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Mon Power & Potomac Edison Want To Raise Your Electric Rates Another 12 Percent

8/30/2015

There's nothing as certain as death, taxes and yearly FirstEnergy rate increases. On August 14, the company filed a request to increase its WV ENEC rates by $165M. If you're a hypothetical customer, using a hypothetical amount of electricity each month, you'll pay an extra hypothetical amount of nine bucks or so a month. Of course, you can't pay your debt to FirstEnergy in hypothetical dollars. This rate increase is very real, despite all the hypothetical blather.

So, what kind of kool-aid is FirstEnergy and its PSC minions serving up to help the medicine go down this time? The PSC's windbag says:

“It’s an annual true-up, and it is to cover the cost of fuel and purchased power,” PSC spokeswoman Susan Small said. “There’s not profit for the company. It’s not going to staff salaries. It’s not operations and maintenance fees. It doesn’t go to rent and pension plans or anything like that.”

Say what? Of course there is profit for the company built into the transmission costs being recovered, since FirstEnergy owns the transmission capacity being billed in this filing. Transmission rates also contain staff salaries, operations & maintenance, rent and pension plans.

And about those O&M costs? The $44.5M correction for under-recovery of the "Temporary Transaction Surcharge" ("TTS") that is being recovered in this rate increase consists of $26.1M of unexpected Operations and Maintenance expense for the Harrison Power Station. It also includes $5.7M of profit for the company. I guess Susan Small doesn't know what's she's talking about... again. Maybe she should read a case filing or two before activating the ol' pie hole?

The TTS was "designed to recover the net increase in non-fuel operation and maintenance expenses, depreciation and amortization expenses and taxes other than income taxes, and a return on incremental net plant, fuel inventory and materials/supplies resulting from the completion of the transaction [sale of Harrison]. The TTS also reflected reduction in non-fuel O&M expenses associated with the deactivation of Albright, Rivesville, and Willow Island power stations on September 1, 2012," according to the testimony filed by FirstEnergy at the PSC. Sounds like it IS operations and maintenance, Susan...

The TTS was a temporary rate increase approved by the PSC to allow the company to recover the base rate cost of the Harrison power station from ratepayers for the period October 2013 and February 2015, when the new base rates that included Harrison went into effect. At the time, the company calculated that it would need $199.8M to cover the cost of Harrison for 17 months. It designed its TTS to produce $160M of this revenue. However, the case settlement (negotiated between parties without PSC ruling) only allowed for collection of a $113M TTS. According to the company's most recent calculations, there is a $44M shortfall, which it is requesting to recover over the next year. The biggest part of this shortfall is $26M of "higher than anticipated expense related to maintenance outages at Harrison." In addition, there was an additional $9M O&M expense related to employee pensions and benefits at Harrison.

Hmm... what should you expect when your electric distribution company buys an antique coal plant? Once the ratepayers own it, the company spends generously performing all the maintenance it has put off while it was the owner responsible for the bills.

There were also some mysterious increases in the book value of Harrison, decreases in the book value of the purchased Pleasants power station, and a $10M increase in the illegal "acquisition adjustment" FirstEnergy scored from the PSC. The "acquisition adjustment" was the difference between what Harrison was actually worth and its book value, which produced $256M (now $266M) of pure profit "funny money" for FirstEnergy. Federal accounting regulations do not allow the recovery of "acquisition adjustments" from ratepayers, but the WV PSC ignored that in its haste to bless the Harrison purchase transaction. The acquisition adjustment and any adjustments related to it are pure nonsense.

Adding insult to injury, forecasted sales of power from Harrison were much higher than actual... because power market prices were low and Harrison's coal-fired power was more expensive than other resources during the period, reducing Harrison revenue that might have offset some of the costs of owning the power station.

Upon further contemplation, it looks like most of the testimony of FirstEnergy witness Kevin Wise is nonsense. What else could explain the general advertising expenses totaling nearly $5K booked to the TTS in October 2014, January and February of 2015? Did you ever see any advertising about Harrison on your TV or in your newspaper? Hear any radio commercials? Of course you didn't. This is probably just a misallocation of general FirstEnergy corporate expenses. *sigh* I hope someone goes over this nonsense with a fine tooth comb. There's probably plenty of "mistakes" in here that don't belong but coincidentally increase the rates you pay and the profits of FirstEnergy. Thank goodness for West Virginia's Consumer Advocate, who gets the blinding and thankless task of separating the legitimate from the nonsense in FirstEnergy's filing.

In addition to the $44.4 TTS adjustment, the company wants to recover around $96M of inaccurately estimated fuel, purchased power and transmission costs for the past 2 years, along with $23.6M of new rate increases for 2016, the amount it would be short if it keeps collecting at the current rate through June of 2016. Total rate increase $165M.

