Well, well, well, the truth comes out at last!

It seems that "...the company continues to contemplate asset sales to meet its equity needs, which are likely around $500 million, to maintain its corporate credit rating.”

According to a UBS Securities spokesman, and demonstrated by tanking stock prices, FirstEnergy is in trouble with cash flow to pay off looming debt.  The company needs to raise some quick cash to pay off "$1.4 billion in debt at its retail power marketing business and about $400 million held by a transmission unit."

In order to do so, FE "has asked West Virginia regulators to allow it to shift ownership of a merchant coal plant to a regulated utility, adding about $1.1 billion to the rate base that determines the utility’s earnings."

It's not about securing adequate generation for Mon Power customers, or any of the other excuses FirstEnergy made to the WV PSC, it's about raising quick cash to prop up a poorly-run company.  And it's about lying to the West Virginia Public Service Commission and what the company thinks are ignorant, uninformed customers in West Virginia.  Bad plan.

But wait, there's also more bad news for FirstEnergy, "...it may be snared in a probe that Ohio regulators announced yesterday of the state’s retail electric market."

All that lying and buying influence will catch up with a greedy and crooked company eventually and the truth will prevail.  Always.

A coalition of citizen groups has filed an injunction in federal court asking that construction of the unneeded Susquehanna Roseland 500kV transmission line be halted within 20 miles of the Delaware Water Gap National Recreation Area.

The groups earlier filed a lawsuit against the National Park Service for its issuance of a permit to the power companies to destroy the park in contravention of the NPS's mission to preserve our irreplaceable natural resources.

Project owners PSEG and PPL have begun construction of the project in an all-fired big hurry, trying to get it built before legal remedies have been exhausted.  Looks like they're very afraid that the lack of need for their project and the underhanded way they went about securing permits will be exposed.  And it will, but the companies are hoping the power line will be built before anyone really notices or cares.  Too late!

The petition asks for an expedited hearing.  Will justice finally be done?

West Virginia Consumer Advocate Byron Harris was a guest on The State Journal's "Decision Makers" program on Sunday.  Here's a link to the video.

While Byron says he opposes FirstEnergy's proposal to sell one of the company's competitive market coal plants to captive West Virginia electric consumers, his main concern seems to be the price of the plant, and not the purchase of the plant.

Host Bray Cary gets way off track and Byron doesn't take control of the situation to re-direct back to a coherent argument.  Cary is one of those individuals who is so terrified of accounting that he views corporate accountants as "tricky" and "sneaky."  He dubs the transaction "corporate hocus pocus" and believes it's "purely bookkeeping."

Bookkeeping is a scary concept for people like Bray Cary, who believe bookkeeping doesn't involve real money.  However, FirstEnergy's coal plant sale is going to cost you real money.

The cost of the plant for West Virginians is a cool $1.102B.  This amount represents real cash that will be exchanged between FirstEnergy subsidiaries Mon Power and AE Supply, one of the company's unregulated generation subsidiaries.  Of that $1.102B in cold, hard cash, 45%, or $529M, will come from an equity capital investment in Mon Power from parent company FirstEnergy.  In exchange for their investment, FE will earn 10.5% return on the money.  The other 55%, $573M, will be borrowed at a rate of approximately 5% over a 35 year term.  According to the testimony of Steven Staub submitted as part of the company's filing with the WV Public Service Commission:

"Power plants are capital intensive assets with long useful lives. The tenor of a debt financing associated with a power plant should complement the useful life of
the asset. The financing plan is expected to include new notes that will mature no more than thirty-five years from their dates of issuance. Based on a review of
treasury yields and corporate credit spreads for  comparably rated issuers over the past year, the newly issued long term debt would be expected to be issued with a coupon of approximately 5%. Rates will fluctuate in the future; thus, the actual cost of debt for the Transaction will be determined when the new long term debt is issued."

