Watch this powerful video and ask yourself just how far away we are from a similar moment in the U.S.?
I routinely get requests for assistance opposing other transmission projects, but I received one today that comes from the other side of the world. The theme and message is the same, however: powerful forces that stand to make a bundle of money are running roughshod over the people who are expected to make the ultimate sacrifice for others by giving up their home to make way for new transmission. When the actual "need" for the project is mired in controversy, some people dig in and take a stand. The people are connected with the land they have nurtured (and that has nurtured them) for generations, and they will not give up easily. This is an old story that never changes, however the character of the resistance is changing as people come together in solidarity. We reach out over state lines, across regions, across borders, across cultural and language barriers. The people ultimately will not be denied. Watch this powerful video and ask yourself just how far away we are from a similar moment in the U.S.? How far are we from the transmission tipping point? It's coming faster than you might think...
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Interesting article in the Pittsburgh Post-Gazette. It seems like the locals are a bit miffed at the way Ohio-based FirstEnergy has been slowly cannibalizing former Pittsburgh energy star Allegheny Energy. That echoes an anonymous sentiment I saw in an online forum yesterday, where it was said that FirstEnergy is wrecking what used to be a good company. It's all about the stockholder dividends anymore. FirstEnergy doesn't give a damn about its customers, or the communities where it does business. FirstEnergy made all sorts of glittering promises to regulators and communities in order to get its merger approved, and has been systematically violating its promises ever since. FirstEnergy just doesn't care if you don't like it, little customers. The company has a monopoly in this state, step in line and take what you are served. But, FirstEnergy's monopoly state franchise isn't irrevocable. Look what's happening in another town that got fed up with a different out-of-state utility conglomerate...
Electric market manipulation is becoming mainstream news lately. In the comments section of my post about renewal of the PJM Market Monitor's contract this week, manipulative banksters JP Morgan and Barclays were mentioned. Just to be clear, JP Morgan and Barclays have been accused of manipulating electricity markets in California, other western markets, and midwest states. They have not been accused of manipulation in PJM (at least not in these big, high profile cases). Is that a good thing or a bad thing? Does it mean that these banksters haven't been playing games and skimming on PJM's electricity market, or does it simply mean that they haven't been caught yet?
The Wall Street Journal had a big, splashy article about market manipulation the other day. It's got some really great graphics that explain one way that these banksters have manipulated the market in such simple terms that anyone can understand it. Bankster offers electricity in the next day market at a really low price, then jacks up the price when it comes time to actually sell it. The buyer decides not to buy it after all, because it's too expensive. Bankster collects what's known as a "make-whole payment" from the buyer in exchange for being ready to supply power. Maybe the WSJ's graphic designer needs to go work for FERC or Monitoring Analytics to make their reports and explanations of market manipulation sexy enough for water cooler chat, too. Here's FERC's attempt to be scary with talk about fraud and attempts to deceive. Any ordinary consumer reading this would still have no idea what market manipulation really is. Here's the PJM Market Monitor's 2012 State of the Market Report. Boring! You'd have to be a real geek to even enjoy flipping through it. But wait, Monitoring Analytics has produced a "Press Briefing" version that includes some explanation of what they do and what happened in 2012 as represented by a bunch of graphs! Where's the comic book version? There isn't one. Therefore, if it wasn't for our friendly, neighborhood banksters, we wouldn't even be discussing market manipulation in the first place. And market monitors and regulators wouldn't be today's pop culture rock stars. And try though they may, FERC and Monitoring Analytics seem to be incapable of dumbing this stuff down enough so that the average consumer can understand it, much less find it interesting. The WSJ article explains one scheme that was uncovered. There are probably hundreds more going on right now, and hundreds more being devised. As soon as the regulators close one loophole, the banksters start manipulating another. It's a never-ending battle. Deregulation and competitive markets don't benefit consumers. It actually costs them money. The WV PSC issued an Order today refusing to dismiss the Potomac Edison/Mon Power general investigation of billing and meter reading practices as requested by the companies.
