Category: $$$$$$

FirstEnergy Getting Desperate - Tries to Kill Energy Efficiency in Ohio

3/19/2013

FirstEnergy is up to no good in the state of Ohio, where the company is telling large businesses that they will save money on their electric bills if they sign FirstEnergy's pre-written form letter asking legislators to kill Ohio's energy efficiency standards.

Why? Perhaps this picture from the folks at Ohio Beyond Coal explains things:

Scary, huh? Evil personified up there is just begging for you to draw some horns and a tail on him to complete the picture.

"The Akron power company tried but failed to get the standards scuttled or frozen just before Christmas by asking legislators to slip an amendment into unrelated legislation. But lawmakers scattered when the tactic was publicly revealed.

This time, FirstEnergy is sending a form letter written by its lobbyists to some of its larger commercial and industrial customers, asking them to fill in their company's name and send it by Friday to the Ohio Senate, which is trying to decide whether to tinker with the efficiency rules.

The company defended its tactic to gin up support for its position.

"FirstEnergy remains concerned that meeting the state's energy efficiency goals will continue to place burdensome costs on our customers, particularly Ohio businesses," the company said in a prepared statement."

Why does FirstEnergy want to do away with energy efficiency programs in Ohio? It's hurting their bottom line and working as intended to save consumers money. More money in consumer pockets through energy efficiency, less money in FirstEnergy's pocket. Investments in energy efficiency cost much less than investments in new power plants. The cheapest resource is the one you never have to build.

"FirstEnergy CEO Anthony Alexander [aka "Satan"] has said in public meetings that the rules have interfered with normal market growth, already made tough by the recession."

Right... and FirstEnergy thinks its customers are dumb enough to hurt their own bottom line by signing form letters opposing energy efficiency programs. Good luck with that, FirstEnergy, your arrogance is stunning. Some things just can't be fixed by lying to your customers, legislators, regulators and the media.

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Cut the Fat -- Give Private Utilities the Boot

3/16/2013

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The City of Boulder, Colorado has been engaged in battle with private, investor-owned utility Xcel for the past several years. In 2011, the City passed a referendum to form its own municipal electric utility and give utility giant Xcel the boot. Since then, the City has been negotiating with Xcel to give the utility one last chance to shape up or get kicked out.

A recent article in the New York Times discusses the pros and cons of municipal utilities.

"Roughly 70 percent of the nation’s homes are powered through private, investor-owned utilities, which are allowed to earn a set profit on their investments, normally through the rates they charge customers. But government-owned utilities, most of them formed 50 to 100 years ago, are nonprofit entities that do not answer to shareholders. They have access to tax-exempt financing for their projects, they do not pay federal income tax and they tend to pay their executives salaries that are on par with government levels, rather than higher corporate rates.

That financial structure can help municipal utilities supply cheaper electricity. According to data from the federal Energy Information Administration, municipal utilities over all offer cheaper residential electricity than private ones — not including electric cooperatives, federal utilities or power marketers — a difference that holds true in 32 of the 48 states where both exist. In addition, they can plow more of their revenue back into maintenance and prevention, which can result in more reliable service and faster restorations after power failures."

Not only have municipal utilities proven themselves more reliable during recent extreme weather events, they're also cheaper. While the private utility mega-corporations have touted their "economies of scale" as more cost effective, that's no longer true. With increasing pressure to turn a profit and pay shareholder dividends every quarter, these corporations are increasingly looking for ways to increase profits and cut expenses. Reliability and service suffers first, instead of cutting exorbitant executive salaries, lobbying budgets, and "corporate stewardship" waste, such as buying naming rights to football stadiums and other ridiculous expenditures. The fundamental problem is that shareholders don't care where the profits come from, as long as they show up every quarter. Company executives are loathe to dip into their ever-increasing perks, so the customers are the ones who take a hit for the team.