So, Mon Power and Potomac Edison customers will repay $1.102 BILLION to both parent company FirstEnergy and Mon Power's creditors at an approximate average interest rate of 7.75% for the next 35 years.  In the video, Byron states that the cost to the "average residential consumer" will be about $90 per year.

That's $90 of cold, hard cash out of your pocket and into FirstEnergy's every year for the next 35 years, for a total of $3,150 per household.  That's real debt, real money.

Just say no to FirstEnergy's "corporate hocus-pocus" and tell the WV PSC that you do not support FirstEnergy's proposal and do not wish to pay higher rates to subsidize an out of state corporation's financial success by purchasing their unwanted, cast-off, uncompetitive coal plant liability.

Click here to submit your comment to the PSC online.  The case number is 12-1571-E-PC.

In its Order on PATH's abandonment filing last week, FERC tossed thousands of opponents of the Project Mountaineer transmission line projects a bone.  It won't reimburse you for all the time and money you've invested fighting transmission projects that were never needed in the first place, and it won't unbuild the TrAIL Project or make affected landowners and consumers whole, and it won't stop the unneeded Susquehanna-Roseland Project from continuing to proceed with stunning haste.  But if a little validation and personal satisfaction makes a tasty snack for you, here's your bone:

"The PATH Project concept was originally introduced by PJM in May 2005 at a Commission technical conference as Project Mountaineer- a major east-to-west transmission corridor.  In early 2006, AEP and Allegheny separately filed petitions for declaratory order with the Commission requesting transmission incentives to build this multi-corridor concept in their respective zones in Docket Nos. EL06-50-000 and EL06-54-000,  respectively. The Commission affirmed abandoned plant recovery for the proposals subject to approval in the PJM Regional Transmission Expansion Plan (RTEP) and requiring a future section 205 filing, among other things. On June 27, 2007, PJM’s Board of Directors approved the projects for inclusion in PJM’s RTEP, changing the route and scope from those originally conceived, combining portions of both AEP and Allegheny’s projects into a single project (the PATH Project) with a requested completion date of June 2012."

That's right... FERC says that the PATH Project (and TrAIL, MAPP and Susquehanna-Roseland) originated as a concept in 2005.  The Commission technical conference referred to is what we've been calling "The Coal Love Fest."  Its goal was to increase the use of coal-fired resources.  It wasn't about increased demand, congested transmission lines or reliability.  It wasn't until 2007 that PJM created the reliability violations that caused a "need" for the PATH Project under the guise of reliability and "ordered" AEP & Allegheny (now FirstEnergy) to build PATH.

1.    Project Mountaineer.
2.    Creation of PATH Project concept.
3.    Creation of "need" for PATH Project.

Nibble slowly, PATH opponents.  It's all you're going to get.

Of course, this isn't news to any of you.  We've been telling you this for the past 4 years.  But now FERC agrees with us.

The PATH Project is a bit of ugly and expensive history now.  However, the lesson could live on.

PJM, FERC and the midwest wind industry are busy concocting a new Project Mountaineer right now but instead of coal, this time it's about moving "midwest wind" to both coasts via $300B of new transmission lines.  We don't need that anymore than we needed Project Mountaineer in 2005.  Those who fail to learn from history are doomed to repeat it.  Consumers can't afford another expensive mistake.

In an order issued today, FERC set the prudence of every last penny of PATH's claimed $121.5M of abandoned project cost for settlement and hearing.

What this means is that despite PATH's claims in their abandonment filing that all expenses were prudently incurred, and although PATH enjoys a presumption of prudence, contentions and evidence submitted by intervenors in the case raised enough doubt to set the matter for a trial-type evidentiary hearing by a FERC Administrative Law Judge.

FERC found that PATH had not demonstrated the prudence of costs it incurred while trying to site and permit its project.  Every issue raised by intervenors was set for settlement and hearing.  Intervenors raised doubt in every category of cost, therefore, the entire cost will be examined.

The only point PATH won was the finding that abandonment of the project was beyond the company's control (blamed on PJM).  Therefore, PATH can collect abandonment costs that are prudent.  The prudence of PATH's expenses will be examined to determine the amount they will be able to collect from ratepayers over the next 5 years.