The PSC was unconvinced by the companies' claim that the matter has been resolved and should be dismissed. The Commission believes the data Staff and FirstEnergy filed indicate the need for further investigation and do not justify dismissing this matter as resolved and therefore FirstEnergy's request to dismiss is denied. The Commission made the following FINDINGS OF FACT: 1. The Commission opened a general investigation into the meter reading, billing and customer service practices of FirstEnergy. June 7, 2013 Commission Order. 2. FirstEnergy reported that 5.3 percent of its customers received two consecutive estimated bills and a further 2.2 percent received three consecutive estimated bills in the May 2013 billing cycle. July 1, 2013 FirstEnergy Filing at 8. 3. Approximately 44 percent of FirstEnergy customers in West Virginia were unable to resolve a billing problem in their first customer service call in 2013. Id. at 12. 4. Staff reported that it has received an increasing number of informal complaints regarding FirstEnergy billing practices. July 15, 2013 Staff Reply. The Commission was unconvinced by FirstEnergy's desperate posturing attempting to show that everything is hunky dory, and tells the company who's boss: "The Commission also takes this opportunity to emphasize that the purpose of this proceeding is to ensure that FirstEnergy takes the steps necessary to provide reliable service and accurate billing. The Commission will not prematurely rush this matter or close the proceeding until FirstEnergy demonstrates that its billing accurately reflects customer usage on a consistent basis and has implemented responsive service practices." The Commission intends to stop FirstEnergy's reign of terror, therefore FirstEnergy must now be monitored like a wayward teenager: "In this case, the Commission believes that it should immediately begin collecting data to allow it to monitor certain aspects of FirstEnergy customer service. This data will assist the Commission and the parties in this proceeding by generating a statistical benchmark for determining improvement or decline in service quality and providing empirical data that demonstrates whether the problems have been resolved as contended by FirstEnergy." Beginning August 15, 2013, and continuing for one year, the required monthly submissions should include the following information: 1. Current customer contact center metrics collected by FirstEnergy. 2. The number and percentage of customers with two or more consecutive estimated bills rendered. 3. The current number of budgeted meter reader positions and the current number of meter readers employed. 4. The current status of the project to re-number meters and adjust meter routes. 5. The steps taken to adjust or improve the current enhanced estimation algorithm. 6. The number and percentage of meter rereads. 7. The number of complaints handled by the customer contact center with a breakdown by complaint type. 8. The number and percentage of customer complaints resolved on the first call to the FirstEnergy call center. 9. The number of customers placed on a deferred payment plan and note the percentage of those with two or more consecutive estimated bills. The Commission also ordered: "Further, Staff must review the reports FirstEnergy will file and promptly submit an analysis of the new data after three and six months of those filings. The Commission, however, expects Staff to continue to investigate this matter beyond the analysis prescribed by this Order and recommend further steps as needed. The Commission will monitor the monthly filings and expects FirstEnergy to demonstrate improvement consistent with its representations in the July 1, 2013 filing that the underlying problems are resolved. The Commission will determine the need for further action after approximately six months of statistical filings and will issue a subsequent Order that may either call this matter for an evidentiary hearing or prescribe an appropriate alternative. The Commission will also hold public comment hearings in the FirstEnergy service areas after it receives and reviews the first two monthly reports." The Commission reasserts its authority and hopefully strikes a little fear in FirstEnergy's flippant little corporate heart by reciting possible future outcomes: "The Commission cannot at this time conclusively determine what future action might be necessary if current trends continue, possible future interventions may include (i) requiring more costly monthly meter reading instead of bimonthly readings, (ii) fixing minimum meter reading staff levels and practices, (iii) creating financial rate penalties tied to statistical performance or (iv) requiring FirstEnergy to retain a consultant to revise its integration process." The Commission has even issued a press release. It's time to stop playing around now, FirstEnergy, quit denying there is a problem, and get down to the serious business of making amends with your customers. The arrogant energy industry and their paid media pimps continually pretend they know what consumers want. They believe that if they write and publish enough lies that consumers will start to believe them.