When the corporate baggage of multi-million dollar salaries and frivolous executive waste are taken out of the picture, a municipal utility may more than make up for any "economies of scale." Check it out in your local area!

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Update on PATH's Abandonment and Formal Challenges

3/12/2013

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If you've been wondering what's going on with PATH's abandonment and the Formal Challenges at FERC, here's your update.

Sorry, that's the only public information that's available.

While you wait for closure, perhaps you can entertain yourself contemplating the meaning of FERC's paper mache sculpture that sits in the hallway outside the hearing room.

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New Report: RTO Markets Don't Save Electric Consumers Money

3/10/2013

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"The evidence is clear that generators are profiting excessively from RTO power markets, and that sellers’ rates are not ‘just and reasonable’ as the law requires. Consumers are paying the price, to their detriment and that of the overall economy."

That's the conclusion of a report on FERC's restructured regional electricity markets published in December by Elise Caplan of American Public Power Association and Stephen Bobeck of the Consumer Federation of America.

The report takes a look at how FERC has restructured regulation of wholesale power to rely on market based rates and regional transmission organizations. "FERC has chosen to rely on supposed market “competition” to ensure that prices are “just and reasonable,” as required under the Federal Power Act."

Do these markets work to protect consumers? No. The report opines that, "Instead, evidence is mounting that customers have been harmed by the markets."

Despite repeated attempts to get FERC to do some sorely needed analysis and adjustment to its competitive market experiment, "FERC has still not undertaken such an analysis. But there is a wealth of data available to support the conclusion that consumers actually have been harmed by the restructuring of wholesale electricity markets and that access to alternative retail suppliers does not solve the fundamental problems of the wholesale market from which those suppliers must purchase power."

In the report, "...we discuss specific RTO rules and structure that have provided opportunities for excess generator earnings at the expense of consumers."

In uncompetitive RTO cartel electricity markets, "Offers into the energy market need not reflect the sellers’ actual costs of generation, as FERC would have required under a traditional cost-of-service ratemaking regime. Rather, the sellers set their own price offers, regardless of their actual costs, subject only to review and possible adjustment by the RTOs’ market monitors. In PJM, the market monitor typically mitigates less than one percent of the energy offers in both the real-time and day-ahead markets."

Thanks, Market Monitor! Always looking out for my interests, aren't you? It's just too bad that PJM's attempt to replace the Market Monitor isn't intended to provide more protection for consumers, but LESS.

And here's another problem we've written about before that pops up in the report: "The conceptual basis for LMP is that these differential prices will send “price signals” to indicate where there is a need for new generation or additional transmission capacity, or to reduce load through conservation or shifting the times when energy is consumed. As discussed below, this theory has not borne fruit in practice."

In PJM, new transmission is always proposed before new generation has a chance to happen, and demand side resources aren't given serious consideration. This is why consumers are now paying half a billion dollars for two failed transmission projects -- transmission projects that were approved and intended to be quickly rammed through before demand side resources and new generation could be recognized. Ultimately, PJM's Project Mountaineer scheme failed, along with the transmission projects, when demand side resources and generation developed despite PJM's best efforts to squelch them.

"The theory behind locational pricing is to provide price signals indicating where new transmission and generation is most needed. But in reality, new resources have not developed to respond to higher prices in these markets. Instead of inducing new resource development, the higher prices provide a financial incentive for incumbent generation owners to keep supplies constrained, or at least to ensure that prices bid by new market entrants remain high.

The financial benefits of constrained supplies can be seen in the candid presentations by merchant generation owners to the financial community wherein the potential closure of coal plants is touted as a benefit to their earnings."

You know... like how FirstEnergy's wave of coal plant closures last year provided the company with jacked up capacity prices in ATSI and a whole bunch of new transmission projects in which to invest its "transmission spend" to increase the company's earnings. Remember that?

