PATH-Allegheny could have possibly had 5.1 full-time employees on an abandoned project in 2012 by telling everyone that "most" of that time was spent answering information requests about its formula rate filings.

Let's see, Randy, 5.1 full-time employees at 2080 hours each equals 10,608 hours spent answering 270 individual questions, "most" of which PATH refused to answer because they were alleged to be harassing, oppressive, annoying and burdensome.  That equals 39.28 hours per question, including those where a refusal to answer was merely copied and pasted into PATH's response.  That's nearly a work week.  It took PATH one full work week to answer each question?

Right.

Stop making crap up when you're talking to accountants, okay?

And when given the opportunity to answer questions informally over the phone during the Open Meeting and save all those work hours in 2013?  PATH refused and asked interested parties to submit written information requests.

FirstEnergy subsidiary "Potomac Edison" submitted its most recent discovery responses in the General Investigation case before the WV PSC yesterday.  In its response to one of the Consumer Advocate's questions, "Potomac Edison" cites an "article" from this blog.

Of course, the invitation received was the infamous invitation to the Citizens' Public Hearing from George Rutherford that The Friddler lied about to the Jefferson County Commission, telling them that the invitation did not mention the Harrison plant transfer.

I'm so glad this blog could be of service to FirstEnergy, bringing them news that they "forward internally."

It wasn't too long ago, however, when FirstEnergy's PATH companies were complaining about this blog to the WV PSC:

Maybe I should start charging them admission?

The entities that stand to profit from building hundreds of billions of dollars worth of new high voltage electric transmission are at it again.  In the wake of FERC’s Order 1000 requiring cost allocation to be “at least roughly commensurate with estimated benefits,” and that those who receive no benefit shall not be allocated costs involuntarily, the industry has simply redefined the term “benefit” to suit their pecuniary purposes while toeing the line with FERC.  This is exactly what my Magic 8 Ball told me would happen, so we shouldn’t be surprised.

WIRES, which is a group of industry lobbyists and their sycophants, has bought a study prepared by The Brattle Group (proud industry whore since 1990) that supposedly identifies and analyzes a whole bunch of “new” benefits of building transmission that they feel will, when added to current planning evaluations, ensure that transmission wins every time!  *cha-ching $$$$* WIRES pretends that it is only concerned about the good of society.  Baloney.  It’s all about the money!

WIRES and their well-paid former FERC Commissioner counsel have submitted this study to FERC because, “It is our expectation that this new analysis will be helpful to the Commission and to parties filing in compliance with the regional and interregional planning provisions of Order No. 1000.  Although Order No. 1000 compliance involves numerous additional dockets, we believe the report should at least be part of the record in the overarching rulemaking proceeding so that parties are able to access and use its contents.” 

Right, let’s allow WIRES buy some new FERC policy with our money.  You know how I know this report is made-up crap?  Because it uses sources such as Clean Line Energy Partners’ self-serving analyses and other industry-commissioned “studies,” as well as clueless NYT blogger Matt Wald and other biased media sources.  Any trained monkey can compile a whole bunch of dubious sources to come to pre-determined conclusions.   Congratulations, Brattle Group!  I wonder how much they charged WIRES for something a 3rd grader could have accomplished?

So, how speculative are all these new “benefits” that transmission planners must consider in order to force unneeded transmission?

WIRES says, “An analysis that ignores or rejects benefits that are not measured with precision implicitly assumes that the value of such benefits is zero. This will systematically understate the overall value of transmission investments.  It will also, in turn, lead to the unintended consequence of rejecting valuable transmission projects that offer a broad set of long-term benefits with total values that exceed project costs.”

Or, perhaps there’s a reason these “benefits” have historically been given a value of zero in order to ensure that only cost-effective and needed transmission projects are actually built?

Here are the “benefits” that WIRES insists be calculated, no matter how specious they may be:

1. Production cost savings;
2. Reliability and resource adequacy benefits;
3. Generation capacity cost savings;
4. Market benefits, such as improved competition and market liquidity;
5. Environmental benefits;
6. Public policy benefits; employment and economic development benefits; and
7. Other project-specific benefits such as storm hardening, increased load serving capability, synergies with future transmission projects, increased fuel diversity and resource planning flexibility, increased wheeling revenues, increased transmission rights and customer congestion-hedging value, and HVDC operational benefits.

Production cost savings are one of the traditional ways transmission “benefits” are derived.  However, “As noted earlier, production cost savings only measure the reduction in variable production costs, including fuel, variable O&M costs, and emission costs.  This means that production cost savings, even if the simulations capture the additional factors discussed above, will not capture the benefits associated with reliability, capital costs, increased competition, certain environmental benefits and other public policy benefits, or economic development benefits. These benefits provide additional value to electricity customers and to the economy as a whole.”

WIRES would rather have us concentrate on those hard to quantify “economy-wide benefits” that can be concocted out of whole cloth and come in handy to tip the scales in favor of questionable projects.  In addition, WIRES recommends that regions bundle a whole bunch of such dubious projects into “project portfolios” (as MISO has done).  When “benefits” of many projects are combined into an impossible to separate mega-project for regional transmission organization approval, WIRES believes this sleight-of-hand spread of “benefits” among a wider pool of consumers makes cost allocation easier. 

“We also suggest aggregating beneficial transmission projects into larger portfolios of projects to simplify the necessary cost allocation analyses, reduce misperceptions that benefits appear to accrue only to a limited subset of market participants, and facilitate less contentious cost allocation processes.”