How did the company estimate its rate so badly that ratepayers are so far into the hole, requiring a 12.5% rate increase? This increase is for ENEC rates, which are supposed to be filed yearly to cover variable costs incurred by the company. ENEC rates are based on an estimate of the yearly costs. At the end of the year, a true-up occurs, where the company compares its actual costs to the estimate it collected, and either issues a refund, or asks to recover the shortfall. In contrast, base rates cover the company's fixed costs and are determined through occasional base rate cases, where a fixed rate is established. The company must operate within that rate until the next base rate case is filed. The last rate increase was a base rate increase where the company added Harrison to its rate base. But that wasn't the end of the Harrison costs, because as this most recent filing shows, Harrison was also racking up additional costs that the PSC said it could recover in this delayed ENEC filing. This filing got delayed because of the Harrison purchase, so now ratepayers are on the hook for 2 years of ENEC true-up, in addition to the Harrison TTS true-up.

Hey, remember when FirstEnergy told everyone that purchasing Harrison would offset itself because Harrison would sell its excess power capacity into the PJM electric market and credit the proceeds to ratepayers? Well, guess what? There were no proceeds! Prices and sales were much lower than FirstEnergy anticipated, making the ratepayers subsidize the Harrison plant, instead of profit from it. There was no offset, just more expense. Gee, that's exactly what all the other parties told the PSC during the Harrison proceeding. "I told you so" x multiple rate increases. The purchase of Harrison was nothing but a ratepayer-funded subsidy for FirstEnergy and the coal industry. The plant wasn't economic without these subsidies and should have been closed, instead, FirstEnergy "sold" it to West Virginia ratepayers and collected a huge windfall. We'll be paying for this mistake made by the WV PSC for a long, long, long time.

This article introduces something I haven't had to contemplate for a long time (and what a nice time that was!), the senseless babble of FirstEnergy spokespuppet Toad Meyers. As regular readers will recall, Toad uses "Magic Math" to explain the benefit of rate increases.

FirstEnergy spokesman Todd Meyers said the $165 million increase proposed in the Aug. 14 filing is largely the result of lower-than-expected wholesale electric prices over the past year.
Meyers noted the current rates were set partly based on projections of what amount of revenue the utility would be able to pass on to customers as a result of selling the excess electricity generated at its power plants.
“When we set the rates ahead of time based on where we think power prices are going to be, and then power prices aren’t there, we’ve already built in what we project the net benefit of sales to come back to customers will be. That’s built into the rates as they stand,” Meyers said. “That’s why the lower sales then really have an effect in the next true-up.”

Meyers said the Harrison Power transaction was never meant to be evaluated on the basis of a single year, but over the entire projected life of the plant. Prices can change year to year, sometimes in unforeseen ways, he said.
“We’re never looking at things to be a benefit to customers at one particular snapshot in time. We’re looking at what the best-case scenario is over time,” Meyers said. “You just don’t know what’s going to come around the corner, and we thought that having our whole strategy dependent on market purchases, then you’re really at the mercy of the market.

While recent case filings may create the impression that FirstEnergy has continued to seek rate increases, Meyers noted that there have also been decreases, such as the 5 percent rate decrease resulting from the 2012 ENEC filing.

At that time — roughly a year before the Harrison Power transaction was approved — the companies cited lower fuel and wholesale electric costs as reasons for the decrease.
“The perception that we keep raising the rates lately — that perception may be true — but there’s also times that we lower the rates, and people forget about the downswings,” Meyers said. “I wouldn’t call it a pattern. Every year, it’s a different look based on different circumstances.”

Oh, shut up, Toad! Cathy Kunkel told you what was going to come around the next corner when your company proposed buying Harrison in the first place.

Cathy Kunkel, a fellow with the Institute for Energy Economics and Financial Analysis who testified against the Harrison Power transaction, said the PSC’s 2013 decision has a direct correlation to the scope of the proposed ENEC increase.
Had the transaction never occurred, Mon Power and Potomac Edison would have purchased more electricity from the market than what they generated at the power plants under their control. This means ratepayers would have directly benefited from the low wholesale electric rates during the current ENEC review period, Kunkel said.
“One of the fundamental things we were saying at the time is the transaction was about risk, and it was about shifting risk from shareholders to ratepayers. And whether or not the risk actually materializes, it was still a shift of that risk,” Kunkel said. “And I think now we’re seeing the risk has materialized, and we’re seeing it in this rate increase.”
In recent years, wholesale electric rates have been driven down by low-cost natural gas, Kunkel said. But with a lack of fuel diversity in Mon Power and Potomac Edison’s generation fleet, West Virginia ratepayers haven’t seen as much benefit from this downward pressure on the wholesale electric market, she said.
The Harrison Power Station is one example of a larger strategy that FirstEnergy has adopted in recent years of moving more of its largely coal-fired generation fleet into regulated markets where the company is able to pass on more costs to ratepayers, according to Kunkel.
“I think the big picture is we’re just seeing coal less competitive in the marketplace than it used to be, and ratepayers are paying the difference, because Mon Power has invested so heavily in coal,” Kunkel said. “No one can say what the power prices are going to be, but it looks like a bad deal at least in the short run. It’s a high-risk investment for ratepayers. Let’s put it that way.”

