Choices.  We all make them every single day.  Sometimes we make good choices, and then there are those other choices that we make which leave onlookers scratching their heads and saying, "What were you thinking?"

So, what were you thinking, FirstEnergy?  Last Friday, Goldman Sachs downgraded FirstEnergy.  This comes on the heels of concerns about cash flow from UBS Securities last month.

So, FirstEnergy cheers itself up with a little shopping spree to buy the naming rights to Cleveland Browns Stadium?  Who does that, FirstEnergy, honestly!!??!!!  Okay, so I'm a big fan of retail therapy myself and, in fact, my last "treatment" was actually necessitated by the actions of a FirstEnergy subsidiary and required a box of European chocolate cookies, a paperback novel and a new blazer to cure, but I had the cash to pay for it all.

FirstEnergy continues to throw its money away on stupid stuff and make bad choices.  Where does FirstEnergy think its cash is going to come from?  From the sale of its uncompetitive coal plants into the West Virginia regulatory system?  I wouldn't bet on it.  How about from Tony's "transmission spend?"  No, not there either.  Maybe they can make it up by stealing all AEP's Ohio customers?  Not with those margins.  Perhaps they can raise some cash by killing AEP's Ohio solar farm deal and hundreds of jobs for veterans?  Oh, wait, that's just spite, not a source of cash for FirstEnergy.

I know!!!  Maybe FirstEnergy could sell one of its subsidiaries after milking it for every last penny!  Mon Power and Potomac Edison could be put up for sale in order to raise much needed cash to pay for stadiums, cigars, and state regulatory commissioners.  Inflation, you know, prices are going up for everything these days.

But take comfort, little consumer.  The Plain Dealer reminds:

"Whatever FirstEnergy is paying for the naming rights, by law the company cannot pass that cost on to its customers by increasing rates. FirstEnergy's delivery rates are determined by the the Public Utilities Commission of Ohio and reflect what it is spending on wires, transformers and the like, not what it spends on advertising or lobbying. The price of the electricity itself is determined by auctions and then reviewed by the state."

Ha ha ha ha ha.  Apparently The Plain Dealer hasn't seen this pile of discovery responses sitting on my desk.  Laws are only as good as the folks who enforce them, and certain companies cheat when they think nobody is watching.

Where's my box of cookies?

A fierce energy battle over authority to site and permit new high-voltage interstate transmission lines has been underway for years inside the Beltway.  Now the battle has moved to your state capitol, and if you ignore it, you may just end up with a transmission line right in the middle of your living room, and your rights to property ownership and due process obliterated.

Electric transmission permitting and siting has historically been the responsibility of states.  This has caused problems for utilities who want to increase their profits by building new lines because the states may deny applications for lines where need is not proven, or where the state's citizens receive no benefit from the project.  Your state public service commission is the ONLY authority who is looking out for you.

The utilities who build transmission lines would much rather have the federal government site and permit interstate transmission lines.  The federal government would champion national interests.  Under federal authority, all decisions would be made in D.C. by politically appointed regulators and you would be disenfranchised from any meaningful participation.

The utilities and their bought and paid for congressional representatives, along with certain federal agencies, have been trying to take authority from the states for years, but their aggression has been as yet unsuccessful.  The Energy Policy Act of 2005 (Cheney's Secret Energy Task Force) put several vehicles to usurp state siting authority into law.  One was to give "backstop" siting authority to FERC in the event that a state failed to act on a transmission line application for more than one year.  FERC defined "failure to act" to also include denial of an application, however their backstop authority was neutralized through the courts.  Another vehicle to usurp state authority that has not been seriously utilized until now is the authority granted to states by the EPAct to form interstate compacts to site and permit transmission lines on a regional, instead of a state-by-state, basis.

Now the utilities, federal agencies, and their "corporate bill mill" are asking states to voluntarily relinquish their authority by passing interstate transmission siting compacts into law.  They intend to accomplish this through the use of an "education" (indoctrination) campaign targeted at state legislators and "model legislation" to be introduced by state legislative puppets and shepherded through approval by corporate lobbyists.  The corporate bill mill behind it is one of the "mini-ALECs," known as The Council of State Governments (CSG).

CSG has announced that "a new transmission line siting compact developed by The Council of State Governments’ National Center for Interstate Compacts is ready to be introduced in state legislatures across the country."

The idea here is for states to voluntarily relinquish their authority to site and permit transmission to a larger regional body made up of "member" states who have passed the interstate compact "suggested" legislation written by utilities and slipped into your legislature as the work of a sponsoring legislative member of CSG.  Your state legislative sponsor didn't write this bill, in fact, he or she probably didn't even read it before submitting it.  That's the way these corporate bill mills work.

While the public's attention has been focused on FERC's Order No. 1000 attempts to regionalize planning and cost allocation for interstate transmission projects, the interstate compact bill has been quietly honed to a razor-edge and is now ready to pass unnoticed through your state legislature.  The interstate compact bill will do much more damage to your due process rights than anything FERC can dream up and must be stopped.