The ordered hearing has been held in abeyance so parties can attempt a negotiated settlement before spending time and money on a hearing.  Settlement conferences will be conducted at FERC, administered by an Administrative Law Judge, and are confidential, so don't expect to be reading any news about what's going on in settlement.  Settlement could last a while.

In addition to the prudence of expenses, FERC also set the issue of PATH's disposal of land for settlement and hearing, where certain controls can be placed on how PATH disposes of land it currently owns.

FERC also found that PATH is no longer entitled to the 50 point adder for continued membership in PJM because the PATH Project will never be built and turned over to PJM, which was the intent of the incentive.  The extra half percent interest that this incentive adds to a transmission project's ROE has now been attached to the specific project.  If the project is not built and turned over to the RTO for control, then it cannot be continued.  PATH was at a distinct disadvantage here because the company had only one project.  When the one and only project died, there was nothing to turn over to PJM.  This reduces PATH's ROE to 10.4% (from the previous 12.4%).  The PATH project has now lost ALL their above-cost incentive ROE adders.  No rewards for failure, PATH!

FERC was not convinced to consolidate the abandonment with the ongoing formal challenges settlement and hearing in its Order.  Instead, the Commissioners punted that off to the Chief Administrative Law Judge to decide in the future.

In addition, FERC determined that PATH had made errors in its proposed changes to the formula rate and erred in transferring abandoned plant to create a regulatory asset.  FERC ordered PATH to correct its accounting mistakes, submit additional detail of project costs for which PATH had requested a waiver, and resubmit its proposed rate within 30 days.  Merry Christmas, PATH!  :-)

PATH has been reduced to nothing but a contentious battle about money.  But isn't that what it's always been about?

In an article in the Beckley Register-Herald yesterday, "Mon Power Representative Responds to EEWV Comments," FirstEnergy flack Todd Meyers attempted to convince readers that the company's proposal to offset an upcoming rate decrease with an upcoming rate increase would still result in a rate decrease.

"One way or the other, people will get that 5 percent break,” Meyers said."

How did Todd do that?  Todd used magical FirstEnergy math to demonstrate that taking away your rate decrease and replacing it with a rate increase would still result in you receiving a rate decrease.

Shazam!  Power company magic!  Only from FirstEnergy!

Midwest utility-scale wind generators who stand to rake in enormous profit, and the big national environmental organization Pollyannas who think these lines will actually be used for renewables, want to broadly socialize the cost of building $300B worth of new transmission lines to export wind energy from the midwest to both coasts.  This uneconomic prospect is made possible by "public policy" renewable portfolio standards adopted by some individual states that would require them to purchase renewables at any price.  Every state that has adopted a RPS has different goals regarding what qualifies as "renewable" energy, different renewable percentage requirements, and the states even differ on whether the standard is voluntary or mandatory.  Some even include carve-outs reserved for in-state renewables only.

Because there is no national standard by which all states must abide, there's no way for federal regulators, regional transmission organizations, or environmental organizations, to force individual states to permit and pay for these new transmission lines.  But, that doesn't stop these entities from trying.

I came across an article in The Georgetown Law Journal the other day entitled It’s Electric, but FERC’s Cost–Causation Boogie-Woogie Fails To Justify Socialized Costs for Renewable Transmission that discusses why FERC's attempts to socialize the cost of individual state public policy projects ultimately must fail.

FERC, or a RTO, cannot force citizens of one state to pay for the public policy goals of another state in which these citizens have no legislative representation.