So, what protections are built into RTO markets, and do they work? "FERC relies solely on market monitors for each RTO to determine whether the wholesale electricity markets are competitive. These market monitor analyses are based on a limited frame of analysis that ignores evidence, such as the profitability data presented later in the report, which raises questions about the competitive nature of these markets. Moreover, the reports issued by the market monitors do not always support a definitive finding of competition. For example, in the most recent State of the Market Report for PJM, the market monitor found that the local market structure in the energy market and both the local and aggregate market structure in the capacity market were not competitive, as was the structure and the performance in the regulation market."

Go ahead, click through and read this analysis:

"Prior to examining the empirical evidence of the effects of RTO markets on electricity prices paid by utility customers, this section describes the structural flaws in RTO markets – conceptual problems that have led to higher prices than would have occurred absent such markets. These fundamental features of RTO markets, discussed below, provide both incentives and opportunities for merchant generators to earn excess revenues at the expense of consumers".

How does PJM "fix" their markets when things go awry? "When a given market structure does not achieve its goal of providing satisfactory revenue to RTO generators, the response – prompted by generators, many of them the spun-off affiliates of formerly vertically-integrated utilities – has been to induce the RTO to add a new, more complex market or a rule to prop up prices, such as a tightening of the minimum offer price rule in PJM." This kind of "make the rules up as you go" is the basis for the most recent bickering over new MOPR rules secretly concocted by PJM and its incumbent generators. This is the behavior of a cartel, not a competitive market.

If competitive markets save money for consumers, why do "RTO generation owners’ 10-K reports to the Securities and Exchange Commission list restrictions on competition as a potential risk to their earnings?"

The evidence examined in the report "lead[s] to a conclusion that the restructured RTO-operated markets have increased prices above what would be seen in the absence of restructuring."

How much? "...a possible $12 billion excess payment from consumers to generating companies that do not face genuine market competition – demonstrates the scope of restructuring’s negative impact."

And this about sums it up:

"The greatest beneficiaries of restructuring have been not consumers, as was promised, or innovative companies that were expected to emerge, but the “usual suspects” – owners of previously regulated, largely depreciated generating units."

How do we fix this mess? "It is crucial that FERC, as the regulator responsible for ensuring under law that wholesale prices are just and reasonable, determine whether RTO markets are achieving their cost-reducing potential, and, if not, to implement needed reforms."

Don't hold your breath. FERC refuses to even examine the results of their RTO experiment, much less take any action to fix it. Perhaps it's time for Congress to step in.

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PJM Wants to Replace Independent Market Monitor With Cheaper and Less Independent Variety

3/7/2013

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The new and mysterious "PJM Insider" employs one of the most annoyingly trite and overused headline words in today's "Commenters Blast PJM Plan to Shop for Market Monitor." Who pays for this slop anyhow? Geek overload alert!

Who is the Market Monitor and why should you care, little consumer?

The Market Monitor describes its function as PJM's electric market babysitter this way:

"Since 1999, the PJM Market Monitoring Unit has been responsible for promoting a robust, competitive and nondiscriminatory electric power market in PJM by implementing the PJM Market Monitoring Plan. Under the PJM Market Monitoring Plan, the PJM Market Monitoring Unit has been responsible for monitoring compliance with the rules, standards, procedures, and practices of PJM markets. We observe and comment on actual and potential design flaws in market rules, standards, and procedures, and identify structural problems in PJM markets that may inhibit robust and competitive markets. We monitor the potential of market participants to exercise undue market power, the behavior of market participants that is consistent with attempts to exercise market power and the market performance that results from the interaction of market structure with participant behavior. We monitor the actions of PJM and the impact of those actions on market outcomes."

PJM Insider wraps up the Market Monitor history very succinctly:

"Monitoring Analytics is headed by Joseph Bowring, a Ph.D. economist who has served as PJM’s market monitor since 1999. In April 2007, Bowring sparked a firestorm at a FERC technical conference when he accused then-PJM President Phil Harris and his allies of attempting to muzzle him by squelching his reports and cutting his budget.

