Last year, the Federal Energy Regulatory Commission opened an investigation of formula rate protocols in the Midwest Independent Transmission System Operator (MISO) region.  MISO's outdated formula rate protocols (and those of its regional transmission owners) were woefully inadequate to ensure just and reasonable transmission rates.

At issue was participation, transparency and a recognized procedure to challenge rates.  MISO's pro forma protocols and those of the subject transmission owners lacked clarity on all three issues.  Yesterday, FERC ordered the parties to make compliance filings to revise their formula rate protocols within 60 days to set methods to define participation, ensure transparency and provide a method for challenge. 

Formula rates provide a mechanism for transmission owners to set a yearly revenue requirement that enables the transmission owner to recover its costs in real time as they are incurred.  Under a formula rate, a transmission owner files a yearly projected revenue requirement, which is then collected from customers over the upcoming year.  After the year ends, the company must file a true-up comparison between the estimate it collected and the actual amount it spent.  If too much has been collected, ratepayers will receive a refund in a subsequent year.  If not enough has been collected, ratepayers will pay the balance due in a subsequent year.  The formula rate (which is a series of calculations used to arrive at the actual dollar amount of the revenue requirement) is the transmission owner's FERC-approved, filed rate.  Formula rates produce an annual revenue requirement, which can change from year to year.  This obviates the need for transmission owners to file traditional rate cases at set intervals and prevents regulatory lag.  The annual formula rate filings are informational only and deemed to be just and reasonable unless an interested party raises a challenge to the revenue requirement as filed.  FERC does not audit, review or approve annual formula rate filings.  FERC relies on those who pay these annual revenue requirements to review them yearly, settle any disputes with the transmission owner, or to challenge the formula rate annual update if a transmission owner and interested party cannot settle their dispute without intervention by the Commission.

Formula rate protocols are a set of rules for yearly filing and review of the particular formula rate that the transmission owner and interested parties must follow.  If you want to review transmission rates you are paying, the protocols are your instruction manual.  

FERC toughened up the lax protocols under which MISO had been operating, requiring that revised protocols more closely resemble formula rate protocols in use in the PJM region.

MISO transmission owners are going to have to clean up their act or they may be facing annual challenges to the accuracy and prudence of the costs making up their annual revenue requirements.  Several challenges to formula rates in the PJM region have been filed and granted by the Commission.

The best part of this Order comes right at the end, where FERC makes reference to a prudence challenge that it granted as an example to follow:

"We will, however, continue to apply our well-established precedent with respect to challenges to the prudence of costs incurred by a transmission owner.  The Commission has historically recognized that “managers of a utility have broad discretion in conducting their business affairs and in incurring costs necessary to provide services to their customers.”[1]  Consequently, parties seeking to challenge the prudence of a transmission owner’s expenditures must first create a serious doubt as to the prudence of those expenditures before the burden of proof shifts to the transmission owner.[2]"

[1] New England Power Co., 31 FERC ¶ 61,047, at 61,084 (1985).

[2] Potomac-Appalachian Transmission Highline, LLC, 140 FERC ¶ 61,229, at P 81 (2012) (citing Midwest Indep. Transmission Sys. Operator, Inc., 115 FERC ¶ 61,224, at P 28 (2006)).

Despite a whole bunch of transmission owner and MISO whining that FERC was wrecking formula rates, FERC believes it is preserving the use of formula rates.  It's only transmission owner imprudence and over recovery that took a hit.  This is good news for consumers in MISO states, but only if someone steps up to actually use the new protocols.

POTOMAC EDISON ELECTRIC BILLING PROBLEMS?

Outrageously high bills?

Month after month of estimated bills?

Poor customer service and too many excuses?

We’ve had enough!

Join us for a citizens’ public hearing on May 22, 2013, at Wright Denny Intermediate School in Charles Town where we will gather information, share experiences, and provide feedback to the West Virginia Public Service Commission, your elected representatives, and representatives from the electric company.  Let your voice be heard!