"Where a state has chosen not to adopt a renewable portfolio standard, or a standard as high as MISO’s tariff supports for a given resource, FERC has no “articulable and plausible reason” to approve a regional tariff that permits some states to impose their policy judgments upon states with divergent policy positions.  A contrary view raises commandeering and federalism questions.
FERC would be deciding what policies benefit a state and then forcing that state’s constituents to pay to support that policy. Although this situation differs from landmark cases, like New York v. United States and Printz v. United States, in that FERC would not be forcing state legislative action or commandeering a state administrative body, the situation raises similar political-accountability concerns.  As the Court noted in New York, when the federal government compels state action, “the accountability of both state and federal officials is diminished.” If state citizens wish to change state policy, they may elect state officials who share their view. That view can always be pre-empted under the Supremacy Clause if it is contrary to the national view, but in such a case it is the Federal Government that makes the decision in full view of the public, and it will be federal officials that suffer the consequences if the decision turns out to be detrimental or  unpopular."

FERC is on the fast track to a nasty federal court battle with states if they continue to coddle midwest wind developers in a misguided attempt to make utility scale renewables "affordable" for consumers thousands of miles away from the point of generation.

"It appears that the Commission is overextending its existing power without any supportive legislative augmentation. It is concerning that an independent agency lacking direct political accountability continues to push the envelope into controversial areas. Politically accountable federal legislators would be more appropriate arbiters of these issues in the first instance."

The article concludes with this warning:

"FERC should be mindful of approving cost-allocation methodologies over the objections of states within a
given region. While renewable power is critically  important to our country’s energy independence and the health of our environment, a one-size-fits-all socialized cost-allocation methodology might not be the  appropriate fit for every region."

But, read the entire article for yourself -- it's a great read!

According to this article, energy efficiency programs in Ohio are too expensive for FirstEnergy's customers.

"The power giant says the programs they’ve implemented to incentive customers to reduce electricity use are getting too expensive.

Doug Colafella, is a spokesman for First Energy.

Colafella: “As these programs become more aggressive, as the goals become more difficult to achieve, the costs for these programs are undoubtedly going to increase.”

I'm not sure where our lil' CoalFella picked that winner from, but I think he may have his hand jammed in the wrong orifice.

After whining about how much energy efficiency is going to cost customers as justification for gutting Ohio energy efficiency mandates, FirstEnergy turns around today and announces the building of a new $45M "transmission control center" in Ohio.  Now who do you think is going to pay for Tony the Trickster's new underground lair?  You are!  Those poor, broke customers who can't "afford" energy efficiency investment that will lower their bills over the long term can afford to pay for a shiny, new office building for the company, according to FirstEnergy.

How much energy efficiency could Ohioans buy with $45M?

One of PJM Interconnection's purposes is to provide reliable power at the lowest possible price.  As part of its attempt to accomplish this goal, PJM plans for transmission "enhancement" and administers an artificial market construct that is supposed to foster competitiveness that will ensure market prices for electricity are "the lowest possible."

Although PJM can order new transmission to artificially adjust electricity markets, they cannot order new generation to shape the market.  This unbalanced "market" is what set up the investor owned incumbent utility transmission feeding frenzy we've had to put up with over the past few years.  Instead of ordering new economic generation near load, PJM orders expensive new transmission lines that source from existing generation farther from load.  PJM believes that "the market" (that is the REAL economic market, not PJM's artificially constructed and controlled market) will stimulate new generation without interference.  However, PJM will not rely on "the market" to drive transmission expansion.  If they did, would the lights go out while we wait for "the market" to catch up?  PJM thinks so.

Because PJM cannot order new generation, the states of New Jersey and Maryland took matters into their own hands and ordered new generation in their own states.  This upset PJM, the Market Monitor, and the incumbent generators, who have been scheming to actually prevent new generation.  So much for allowing "the market" to encourage new generation.

PJM "ordered" four new high capacity long distance transmission lines between 2006 and 2008 in order to increase the use of coal-fired resources.  These lines were supposed to bring lower cost electricity to the east coast, instead of waiting for "the market" to encourage new east coast generation.

The lines were economic projects, designed to decrease the "congestion" on existing lines that prevented the import of additional coal fired generation to the east coast during peak load.  However, PJM also floated these projects as reliability projects, insisting that eastern load would continue to attempt to draw cheap coal fired power from the west over congested lines until the lines simply overheated and failed, pitching the entire region into the dark.  That would never have happened because the east coast had plenty of their own generation, albeit more expensive (at the time) gas fired generation, that would increase prices when relied on to support peak load.