So, what should you do about this proposed rate increase? Simply whining to the PSC that you can't afford it does no good. The PSC has already approved the Harrison transaction and the company has already spent this money. The best you can do is to support the efforts of your Consumer Advocate, who will be busily chopping down the total rate increase and fishing out all the financial funny stuff.

“We are very concerned about the level of rate relief the company’s requesting,” Jackie Roberts, executive director of the PSC’s Consumer Advocate Division, said. “We are in the process of evaluating the filing to understand what drives their cost request.
“This is a very large rate increase following on the heels of other large rate increases, and we will be carefully scrutinizing this case.”

Unless, of course, you want to take on the task of auditing FirstEnergy's filings yourself to come up with a more reasonable rate. Good luck with that! Just a cursory review of the thousands of pages filed will make you deeply appreciate what your Consumer Advocate does with little money, and even less respect from the company and the PSC Commissioners. Maybe you should direct your efforts toward funding and strengthening your advocate?

Because... I've saved the best part for last. FirstEnergy has proposed doing away with these annual ENEC filings in favor of quarterly filings that raise your rates 4 times per year. Can you imagine having to go through these thousands of documents 4 times a year, instead of just once? Your Consumer Advocate won't be able to keep up, unless its funding is increased three-fold in order to hire more staff to do nothing but pore through FirstEnergy's quarterly ENEC filings. And if the PSC allows FirstEnergy to switch to quarterly filings, then all the other utility kids are going to want the same treatment, until your advocate gives up in desperation. As well, the news media would soon tire of reporting on small quarterly increases, and there would be no bad publicity for FirstEnergy or the PSC. Get in line and eat what you're served, little ratepayer...

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Don't Waste Your Money on FirstEnergy Add Ons

3/2/2015

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Have you been getting random mailers from "Potomac Edison," "Mon Power," or another FirstEnergy distribution affiliate trying to sell you an "Exterior Electrical Line Protection Plan from HomeServe?"

Just say no.

Go outside and look at your electric meter. You are responsible for some components of your electric service connection. The utility is responsible for the meter components and any underground service lines. You are responsible for maintaining the rest. Is your service drop overhead, or underground? Read the fine print:

The meter that measures the amount of electricity used, any underground service entrance conductor, and the meter base (materials only) are not covered under this plan, but are covered by your local FirstEnergy Company. Your local FirstEnergy Company will supply the materials to repair or replace the meter base...

So, what is covered? An overhead connection to your house (cost estimated at $200) and the labor to replace the company-supplied meter base (estimated to cost another $200), if they ever need to be replaced! So, how much will FirstEnergy's insurance cost you? $5.49/month. Forever. You'd be better off putting that $5.49 in a mason jar every month, on the off chance that you ever do need these unusual electrical repairs, so that you can hire a local electrician to fix them. FirstEnergy's literature claims that your homeowner's insurance won't cover these repairs. Know why? Because the cost of repairs is usually lower than your deductible!

Why would you want to give a bunch of money to the utility for "insurance" against an unusual problem that only costs a couple hundred bucks to fix? It doesn't say "stupid" on my forehead. Oh, but wait! If you sign up you will receive a "special" phone number to call to get your service. If you remember what you did with that phone number and the rest of your paperwork when you have an outdoor electrical line issue, then you could avoid the hassles of looking for an electrician in the yellow pages and "waiting" for service (because service dispatched through Akron, Ohio, is much quicker than calling an electrician in your own town).

Sounds like a scam to me!

So, I've been a Potomac Edison (or Allegheny Power, when that name suited them) customer for nearly 30 years. How come I'm just now being bombarded with these junk mailers? Because the West Virginia PSC recently sold me out to the company, going against the advice of its own Staff, the Consumer Advocate Division, and the findings of one of its own Administrative Law Judges.

Say what? Take a look at WV PSC Case No. 13-0021-E-PC (look up "Case Information" here). Two years ago, FirstEnergy asked the PSC for permission for its two West Virginia distribution companies (Potomac Edison and Mon Power) to market these useless "services" and products to their customers and to add the cost of any purchases to the customer's electric bill.

The Staff of the PSC and the Consumer Advocate objected to FirstEnergy's plan, which, in addition to the "Exterior Electrical Line Protection Plan," will soon be offering you:

1. Other Home Solutions maintenance and repair plans (i.e. insurance) for other appliances you own, your natural gas service lines and even your plumbing.

2. Surge suppression service (which they already separately offer as part of their regulated service activity in West Virginia).