This secret scheme of utilities, CSG and the federal government to neutralize state authority has been underway since 2010.  Meetings, "hosted by the Office of FERC Commissioner Philip Moeller," were held in 2010 and 2011 that included CSG personnel, FERC personnel, and utility representatives.  The interests of citizens and electric consumers were not represented, except as a discussion of "NIMBY Challenges."  That's all you are to these people - "NIMBYs."  According to the PATH transmission attorneys, "NIMBY refers to "Not In My Back Yard," a common position taken by certain opponents whereby the opponents do not necessarily protest the specific proposal but, rather, protest the location of the specific proposal as being too close to their own property."  "NIMBY" is a propaganda tactic known as "name-calling" whereby a negative connotation of an idea or group is used instead of an argument.  Name-calling is a substitute for rational, fact-based arguments against a group, idea or belief, based upon its own merits, and becomes an argumentum ad hominem -- a way of removing participants from an argument.

According to a white paper written by the working group after the first meeting, the whole premise behind this is based on this lie:

"There are two key reasons why a more collaborative and efficient approval process is needed: First, the demand for electrical energy has grown and is projected to continue growing across the nation – even with investment in energy conservation/efficiency. Second, low cost electricity that is environmentally responsible will be particularly attractive to consumers and businesses."

Electrical demand is not growing.

But wait, the white paper also reveals the real reason for interstate compacts:

"The multiyear application review process and separate evaluations by multiple jurisdictions constitutes a growing burden for transmission companies..."

Regulation is a "burden" to transmission companies earning more than 10% yearly on their investment in new lines.  But new transmission lines are an even bigger burden to electrical consumers who pay for them and sacrifice their properties through eminent domain takings to create new transmission line rights-of-way.

The group identified challenges to transmission line siting, including those pesky NIMBY Challenges:

"One of the greatest challenges to increased transmission line siting comes from NIMBYism (not-in-my-backyard), where local municipalities, environmental groups, and others oppose having lines run through their respective areas. Such opposition—while warranted in certain cases—can lead to costly delays that potentially impact grid reliability and loses sight of the over-all regional or national benefits of a more robust transmission grid."

The white paper goes on with this description of due process:  "NIMBY groups often seize upon the competing interests of the stakeholders to frustrate the regulators with overlapping jurisdictions."

And finishes with this thought:  "It is important to note that there are two forms of NIMBY, each of which involves a different response—the first is one comprised of local geographic issues, such as landowners. The second type of NIMBY is environmental and is often represented by outside groups. Each group’s concerns will need to be addressed during the pre-application phase in order to ensure a smooth process."

News flash:  There's now a third form of "NIMBY."  It's the consumer who will pay for all this transmission, have property taken through eminent domain, and would prefer to consume locally-produced renewable power.  Smooth that, while you manage to be both arrogant and clueless at the same time.

Another "challenge" is the statutory responsibility of a state to determine whether a proposal is needed by its citizens.

"Another stumbling block to siting transmission is that states consider their local interests, not those of the regions they inhabit. In turn, regions often neglect to consider the needs of other regions, and the nation, as a whole, in maintaining reliability and bringing new energy to market."

When are the "regions" and the nation going to consider providing for their own needs instead of constantly taking from consumers, taxpayers and landowners under the guise of "the needs of the many trump the rights of the few?"

So, here's what the group decided an interstate compact needed to do:

1.    "Need" findings would be regional so that pass-through states who do not benefit would be forced to find a project "needed."

2.    Create an interstate siting board to overrule reluctant states and "facilitate a smoother process."

3.    The interstate siting board would have sole authority to site the line in all affected states.

4.    Form "partnerships" and sign Memorandums of Understanding with relevant federal agencies to "streamline the siting process."

5.    Make it nearly impossible for a state that feels railroaded to "opt out" of the compact.

6.    Approval by the interstate siting board would bestow individual state eminent domain authority to transmission owners.

What do the transmission owning corporations behind this scheme think about interstate compacts?

“Clearly, we haven’t made any progress on federal siting legislation” since EPAct05, he said, “so if the states can think more broadly in terms of a compact, I think that’s a good start,” Jimmy Glotfelty, executive vice president of external affairs for Clean Line Energy Partners, told
TransmissionHub. “There are a lot of things a compact could do.”

Yes, an interstate compact can strip a pass-through state like Illinois of its permitting authority so that Jimmy can build his unneeded Rock Island Clean Line project and make a bundle of money.

So, where's the "model" legislation?  Despite hosting a page of information and links about interstate compacts, CSG fails to display the proposed legislation anywhere on its website.  What is CSG trying to hide?

Here's the "model legislation" as it was introduced in the Washington state legislature on December 31.

Features of the proposed interstate compact:

1.    Creation of an interstate "Commission" consisting of:   "...from each member state, three (3) representatives: one appointed respectively by the governor, the legislature, and the state agency with siting authority or as otherwise prescribed by the adopting state."  The expertise of your state public service commission will no longer be needed to review and approve transmission projects -- political appointees who know nothing about utility regulation will now make all the decisions.

2.    "In member states, federal backstop permitting under section 215 of the Federal Power Act (FPA) may not be requested."  This is the big selling point for interstate compacts, however, there is no more "federal backstop permitting," it was previously nullified by two different federal court decisions!  While sec. 215 still contains the language, the "backstop" has been so diluted as to be worthless.