Where: 
Wright Denny Intermediate School
209 W. Congress St.
Charles Town, WV

When: 
7 p.m. Wednesday, May 22nd (doors open at 6:30)

What:
Public input calling for investigation of Potomac Edison business practices and information about additional increases to Potomac Edison bills caused by the company’s proposed generation purchase.

Sponsored by:  
Jefferson County NAACP
West Virginia Chapter of Sierra Club
The Coalition for Reliable Power

OPEN TO THE PUBLIC

Please bring a copy of your most recent Potomac Edison bill.  We will be distributing a questionnaire to gather information on common problems residents are facing.  If you plan to make public comment, please bring a copy of your comments to submit to the PSC.

For more information contact:

George Rutherford, Jefferson County NAACP

Warren Stewart, Jefferson County NAACP

Daniel Chiotos, WV Chapter, Sierra Club

Keryn Newman, Coalition for Reliable Power

Download a copy of this flier to post or distribute!  Spread the word!

Another entity has joined the litany of complaints against FirstEnergy subsidiary Potomac Edison.  The Jefferson County Commission unanimously and enthusiastically voted last Thursday to send a letter to the West Virginia Public Service Commission asking the regulator to open an investigation of the company's billing and meter reading practices.

The Commission heard from WV Delegate Stephen Skinner during the meeting, as well as public comments from three different citizens, regarding the outrageous, unjust, and unreasonable Potomac Edison business practices customers had been subject to over the past year or so.

Delegate Skinner has been a vocal advocate for his constituents, many of whom have been hit hard by bills up to 1000% more than usual that are the product of the company's failure to read meters every other month as required by law, as well as both human and computer error on the part of the company.  As a regulated monopoly, Potomac Edison has obligations to its customers, and Delegate Skinner intends to do all he can to ensure Potomac Edison meets those obligations.

Since he began questioning Potomac Edison's practices, Skinner has been contacted by the company's government affairs person, who made all sorts of excuses, and promises that have failed to materialize.  The complaints continue.

Commissioner Widmyer expressed her disappointment with the company's "robo-call" method of attempting to connect with and mollify angry "real people" customers.

Meanwhile, the WV Attorney General pretends he is looking out for consumers by making a "hotline" number available for angry customers to call the company.  There's already a customer service number on your bill, little consumer.  The Attorney General recommends you call it.  Personally, I'd rather call Delegate Skinner or the Jefferson County Commission for some real help.

The parade of perturbed Potomac Edison patrons persists.

Explaining the ludicrous folly of FirstEnergy's proposed Harrison plant sale to the average West Virginia ratepayer is something James Van Nostrand, Director of WVU's College of Law Center for Energy and Sustainable Development does very well in this recent article in the Energy Forward Blog.

Have you submitted your comment to the PSC opposing the transaction yet?  What are you waiting for?  Click here to submit your comment on case number 12-1571 now.  It only takes a minute!

Great news today at FirstEnergy's quarterly earnings call!  Eternal optimist Tony Alexander (who is still waiting in vain for the economy to improve and power prices to increase) has stated that FirstEnergy's proposed West Virginia Harrison coal plant transfer is no longer critical!

"Our success with the actions we have already taken, particularly the bond deal at FirstEnergy Corp. means the Harrison transaction while still important to both West Virginia and FirstEnergy Solutions is no longer critical to the successful completion of our financial plan."

FirstEnergy management has finally admitted what I've been saying from the very beginning:  The proposed plant transfer is all about raising cash to pay down debt at FES to improve FirstEnergy's balance sheet and maintain its credit position. It was never really "...expected to help insure reliable power for our West Virginia utility customers for many years to come," or to be "...very positive for the West Virginia economy and our customers of our utilities in West Virginia."