3. Customer Electrical Services Program that allows your electric company to "arrange" electrical service work to be performed in your home. You still pay for all the work they do, your monthly fee just alleviates your "hassle" of finding your own electrician and negotiating a reasonable fee for service with him.

4. Online store - where you can buy all sorts of useless crap and energy-wasting space heaters, and pay for it all on your monthly electric bill.

A hearing was held, and the PSC's Administrative Law Judge recommended that the Commission prohibit this kind of promotion. However, FirstEnergy didn't like that decision, so they filed exceptions to the Judge's Order and the Commission disregarded it and made a new finding that FirstEnergy could continue to promote these useless "services."

Remember, none of these services are regulated, so if you have an issue with service or billing of these add-ons, the PSC can't help you. You're on your own to solve the problem with the company (and it's not even the utility you'll be fighting with, but some third-party "insurance company") or through the court system.

So, how much money does FirstEnergy make off these products? Is the company really that desperate that it needs to peddle space heaters and worthless "insurance" to its customers? It's not about the few pennies in kickbacks FirstEnergy receives from these third-party companies for selling you a "service," it's about the half a million bucks FirstEnergy was paid by one of these third-party companies for "licensing rights and utility bill access fees" to access Potomac Edison's or Mon Power's customer records and to have your utility bill you for their services. FirstEnergy is essentially selling an asset -- its customer base and monthly billing system -- to a private company that hopes to make money selling things to the customer base. There is a commercial value to a customer base of 500,000 customers. When the customer base is acquired through a regulated monopoly, should the utility be able to sell it for private profit? Your WV Public Service Commission says they can.

Tell your legislators to ask the PSC why they have allowed Potomac Edison and Mon Power to sell you out like that. And think twice about jacking up your monthly electric bills with "insurance" you'll probably never need and overpriced lightbulbs from FirstEnergy's online store.

And want to have some fun right now? All those junk mailers they're sending you have postage paid return envelopes to "Plan Administrator." The envelope instructs: "Include only your form and nothing else." If you don't sign up for the plan, you won't need a "form," so go ahead and stuff them with "nothing else" or whatever you want and return them. See how much scrap paper you can fit into the envelope! Or perhaps your child would like to draw a picture for "Plan Administrator?" Go ahead, have some fun!

And then, get serious. The fine print instructs:

If you would prefer not to receive these solicitation from HomeServe, please call 1-888-866-2127.

Tell them you don't want to receive any more offers for their services from Potomac Edison or Mon Power and see what happens. Of course, this won't stop the other offers from the other vendors mentioned above, but it's a start. I'd like to know who's really controlling the mailing list here -- is it FirstEnergy or is it HomeServe? Let me know what you are told in the comments section of this blog post...

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Did You Get a Good Deal in Potomac Edison/Mon Power Rate Settlement?

2/5/2015

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The West Virginia PSC has approved the settlement reached by the parties to FirstEnergy's request to increase rates, and your rates will go up 8% overall on February 25. Yeah, rate increases suck, but I think the bigger question here is... Did you get a better deal in the settlement than you would have if this case had gone through the full evidentiary hearing and been decided by the Commissioners?

I'm thinking... yes. And here's why:

Actual base rate increase requested: $95.7M (9.3%).
Actual base rate increase granted: $15M (1.45%).

Vegetation Management Surcharge requested: $48.4M
Vegetation Management Surcharge granted: $47.5M HOWEVER, something good happened here that is not reflected in the number. For the first time, FirstEnergy will have to account for every dollar spent on vegetation management and file semi-annual reports that true up its actual expenditures to actual rates collected. The vegetation management expenses must be reviewed for prudence. In the past, the company was simply handed a certain amount annually for "vegetation management." The company never had to account for how (or if!) the amount was actually spent on vegetation management. What happened is that the company wasn't doing adequate vegetation management, resulting in more severe and frequent outages, but was using the money to bulk up its balance sheet and share dividends. Now all the money collected for vegetation management must be spent actually maintaining vegetation. This is a very good thing!

Depreciation rate change increase requested: $17M
Depreciation rate change granted: None.

Requested increase in monthly customer charge: $1 (up to $6 from the existing $5)
Monthly customer charge granted: $5 (no change).

Deferred expense for 2012 storm restoration: $45.8M. The companies wanted to collect this with an annual return calculated on the balance. Instead, they will collect this over 5 years ($9M/yr.) WITHOUT any return (interest) being paid.

The company wanted to collect $60M in expense it incurred in closing its Albright, Willow Island and Rivesville generating plants. Instead, it will collect zero. However, the companies are permitted to defer this expense (hold it on their balance sheet) for the time being, and may request recovery of it at a later date. At that later date, you bet the recovery request will include years of "interest" accrued during the deferral. This bears watching!