Not. Forbes "contributor" Ken Silverstein tells us that "Utilities would have an easier time building transmission lines if it were not for a feisty public, which generally feels that those ugly lines ought to be built somewhere else." Really? This guys bills himself as "editor-in-chief for Energy Central's EnergyBiz Insider. With a background in economics and public policy, I've spent two decades writing about the issues that touch the energy and financial sectors. My EnergyBiz column has twice been named Best Online Column by two different media organizations." However, his NIMBY name calling merely showcases his complete ignorance of the dynamics of current transmission policy debate. Is he really this clueless, or is he merely posturing for the crowd to parrot power company propaganda? Let's take a look at just a few of the facts Silverstein gets wrong: 1. "...the transmission grid is aging and it needs to be updated and expanded so that it can fulfill the needs of consumers — many of whom don’t want those unsightly lines near them." WRONG! The transmission grid was not designed to wheel energy from coast to coast to fill the pockets of greedy traders. The industry is not spending enough capital "upgrading" for any real need, but has been banging its head against a brick wall attempting to "expand." Let's look at just one example: While PATH was shooting blanks attempting to get its new build project approved, Dominion slipped in and quietly punked AEP/FirstEnergy with the rebuild of an existing line that completely obviated the PATH project. Consumer issues center on NEED and COST. It's not about NIMBY anymore. How loud do you suppose Silverstein would squeal if someone routed a transmission line through his own backyard? Silverstein loves new transmission... as long as there's no personal sacrifice on his part involved and it's not in his backyard, therefore, Silverstein is the real NIMBY. 2. "Inevitably, disputes emerge that typically center on the potential ecological harm that a given line may take. In other instances, the arguments are that the development is occurring in states that will not get the benefit of the added electricity, or that it would increase the usage of coal. Such was the case when American Electric Power and FirstEnergy Corp. tried to build the so-called Potomac Appalachian Transmission High-Line, which would have stretched 275 miles from West Virginia into Maryland. The PJM Interconnection, which coordinates the transmission planning for the MidAtlantic states, has now withdrawn the project. It has done the same for Pepco Holding’s Mid-Atlantic Power Pathway, although both concepts could get resurrected once the economy is in full swing." WRONG! PJM cancelled the PATH project because it was not needed, not because of cost allocation, environmental or coal-related issues. The opposition to PATH was ALWAYS based on the fact that the project was not needed. PATH and MAPP are not going to be "resurrected," and neither is an energy-wasting economy that increases energy demand. Consumers in the PJM region are already on the hook for the quarter billion dollars wasted developing the unneeded PATH project, a project that will never provide consumers with any benefits. None. Zero. PATH and MAPP were part of an industry money-making scheme named Project Mountaineer and were never needed for reliability or market efficiency. 3. "While the concerns and the subsequent legal battles are well intended, they oftentimes perpetuate uncertainty. That is, investors are skeptical because they can make more money in alternative investments while the delays impede reliability. And if brownouts or rolling blackouts occur, the financial toll can mount." WRONG! Brownouts and blackouts? I haven't heard that kind of fear-mongering since PATH got shelved. Get a grip, Silverstein. You and I both know that is NEVER GOING TO HAPPEN. Silverstein goes on about new transmission needed for renewables and then tosses in the blackouts invective? Sorry, but the lights will not go out if renewables can't be transported coast-to-coast. Investors are salivating at the prospect of plunking their dollars into transmission investments making double-digit returns, despite the industry's "the sky is falling" whining. As well, transmission projects can and do request formula rates and incentives that provide them with a continual return during the development and construction period. There's absolutely no risk to transmission investors. None. Zero. Maybe Silverstein should do some research before he approaches a keyboard in the future. There's plenty of information to be had on this website. Maybe Silverstein could learn a few things about his topic here? And maybe, just maybe, he might want to consult a consumer before writing more folderol about what they want. The staff of the West Virginia Public Service Commission filed their comments and initial staff memorandum yesterday regarding the general investigation of Potomac Edison's and Mon Power's billing and meter reading practices. You may read the memo here. The staff gets really, really close to determining the probable cause of the most recent problem. Of particular note is that on about April 1, 2012 MP and PE changed over from the prior Allegheny Power billing system to the billing system of FirstEnergy. Ut-oh, FirstEnergy! Maybe