More than a dozen PJM stakeholders, including several of those who filed the letters this week, responded by filing a complaint calling on FERC to take steps to ensure the monitor’s independence.

Following an investigation by an independent counsel hired by PJM, Harris resigned and FERC approved a settlement between PJM and Bowring. The settlement called for Bowring to form an independent company, which was awarded a six-year contract as PJM’s market monitor."

Six years will be up next year. The PJM Cartel's Board of Managers has proposed issuing a Request for Proposals for a new Market Monitor. It seems that the Board hasn't articulated why they would want to replace the current one, just mumbling something about budgets and costs. I guess they've never heard the phrase, "if it ain't broke, don't fix it."

Instead PJM's Board wants to make some changes to the way the Market Monitor operates.

1.    Selection of the new Market Monitor will be subjective and secret.

2.    Conflict of interest disclosure does not include any prior relationships with market participants (you know, those 800-pound gorilla incumbent generation & transmission companies who are supposed to operate "separately") or relationships with Board members. I kind of find this last one distinctly odd... why would so many entities objecting to this RFP be pointing this out if it wasn't a real possibility. Scary.

3.    There is no minimum service level. Any company could work up a proposal for minimal monitoring for a minimal price, then turn around and jack it all up if they are selected and then find out they can't handle the job. Sound familiar, PATH opponents? Or maybe a new Market Monitor could just do a crappy job for a lower price. Collectively, we may all save a million or two, however, the savings will most likely come at the price of higher electric rates as our gorillas rob us blind with shady practices. Now, isn't that a great idea?

4.    The Board wants to control the Market Monitor by having sole power to make the Monitor jump through hoops and report when they whistle. The Board wants to know who gets reported to FERC for market manipulation, even though FERC regulation prohibits this disclosure to the Board.

Sort of sounds like the PJM cartel is reverting to its previous behavior that got them into trouble in 2007. Not really surprising, since PJM thinks they answer to no one. They really do answer to someone though, however FERC plays the part of the distracted and absent parent and never asserts its authority over it's regional transmission cartels. And this is what happens. What's next? Couple more billion dollar transmission projects that the consumers don't want or need?

You're going to have to make up your own mind on whether you think this is a good idea or not. There's a ream or two of comments about the RFP on PJM's website. The Consumer Advocates of Maryland, Pennsylvania and West Virginia don't like it. PJM's Industrial Customer Coalition doesn't like it. Municipal and co-op electric service providers don't like it. The PA-PUC doesn't like it. The Organization of PJM States doesn't like it. These are all entities focused on consumer issues or are not-for-profit. Funny not to see any comments from the gorillas, isn't it?

And of course, the Market Monitor has its own issues with its impending demise, however there are plenty of logical points and a couple of zingers buried in here.

So, what do you think, little consumers? Should they stay or should they go?

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Take Action Now: Integrated Resource Planning Bill Introduced in West Virginia State Legislature

3/4/2013

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Legislation requiring West Virginia's electric utilities to perform Integrated Resource Planning was introduced in the House today.

Integrated Resource Planning (IRP) legislation requires our power companies to submit long-term plans to the Public Service Commission every two years to determine the mix of resources to best meet future energy needs. Power companies would be required to give investments in energy efficiency (reducing demand) equal consideration to investments in traditional power plants, which they currently do not do. Over half the states in the country currently require their utility companies to use IRP. Learn more at EEWV's website.

Integrated Resource Planning is also supported by James Van Nostrand, Director of WVU College of Law's Center for Energy and Sustainable Development, in this report.

Integrated Resource Planning will help to keep your electric bills manageable by optimizing the mix of resources needed to provide electric service at least cost.

It would also prevent further scurrilous schemes from our out-of-state investor owned utilities to dump their uncompetitive, antiquated resources into West Virginia's captive rate base where YOU will continue to pay the utility a profit on resources that are long past ripe for retirement.