The companies had requested a surcharge to pay for the cost of upgrading their generators to comply with EPA regulations. They withdrew their request in the settlement, however, the settlement simply kicks that can down the road, allowing the companies to create a regulatory asset (deferral) for those costs and to collect them during its next base rate case. In the meantime, the accumulating costs will earn 8.19% return (interest), which will be payable at the next rate increase.

But, it looks like the apportionment of rates between customer classes was adjusted to lower rates of the industrial users, while residential rates were increased. Remember, industrial users were a party to this settlement.

Do you think you might have gotten a better deal from the PSC Commissioners? I doubt it. They're used to giving FirstEnergy everything it wants. The Commissioners aren't really fighting for you, but the staff of the PSC, and our Consumer Advocate WERE fighting for you here and I think they engineered the best deal possible. There was never any chance that the PSC would simply deny the rate increase in its entirety. It was all about "how much." And you kept the pressure on by filing comments and speaking at the public hearings. Get educated, stay engaged!

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Looks Like FERC is Tired of Being Embarrassed

1/28/2015

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RTO Insider reports that FERC has issued a proposed policy statement regarding "hold harmless" commitments made during utility mergers.

The policy is intended to further define merger costs and how they are accounted for, as well as proposed accounting mechanisms to track them.

As if it's about some accounting "confusion," and not about utilities willfully violating the commitments they make as a condition of approval for their merger. But, hey, FERC has to start somewhere, I suppose. Maybe some proactive monitoring of utility financial filings could begin to put a damper on the merger cost recovery free-for-all. But then will the utilities just find more creative ways to improperly recover their merger costs? How about some penalties for utilities found to have improperly recovered merger costs? I think maybe a $30M fine for each occurrence would be appropriate.

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Faster, FirstEnergy, Faster!

1/16/2015

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Isn't that amazing? FirstEnergy has learned to work faster for shale clients. Remember that next time you want some service... pretend you're a shale gas company.

And here's another amazing fact:

Their promise and rapid pace of development happen to coincide with the Akron-based electricity company’s recent focus on making its transmission segment the lead revenue growth generator for FirstEnergy, where Mr. Bridenbaugh serves as vice president of transmission.

Serendipity, right?

So, who pays to supply electricity to new shale gas companies? You do.

Most of the time, when the company upgrades a transmission line or builds a substation to service a new gas processing plant, the investment is recovered from the utilities that benefit from the upgrade.

Utilities. Got that? Not shale gas companies.

How much will you pay?

...the company has said it wants to retrench in its utility and transmission businesses, both of which provide a guaranteed rate of return. For transmission projects, the return is often in the double digits.

Lots.

Why are you paying? Because the new shale gas companies make the existing grid unreliable, and you need reliability! (which came first? the chicken or the egg?)

Because the new, shale-related loads are springing up in rural areas with older or nonexistent infrastructure, the new pull on the lines often presents a reliability risk for other customers drawing electricity in the area. Therefore, many such projects end up going before PJM Interconnection, a Valley Forge-based organization that manages the nation’s largest grid, servicing 13 states in the northeast including Pennsylvania.

PJM has a formula to determine who’s responsible for the cost of upgrades.

Typically, for projects like those on FirstEnergy’s shale plate, it’s shared between the direct beneficiary — a compressor station or processing plant — and the regional utilities whose customers also see a benefit from improved service and reliability.

Hmm... I wonder if regional utilities want to pay half my electric bill this month? Because, you know, I could jump up from my chair and turn on every electric appliance and light in the house right now. And that might hurt regional reliability... right?

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For Sale: Environmental Liability

1/7/2015

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The Columbus Dispatch reports today that AEP has hired Goldman-Sachs to explore the potential sale of its unregulated coal-fired merchant generation fleet.

Coal-fired power plants are no longer profitable. AEP and FirstEnergy have been unloading these liabilities on the backs of ratepayers in regulated states, and even have cases pending to unload them in unregulated states.

The power plants are no longer profitable because the price of power has fallen below the cost to operate them, and these plants need a bunch of expensive retrofits to comply with new EPA regulations. AEP and FirstEnergy are in a bind because they placed all their eggs in the same basket by hanging onto coal plants way past the time when smart utilities unloaded them at fire-sale prices. Corporate greed strikes again!

The WV PSC just recently approved an AEP subsidiary's purchase of all but 140MW of one of the company's merchant plants, making Wheeling Power and Appalachian Power customers responsible for operating it and absorbing any losses.

In 2013, the WV PSC approved FirstEnergy's plan to dispose of its Harrison Power Station the same way, by making customers of Mon Power and Potomac Edison responsible for it.

The WV PSC never met a coal-fired power plant or rate increase that it didn't like.