In order to decrease prices on the east coast through the building of these new lines, the cost of the lines is shared by all consumers in the entire PJM region.  The east coast only paid a fraction of the cost of the lines that lowered their prices.  And, in fact, the lowering of prices on the east coast by building new transmission actually increased prices in the western region by providing new markets for previously constrained generation.  Eliminating "congestion" serves to levelize prices between different markets.

But, something amazing happened between 2006 and 2012.  Demand for electricity on the east coast tanked due to increased energy efficiency and demand side management.  By shaving peak load, the east coast made great strides to solving the "problem" of not having access to cheaper, western coal fired generation.  Something else happened during that time as well.  Shale gas flooded the market, opening up a cheap, plentiful, new supply of natural gas that lowered the cost of previously expensive gas fired generation on the east coast and motivated new gas fired generation builds near east coast load.

The combination of decreased load and more economic east coast generation completely obviated PJM's "need" for the four new transmission lines.  Unfortunately, TrAIL had already been built at enormous cost and personal sacrifice by the people of West Virginia.  However, two other projects, PATH and MAPP, have finally been abandoned by PJM and won't be built.  But, the PJM consumers will still pay for these abandoned projects they never wanted and no longer need.  PJM's transmission planning has failed on a massively expensive scale.

But I've only accounted for three of the four projects thus far.  The last one is PSEG & PPL's struggling Susquehanna Roseland project in Pennsylvania and New Jersey.  Although there is no economic or reliability need for this project anymore either, the project owners and PJM continue to insist on constructing it at enormous cost to consumers, landowners and the citizens who own the Delaware Water Gap National Recreation Area.

PSEG & PPL read the economic writing on the wall over the past few years and stepped up their efforts to ramrod their project into reality by making it "too big to fail" even though the economic justification for it had evaporated.  The companies still claim that S-R "will save consumers $200M per year in congestion costs," therefore it is urgently needed and justifies enormous cost that will raise electric prices, take land from property owners, force those living in close proximity to risk their health being bathed in the line's continuous EMF soup, and destroy a priceless and irreplaceable national park.

In order to do so, PSEG & PPL bribed towns and landowners with "mitigation" payments and began a lobbying program that reached all the way to the White House with the goal of obtaining the approval of the National Park Service.  The cost of all this, of course, will be borne by all consumers in PJM.

Last week, I watched FERC Commissioner Moeller extoll the virtues of new transmission while disparaging the efforts to hinder Susquehanna Roseland, a project that "would save consumers $200M a year in congestion costs," according to Commissioner Moeller.

So, where did that congestion figure come from?  PJM and the project owners floated it at the time the project was approved, many years ago.  Does that figure still bear any resemblance to reality?  No. The "congestion" driving S-R has evaporated.  The building of S-R will actually cost consumers more than any subset of consumers will ever save on their electric bills.  Whether or not there is a "reliability" need for this project I really can't say, but if there is one, a simple rebuild of the existing line may suffice to fill that void.  S-R as planned is overkill.

Every quarter PJM's Market Monitor publishes a "State of the Market" report.  The one for the third quarter of 2012 was released the other day.  The report has a section about "congestion."  If S-R was still going to save consumers "$200M per year" that information would show up in the report.  It does not.

The SOM report says, "The AP South interface was the largest contributor to congestion costs in the first nine months of 2012. With $50.9 million in total congestion costs, it accounted for 12.0 percent of the total PJM congestion costs in the first nine months of 2012.
The top five constraints in terms of congestion costs together contributed $112.5 million, or 26.5 percent, of the total PJM congestion costs in the first nine months of 2012. The top five constraints were the AP South interface, Graceton – Raphael Road transmission line, Woodstock flowgate, Belvidere – Woodstock line and Clover transformer."