Here's what you need to do: Visit EEWV's Action Alert page here and click the link to email Delegate Morgan to show your support for the bill. All you have to do is add your name and click "send." Three clicks to keep your electric rates low. It couldn't be simpler. Do it now!

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FERC Says No to Pepco's Plan to Collect Incentive ROE on Abandoned MAPP Project

3/1/2013

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Remember Pepco's silly plan to collect a 12.8% incentive ROE on $87.5M of abandoned plant costs for its unneeded MAPP project?

Although it granted Pepco the right to recover its prudently incurred investment yesterday, FERC denied the continuation of MAPP's 150 basis point incentive ROE on abandoned plant. No big surprise -- Pepco's arguments were absurd.

"We find that the continuation of the additional 200 basis points of incentives, on top of the base ROE, on an abandoned project is not appropriate. Once a project has been canceled, none of the incentives granted other than the ability to recover prudently incurred abandonment costs continues to apply, as explained below."

FERC also denied Pepco its 50 basis point incentive for continued membership in PJM. The Commission reconfirmed its determination in the PATH abandonment order:

"We therefore find that the 50 basis point adder for RTO participation is not appropriate for recovery in an abandonment application. This finding is appropriate in the context of abandonment even though the Commission has found that the RTO participation incentive is unrelated to any particular project but instead is intended as an incentive for joining and remaining in an RTO. This is because even though the public utility project developer has joined an RTO, the facility at issue in an abandoned plant cost recovery situation will not be transferred to the RTO's control, and therefore the benefits from that project’s inclusion in an RTO will not materialize.

This outcome is consistent with the PATH Abandonment Order, where the Commission clarified that continued recovery of a 50 basis point adder for RTO participation is not appropriate for recovery in an abandonment application."*

Do you think the Commission was clear enough this time? Greed seems to be interfering with utility understanding of this concept.

In addition, the Commission also determined that Pepco can recover only 50% of its incurred costs prior to issuance of their incentives order in 2008. Because Pepco incurred these costs before being granted the 100% abandonment recovery incentive, they are only eligible for 50% recovery. Pepco wasn't greedy enough to ask for amortization of its pre-incentive costs over its construction period like PATH did. Silly Pepco, that's going to cost ya...

However, the Commission also awarded Pepco a 10.8% ROE on its recovery of abandoned plant, instead of setting ROE for hearing like it did on PATH's abandonment. Pepco's brazenly ridiculous request to recover an incentive ROE on abandoned plant captured the attention of all the protestors, who failed to advance any arguments against Pepco's base ROE. You gotta admit, it was pretty smart. Maybe PATH's counsel could take some lessons from Pepco's. Or maybe PATH just needs smarter counsel.

As it did with PATH, the Commission set the prudence of MAPP's abandoned plant costs for settlement and hearing.

Before you get all carried away praising the Commission for this Order, remember that it is because the Commission continually fails to enforce any discipline on their little darling PJM that consumers in 13 states and D.C. will have paid nearly half a billion dollars for these two abandoned transmission projects. PATH and MAPP (and TrAIL and Susquehanna Roseland) were never truly needed. It was all about increasing the use of coal-fired resources, not reliability or economics. The utility cartel that is PJM has cost us all higher electric bills that we can ill afford and will not be held accountable for its machinations.

*This bodes well for PATH's rehearing, doesn't it?

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WV Plant Sale Delay Causes Panic at FirstEnergy

2/28/2013

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FirstEnergy has been swirling round and round the bowl for the past few weeks.

Now the wheels have come off FirstEnergy's poorly executed plan to dump antique coal-fired electricity plants on it's West Virginia customers.

Despite FirstEnergy's desperate pleas for the WV Public Service Commission to approve the company's transfer of coal plant assets from their unregulated (company financed) Ohio subsidiaries to West Virginia's regulated (ratepayer financed) subsidiaries before early May, the PSC issued an order on Feb. 11 setting a procedural schedule that won't hold hearings until the end of May. A decision won't come until several months later. FirstEnergy needs to transfer these plants between their subsidiaries to raise over a billion dollars cash that the company desperately needs to pay down its debt.