3.    "Public notification of the application and the proposed line shall be provided to each involved state by the convening state."  Notice is given to states, not to the affected public.  You may never know a transmission line is coming through your front yard until the bulldozer shows up.

4.    "Once a route is certified by the combined state application review board, eminent domain shall be based on each state's existing authority."  The "Commission's" approval of a project will trigger eminent domain in member states.  But wait...  you haven't even been "notified" yet!

5.    "Affected federal agencies and tribes shall be notified and the "Commission" shall include one advisory
representative for federal agencies (if federal land is involved) and one representative for all federally
recognized tribes (if tribal land is involved) who shall serve in an ex-officio capacity."  Ex-officio in this instance means in a non-voting capacity.

6.    "The first "Commission" hearing shall occur within 90 days of the initial filing and is intended to assess the
completeness of the application. A second "Commission" meeting will occur no more than 30 days after the initial
decision. The second meeting will assess the merits of the application, including, but not limited to the
proposed route, regional and national energy needs, and costs."  That's 120 days - 4 months - between filing of an application and evidentiary hearing.  No more technical reviews, no more quasi-legal process!

7.    "The "Commission" at their initial meeting shall establish procedures by which interveners may participate in developing the formal record for the application review.
The "Commission" shall hold at least one public comment hearing in each of the involved member states. These public comment hearings must be completed within 120 days after the initial application filing."  Here's where you fit in, little NIMBY.  The "Commission" will decide what your rights are and limit your participation to as little as public comment at one hearing somewhere in your big, wide state, probably located as far away from the project area as possible.

8.    "Commission" meetings are open to the public, unless the "Commission" votes to close them.  Then it's too bad for the public.

9.    "The "Commission" will issue conditional or final approval based on the record within 270 days of the filing of the application unless the applicant and the "Commission" agree to a different timeline. The "Commission" shall outline the required actions in instances where conditional approval is granted.
All decisions of the "Commission" will be based on majority vote, with each involved state having one vote as determined by a majority vote of each State Project Review Panel.
A state, based upon the rules of the involved states, may alter the route for the transmission line within its
boundaries by assuming incremental costs."
The only outcome for an application before the "Commission" is approval or conditional approval.  Denial is not an option.  In that case, why even bother with this kangaroo court at all?  If a state doesn't like the route and wants to change it, they do so at their own expense (which will probably be prohibitive).

10.    Your only right to appeal a decision of the "Commission" is to petition for rehearing within 90 days.  If still not satisfied, you may appeal to the D.C. Circuit Court (as in Washington, D.C., folks, no matter where in this big, ol' country you may happen to live).  Isn't that convenient for the ordinary landowner?  If you appeal and lose, you will be responsible for all legal fees and court costs of the "Commission" and the transmission owner.  This could be hundreds of thousands, or even millions, of dollars.  Ordinary citizens don't have this kind of money, therefore, ordinary citizens will be disenfranchised from the appeals process.

11.    The "Commission" can make up or change its own rules at any time during the process.

12.    If a member state "defaults" on the compact as determined by the "Commission," the "Commission" can  assess fines or penalties or take other action against the state (paid for by taxpayers, of course).

13.    "The "Commission" may accept contributions and other forms of funding from federal agencies,  compacting states and other sources."  You mean like the transmission owners whose application is being reviewed?  No, that wouldn't present a conflict of interest at all...

14.    "Withdrawal from this compact shall be by the enactment of a statute repealing the same, but shall not
take effect until the later of either the final determination of a pending application involving that state or one (1) year after the effective date of such statute and until written notice of the withdrawal has
been given by the withdrawing state to the Governor of each other member jurisdiction."  In the interest of full disclosure, this should probably be dubbed the Hotel California bill.  States may check out, but they may never leave.

15.    This has to be my personal favorite provision:  "All member states' laws conflicting with this compact are superseded to the extent of the conflict."  So, if any of your state laws conflict with anything the "Commission" wants to do, the "Commission" rules!

Why would any state agree to an interstate compact like this?  CSG plans to persuade states through propaganda, half-truths and lies as indicated in this presentation.  Some minor "disadvantages" states forming interstate compacts must overcome include:

"Loss of individual state sovereignty and delegation of state regulatory authority to interstate entities."

That about sums it up.

The model legislation is based on two lies that its proponents will spin:

1.    States will be subject to federal backstop siting without a compact.  Federal backstop siting has been nullified by more than one federal court decision.  There is no federal backstop siting to be worried about.

2.    The transmission siting/permitting process is "broken."  There's nothing wrong with our current state-based approval processes.  Projects are being approved and built within 5 years.  Others take longer due to transmission owner incompetence.  This is not the fault of the states.  State authority is the only process that protects the due process rights of citizens and must be maintained.

How does CSG predict its "suggested state legislation"  will fare in state legislatures this year?

“It’s always a little hard to predict [but] a ‘pretty good’ response rate during [the first] legislative session is somewhere in the neighborhood of 10 to 12 states,” Crady deGolian, director of the CSG’s National Center for Interstate Compacts, told TransmissionHub. “Given the fact that probably most of the focus will be in the West and in the Midwest ... I think we could probably hope to achieve somewhere in the neighborhood of seven to 10 states [during the first legislative session] if things go well.”