Obviously, FirstEnergy now realizes that the West Virginia PSC is not going to approve this transaction, so  it has taken other measures necessary to patch up its balance sheet, such as selling bonds and its hydro assets (which are much more marketable than an antique coal plant).  FirstEnergy has decisively removed all its precious balance sheet eggs from the precarious Harrison plant transfer basket.  If the company had any faith left at all in the WV PSC approving the transaction, don't doubt that it would still be considered "critical."  Instead, the transfer idea has simply been tossed onto the ever-growing waste heap of FirstEnergy's bad ideas.

FirstEnergy also stated that transfer at a price lower than its jacked-up merger plant cost (which magically doubled the value of the plant overnight), as suggested by several intervenors in the case, was "a non-starter."  FirstEnergy would apparently rather give up entirely than sell the plant at a reduced rate.  I think we're all in agreement here then, and Tony can keep his "great asset" because it really isn't "more important to West Virginia and Mon Power than is it to FirstEnergy."

I think FirstEnergy's answer to this question pretty much clears things up all around:

It sounds like the bloom has come off FirstEnergy's plant transfer rose.  How refreshing for FirstEnergy to finally admit that they expect to LOSE on the Harrison proposal.  So, why not withdraw your application and quit wasting everyone's time and money, FirstEnergy?
It's still not too late to save the State of West Virginia and all the intervenors in the case a whole lot of time and money going forward with a hearing on a case you no longer care about.  FirstEnergy should withdraw now and let everyone cut their losses (well except for those shysters at Jackson Kelly, who are most likely counting on all the billable hours continuing this case provides -- because composing nonsensical and ridiculous discovery questions doesn't come cheap, does it?). 

We're not going to quit until FirstEnergy throws in the towel completely.

Keep those petition signatures, letters and postcards opposing the plant sale to the PSC coming!

Other news and entertainment to be had during today's call:

1.    AMP has pulled out of a MOU with FirstEnergy to build a peaker plant at its Eastlake site.  This now puts a whole bunch of new transmission back on the table.  But that's okay, transmission is an "investment opportunity" cash cow for FirstEnergy.

2.    FirstEnergy has succeeded in persuading the Ohio State Senate to introduce a bill to gut the state's energy efficiency standard.  "FirstEnergy is actively involved in this process and is advocating changes that we believe make more sense for our customers and help foster solid economic growth in Ohio, including the development of shale gas."  Oh, nonsense!  Again, it's not about FirstEnergy's customers or economic growth, it's all about FirstEnergy's bottom line.  Utterly revolting.

3.    FirstEnergy "took a look at" long term trends in residential sales, which have remained flat since 2007.  The FirstEnergy sleuths are getting closer and closer to the truth with every earnings call.  Maybe sometime in this decade they'll realize that residential growth is dead and cannot be revived because its all about energy efficiency.  However, if you look closely at #2 above, you'll see that it's simply a matter of willful denial at this point.

4.    Michael Lapides of Goldman Sachs got Donny Schneider off into a discussion of purchased power, where our hero stated, "We're very comfortable with being able to procure power to serve load. For years, prior to our merger with Allegheny, we served all of the Penelec and Met-Ed load, and I think that in total was about 30 terawatt hours a year, and we did almost of all of that with purchased power."  But now, all of a sudden, FirstEnergy is telling the WV PSC that relying on purchased power to serve Mon Power/Potomac Edison load is too risky and too expensive and that purchasing Harrison is a better idea.  Giggle break! :-)  Was Lapides REALLY asking about "exposure?"

5.    FirstEnergy was also grilled about their balance sheet hocus-pocus where the company is simply taking on short term debt at the holdco level to pay down debt at its FirstEnergy Solutions subsidiary, as well as another question about the source of funds for FE's "equity infusion" to either Mon Power or FES.  The company avoided both questions.  I'm not convinced that the analysts were fooled.  In fact, I don't think FirstEnergy is fooling anyone but themselves anymore.