the company should tell the PSC what happened now, before the staff figures it out for itself? Maybe the staff needs just a little help? The longer this goes on, the harder it's going to be for FirstEnergy to admit to the real problem and create a story for why it's being covered up. The PSC isn't convinced that all the problems are "in the rearview mirror." A major Staff concern is the future impact on MP and PE customers affected by recent problems whether storm related, related to meter reading staffing problems, or route renumbering projects that have been unreasonably billed. Since both estimation methods generally rely on historical usage data, how is MP, in the customer example of Attachment 3, going to produce reasonable usage estimates for that customer in the forthcoming "winter heating season" given the obviously bad usage data that has been generated? How for all other similarly affected MP and PE customers? The staff isn't buying FirstEnergy's storm-related excuses for not reading customer meters: The Companies report that it reassigned meter readers to assist in storm restoration after Super Storm Sandy caused damage on October 30, 2012, which would account for MP averaging 27% of customers receiving consecutive estimated bills in November 2012 and PE averaging 23%. In December 2012, PE The PSC staff wasn't convinced by FirstEnergy's billing fish story, so the investigation will continue. After reviewing the Companies' report and their responses to discovery requests, Staff believes it requires additional information in order formulate final recommendations in this general investigation proceeding. Staff is seeking this information through a separately filed second set of discovery requests. Staff will continue to review this matter and submit final recommendations in accordance with a procedural schedule to be established by the Commission. Don't miss your opportunity to help the PSC staff out by submitting your own comments!
The smartly renamed RTO Insider brings us word of a new feeding frenzy that has erupted at PJM: PJM’s first competitive transmission project under FERC Order 1000 attracted proposals from five utilities and three independent developers. Ever seen one of those TV clips where sharks go berserk feeding on the incapacitated corpse of a helpless animal? The similarities are stunning. Transmission builders are hungry, hungry, hungry for new projects where they can plunk down their "transmission spend" and spin the Wheel of Regional Cost Allocation and Incentive Returns to win big!
RTO Insider provides a run down of the proposals and a link to the July 10 PJM TEAC slide deck with more details and maps of each proposal (beginning on page 61). I'm loving the way that RTO Insider makes the job of babysitting PJM so much easier for me! No more random, inconvenient urges to go wade through PJM's webmaze to see what's new, and then going through all the trouble of running my find through the geek translator. RTO Insider does all that for you! Go get yourself a subscription now... because if you don't, I may know something you don't. According to the RTO Insider's proposal list, all the proposals for Artificial Island include new transmission lines of various sizes. It's just colorful lines on a map right now, isn't it? It looks like someone at PJM had fun with their mouse and an RGB color chart, drawing proposed transmission lines across Maryland, Delaware and New Jersey. Reality Check: Each one of those lines runs through hundreds or thousands of backyards. Real people, real property, real lives. Will PJM spend any time contemplating the people whose way of life they are blithely sacrificing for the needs of others? Will PJM consider the likelihood of opposition, environmental considerations, land values, or the welfare of affected individuals when choosing the winning proposal? Will PJM notify the affected communities that there is a problem that needs to be solved by building new transmission lines in their area? Will PJM consult with the communities to allow those possibly affected by the new project to weigh in on the proposal that is selected? Of course not! What do you think this is, a transparent democracy? PJM will make its selection based on cost, or engineering, or other considerations (like which transmission company schmoozes best). And then the winning bidder will begin planning their project and greasing the proper palms, carefully keeping their plans under wraps until they are ready to pull the rip cord and hold their public "open houses." At that point, the transmission owner tells the people that the mysterious, unseen, regional transmission authority has ordered the company to build this project across the peoples' land and that there's nothing the transmission owner or the people can do about it. The transmission owner's hands are tied and the peoples' fate is sealed! What a load of crap! These front-loaded fait accompli approaches never work. The people will always want to backtrack to where the decision to build the transmission line was made in the first place. They want to determine for themselves that there truly is no other option. Meanwhile, the transmission owner pours buckets of ratepayer cash into astroturf front groups, dishonest TV commercials, smarmy land agents, political palm greasing, and celebrity spokeswhores, trying