Only if YOU allow it to happen, and I would strongly urge you not to.  Pay attention to what's going on in your state legislature this year, especially if you live in the west or midwest.  Find it.  Kill it.  And spread the word to all your friends in other states.  Together we can prevent the creation of this corporate-created, jackbooted "Commission" who proposes to strip you of your due process rights, your property, your money and your pursuit of happiness.  Just say no to corporate governance.

I came across an editorial the other day with some thoughtful ideas about reforming an out-of-control federal regulatory system that often forgets that it is supposed to serve the consumers.  Reforming FERC is the work of Tyson Slocum, who the publication fails to inform you is with Public Citizen.

Slocum is just the latest to criticize the Regional Transmission Organization structure that FERC has created that, as Slocum puts it, "delegated sweeping Federal Power Act authority to [RTOs], creating private organizations on the front lines of federal law enforcement with little accountability to the public."

Indeed, there is no public accountability at regional transmission organizations, despite their claims of transparency and "stakeholder participation."  In fact, the vast majority of electric consumers do not even know these organizations exist. 

"Governance is also a problem. The RTOs assign voting shares to different stakeholders. PJM, NYISO and the others tilt the voting rights heavily in favor of generators, power marketers and utilities. End users always have a tiny minority of the voting shares, and therefore no influence. Sure, the RTOs have dozens of working groups that meet hundreds of times on an array of market topics, but at the end of the day, the RTO votes on policies, and the outcome of the election is rigged against the consumer's interest." 

As a friend recently observed, "The only way these organizations will ever be "stakeholder-driven" is when they get stakes driven through them by the holders!"  Must we gather our torches and pitchforks and storm the castle?

FERC's little experiment with allowing the industry to regulate itself through the formation of self-interested cartels is about an inch from failure and must be reformed.

Because they have been free to operate and "answer to no one" for years, it's been a very slippery slope.  Just as an unsupervised child toes the line to see what he can get away with, the RTOs are getting bolder and bolder.  One doesn't have to spend much time riffling through FERC dockets to find numerous examples of RTOs behaving badly.

For instance, PJM's recent revisions to the Minimum Offer Price Rule (Docket ER13-535) were concocted during secret meetings that purposely excluded state consumer representatives.  The new rule is intended to prevent the construction of new gas-fired generation ordered by two east coast states.  It doesn't take much imagination to determine that new generation will cut into incumbent generator profits, and incumbent generators and their affiliated investor-owned utilities hold huge "stakeholder" voting blocks.

In another example, one utility has filed a request for rehearing (Docket ER12-1178) of FERC's approval of recent planning scenario changes that allow for "PJM’s engineering expertise and experience as the transmission planner and operator for the PJM region" to be a mysterious surprise factor when selecting transmission upgrades through a "transparent" planning process.

And lest you think I'm just picking on poor, persecuted PJM, this "engineering judgment" black box decision making is also going on in other RTOs.  There's a dispute going on between a Wisconsin generator and MISO (ER12-1928) wherein MISO has "used its engineering judgment" to decide three years after the generator went into service that it is now responsible for new transmission builds as part of its interconnection agreement.  If MISO gets its way, no generator is safe from being assigned millions of dollars of transmission upgrades in order to continue to operate.  The generator actually pondered whether it would ultimately be cheaper to just retire its brand new wind farm than continue to operate and risk being ordered to pay for future upgrades that come out of MISO's "engineering judgment" black box.

This kind of railroading of the "stakeholder" process and black box decision making is plainly ridiculous and should serve as a wake-up call for FERC to re-examine its RTO construct.

Another suggestion Slocum makes is to establish a consumer advocate office at FERC.  There is currently nobody looking out for consumer interests in the federal regulatory world.  It's pointed out that state consumer advocates are underfunded and overworked and rarely get involved at FERC.  This does not mean that consumers cannot protect their own interests at FERC, however. 

Personally, I have no complaints about the way FERC treats consumers, however, it is extremely rare that a common end user dares to penetrate the barrier presented by a complicated regulatory process with an extremely steep learning curve.  Despite PATH's dire warnings to FERC that if it found consumers to have standing under Sec. 206 of the Federal Power Act that millions of consumers would storm the agency and file complaints, it just isn't going to happen.  Nobody else is lining up to put in the hundreds of hours of volunteer labor required to examine transmission rates, even though their learning curve would be substantially less steep than the one Ali and I faced.  Other transmission owners who may fudge their revenue requirements are probably quite safe from consumer intervention for the time being.

Slocum says, "Congress never expressly authorized the private organizations that run power markets; rather, FERC created them as voluntary organizations under Orders 888/889/2000."

Perhaps it's time for Congress to act, because it's highly unlikely that FERC will initiate Slocum's suggestion to "open an investigation into whether or not RTOs are producing just and reasonable rates."  Sometimes the truth is a bitter pill to swallow.

Well now, it's time to hand the Captain Obvious Award to The Wall Street Journal for this article, U.S. Electricity Use on Wane.  Reporter Rebecca Smith makes the stunning revelation that despite the fact that we're using more gadgets than ever, electric use continues to fall.  Gee, how original!  However, AP's Jonathan Fahey beat her to it more than 15 months ago.

