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Don't Waste Your Money on FirstEnergy Add Ons

3/2/2015

40 Comments

 
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.  O
ther 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...
40 Comments

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

2/5/2015

2 Comments

 
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!

2 Comments

Internal Emails Reveal Utilities are Despicable

2/3/2015

1 Comment

 
"Gotta read" post on UWUA Local 304's blog today.  Utility’s “Cozy” Relationship With Regulators Questioned tells the story of Pacific Gas & Electric (PG&E), whose lack of maintenance was responsible for a massive gas line explosion in 2010 that leveled a neighborhood and killed or injured many.

But, wait, there's more!
The story may have stopped there, except for a consumer advocacy group’s efforts for utility reform. Their allegations kept the San Bruno disaster front and center by claiming PG&E knowingly pumped up their balance sheets and pocketed funds that should have went to the maintenance and upkeep of the aging natural gas system and that it was a relationship with the California Public Utilities Commission, that the group described as “cozy”, that let PG&E to get away with it.

Both the regulator in question and a PG&E Vice President have lost their positions, but recently released e-mails between the two seemed to confirm the allegations, and the fact that both have since lost their jobs also is a strong indicator that the charges were well founded (click here for a great story on this subject).

Discussed in the e-mails are, among other things, talk of vacations, chats with invitations to private meetings at remote and luxurious locales, and a general feeling of collusion between close friends rather than a more professional and business-like exchange between the regulator and the regulated. There are even some chat about PG&E meeting then Governor Jerry Brown and strategies to diffuse the events of San Bruno.

However, the most disturbing aspect revealed in the e-mails is the how the utility targeted the The Utility Reform Network (TURN), which was the advocacy group highlighting and investigating the events of San Bruno.
UWUA links to this story originally published in the San Francisco Chronicle.

Apparently the executive director of the California PUC and an "external affairs" schmoozer vice president were having a ton of fun making nasty jokes about the president of The Utility Reform Network (TURN), whose only crime was trying to protect customers and "reform" these dirty bastards.

The emails also detail the cozy relationship between PG&E and its regulators, as well as PG&E and elected officials.  It was suggested by the president of the CPUC that PG&E should whine to Governor Jerry Brown about how the explosion disaster was hurting poor, poor pitiful PG&E stock prices, so he could "fix" things.
In January 2011, Peevey sent an e-mail to Cherry urging him to share with a Brown aide, former PG&E executive Nancy McFadden, a financial analyst’s views that the San Bruno case was hurting PG&E’s stock. The report credited Peevey for his “even-handed” approach in controlling the situation.

‘‘As I suggested before, this info should go to the governor’s office, probably best to Nancy McF,” Peevey wrote to Cherry. “Jerry has to be made aware that actions have consequences and the economy is best off with a stable utility sector.”
No, you're not reading a John Grisham novel.  This stuff actually happened.  In fact, I'm pretty certain this is not an isolated incident.  This stuff happens all the time at just about any investor owned utility you can name.

UWUA finishes up their report with some very good advice:
The real news here is that when people stand together, no matter what derisive things business executives may say against them or how small they may view their fellow citizens, America is still America and people can still make a difference.

The story above is also a reminder that as Americans we have a responsibility to hold the people that serve the public interests in any capacity accountable, and by doing so, we can discourage such insular and covert “cozy” relationships from developing.
1 Comment

PJM Doesn't Understand Competition

1/31/2015

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Wow, what a shocker, right?  What happens when a cartel has to make new rules whereby its members have to compete for projects? 

Complete and utter failure.

On Thursday, PSE&G filed a complaint against PJM at FERC.  The complaint is just a new wrinkle in PJM's failure to carry out a competitive transmission planning process ordered by FERC and set out in PJM's own rules.  PJM didn't seem to have any problem coming up with a competitive process in order to comply with Order No. 1000, but it completely failed at carrying out its own rules in its first attempt at a competitive transmission project window.

The complaint alleges that PJM altered all projects submitted in the Artificial Island competitive window, substituting its own project creations for the ones actually submitted, and then allowed a select set of project sponsors to continually alter their projects throughout the evaluation process.  PJM still has not selected a "winner," although the process has been dragging on for nearly two years.  PJM simply cannot resist using its heavy hand to unfairly influence selection of transmission projects that need to be built.

Funny that when PJM has to operate competitively, it cannot.  Everything falls apart.

Is it really about keeping the system reliable and cost effective, or is it about ensuring profits for its most favored members?  Where do consumers fit in?


So, why don't we just do away with PJM transmission planning altogether?  It's a miserable failure.
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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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Secretary Moniz Practices His Clean Line Face

1/22/2015

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At some point in the near future, Secretary of Energy Ernest Moniz will have to read and make a decision on Clean Line's "updated" application to utilize Sec. 1222 of the Energy Policy Act to forcibly take land from people in Oklahoma and Arkansas to build an unnecessary transmission line.