to convince the people, and ultimately the state regulators, that the project really is needed. There's got to be a better way. Good luck with that, PJM. Residents of Maryland, Delaware and New Jersey -- we'll get to know each other real soon, won't we? *sigh* A recent article in Greentech Media says that 76% of consumers don't trust their utility. Two years ago, Greentech Media asked if utilities could rebuild trust with customers. According to a recent study by Accenture, it appears that it hasn't happened yet. But, but, but... Potomac Edison and Mon Power insisted to the WV PSC that 73% of their customers rate their satisfaction with the company a 9 or 10 out of 10. How do you suppose a company that is under general investigation in two different states due to hundreds of complaints about their meter reading and billing practices is getting such stellar marks in customer satisfaction? Denial. FirstEnergy clutches its phony customer satisfaction statistics tightly and pretends nothing is wrong. That's great -- a whole bunch of nice folks will keep their jobs for the time being. But because none of them want to tell The Emperor that he's naked, they only facilitate the demise of the company and put their personal financial situation in jeopardy over the long term. How badly run is FirstEnergy that its employees are terrified to make suggestions for improvement? How long has it been since anyone at FirstEnergy's Fairmont call center went home at the end of the day feeling like they made a difference and helped someone? Or, more likely, how often do they burn rubber out of there in order to get home to the liquor cabinet as quickly as possible? The result is that people are increasingly looking past the utility for energy-related services. Home services providers, security companies and commercial retailers are all taking a piece of what could be new revenue streams for utilities. More than 70 percent of consumers surveyed by Accenture said they would consider a provider other than the utility for energy services if it were available. When asked recently, dozens of Jefferson and Berkeley County, West Virginia, residents overwhelmingly gave Potomac Edison a vote of non-confidence. When asked how likely they would be to select a FirstEnergy company if given a choice, 19% said they would be somewhat unlikely, 31% said very unlikely, and an another 31% said "never in a million years." This isn't shaping up as a bright future for FirstEnergy in West Virginia, as the utility industry remakes itself over the next decade. It's been one screw up after another in Jefferson County, and since FirstEnergy couldn't be bothered to listen to its customers when given a chance, it has absolutely no concept of just how hated it is. Overall, the utility's satisfaction rating has been hanging around 3.8. Yes, that's on that same 10 point scale where FirstEnergy claimed it was receiving a 9 or 10 from 73% of its customers. Maybe FirstEnergy is holding their statistics upside down, because it sure looks like they've got things backwards? And if you think that's bad, FirstEnergy's "Customer Service" call center gets a rating even worse than that. It's at an all-time high of 3.3 this morning. It's been as low as 1.98 (also using the 10 point rating scale). Just a few customer complaints about their call center experience: "They state that the increase was do to square footage. When we read our meter they told us we were wrong. They refused to read our meter and continue to charge us based on estimated bills." "Even the staff couldn't answer why my bill was so inconsistent. They have no idea how to average the use without the actual reading. It made it seem like something in my house was consuming electric at an alarming and dangerous rate." "Horrible customer service, erratic bills (one month $170, the next month $500), not reading the meter every month instead relying on "estimating." "As I noted above, they could not explain my bill and because I was unhappy with the inability of the customer service person, she hung up on me. I had to call back again and that person could not explain so I was given to a supervisor and while she was nicer, she could not explain it either. Unacceptable." "Put on hold for so long I gave up." "Got "stock" answers to questions about billing. Would not really answer questions." "Long delays before a person answers." "Very hard to get to the right person to answer my question. I was passed though 8 people in 1 hour to get to the person that I should have gotten in the first place, not someone in a different state who did not have a clue about what I was taking about." "15min wait timed on hold. Don't return calls as promised. Wrong phone numbers on website." "Would not help with payment. Resulted in loss of service." "Rude, rude, rude." "Promised calls back, never happened. Rude customer reps who cannot/will not answer specific questions about billing/meter reading. Ridiculous!" "Placed on hold for over an hour, I finally gave up and hung up. My time is too valuable to sit on hold." As long as FirstEnergy employees keep making excuses for their own laziness and failure, customer trust will continue to deteriorate. As long as FirstEnergy keeps lying both to the WV PSC and the public, the situation will not improve. You know what they say... trust, once broken, can