Encouraged by the WV PSC, the Ohio companies next decided to try to unload more of their coal-fired assets on ratepayers in Ohio. Except... Ohio is a deregulated generation state. Demonstrating extreme creativity, the tedious twins came up with ingenious plans to shift responsibility for the plants to ratepayers anyhow. FirstEnergy came up with its "Powering Our Profits" plan. I don't know if AEP came up with a cutsie-poo name like FirstEnergy, but it also put forth a proposal to transfer responsibility for its plants to Ohio ratepayers.

Gotta wonder how those cases are going to turn out at the PUCO, considering:

AEP has proposals pending with Ohio regulators that would provide a profit guarantee for five plants, four of which are part of the unregulated fleet. The company has said the plans would allow it to continue operating the plants, as opposed to a potential sale or shutdown.

But now it looks like AEP is getting ready to sell them instead. Smart move. Finally.

FirstEnergy is still too dumb to buy a clue.

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The Forked Tongue of FirstEnergy

1/2/2015

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I noticed something funny the other day. It seems that FirstEnergy is having trouble telling the same story about its transmission building endeavors to different audiences.

Just like new transmission lines proposed to criss-cross the midwest to allow "wind" to interconnect with the existing transmission system are nothing more than gigantic generator lead lines, FirstEnergy's "Energizing the Future" campaign to build new substations and transmission in West Virginia are nothing more than gigantic service lines to new Marcellus shale processing plants.

Generator lead lines (the transmission necessary to connect a generator to the existing transmission system) are paid for by the generator. It's part of their cost of selling power, just like the rest of their plant.

So, why are service lines for new customers the responsibility of all customers? If I wanted to open a plastics factory in my backyard and asked Potomac Edison for service, I bet they'd charge me plenty... like the entire cost of the service line connected to whatever voltage I required for my plant, or the cost to upgrade existing lines to serve my plant.

The State Journal reports that FirstEnergy is building new transmission and substations in West Virginia to support the Marcellus shale industry.

Projects include the new Waldo Run transmission substation and a short 138-kilovolt transmission line in Doddridge County near Sherwood. The $52 million project is expected to support industrial users and enhance electric service to more than 6,000 customers in Doddridge, Harrison and Ritchie counties. The substation will accommodate additional load growth at a new natural gas processing facility, which consumes large amounts of electricity separating natural gas into dry and liquid components.

FirstEnergy is also working on a 138-kilovolt transmission line that will support the natural gas industry, as well as enhance service reliability for nearly 13,000 customers in the Clarksburg and Salem areas. The 18-mile, $55 million Oak Mound-Waldo Run transmission project is expected to be placed into service by December 2015.

The company is also evaluating additional transmission upgrades as new service requests from shale gas developers continue throughout the Mon Power territory. FirstEnergy is currently evaluating new transmission facilities in Wetzel County to support a midstream gas processing plant that continues to expand.

Would the existing 19,000 customers need their electric service "enhanced" if not for the addition of the Marcellus facilities? Probably not.

So, what is FirstEnergy telling the landowners affected by their new, Marcellus-supporting projects?

Project Need
FirstEnergy has identified the reliability risk of low voltage conditions on the transmission system under certain conditions. The proposed project addresses the reliability issues. Its assessment is based on existing conditions and the need for system reliability to safely meet the electrical needs of the region now and into the future.

Nothing about shale gas development or new Marcellus facilities there. Just mysterious "low voltage conditions on the transmission system under certain conditions." Wanna bet those "certain conditions" are the construction of Marcellus facilities?

It seems that FirstEnergy has two stories here. The one for its investors is all about building things to support Marcellus. The one for ratepayers is about building things to support existing customers. Obviously, one of these stories isn't exactly honest.

Why isn't the Marcellus industry paying the cost of new electric facilities to support its business?

Why are West Virginia electric consumers, who have been subject to more and more rate increases recently, being asked to pay the cost of harvesting Marcellus gas? Isn't the gas industry in West Virginia profitable enough without subsidies provided by ratepayers?

And if that isn't bad enough, FirstEnergy's transmission scheme is all about pumping more and more "transmission spend" into its transmission subsidiaries, like TrAILCO, that earn a sweet 12.7% return on equity courtesy of federal transmission rates. In addition, these lower voltage transmission lines are beyond the jurisdiction of state regulators. As noted on FirstEnergy's "fact sheet:"

Regulatory Approval
TrAILCo will submit a letter to the staff of the Public Service Commission of West Virginia advising them of the project.

Just a letter. No debate. FirstEnergy is a utility with eminent domain authority in West Virginia so they're just going to write a letter to the PSC, and come take your property. They don't even need to notify you until they show up with the bulldozer. Who needs due process?

Easements
In most locations, a new 150-foot wide right-of-way will be needed for the proposed transmission line. In a few locations, the new right-of-way will be 200 feet wide.

Who wins here? The Marcellus industry. FirstEnergy. And your elected officials owned by both industries.

Who loses? Ratepayers. Again.