Have you been plagued with high electric bills?  Has your electric company failed to read your electric meter as required by law?  Has your electric bill been estimated more often than not?  Has your billing date changed, causing you to get an outrageous bill?  Do you feel you are being lied to by your electric company's customer service? 

Welcome to the club, Potomac Edison, Mon Power and West Penn Power customers!  There are thousands, perhaps millions, of us!  But, don't despair... your electric bills are going toward a good cause.

Potomac Edison, Mon Power and West Penn Power parent company FirstEnergy will be holding it's annual stockholders' meeting later this month and asking its investors to approve (although approval is merely a formality that can be overruled) an executive compensation package that will provide CEO Tony Alexander with $23.3 MILLION in annual compensation and performance awards, including perks such as:

1. Company-paid financial planning and tax preparation services.
   
2. Limited personal use of the corporate aircraft.  Pursuant to the direction of the Board, Mr. Alexander is required to use our corporate aircraft for all personal and business travel for security purposes (because those hoi polloi cooties can be deadly). With CEO approval, other executives including the (henchmen) NEOs, may from time to time, use our corporate aircraft for personal travel. We have a written policy that sets forth guidelines regarding the personal use of the corporate aircraft by executive officers and other employees.  The Committee believes these perquisites are reasonable, competitive, and consistent with our overall compensation philosophy.
3. Severance Plan which provides three weeks’ base pay for each full year of service with a minimum benefit of 52 weeks of base salary and maximum benefit of 104 weeks of base salary (and a golden parachute). Additionally, executives who elect continuation of health care for the severance period will be provided this benefit at active employee rates and must also pay taxes on any amount in excess of what employees with the same level of service would receive under the FirstEnergy Employee Severance Benefits Plan.
4. In addition, certain executives are eligible to receive limited perquisites. In 2012, the NEOs were provided: (1) financial planning and tax preparation services for Alexander and Vespoli of $11,370 and $9,265, respectively; (2) charitable matching contributions for Vespoli and Jones; (3) premiums for the group personal excess liability and life insurance for all NEOs; and (4) personal use of the corporate aircraft for Alexander, Vespoli, Jones, and Lash.  Executive officers’ spouses and immediate family members may accompany executives on Company aircraft using unoccupied space on flights that were already scheduled, and we incur no aggregate incremental cost in connection with such use. (bring the whole fam damily for a ratepayer financed vacation!)
   
5. Accumulated pension benefits of $33M.
6. Supplemental Executive Retirement Plan in addition to pension.
   

Additionally, FirstEnergy's Board shares:

Also in 2012, we entered into an employment agreement (later referred to as the Alexander Agreement) with our President and CEO, Mr. Anthony J. Alexander. Your Board believes Mr. Alexander is uniquely qualified to guide your Company through the current unsettled environment based on his lengthy experience in the industry, familiarity with the regulatory process, and visionary leadership. The Alexander Agreement, by its terms, is expected to incent (psst - "incent" isn't a word!) Mr. Alexander’s service, expertise, and direction through at least the next several years as we execute our strategy, address the challenges of a weak economy and increasing regulations, deploy our succession plans, and position your Company for long-term success.

Finally, your Board is confident the Alexander Agreement, which encourages Mr. Alexander’s continued employment, will benefit shareholders and your Company favorably.

However, given Mr. Alexander’s age, eligibility for retirement, personal circumstances, and the fact that he was evaluating the timing of his retirement from the Company, your Board believed it was important to shareholders and our Company to look beyond the annual compensation programs in order to solidify Mr. Alexander’s continued employment through at least the next several years.  Your Board believes Mr. Alexander is uniquely qualified to continue to direct the achievement of our strategy based on his vision for the future and strong commitment to that vision, deep understanding of the strategic direction of our Company, ability to identify opportunities to navigate market complexities, and foresight to understand the impact of potential opportunities on our Company. In support of our strategic business objectives, Mr. Alexander guided the Company through the transition to competitive generation markets in Ohio and Pennsylvania, developed our long-term retail strategy to compete in deregulated markets and led the execution of the strategy to pursue opportunities for growth that would not otherwise be available in regulated markets. He was also instrumental in pursuing our merger with Allegheny Energy, Inc. in 2010 which was consummated in February 2011. The merger created opportunities to enhance shareholder value, including repositioning our business mix to include a substantially larger regulated utility base that supports our dividend. Also, your Board believes Mr. Alexander’s 40 years of experience with the Company, including 23 years as a senior officer; his knowledge of regulatory and governmental affairs; and the relationship he has built with regulators, policy makers, investors, and employees is critically important to our success, especially during the current continuing depressed economic conditions.