never be fully repaired. In the next few years, utilities will not only have to build out those platforms while also maintaining and upgrading an aging electrical grid, but also do it all while providing a level of customer service many have never had to provide before. What do you think? Take our Potomac Edison customer satisfaction survey. There are only six questions. You'll be finished in less than 2 minutes! It's way past time to burst FirstEnergy's customer satisfaction fantasy bubble! Create your free online surveys with SurveyMonkey , the world's leading questionnaire tool. Jefferson County Commission Resolves to Oppose FirstEnergy's Harrison Plant Purchase Scheme7/11/2013 The Jefferson County Commission voted 3 - 2 this morning to pass a Resolution Opposing FirstEnergy's Proposed Intra-Company Sale of the Harrison Power Plant. This makes the third West Virginia county to pass a Resolution opposing FirstEnergy's scheme to dump the risk and financial responsibility of a 40-year old coal plant on West Virginia's captive ratepayers.
It took us four Commission meetings to get there, but our Commission has once again demonstrated that it stands with the citizens who elected them to carry out the county's business. Public comment supporting the Resolution was given by George Rutherford, Patience Wait, and Keryn Newman. Public comment opposing the Resolution was given by FirstEnergy's public relations guy from some other part of the state, Mr. Charlie Frid-lee (or whatever his name is, as if it matters). Mr. Frid-lee launched into a line by line attack of the Resolution. It pretty much went this way: This statement is incorrect. There's no basis for this statement. This statement is speculation. Our experts filed testimony at the PSC saying something else. About halfway through, he stumbled over the item about whether or not Harrison would continue to operate if the sale is not approved. Apparently, according to Mr. Frid-lee, merchant generators operate differently than fully regulated ones. He helped bang home the point I had just made to the Commission, that FirstEnergy was not willing to take a risk on its merchant coal plants and has recently announced the closure of two more plants. However, the company wants to dump the risk of Harrison on West Virginians. If FirstEnergy wouldn't take the business risk of continuing to operate old coal plants, why should West Virginia's ratepayers? Mr. Frid-lee was saved by the bell about halfway through the resolution. Turns out he had friddled away his 3-minute speaking allowance before getting even halfway done. The Commission was not willing to bend the rules for Mr. Frid-lee and he was cut off. Frid-lee friddle FAIL, FirstEnergy! The Commission made Mr. Frid-lee cool his heels for another hour before they got to the agenda item about the Resolution. Chairman Manuel moved that the Resolution be adopted. Commissioner Tabb seconded. Discussion ensued. Commissioner Pellish said the Resolution was political correctness, did not contain facts, and was just a "feel good" resolution not based on facts. He would not support the language as written. He did, however, offer to support a plain statement simply opposing the plant without all the "whereas" stuff. Commissioner Noland said that she had been wrestling with not having enough info. to back the Resolution as written. But then she read Jamie Van Nostrand's blog post and started to think the plant purchase maybe wasn't such a good idea. But, in the end, Commissioner Noland can't make this kind of decision because she doesn't have enough info and has not seen any facts. Commissioner Tabb said she originally did not have enough info., but she took the initiative to do the research and become informed. Commissioner Tabb knows what it's like to be the ordinary citizen getting run over by the huge corporation from personal experience, and therefore she voted for the resolution, as the voice of the people who elected her to the Commission. Chairman Manuel said that he supported the Resolution because few in West Virginia are standing up for consumers anymore and that he wanted to do so. Commissioner Widmyer closed the show by supporting the Resolution and stating that two other counties in West Virginia had passed a similar resolution opposing the purchase of Harrison. She pointed out that was in direct contradiction to Mr. Frid-lee's statement that "only a few individuals" were against the plant sale. I guess Mr. Frid-lee's statement was incorrect, had no basis, and was pure speculation. The Resolution of the Jefferson County Commission Opposing FirstEnergy's Proposed Intra-Company Sale of the Harrison Power Plant was adopted by a 3 - 2 vote. Thank you for supporting your citizens, Jefferson County Commission! Potomac Edison customers are already familiar with the flat $5.00/month "customer fee" they are paying for fixed cost services such as distribution line maintenance, a customer care center to cheerfully answer their billing questions, and a staff of meter readers who will come to their home every 2 months to read their electric meters. Potomac Edison has been collecting this $5 fee from every customer, every month, although the company has completely failed to actually provide the services, and has instead been pocketing the money to add a few pennies to the stockholder dividend.