Last night he practiced his face for that moment.
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How Regulated Utilities Rip You Off

1/21/2015

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It's really not news, per se, but it's now been verified by economic data -- regulated utilities with cost of service rates have no incentive to minimize their costs that are passed on to ratepayers.  In addition, state-regulated utilities may actually buy more expensive, in-state fuel to appease their political puppets.  And they get away with it because our state regulatory agencies are cozily captured by the entities they regulate.

These were some of the findings of a recent study by Asst. Prof. Steve Cicala from the Energy Policy Institute at Chicago that was
published in American Economic Review.  The study, When Does Regulation Distort Costs? Lessons from Fuel Procurement in US Electricity Generation, was undertaken to study regulation to find the characteristics of "bad" regulation, instead of simply doing away with all regulation.
This paper evaluates changes in fuel procurement practices by coal and gas-fired power plants in the United States following state-level legislation that ended cost-of-service regulation of electricity generation. I find that deregulated plants substantially reduce the price paid for coal (but not gas) and tend to employ less capital-intensive sulfur abatement techniques relative to matched plants that were not subject to any regulatory change. Deregulation also led to a shift toward more productive coal mines. I show how these results lend support to theories of asymmetric information, capital bias, and regulatory capture as important sources of regulatory distortion.
The study looked at fuel deliveries to coal- & gas-fired electric power plants, to compare regulated to deregulated.
He found that the deregulated plants combined save about $1 billion a year compared to those that remained regulated. This is because a lack of transparency, political influence and poorly designed reimbursement rates led the regulated plants to pursue inefficient strategies when purchasing coal.
Deregulated plants paid 12% less for coal... because they have an economic interest in the cost to run the plant.  Deregulated plants sell a product, and all their costs to produce that product are included in the cost of their product in a competitive market.  In contrast, regulated plants sell a service at their cost, the supply of power.  You will pay whatever it costs to produce the power, plus a guaranteed return.  The higher the cost, the bigger the return.  With ratepayers footing all the bills, these plants have absolutely no incentive to purchase the cheapest fuel available. 

This is compounded by the "confidential," opaque nature of coal markets, where regulators may not compare prices to know when plant operators are paying too much for fuel.  The same effect was not found in deregulated gas plants, and this was attributed to the transparent nature of natural gas markets.

In addition, the study found that regulated plant owners are more likely to curry favor with state regulators by purchasing more expensive in-state fuel for their plants.  With ratepayers picking up the tab, why not?  This is how states like West Virginia continue to be ruled by a dying coal industry, and part of the WV PSC's basis for approving the "sale" of an uncompetitive deregulated coal-fired plant into West Virginia's regulated environment in 2013.

The study also found that deregulated plants increase their purchase of low-sulphur coal from out-of-state mines as a cheaper way to meet environmental regulations.  Regulated plants will choose installing expensive scrubbers, because ratepayers pick up the tab and the utilities collect a return on their investment.

Although the study only concentrated on fuel costs of regulated v. deregulated generators, its findings can be liberally applied across the board to all aspects of regulated electric utilities, whose cost of service rates are padded with all sorts of uneconomic purchases.  When faced with the cost of its own inefficiency, the utility will always find a cheaper way to get things done, but not when ratepayers are picking up the tab.
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Transmission Politics

1/8/2015

1 Comment

 
Coming across common themes over and over tells me something... maybe I should write about it?

I've seen a whole bunch lately about the politics of transmission line proposals, more precisely how politics affects the state public utility commission process.

This morning, I read something that pushed the issue into blog post status.

Iowa Governor Terry Branstad has warned his state legislature not to interfere in the business of the Iowa Utilities Board.
Branstad, who appoints the members of the utilities board, warned against "political interference" into the administrative review process by which a pipeline carrying Bakken crude oil and a transmission line transporting wind-generated electricity could be approved.

"It would be mistake to get politics into this," Branstad said. "We should abide by the processes that have been put in place."
Maybe Branstad doesn't understand those "processes?"  Our government is separated into three branches:  The Executive Branch carries out existing laws and recommends (but does not alone create) new ones.  It administers our government.  The Legislative Branch makes laws, at the will of the people it represents.  The Judicial Branch interprets existing laws.  Branstad is a member of the executive branch.  The Iowa legislature is a member of the legislative branch.  The IUB is a member of the judicial branch, although unlike a regular court, a utility board can make up copious rules about how they're going to carry out the laws made by the legislative branch.  Trying to figure out which one is more powerful is an exercise in futility... and politics.

Branstad, as Governor, appoints the members of the IUB.  This is a political process.  A member of the executive branch will appoint those he believes will carry out his mission.  Once appointed, IUB members are supposed to serve independently as they interpret utility laws, however, a crafty governor can control this process by allowing appointments to expire while the incumbents continue to serve at the daily whim of the governor, who can remove the incumbent and replace him at any time.  I have no idea if this is the situation in Iowa, but I have seen just this situation perpetuate in several states.  When it happens, the judicial branch comes under the thumb of the executive branch and can be easily influenced to make certain decisions on a political basis in order to remain in place.