None of these congestion contributors is located anywhere near the Susquehanna Roseland project area.  And the biggest contributor to congestion costs is $50.9M per year, not $200M.

The SOM report also provides a nifty map on page 221 that shows congestion points.  There's no congestion showing up in the geographic area where S-R is being constructed.

Need and justification for Susquehanna-Roseland have completely evaporated.  If the project is abandoned now, or reconfigured to more closely align with any actual need, the cost to consumers will be dramatically lowered.  Stop constructing this project now.  Just stop.  Consumers can't afford PJM's artificial markets and planning failures any longer.  Stop it.

Yesterday, FERC issued a Policy Statement intended to further refine their policy for awarding financial incentives to transmission projects.  The Policy Statement was the Commission's response to the extensive, 42-page, 74-question Notice of Inquiry it issued in May of 2011.

The financial feeding frenzy has been scaled back for now and transmission owners have had their bag limits on consumer wallets reduced.

If you want the quick and dirty summary, here's FERC's press release.

If you want to know exactly what was in the Policy Statement, read on.

"In particular, the Commission: reframes its nexus test to focus more directly on the requirements of Order No. 679; expects applicants to take all reasonable steps to
mitigate the risks of a project, including requesting those incentives designed to reduce the risk of a project, before seeking an incentive return on equity (ROE) based on a project’s risks and challenges; provides general guidance that may inform applications for an incentive ROE based on a project’s risks and challenges; and promotes additional transparency with respect to the impacts of the Commission’s incentives policies."

1.  "The Commission will no longer rely on the routine/non-routine analysis adopted in BG&E as
a proxy for the nexus test."

What this means:  The nexus test requires an applicant for incentives to demonstrate a connection between the incentive(s) requested and the risks and challenges that a project faces.  Previously, once an applicant demonstrated that a project was not routine, the nexus test was satisfied and the project was deemed to face risks and challenges that merit incentives.  In the refined policy, FERC tosses out the routine/non-routine analysis and will require project applicants seeking incentives to demonstrate how the total package of incentives requested is tailored to address  demonstrable risks and challenges and must provide sufficient explanation and support to allow the  Commission to evaluate each element of the package and the interrelationship of all elements of the package. If some of the incentives would reduce the risks of the project, that fact will be taken into account in any
request for an enhanced ROE.  In short, applicants will have to do more to demonstrate risks and challenges that merit incentives.

2.  "The Commission expects incentives applicants to seek to reduce the risk of transmission investment not otherwise accounted for in its base ROE by using risk-reducing incentives before seeking an incentive ROE based on a project’s risks and challenges."

What this means:  A transmission's base ROE (the interest a project earns on its investment) is already set to account for the riskiness of transmission investment.  However, when a transmission project is riskier than a "normal" transmission project, it can be granted additional incentives to compensate for additional risk.  However, a project must request and utilize risk-reducing incentives before requesting an incentive ROE (extra interest) on a particular project.  A project owner must show how their project is riskier than "normal" and then how certain risk-reducing incentives will compensate for or reduce risk.  If the project is still so risky that risk has not adequately been reduced through the base ROE and risk reducing incentives, it may also request further risk compensation in the form of an enhanced ROE (extra interest).  The Commission is getting tougher judging risk and the need for a full spectrum of every available incentive.  No more using the same risk as the basis for every incentive.  Each incentive granted will reduce risk and a company would have to prove further risk that has not already been compensated for with other incentives in order to be awarded an incentive ROE.

3.   "Investments in the following types of transmission projects may face the types of risks and challenges that may warrant an incentive ROE based on the project’s risks and challenges that are not either already  accounted for in the applicant’s base ROE or could be addressed through risk-reducing incentives:

1. projects to relieve chronic or severe grid congestion that has had demonstrated cost impacts to consumers;
2. projects that unlock location constrained generation resources that previously had limited or no access to the wholesale electricity markets;
3. projects that apply new technologies to facilitate more efficient and reliable usage and operation of existing or new facilities."

What this means:  I think it's pretty self-explanatory.