Remember those silly PATH TV commercials that screamed: 

"More people, more appliances, more gadgets, more equipment, what do they all need to keep going?  MORE ELECTRICITY!"

Fact:  Our gadgets have become more efficient.  Our lighting has become more efficient.  Our appliances have become more efficient.  Our manufacturing has become more efficient.  We have become more efficient, and we're using less power than ever.  Demand will never snap back to pre-recession levels.  Perhaps even PATH has given up that impossible dream lately.

"Nick Akins, CEO of American Electric Power Co., which has the nation's biggest high-voltage transmission network, said he is focused on projects that can be built quickly, mostly connecting utilities it owns in 13 states.

"Mr. Akins said he wants to avoid the bruising battles that delayed or doomed big projects in the past, like the 275-mile Potomac-Appalachian Transmission Highline project from West Virginia to Maryland. AEP and partner FirstEnergy Corp. dropped development plans for the complex project in 2011. [Not voluntarily, Rebecca, they were "ordered" to abandon the project by regional grid operator PJM Interconnection due to dropping electric demand.]

"Sometimes, we were just dreaming" that the companies could get enormous power lines built across multiple states, Mr. Akins said. He said AEP now is focusing on shorter projects blessed by federal regulators that eliminate grid bottlenecks. "It's where you want to put your money," he said."

Ahhhh... Ha ha ha ha ha ha ha!  I'm sure a hundred million or so will heal Little Drummer Boy's bruise just fine.  The entire cost of the PATH Project will be reimbursed to AEP and its project partner, FirstEnergy, by electric consumers in 13 states, plus 10.4% interest annually for the next 5 years.  It didn't cost him a dime.

So, how's an investor-owned utility supposed to make money these days?

"Many utilities with regulated and unregulated operations are redirecting spending to their regulated side, where regulators practically guarantee them a profit."

Right, like AEP and FirstEnergy "selling" their unregulated coal plants into West Virginia's regulated environment, where captive customers will end up paying off billions of dollars of debt for years to come, plus 10.5% interest annually.

"Some companies, including Public Service Enterprise Group Inc. and Northeast Utilities, are pouring money into high-voltage transmission lines—superhighways for electricity—because federal regulators are allowing them to collect above-average returns from customers on those outlays to encourage new investment in the nation's aging power networks.

Ralph Izzo, the company's CEO, recently told investors that he likes spending on power transmission, because "it's not dependent on [electricity] load growth." Part of his motivation is the return on equity of 11.7% to 12.9% set by the Federal Energy Regulatory Commission."

Right, those FERC transmission incentives are just like a free trip to the candy store, aren't they?  What's that you say?  Transmission lines aren't dependent on load growth?  That's right, they're all about "reliability," or "economic congestion," or "public policy," or simply padding the investor-owned utility balance sheet.

Seven years ago, PJM Interconnection dreamed up an initiative to build four new transmission lines to increase the import of coal-fired generation to the east coast by 5,000 MW.  Turns out none of that transmission was needed after all, however, consumers have shelled out billions for one completed project (TrAIL), another still persisting at construction attempts (Susquehanna Roseland), and two other projects that have since been abandoned (PATH and MAPP).

Today, the utilities, FERC, the regional transmission planners, environmental organizations and a bunch of get-rich-quick yahoo cowboy merchant transmission builders have dreamed up an initiative to increase the export of wind energy from the midwest to both coasts.  How much consumer funding is going to be poured into the "Saudi Arabia of wind" rathole before that initiative is also determined to be another costly boondoggle?

We don't need all this new transmission!  $300B of new transmission will only serve to increase prices paid by consumers and line investor pockets. Meanwhile utilities continue to cut operations & maintenance spending on existing infrastructure and our grid becomes more and more unreliable.

Stop the crazy train!  I want to get off!

If you haven't been keeping an eye on PJM's Order No. 1000 compliance filing at FERC, you've been missing out on a remarkable display of overreaching greed and self-importance. 

The main issue of contention appears to be PJM's state agreement approach to cost allocation for "public policy" transmission projects driven by individual state renewable portfolio goals.  PJM's approach is to have these type of projects proposed by the states whose RPS requires them, and who agree to pay for them in their entirety.  Entities who stand to profit from building this type of transmission believe they should be free to develop these projects without input from the beneficiary states and that these projects provide some hard to identify regional benefit and therefore should be allocated to all consumers in the PJM region, either in whole or in part.

Since "public policy" is a state matter, decided by state legislators on behalf of their constituents, who the heck do these for-profit transmission builders and Pollyanna environmental organizations think they are to take over administration of individual state policies and direct how they will be fulfilled and paid for?

The transmission builders are representing their own interests to profit from new transmission to meet "public policy" goals, and the environmental organizations are representing their own ivory tower, academic, environmental goals.  Neither of these groups represents the consumers who will pay for new transmission.  The only entities here representing the most important "stakeholder" of all (YOU!) are the states.  The Organization of PJM States makes it quite plain that transmission owners and environmental organizations simply don't have the authority to propose and force "public policy" projects.