The primary objectives of your Company’s executive compensation program are to attract, motivate, retain, and reward the talented executives who we believe can provide the performance and leadership we need to achieve success in the highly complex and competitive energy services industry. Our executive compensation program is centered on a pay for performance philosophy and is aligned with the long-term interests of our shareholders.

Our vision is to be a leading regional energy provider, recognized for operational excellence, customer service and our commitment to safety; the choice for long-term growth, investment value and financial strength; and a Company driven by the leadership, skills, diversity, and character of our employees.

Puh-leeze!  I'm betting if Tony and his henchmen were the sudden and unfortunate victims of a targeted alien abduction that our lights wouldn't even blink.  Simply put -- nobody would miss them -- and we'd be paying millions less for our electric service!  Where's a good alien invasion when you need it?  Of course, I expect the aliens would promptly return the NEOs when they realize how completely useless they are.  Hope dashed once again.

Now, compare the plight of Tony and his henchmen to Philippe, who writes,
"Potomic Edison is in the business of gouging it's customers. I received a bill due april 12 2013 for 831.35. I found out about it through my online checking account which I was floored. Apparently they missed a reading and due to UNDER estimating this bill covered costs that went back 6 damn months. No phone call no anything other then sorry sir but the money has allready cleared and there is nothing we can do about it. I am fed up with all the back handed undermining and borderline extortion that we as a citizen have to endure all because of greed and that all mighty dollar. I will be taking up the cause of bringing a class action lawsuit against this company as I have already spoken to many of my neighbors in regards to this Companies less then lawful and misleading ways. I am a disabled vet on a very fixed income and in the 20 plus years of living here I have never had a bill exceed the hi 300 dollar range EVER. As for Potomic Edison who is already having to explain themselves in court in the State of MD. may now ad another state to the mix, WV. and very very pissed off about this!"

Or perhaps the plight of Cathy, who told others gathered to discuss Potomac Edison's billing issues that she hadn't yet moved into her trailer when she received an electric bill for $600. The Harpers Ferry resident, who has been living next door to the home for six months, said she set the thermostat below 50 degrees all winter and only kept a small light burning as a deterrent.  "Their explanation to me was they estimated it for two months, and then we had a hurricane and they couldn't come. And then we had bad weather and they couldn't come," Jackson said of her conversations with the company. "I said, 'Then why didn't you come when the weather was good?' They didn't have an answer."

Or "SWOFLO" who writes:
"some of us live on a limited income and cant afford to pay 2 bills in 1 month. mine was estimated 4 months and by the time it got read they overcharged me 900 dollars, of course i will get a few months of bill less elect but i wont get the car i had repossed back because i couldnt make the payment for 2 months."

Tony, the peasants have no bread!  I fear that telling them to eat cake instead would be equivalent to fomenting insurrection.  Let Marie be a lesson to you!

Intervenor testimony was filed late last week in FirstEnergy's West Virginia Public Service Commission request to transfer the company's Harrison power station from competitive affiliate Allegheny Energy Generation to regulated affiliates Mon Power & Potomac Edison.

Pam Kasey at State Journal has a good summary of the testimony here.

"The transaction represents an effort to bail out the companies' unregulated affiliates," said PSC Consumer Advocate Byron Harris flatly in his testimony.

Ya think?