4.  "The Commission will no longer consider requests under Order No. 679 for a stand-alone incentive ROE based on an applicant’s utilization of an advanced technology."

What this means:  No more incentive ROEs based solely on advanced technology, this will be considered as part of a project's risks and challenges (see 3 above).

5.    "Risks may be reduced through the risk-reducing incentives described in section II.B, or through mitigating costs by implementing best practices in their project management and procurement procedures. Applicants should consider taking measures tailored to mitigate the various risks associated with their transmission projects and to identify such measures
in their applications."

What this means:  Transmission Owners need to stop creating risks through poor management or bad choices and then asking to be compensated for it.

6.   "The Commission expects applicants for an incentive ROE based on a project’s risks and challenges to demonstrate that alternatives to the project have been, or will be, considered in either a relevant transmission planning process or another appropriate
forum. Such a showing should help identify the  demonstrable consumer benefits of the proposed project and its role in promoting a more efficient, reliable and cost-effective transmission system."

What this means:  No more PATHetic projects!  An applicant must demonstrate to the Commission how its project was compared to alternatives and found to be the most cost-effective solution.  Of course, a showing could be that an RTO/ISO has made this determination.  And since RTO/ISOs are nothing but industry cartels that will choose the projects of their favored incumbents and then make up a justification to support their choice afterward, this really doesn't solve the problem.  However, the transmission owner now has to convince the Commission that it was done properly.

7.   "The Commission expects applicants for an incentive ROE based on a project’s risks and challenges to commit to limiting the application of the incentive ROE based on a project’s risks and challenges to a cost estimate."

What this means:  Any incentive ROE will only be applied to a project cost amount that was used to determine the project's cost effectiveness as evaluated by an RTO/ISO.  So, say a project is found to be superior to other alternatives at a certain price when evaluated by an RTO/ISO, and then is awarded an incentive ROE by FERC.  The project can no longer apply the incentive to amounts that go over budget.  Historically, projects have floated bogus cost estimates at RTOs in order to get projects approved, and then spent a lot more actually building the project, and collected extra interest on the overspend.  This situation perpetuated the "the more you spend, the more you make" scenario that has plagued transmission projects and is breaking consumers while unjustly enriching transmission owners and contractors.  The Commission also gives a nod to SPP's cost containment proposal submitted in comments as a reasonable example.

While these are generally positive changes, they don't go nearly far enough and completely fail to tackle the underlying problems with FERC's transmission incentives policy.  FERC has merely set the stage for another long, slow decline toward lazy rubber stamp approval of ridiculous incentive packages that cause consumer concern.  The PATH project was the impetus for the NOI and the refinement handed down yesterday.  How long before another PATH happens?

I'm not sure what happened between FERC's rather auspicious and ambitious beginning in issuing such a great NOI, and this Policy Statement that feels like a punt.  It could be that there was too much controversy among the Commissioners.  It could be that there was too much political pushback from a greedy industry.  And don't forget those personal visits to the Commissioners from transmission owning CEOs.  Whatever happened, it looks like the Commission lost their nerve and took what they feel is the easy way out.

See statements of Commissioners Norris and LaFleur here.  It's interesting that they didn't publish a statement from Commissioner Moeller, since he had plenty to say yesterday.  Maybe he's part of the problem.  Wellinghoff didn't have much to say about it, and Clark was not participating.

It seems like the Commission was afraid if they came down too hard on transmission incentives that they would stifle investment.  However, they have quite effectively managed to do just that with their Policy Statement.  Which transmission owner do you think is going to be brave enough to step into the void and be the first to apply for incentives under the refinement (which was effective yesterday, btw)?  Not a one of them.  They're all going to hang back and wait for someone else to poke the first stick into the lion's cage so they can begin the process of finding ways to work around well-intended changes in order to continue to unjustly enrich themselves building unnecessary transmission.

I guess if Congress really wants transmission incentive policy reform, they're going to have to do it themselves through amendments to the Energy Policy Act.  I can only wish them luck.