"Absent an explicit legislative directive for a project’s construction, turning a “public policy” into a “transmission need” for a project that is not economic or needed for reliability will likely require the interpretation and/or extrapolation of laws or regulations. Such policy decisions and pronouncements are appropriately made by governmental entities and not by private interests or regional transmission planners. OPSI agrees with FERC that the regional transmission planning simply is not the forum for making policy decisions as “[i]t is not the function of the transmission planning process to reconcile state policies.” No employee in the PJM chain of command is appointed or elected by the citizenry to interpret, implement, or reconcile state laws and regulations. The State Agreement Approach appropriately identifies that only authorized policymakers should make the policy decisions and pronouncements that will be required to convert “public policies” into “transmission needs.”

PJM knows that allowing self-interested entities to dictate how individual state energy policy is implemented is a recipe for disaster and has wisely chosen to allow the states to direct and allocate costs of these projects.  It's the only way anything is going to get built, ever.  However, these gung-ho entities refuse to see how their rabid attempts to force the issue are going to tie "public policy" transmission up in the courts forever.  Whatever, fellas, the lights aren't going to go out if these projects don't get built, and the delay will only serve to prove that the most reliable and economic deployment of renewables is through distributed generation, not centralized utility-scale generation.  So, keep on holding your breath until you turn blue, it's quite amusing!

I do, however, have to hand out an Audacity Award to the glad-handing shysters at Clean Line Energy Partners for their suggestion that merchant "public policy" projects should also be partially allocated on a regional basis.

A merchant project is paid for entirely by the entity who builds it.  All risk is assumed by the transmission owner, who may recover their costs of building the line from the generators and customers who subscribe the line.  No costs are allocated to captive customers.  Costs are voluntarily assumed by entities who buy the "renewable" transmission.

However, Clean Line's merchant business model is falling apart before their very eyes and now they want YOU to help them pay for it.  "Renewable" merchant projects like Clean Line's are not economically feasible.  The cost of building the line makes the cost of its product more expensive than competing "renewable" generation.  Clean Line has been relying on subsidization of generation costs through the production tax credit to lower the cost of its product.  Now with the PTC on the chopping block, Clean Line is looking for another sugar-momma to subsidize its uneconomic business model through allocation of costs to captive ratepayers who will not purchase one electron transmitted over the line.  Give up, Clean Line and quit wasting the Zilhkas' money.  Thanks for pointing out how ridiculous the rest of the whiner entities' proposals about regional allocation of "public policy" projects can be when extrapolated out to fill your own pockets.  Every circus needs a clown.  Or is it a monkey on a bicycle? ;-)

As 2012 draws to a close, let's take a look at the decrepit corpse of the PATH project.  Although it's true that PJM officially cancelled the project in August and PATH will never be built, our little zombie continues to shamble about feeding on consumer wallets.

Back in 2008, FERC awarded several financial incentives to the PATH project.  One of the incentives was the ability to apply at FERC to recover 100% of prudently incurred expenses from consumers in the event the project was abandoned (cancelled).  Although you've been paying a yearly revenue requirement for PATH's Operations & Maintenance expenses and return (profit) every year since 2008 (grand total through Dec. 31, 2012 = $95M), PATH has been spending its own money on project capital expenses such as land, engineering, permitting, etc.  These expenses get tucked away in PATH's rate base as "Construction Work in Progress" where they have been earning a return of 12.4% yearly.  The amount PATH has invested in their project totals $121M.

In January and December of 2011, two West Virginia consumers filed formal challenges to PATH's yearly revenue requirements for the years 2009 and 2010 (part of that $95M).  In September of this year, FERC granted the two formal challenges and set them for hearing.  Expenses challenged include PATH's advertising and dishonest public relations activities totaling around $6M.

A week after FERC set the Challenges for hearing, PATH made their abandonment filing with the Commission, seeking to recover their $121M investment without any examination of the actual costs incurred.  Then PATH turned right around and asked the Commission to consolidate the abandonment with the formal challenges for settlement and hearing.

More than 30 parties intervened in PATH's abandonment filing, including a dozen consumers from West Virginia and Maryland.  FERC found that PATH was entitled to collect prudently-incurred project investment, however it set the prudence of the actual expenses for settlement and hearing.  FERC also denied PATH's request to retain part of the incentive return on equity they were granted in 2008. 

In its filing, PATH voluntarily agreed to forfeit 1.5% of the incentive rate of return they were granted in 2008.  However, PATH asked to retain the extra .5% return FERC granted them as an incentive for joining the PJM cartel.  Several parties protested this rather bald money-grab by PATH.  Because the PATH shell companies were created by parent companies AEP and FirstEnergy (Allegheny Energy) as single-purpose entities to construct and own ONLY the PATH project, and the PATH project has now been cancelled, there is no purpose to PATH's continued membership in PJM, except to collect an additional .5%  interest from consumers every year.  PATH will never build, own or turn over any transmission infrastructure to the PJM cartel.  PATH is simply limping along trying to maximize its profit on its failed endeavor.  PATH's proposal was found to be unjust and unreasonable by the Commission, and PATH was denied the extra .5% interest, which reduced its yearly return to 10.4%.