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FirstEnergy Puts Tony the Trickster Out to Pasture

12/16/2014

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He shall now be forevermore known as Tony the Dotard. Yeah, I know, it just doesn't have that same ring to it, but I'm sure he can still get up to lots of corporate hijinks and mock floggings down at the senior center soon.

FirstEnergy announced today that effective January 1st, they're kicking Tony upstairs to some newly-created figurehead position known as the "executive chairman." Apparently the quotes are included in the official name of Tony's new position. I like how he stopped to pose with a big grin next to a portrait of one of his belching power plants on the way out. Classy!

So, who's next? FirstEnergy's soon to be president and CEO is Chatty Chuck Jones, the famous deal-maker who is completely out of touch with the real world the rest of us inhabit. Someday, someone's going to spit in his mashed potatoes.

FirstEnergy says that Chatty Chuck worked his way up from substation engineer, but they don't share how many co-workers he had to step on to get there. Chatty Chuck has managed FirstEnergy's distribution companies since 2010. That means he was directly responsible for that meter reading disaster over the past several years at the former Allegheny distribution companies -- Mon Power, Potomac Edison and West Penn Power. But wait... Chatty Chuck brings even more to the table! He's also former president of FirstEnergy Solutions, the company's failed competitive generation subsidiary.

Chatty Chuck is also the insufferable jerk who made that stupid $102M deal to plaster FirstEnergy's name all over Cleveland Browns Stadium a couple years ago. In the wake of all the bad publicity that generated, Chatty Chuck tried to clear it up with an amusing little story about how he intimidated the staff of the restaurant where the deal went down. Aren't FirstEnergy's communications shysters going to have fun?

As amusing as all this is, Chatty Chuck shares that nothing will change. He's going to run the company exactly like Tony the Dotard did. And, just in case he starts acting like a wise guy:

Alexander, serving in the newly created position as executive chairman of the company, said he will be in an advisory role. "But Chuck is running the company," he said.

...with a wink.

Demonstrating that FirstEnergy's death spiral will continue, perhaps even speed up, Jones revealed that he doesn't understand finance.

"Having a stronger technical understanding of the finances would be a plus, but I don't see it as a necessity," he added.

...he has henchmen for that.

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JCP&L Enrages NJ Town With Divide and Conquer Routine

11/19/2014

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FirstEnergy is at it again. Its affiliate JCP&L's "Montville-Whippany Reinforcement Project" not only gave the New Jersey towns of Parsippany and Montville the ol' bait and switch, it's deep into dividing and conquering both of the towns by throwing the focus on shoving the line off onto someone else and pitting neighbor against neighbor, instead of allowing BOTH towns to join forces and focus on the real enemy -- FirstEnemy... errr... Energy!

Last year JCP&L held "open house" sessions for a route through Parsippany. The townsfolk jumped all over opposing the line, forming a grassroots opposition group and making a lot of noise. Last week, JCP&L held another series of open houses announcing they had selected a different route through neighboring Montville.

Montville has already been ground zero for PSE&G's "Susquehanna Roseland" transmission project. I guess the geniuses at JCP&L think transmission lines are like potato chips -- you can never have just one? So, not only is Montville already an experienced transmission opposition warrior, but JCP&L had to go and enrage the town's leadership with its tired, old "open house" meeting format, which the mayor referred to as "the stations of the cross."

The Committee expected the mayor to give an opening statement and then JCP&L would give their presentation, followed by a question-and-answer period. A committee member said that it turned out to be a JCP&L public relations presentation, and the company made no effort to discuss the problems and possible solutions.

So, now the town will be holding its own public meeting, where residents and town leaders will make their own list of demands. The town expects JCP&L will subsequently negotiate modifications to the plan that would lessen impact on residents. Good luck, Montville, and remember, delay is your friend! :-)

Will the utilities ever learn? Their old routines no longer work on an increasingly educated and savvy public. The "open house" is no longer effective in dividing and neutralizing potential opposition. Heck, we use your stupid "open houses" as handy-dandy meet-n-greets to recruit new opposition. It's cheaper and easier when you all do the mailings and media to get affected landowners to a centralized location where they can be recruited by opposition groups.

The only citizens who leave those meetings with a warm, fuzzy feeling are those who find out that their property is nowhere near the project. The rest of them leave confused, shell-shocked... and angry. And they form and join opposition groups that increase costs and delay projects, sometimes even causing the project to be abandoned.

The days of running over the public with stupid PR tricks in order to build overhead transmission are over. The public demands transparency, integrity and better solutions.

Time for a new schtick, FirstEnergy.

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Settlement Proposal Filed in FirstEnergy WV Rate Case

11/3/2014

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A settlement proposal was made public today by parties to the West Virginia Mon Power/Potomac Edison base rate case.

The settlement must be approved by the WV PSC before it becomes final. The PSC has scheduled a hearing on the settlement for Nov. 7 at 9:30. You can watch the webcast here.