Now the investor owned utilities and their trade association, Edison Electric Institute (EEI), have cooked up a new way to increase your monthly "customer fee," or to put in place huge new fees for new or departing customers. A report issued by EEI back in January recognizes an emerging threat to the electric utility business model that will ultimately be its undoing. Investor owned utilities are scared spitless and have been scrambling for ways to dig their hand into your pocket permanently. Simply put, small scale renewable electricity generation developed at point of use is going to make the utility's centralized generation and transmission of electricity about as useful as teats on a bull. Rooftop solar, battery storage, fuel cells, geothermal energy systems, wind, micro turbines, and electric vehicle enhanced storage are becoming what the industry calls "disruptive challenges." A "disruptive challenge" is defined as “an innovation that helps create a new market and value network, and eventually goes on to disrupt an existing market and value network (over a few years or decades), displacing an earlier technology. The term is used in business and technology literature to describe innovations that improve a product or service in ways that the market does not expect, typically first by designing for a different set of consumers in the new market and later by lowering prices in the existing market.” An example of this would be cell phones, which have made made traditional land line phones all but obsolete as technology marches relentlessly onward. The report notes that it only took 10 years for cell phones and deregulation to destroy the telephone company business model. The graphic on page 12 of the report tells the story at a glance. Technology Innovation and Energy Efficiency combine to produce lost revenue for the company. This requires the company to raise rates to continue to make money and pay stockholder dividends. As rates rise, customers assess the cost of implementing additional energy efficiency or investing in their own point of use generation system against continued passive purchases from the company's centralized system. As customers cut their usage or simply check out of the utility's system altogether, lost revenues result. Back to square one. It's a vicious cycle, and it's one the utility cannot win. In order to survive, the utility industry needs to find new products and services that customers need in this brave, new, point of use renewables world, such as positioning themselves as solar leasing companies. But that's only one of the options presented to investor owned utilities in EEI's report. Much higher on the list are tactics such as: 1. Instituting a monthly service charge to make sure that the company can continue to recover its fixed costs and investments, even when customers use less electricity. Right now, these costs are being recovered through a cost of service rate scheme where customers pay a portion based on their share of system use (per kwh). Switching these costs over to a monthly service charge allows the utility to collect a fixed cost for a service it does not provide, such as Potomac Edison's current $5/month service charge. 2. Accelerate the recovery of investment. In current ratemaking schemes, the cost of utility assets are recovered from customers over the asset's useful life (30 or more years). This makes the monthly cost to each ratepayer very low. But, because the utilities fear those customers may disappear before the asset is fully depreciated and paid for, it proposes to accelerate the repayment period and charge you much more each month. 3. Institute a "stranded cost charge" for each customer who departs. In that case, you would pay a big fee to stop your electric service. 4. Institute a "customer advance in aid of construction" fee, which is nothing more than a big fee you would need to pay up front before starting electric service. Unlike a security deposit however, this fee is not refundable when you move or stop taking service from the grid. EEI advises its member utilities to begin putting these new regulatory structures in place in your state right now. I advise you to oppose them. |
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
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