FERC also ordered PATH to provide the cost detail that was missing from its abandonment filing.  PATH asserted that its expenses were prudently-incurred and that no detail of how it spent $121M was necessary.  Ridiculous much?  Other abandonment filings have all included cost detail.  Turns out that PATH had not even sorted its costs before filing for abandonment and needed another 45 day extension to get their act together.  But we were supposed to believe that everything was prudently-incurred ;-)

Today, PATH filed a request for rehearing on the abandonment, claiming that FERC had made legal errors in their Order denying that .5% PJM cartel membership incentive.  *sniff*  *sniffle* *whiiiiiiiiiiiiiiiine*  Pretty revolting, I've seen better tantrums from 3-year olds.

Just remember, all this legal nonsense is being paid for by all 60-some-odd million consumers in PJM's 13-state "region."  No big deal for PATH to continue to stomp its feet and demand more money, it won't cost them a dime.  So, just how much money are we talking about here?  Around $240K in 2013, with lesser amounts in each of the following 4 years PATH has proposed as the amount of time given to ratepayers to pay off project debt.  Wanna bet PATH wastes more of our money on legal fees whining about that .5% interest than it stands to gain overall?

So, here's where PATH stands at the end of this year:

$121M in abandoned project costs + $6M in prior O&M expenses set for settlement and hearing at FERC.  Currently, settlement conferences are scheduled to begin at the end of February, 2013 and will continue as long as negotiations are productive.  If settlement ultimately fails, some or all issues may actually proceed to hearing, adding another couple years and mounting legal fees to consumer misery. 

The PATH zombie -- the gift that keeps on giving!

Pepco has been taking a lesson from the way PATH is getting kicked around at FERC.  After watching PATH run willy-nilly into the abandonment pool without any little arm floaties, or even a bathing suit, at the end of September, Pepco filed with FERC to collect $87.5M in stranded investment for its MAPP (Mid-Atlantic Power Pathway) Project on December 21.

Pepco says they had $101M sunk into the project, but have "mitigated" the damage to consumers by transferring some materials and overhead to other projects and putting the $11M Burches Hill substation upgrades (that will now never be used) into service.  Pepco is asking for $87.5M, to be further "mitigated" by transferring or selling other project assets in the future.

Rights-of-way acquired by Pepco will simply be transferred elsewhere to be held for future use.  If you were unfortunate enough to have signed an agreement with MAPP/Pepco to allow the company a right-of-way on your property, rest assured that the company will be sure to put a transmission line on your property at some time in the future.  You're not off the hook, like the majority of the landowners who caved in to pressure from PATH land agents.

While PATH voluntarily gave up its 150 basis point incentive ROE adder when it filed for abandonment, and had the remaining 50 bpa for membership in PJM wrested away from it by the Commission, Pepco thinks the Commission should award it the full 12.8% incentive ROE it was originally awarded.  Seriously, Pepco?  Got into the holiday spirits a little early this year?  Here's Pepco's silly justification for continuing to collect a 12.8% return over its proposed 5-year amortization period: 

"The PHI Companies are aware of the recent order in PJM Interconnection, LLC and Potomac-Appalachian Transmission Highline, L.L.C., 141 FERC ¶ 61,177, P 71 (2012) (“PATH Abandonment Order”), in which the Commission found that the 50 basis point  RTO participation adder should not continue because the applicants in that case would not be taking steps to turn over operational control of their facilities to PJM and would have no future physical facilities. The Commission’s finding in this regard should not apply to the instant filing for several reasons. First, in contrast to PATH, which is a stand-alone entity that will cease operations after its recovery period, the PHI Companies have turned over operational control of all their transmission facilities to PJM (including the Burches Hill substation and related facilities constructed during the development of the MAPP Project). Moreover, as stated above, the Commission already has approved the ROE applicable to the MAPP Project (150 basis points above the PHI Companies baseline approved equity return and the 50 basis point adder for RTO participation). Although the Commission’s statement in the PATH Abandonment Order, 141 FERC ¶ 61,177, at P 71, indicates that ROE adders are not appropriate in abandonment filings, such direction must be construed as applying prospectively only. That is, if the determination in PATH is now the Commission’s policy for RTO participation adders, it must apply only to transmission incentive orders issued after the date of the PATH Abandonment Order."

*hiccup*  *WAHHHH!*

Pepco also includes some very detailed cost breakdowns of the investment they are now proposing to collect.  In contrast, PATH provided NO cost data.  PATH was in a real big hurry to make their abandonment filing and consolidate it with the Challenges, after the Commission set the $6M Formal Challenges for hearing on September 20.  PATH was in such a hurry, it filed no cost data at all.  That seems to have worked out really swell for PATH so far, hasn't it?

So, the abandoned PATH project is proposed to cost consumers $250M, and now the MAPP project isn't far behind.  Cost of PJM's failed Project Mountaineer initiative to electric consumers in 13 states, plus the District of Columbia, could approach a half billion dollars, while absolutely NO benefit was received for this outrageous consumer expenditure.

Consumers can't afford the PJM cartel's poor planning any longer.