The settlement was crafted during negotiations between the company, the staff of the PSC, the Consumer Advocate Division, WalMart and the WV Energy Users Group (a group of energy hog industrials). The PSC Commissioners (what few we have left) did not have a hand in crafting this settlement. They will have a hand (or a rubber stamp) in approving it.

So, what happened? They agreed to a rate increase effective Feb. 25, 2015. The press release yammers on about how much this will cost the "average" customer (23 cents per day, $6.90 per month, $84.40 per year). Mr. & Mrs. Average Customer use exactly 1,000 kwh of electricity every month. Your usage isn't so neat, so therefore your increase will vary.

But, it's not the rate increase the company asked for. It's less. The original proposal was going to increase Mr. & Mrs. Average Customer's bill something like $15/month, so consider the proposed settlement to be slightly less than half the amount requested.

The company had asked for a total of $151M annual increase. The settlement amount is $62.5M annually. This amount includes a $15M (1.45%) increase in base rates and a new $47.5M surcharge for vegetation management.

The vegetation management surcharge bears further examination considering the company asked for a $48.4M surcharge for increased vegetation management. The company has been receiving a separate amount for vegetation management that has been included in the base rate for years ($28M). What this settlement does is remove that amount from the rate base and combine it with an additional amount for increased vegetation management to create the new vegetation management surcharge. This new surcharge is subject to filings in the first, third and fifth year in which the company must true up actual expenditures to the amount collected. Gone are the days of FirstEnergy collecting millions for "vegetation management" that it never performs (and contributes to more severe and prolonged storm outages). Now you'll actually get the vegetation management you pay for!

Back to the base rate increase: Included is $46M of 2012 storm costs, amortized over a 5-year period, without earning a return (about $9M/year). Once the 5 years is up, this is gone forever (unless we have another storm disaster in the meantime).

The stipulation regarding the $60M FirstEnergy wanted to collect for closed power plants Albright, Rivesville and Willow Island sounds like Yoda wrote it.

For the unrecovered the companies may account, undepreciated investment.
Balances in the 2012 deactivated power plants (albright, rivesville, and willow.
Island) in any manner the companies deem appropriate, with gaap in accordance.
And regulatory accounting. Not, the parties agree that such accounting does.
To recover these costs or amortization expenses in future rate establish a right.
Proceedings, and this joint stipulation shall prevent the parties from nothing in.
To recovery of these taking whatever position they deem appropriate in relation.
Amounts in future proceedings. Herh herh herh.

I'm not sure what it means. Probably nobody else knows either. Except maybe Yoda.

The companies must increase the amount they contribute to the Dollar Energy Fund that assists low income folks with their outrageous FirstEnergy electric bills. FirstEnergy's increase is $150,000/year. In addition, the company must continue to "contribute" an additional $250,000/year that they recover from ratepayers. So, essentially, YOU are paying this extra and FirstEnergy is getting the credit for the "donation." Isn't that special? Betcha' didn't know that FirstEnergy provided charitable giving coordination services like that! Of course, how much of any of this is "giving," when all the money ends up right back in FirstEnergy's pocket?

This one is kinda confusing. Even Yoda can't help.

The proposed increase to the customer charge for residential and small commercial
customers shall remain at $5.00 per month.

The increase shall remain at $5.00 per month? We're already paying $5.00 per month. Does this mean that we're now going to pay $10.00 per month, or does this mean that there will be no increase in this fee? Clarity needed.

The company is allowed to establish a regulatory asset for its expected EPA compliance plans at Harrison and Ft. Martin. This amount will be deferred (sit on the balance sheet uncollected and earning interest) until a future rate case.

The company will earn a 9.9% ROE, down from the requested 11%. When combined with the return on debt of 5.15%, and adjusted by the company's capital/debt ratio, the total return will be 7.36%.

The company will receive an additional $1,074,174 per year to read every meter every month going forward. This is down from FirstEnergy's requested $7.5M yearly cost to read meters monthly. Now the trick is going to be making sure the company actually DOES the required readings! No skimping now, we'll be watching!

So, what do you think? Did your advocate cut you a good deal in this rate case? You can submit comments to the PSC here.

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Forward>>

Mon Power & Potomac Edison Want To Raise Your Electric Rates Another 12 Percent

Don't Waste Your Money on FirstEnergy Add Ons

Did You Get a Good Deal in Potomac Edison/Mon Power Rate Settlement?

Looks Like FERC is Tired of Being Embarrassed

Faster, FirstEnergy, Faster!

For Sale: Environmental Liability

The Forked Tongue of FirstEnergy

FirstEnergy Puts Tony the Trickster Out to Pasture

JCP&L Enrages NJ Town With Divide and Conquer Routine

Settlement Proposal Filed in FirstEnergy WV Rate Case

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