It's not "to help ensure reliable power for our Mon Power and Potomac Edison customers in West Virginia for many years to come," it's to raise desperately-needed corporate cash that West Virginia's captive ratepayers will be stuck repaying for years to come. Let's at least be honest about it, shall we, FirstEnergy?

Last week, Fitch cut FirstEnergy's ratings.

On Monday, FirstEnergy reported a loss for the fourth quarter.

Yesterday, FE's stock was downgraded.

Today, FirstEnergy announced a tender offer to buy back some of it's high interest rate debt. The scheme here is to offer a premium to holders of these high interest rate bonds FE issued so that they will sell their bonds back to the company. To finance this buy back, the company will borrow money at a lower interest rate than they would have paid the holders of these bonds.

Kind of reminds you of watching sick water buffalo flounder and drown, doesn't it?

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Recycled Expert Opinion - The "Regulatory 'Gotcha'"

2/20/2013

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Research for another project turned deja vu this morning when I ran across this phrase:

“Awarding a downward-biased ROE by hewing only to a ‘knee-jerk’ application of recent precedent would result in a regulatory ‘gotcha’.”

Now where have I heard that bumptious phrase lately? Could it be in PATH's "case-in-chief?"

"Now that investors are captive, awarding a downward-biased ROE would result in a regulatory “gotcha” that would violate regulatory standards and undermine the Commission’s own incentive policies."

Yup, same "expert." How many times will AEP pay this guy to theatrically yell "wolf?" As many as necessary, since they're using ratepayer funds to pay this "expert" to say the same thing over and over on different cases.

Quick, someone grab a violin, FERC is single-handedly destroying our economy! *shudders in horror*

I wonder if the Commission's eyes also roll back in their heads every time they read "regulatory 'gotcha"? Maybe they have a sort of office football pool going where they make bets on when Avera will pop up wailing "regulatory 'gotcha'" in a case. If not, they should consider it. Might be fun. At least more fun than reading Avera's billowing opinions over and over again.

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Greedy Transmission Developers Putting Consumers in Peril

2/20/2013

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It's not rocket science. The longer the distance between generation and load, the more unreliable the "grid" becomes. Long haul transmission lines provide opportunity for all sorts of failure... or mischief.

Apparently the Chinese military is hard at work compromising the security of the U.S. electric grid. No big surprise. Investor-owned utilities don't want to waste precious shareholder pennies on silly stuff like cybersecurity when there are memberships to The Duquesne Club to be purchased instead!

No matter how much the industry insists that it can regulate itself on the honor system, there is no honor among thieves. Looks like Congress is going to have to intervene and bestow authority to FERC to regulate cybersecurity of the grid. Just imagine how much this is going to cost when the obvious solution is so much cheaper and quicker -- stop "expanding" the grid and making it more vulnerable. We don't need a whole bunch of new transmission, and a bigger, more interconnected grid exposes larger and larger geographic areas to one massive failure instigated by the click of a single key somewhere in China.

Thanks, Jimmy!

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<<Previous

Forward>>

FirstEnergy Getting Desperate - Tries to Kill Energy Efficiency in Ohio

Cut the Fat -- Give Private Utilities the Boot

Update on PATH's Abandonment and Formal Challenges

New Report: RTO Markets Don't Save Electric Consumers Money

PJM Wants to Replace Independent Market Monitor With Cheaper and Less Independent Variety

Take Action Now: Integrated Resource Planning Bill Introduced in West Virginia State Legislature

FERC Says No to Pepco's Plan to Collect Incentive ROE on Abandoned MAPP Project

WV Plant Sale Delay Causes Panic at FirstEnergy

Recycled Expert Opinion - The "Regulatory 'Gotcha'"

Greedy Transmission Developers Putting Consumers in Peril

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