Bad behavior always catches up with you.  It looks like FirstEnergy's day of reckoning has finally arrived!

On Monday, a federal judge approved a plan ordering FirstEnergy to shut down its Little Blue Run Poison Pond, pay $800,000 in fines, set up air and water monitoring systems, replace water supplies that the company has polluted and submit its plan to close the site by March 31.  In addition, FirstEnergy is subject to additional fines ranging from $5,000 to $25,000 for failure to meet its agreement with the Pennsylvania Department of Environmental Protection.

Yesterday, the West Virginia Public Service Commission denied FirstEnergy's plan to absorb a rate decrease due to its West Virginia customers and apply it to the company's desperate plan to sell one of its unwanted coal plants to West Virginia ratepayers.  Bill has the details over on The Power Line.

So, let's add all this up:

1.  Little Blue Run liability and expense of new coal ash disposal site.
2.  WV rate decrease.
3.  Plan to sell coal plant to WV regulated subsidiary falling apart.
4.  $109M judgment in in Pennsylvania negligence case.
5.  Ohio electricity market manipulation probe.
6.  $6.6M risk in PATH rate challenge case at FERC.
7.  $121M risk in PATH abandonment case at FERC.
8.  FE subsidiary rate case in New Jersey where folks are screaming about poor performance during Hurricane Sandy.
9.  FE must raise $500M in cash to pay off looming debt.
10.  Investors are getting nervous. 

Oh, FirstEnergy, it just sucks to be you, huh?  Quit your sniveling, you brought it all upon yourself.

Ha ha ha!

Connecticut Senators Lieberman and Blumenthal sent a letter to FERC Chairman Jon Wellinghoff the other day complaining about ISO-NE's out-of-control budget.  The senators say ISO-NE's budget "has increased by 34 percent from 2009 to 2013, including a 14.8 percent increase projected for 2013 alone. In the past five years, ISO-NE has increased its employment by 100 positions, at the same time other public entities are reducing staff and cutting expenses."

The senators want FERC to exercise some oversight and control over the little monsters it has created.  According to a press release from Senator Blumenthal:

"The creation of regional transmission operators offered the opportunity for transmission line operators, generators, utilities and others to work cooperatively to develop highly efficient, reliable and cost-effective electricity. Under federal electricity restructuring legislation, RTOs were provided with the authority to develop their budgets and implement electricity distribution and generation policies subject to FERC’s oversight.  Because RTOs are predominantly operated by transmission line operators and electricity generators, the consumer must rely on effective intervention by state public agencies charged with representing the consumer’s interests and FERC’s careful scrutiny of RTOs.  Unfortunately, the experience since establishment of the seven RTOs in the United States has been one of relatively lax oversight, budgets that have grown out of proportion to the economy and policies that have been subject to intense consumer criticism."

Problem?  The regional transmission operators have morphed into industry-controlled cartels who feel they "answer to no one" and cost consumers billions.

It was a nice idea, but it doesn't work.  For-profit entities simply cannot regulate themselves under the guise of a not-for-profit organization.  Change is needed.  Consumers simply cannot afford RTOs any longer.

As mentioned in an earlier post, FirstEnergy may be snared in a probe that Ohio regulators recently announced of the state’s retail electric market.

The Public Utilities Commission of Ohio initiated what it terms "an investigation of Ohio's retail electric service market" by posing a series of questions to be answered by interested parties.  Many of the questions seem to focus on FirstEnergy's gaming of PJM's capacity market earlier this year, such as:

Whether an electric utility should be required to
disclose to the Commission any information
regarding the utility's analysis or the internal
decision matrix involving plant retirements,
capacity auction, and transmission projects,
including correspondence and meetings among
affiliates and their representatives?

Should a utility's transmission affiliate be
precluded from participating in the projects
intended to alleviate the constraint or should
competitive bidding be required?

Are shared services within a 'structural
separation' configuration causing market
manipulation and undue preference?

Should generation and competitive suppliers be
required to completely divest from transmission
and distribution entities, maintain their own
shareholders and, therefore, operate completely
separate from an affiliate structure?

And this one, which is a particular favorite of mine:

As fully separate entities, does a utility's distribution affiliate have a duty to oppose the incentive rate of return at FERC?

This very issue was raised in one of the complaints filed by consumers against FirstEnergy's PATH affiliate at FERC this past summer.  PATH had asserted that a consumer was protected from inaccurate, unjust and unreasonable rates by their load-serving entity.  In the case of the complaint, PATH said that a customer of Potomac Edison, one of its affiliates, would be protected by Potomac Edison from unfair rates for the PATH affiliate set at FERC.  FERC rejected PATH's argument and granted the consumer's complaint, finding that consumers have standing to challenge FERC jurisdictional rates.

It's nice to see that even if PJM's Market Monitor chooses to ignore FirstEnergy's obvious manipulation of the capacity market in favor of secret schemes to frustrate the development of new, badly needed generation in New Jersey and Maryland, at least the state of Ohio is interested in protecting its consumers.

Back in June, I pondered, "whether FE will get away with pushing the legal envelope, or whether evidence of possible misdeeds will begin to float to the surface like untethered bodies..."  Looks like there's been a couple of floaters found... ;-)