Bill Howley has been busy tearing into the testimony and summarizing the highlights here.

Be sure to file your own comments on case number 12-1571 with the WV Public Service Commission here.  Do it now.

Alice isn't the only one to find herself tumbling into a rabbit hole where up is down and down is up and nothing is as it seems.

While trying to do a radio program about FirstEnergy's Potomac Edison/Mon Power plant transfer this morning, I found it interesting that every person who called in mentioned Potomac Edison's recent unjust and unreasonable billing practices.  And then I sat down to pay a pile o' bills when I got home and guess what?  There was my Potomac Edison bill.  The company has been urging customers with questions about their bills to call the customer service center, so I did.

Forty minutes later, I still didn't have logical answers to my questions.  I can only imagine how customers who have received astronomical bills they cannot pay must feel after an hour in Potomac Edison's "valued customer" funhouse.

First, I had to verify that I actually was a customer because my name supposedly isn't on the bill.  Now, we know that's just not true, don't we?  I guess that must be a common mistake, right, Randy?

After the first customer service rep. and I determined that the cause of my budget plan billings being inconsistent was Potomac Edison's lack of meter reading over the past year, it was suggested that I begin reading my own meter on those months that Potomac Edison can't make it to my house.  I was assured that Potomac Edison attempts to read meters EVERY MONTH, however they are only required to read them twice a year. 

After being informed that was complete and utter crap, she further insisted that Potomac Edison's WV tariff required only two readings per year and began to argue with me.  When I suggested she check her information with her supervisor, I got dumped onto hold for 29 minutes without explanation.  TWENTY-NINE minutes!  I guess I was supposed to hang up and go away, but I simply turned on the speaker and set the phone on my desk while I tackled the 472 emails that had piled up while I was away.  Oh... and I was highly entertained by Potomac Edison's hold muzak play list, which I have noted to share with you.... song by hysterical song:

You've got a friend

Still the same

Tight rope

Sister golden hair

Carefree highway

Good day sunshine

And here's where it got really hysterical...

How long (has this been going on)

Rocket man (and I think it's gonna be a long, long time)

Operator (could you help me place this call)

And just when I was starting to wonder what was coming next, "the supervisor" picked up the line and was not surprised in the least to find that I had been waiting 29 minutes and no one had bothered to tell her why I was calling.

At least she verified that Potomac Edison is required to read meters every other month according to their WV tariff and that the first customer service rep. was wrong.  I wasn't convinced that the supervisor actually would correct this misconception, however.  I guess it really doesn't matter how much Potomac Edison lies to you when you call for assistance.

However, while also verifying that my inconsistent bills were the product of Potomac Edison failing to read my meter, even she couldn't tell me why my new (APP) Summary only included 4 months while my neighbor's included 12.  Or why last month's bill was much higher for less kwh.  Apparently all my problems will be over if I only read my own meter from now on.  Right.

It's all Todd's fault!

According to a news story filmed yesterday by WHAG:

Well, color me steamed!  I invited Todd to come read my meter last year, and he still hasn't "finished his route" and arrived to do his job.

If you haven't seen Todd at your house either, be sure to contact him and let him know you need him to finish his route:

Todd Meyers
Maryland – Potomac Edison
West Virginia – Mon Power, Potomac Edison
Pennsylvania – West Penn Power
(724) 838-6650
email:  [email protected]

What does Todd mean "help me finish my route?"  I don't have a route!  Is Todd insinuating that I should be reading my own meter from now on, aka "my route?"  But that's what I'm paying you to do, Todd!

I'm also paying you to trim trees and maintain your equipment.  That's not news.  And sadly, yesterday's little drama was just that -- a play staged for the media.  Oh, look at us working today!  Big stinkin' deal!  This hole is much, much deeper than Potomac Edison thinks.

So, what has Todd been doing with the money we've been paying him for years?  Todd has a lot to answer for.  This is all Todd's fault!  Go ahead, give him a call!