And although the report fails to mention it, this combination of many small projects, owned by many different entities, into one big mega-project also allows for convenient re-separation of each smaller segment in order to sail through state or local approvals while shepherded by incumbent utilities that have developed relationships with communities, legislators and regulators.

Here are a couple of spurious gems from the WIRES “report” that had me snorting with laughter.  Do they actually think that intelligent people will fall for this dreck?

“For example, transmission lines that allow for increased imports of lower-cost generation from a neighboring region can provide benefits to both regions: the importing region through a lower cost of delivered power [to consumers] and the exporting region through increased revenues to the exporting suppliers. The increased export revenue can also be a benefit to electricity customers in the exporting region if these additional revenues are used to offset the cost of regulated generation assets or if wheeling out the revenues paid by exporting merchant generators can be used to offset the exporting region’s transmission revenue requirements.”

That’s right… new transmission simply levelizes electricity prices between regions.  While the importing region gets the benefit of lower electricity prices, the exporting region gets the “benefit” of higher electricity prices PLUS a share of the cost of the transmission project that raised their electric rates.  What a bargain!  All benefits to an exporting region go right into the coffers of generation companies.  And here’s a perfect example from the report:

“The economy-wide benefit of the deferred generation investments was estimated at $320 million, about half of which was estimated to accrue to customers in Texas, with the other half of the benefit to accrue to merchant generators in Louisiana and Arkansas.” 

Building transmission to import renewables from coast-to-coast is not economic, and when given a choice between high-priced renewables or affordable "dirty power" utility bills, consumers overwhelmingly vote with their wallet.  In spite of also being motivated by its collective wallet, WIRES just doesn’t get it:

“In such cases, despite the fact that both transmission and retail electricity rates may increase, the transmission investment can reduce the overall cost of satisfying public policy goals.”

Sometimes, new transmission has unintended effects.  Perhaps our Pollyanna environmental warrior friends, who are backing transmission expansion that they optimistically believe will result in renewable energy super-highways, should take a lesson:

“Similarly, the CREZ projects in Texas have also provided new opportunities for fossil generation plants to be located away from densely populated load centers where it may be difficult to find suitable sites for new generation facilities, where environmental limitations prevent the development of new plants, or where developing such generation is significantly more costly.”

In addition, new transmission can perpetuate environmental and social injustice whereby the poor and politically under-represented continue to bear a disproportionate share of the burden to supply the needs of the rich and politically connected in their own or other regions.

WIRES tried to give their dubious “report” more credibility by having it peer reviewed.  Despite being able to choose its reviewers and having sole power to approve or disapprove the content of the review, WIRES still couldn’t prevent a little sanity from sneaking in at the end of the report.  The peer reviewers opined: 

“The electric power system is a complex, interconnected whole. While the interconnection may be argued to be the transmission system, the whole incorporates generation (both central and distributed), storage (again central and potentially distributed), distribution in all of its complexity, and the interaction with end users at all levels and at all levels of complexity in use and control.

It is difficult, if not impossible, to fully evaluate the benefits of transmission without reaching into the competing benefits of investments in other sub-systems of the power system. Technology is not standing still in terms of the transmission system or in terms of the other sub-systems of the power system. Two examples of changes whose impacts upon asset growth in transmission have yet to be quantified are:

• The impact of significant investment in distributed generation and potentially storage within the distribution system. These changes are being brought about by public policy decisions combined with a dramatic expansion in communications and controls allowing for the development of distributed energy systems that interact with the larger utility system

• The impact of sensing and control of the transmission system that allows for dynamic reconfiguration of the topology of the transmission system. Often referred
to as “line switching,” the benefits have been known by system operators for decades. It is only with increased monitoring, advances in analytic techniques, and computation speed that these concepts can be brought into the operational time frame.

Technological changes are adding points of pressure to the power system in general and specifically to the transmission sub-system as the interchange network that allows the system to remain balanced.”

While WIRES is trying to hurry along the filling of its members’ pockets, the electric utility industry is undergoing a sea change that’s going to make most of this new transmission obsolete before it becomes used and useful.  But these guys don’t care if a huge investment in unneeded transmission is left for their grandchildren to repay, as long as the money comes rolling in today.

If we’re going to make up a whole bunch of new transmission “benefits” that must be considered in any regional planning cost-benefit analysis, how about if we also now consider the true cost of building new transmission?  WIRES thinks that the true cost of building transmission is contained in the annual transmission revenue requirement of any particular project.  However, that does not consider the true costs to communities, individuals, landowners, ratepayers, or society as a whole.  But where are we going to get the money to hire an industry whore economist to make up a bunch of crap like WIRES did?  Oh, not to worry… the way transmission opposition is expanding lately, it’s only a matter of time before some transmission routing doofus uses his etch-a-sketch to draw a line through the backyard of an economist or two (or maybe that’s already happened, or maybe the opposition leadership is quite capable of preparing their own cost-effective analysis and report -- The Costs of Electric Transmission: Identifying and Analyzing the True Cost of Transmission!)  If you want to be part of our brain trust and help us identify the true cost of new transmission, just let me know!

Stupid people are annoying.  Especially when they have a seat in the West Virginia House of Delegates, or edit local newspapers.

The Journal (or "the urinal" as it's more popularly known) ran a story the other day claiming that Potomac Edison's Maryland customers were paying much less for electricity than the company's customers in West Virginia.

Of course, that's wrong.  But, it took two days for The Journal to get around to correcting its error.

Larry Kump is still clinging to his misinformation.

Who elected this nincompoop?  Go away, Larry.  You can't fix what's wrong with Potomac Edison, and in fact, you are only making things worse.  Any day I wake up and agree with Toad Meyers disturbs the natural order of things.  I'm busy.