The legislature makes the laws that direct the actions of an independent, quasi-judicial utility board.  The judicial branch cannot create laws, but receives its marching orders from the legislative branch.  If the legislature is displeased by the actions of the Board, it can make new laws to shape the decisions of the Board.  In this way, the legislature can influence the judicial branch.  However, there's more protection on this side of the coin, because the legislative branch is operating at the will of the people, and must obtain consensus from many to create new laws.

I don't know why Branstad believes it's not already "political."  The state utility board process is about as political as it gets.  While he warns the legislature not to get involved in a situation he controls, what the legislature eventually does will be political.  It's all political!

So, if you want to influence your state utility board process, you must engage in politics.  You can talk to your legislators to gain their support to make new laws that guide the decisions the utility board makes.  You should probably talk to your governor about refraining from getting involved in the utility board processes.  Branstad has it completely backwards!

Politics is described as:
the activities associated with the governance of a country or other area, esp. the debate or conflict among individuals or parties having or hoping to achieve power:
Companies proposing new transmission projects hope to influence the judicial process as much as individuals or groups opposing the transmission project.  In order to do so, they push the legislative or executive branch to shape the judicial decision.  Despite plenty of denial, the judicial processes of a utility board are heavily influenced by politics.  It's the reason transmission developers spend so much lobbying your representatives to support their projects AGAINST YOUR WISHES!

Public opinion drives political decisions.  A legislator is carrying out the will of the people.  If enough people become involved in a utility board process, they can shape the process through their legislators, who may be more interested in their duty to the people than the free lunches and campaign contributions transmission corporations provide.  The bigger the public push back, the better your chances.

Transmission developers also court other groups and individuals to take a position supporting their proposal.  Sometimes a quid pro quo situation develops.  This happens because a utility board is unlikely to approve even the best project if it is under political fire not to do so, therefore the transmission developer needs allies to create, at least, an appearance of support.

So, can a large, loud uprising of the people affect the decision of a utility board?  You bet'cha!  But don't get confused by the difference between public opinion and public comment.

Public opinion is an aggregate of public comment.  The public comments citizens make to a utility board, in isolation, rarely drive the decision of the Board because they are typically not based on legal arguments about the laws the Board must follow in its findings.

Utility law guru Scott Hempling recently pondered the effectiveness of public comments in his monthly essay.  This month, he featured several questions that he will use as projects for his utility law students.  Here's one:
Engaging the public:  Candor requires an admission:  The lay citizenry's views do not count as "substantial evidence," required by courts to sustain agency orders.  Does that fact make public hearings (i.e., the non-technical hearings) shams?  If not, then what is the value of public participation?  What are ways to create that value, at reasonable cost?   Traditionally, agencies announced public hearings in the newspaper's "legal notices."  How useful is that approach today?  What are an agency's responsibilities to educate the public and seek its views?
The "substantial evidence" Hempling mentions must come through the legal process, either through an attorney or individuals acting pro se.  While a utility board's decision is politically-driven, it must back up its decision on a legal basis.  The utility provides its proposed legal basis for approval through the evidentiary hearing process.  Opposition must therefore provide its own legal basis for denial in this same venue.  The utility board, thus armed, can choose from whichever body of evidence it needs to to back up its decision (and hopefully make it stick.)  It's pretty hard to make a decision that's not legally sound stick through appeals.  It would be doubly-hard for a utility board to make a decision that denies evidence of future reliability issues coming from a supposedly independent third party, such as a regional transmission organization.  Therefore, a utility or RTO may choose to find new information upon which to withdraw its proposal, instead of forcing a utility board into a denial.  But, again, this is a political process that takes place that allows utilities to withdraw and save face (and money, but that's another story).

So while your own individual comment may not carry much legal weight, when combined with the comments of thousands of others, it is a very powerful, political tool!

If Branstad truly wants to keep "politics" out of utility board decisions in Iowa, he should start a little closer to home.  The legislature, as the body tasked with making laws, can make any laws it chooses, whether Branstad likes them or not.  Sure, he could veto a new law, but doing so to a new law widely supported by the people would come at his own political peril.
"Never doubt that a small group of thoughtful, committed citizens can change the world;
indeed, it's the only thing that ever has."
- Margaret Mead
1 Comment

For Sale:  Environmental Liability

1/7/2015

2 Comments

 
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.
2 Comments

The Forked Tongue of FirstEnergy

1/2/2015

2 Comments

 
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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    About the Author

    Keryn Newman blogs here at StopPATH WV about energy issues, transmission policy, misguided regulation, our greedy energy companies and their corporate spin.
    In 2008, AEP & Allegheny Energy's PATH joint venture used their transmission line routing etch-a-sketch to draw a 765kV line across the street from her house. Oooops! And the rest is history.

    About
    StopPATH Blog

    StopPATH Blog began as a forum for information and opinion about the PATH transmission project.  The PATH project was abandoned in 2012, however, this blog was not.

    StopPATH Blog continues to bring you energy policy news and opinion from a consumer's point of view.  If it's sometimes snarky and oftentimes irreverent, just remember that the truth isn't pretty.  People come here because they want the truth, instead of the usual dreadful lies this industry continues to tell itself.  If you keep reading, I'll keep writing.


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