In the NOI, Promoting Transmission Investment Through Pricing Reform, FERC is seeking comments about the effect of its incentives on promoting transmission. If you're going to comment, you need to understand what the incentives are, and what they are intended to do.
We all know about budgets. People live within their own financial comfort zone, and even corporations and governments must operate within certain set budgets (no, we're not starting a political debate!) Failure to stay within budget causes personal financial problems, and in the case of corporations and governments, failure to stay within budget can turn a project into financial disaster. Imagine a product that costs more to make than can be recouped through sale. You wouldn't stay in business long if you were unable to properly budget.
FERC believes that transmission projects that receive incentives should not be limited by a budget. In FERC's world, the cost of a project will never outweigh its benefits to consumers. This is unrealistic because there is always a tipping point when the cost becomes greater than the benefit. Now FERC ponders if there is a role for cost estimates in their transmission incentives policy. However, they worry that limiting incentives to original budgeted amounts could be punitive when escalating costs are beyond the control of the transmission owner.
FERC is under the assumption that the regional planning process places some weight on cost estimates when evaluating projects. During the PATH battle, we have heard that there is no price too high at which point building PATH would become uneconomical. The cost of PATH played no role in PJM's selection and stubborn loyalty to this project, even when faced with less costly alternatives, such as the Liberty Line and Dominion's Alternative One. In fact, PJM went so far as to evaluate the cost of the Liberty Line in a biased manner that created a conflict of interest, in order to make the cost of PATH appear "economical". We know that PJM is incapable of rationally utilizing cost estimates in selection of projects. FERC gives them way too much undeserved credit.
FERC should limit transmission incentives to budgeted amounts only. Their current system encourages unbridled spending because the more the project costs, the greater the financial reward for the transmission owner. A project should be re-evaluated if cost estimates change. FERC needs to remember the consumer whose cost of delivered power is being reduced by the transmission project because there will come a point at which project costs actually increase, instead of reduce, the consumer's cost of delivered power.
Now that you've contemplated the role of cost estimates, go look at FERC's questions beginning on page 21 of the NOI and formulate your comments/suggestions for FERC. I'm sure you creative consumer "stakeholders" can make suggestions that the industry won't even ponder. The industry will be letting FERC know how they can and should sweeten the pot even further for them. It's up to you to provide balance with a little real world sanity.
If you found this helpful in crafting your comments, you are encouraged to browse the entire FERC Transmission NOI category at StopPATHwv.com for other useful material. You don't have to comment on all aspects of the NOI if that's too burdensome. In fact, if you want to concentrate in detail on just one aspect that interests you and about which you have strong feelings, that's a perfectly acceptable approach to producing effective comments.
We all know about budgets. People live within their own financial comfort zone, and even corporations and governments must operate within certain set budgets (no, we're not starting a political debate!) Failure to stay within budget causes personal financial problems, and in the case of corporations and governments, failure to stay within budget can turn a project into financial disaster. Imagine a product that costs more to make than can be recouped through sale. You wouldn't stay in business long if you were unable to properly budget.
FERC believes that transmission projects that receive incentives should not be limited by a budget. In FERC's world, the cost of a project will never outweigh its benefits to consumers. This is unrealistic because there is always a tipping point when the cost becomes greater than the benefit. Now FERC ponders if there is a role for cost estimates in their transmission incentives policy. However, they worry that limiting incentives to original budgeted amounts could be punitive when escalating costs are beyond the control of the transmission owner.
FERC is under the assumption that the regional planning process places some weight on cost estimates when evaluating projects. During the PATH battle, we have heard that there is no price too high at which point building PATH would become uneconomical. The cost of PATH played no role in PJM's selection and stubborn loyalty to this project, even when faced with less costly alternatives, such as the Liberty Line and Dominion's Alternative One. In fact, PJM went so far as to evaluate the cost of the Liberty Line in a biased manner that created a conflict of interest, in order to make the cost of PATH appear "economical". We know that PJM is incapable of rationally utilizing cost estimates in selection of projects. FERC gives them way too much undeserved credit.
FERC should limit transmission incentives to budgeted amounts only. Their current system encourages unbridled spending because the more the project costs, the greater the financial reward for the transmission owner. A project should be re-evaluated if cost estimates change. FERC needs to remember the consumer whose cost of delivered power is being reduced by the transmission project because there will come a point at which project costs actually increase, instead of reduce, the consumer's cost of delivered power.
Now that you've contemplated the role of cost estimates, go look at FERC's questions beginning on page 21 of the NOI and formulate your comments/suggestions for FERC. I'm sure you creative consumer "stakeholders" can make suggestions that the industry won't even ponder. The industry will be letting FERC know how they can and should sweeten the pot even further for them. It's up to you to provide balance with a little real world sanity.
If you found this helpful in crafting your comments, you are encouraged to browse the entire FERC Transmission NOI category at StopPATHwv.com for other useful material. You don't have to comment on all aspects of the NOI if that's too burdensome. In fact, if you want to concentrate in detail on just one aspect that interests you and about which you have strong feelings, that's a perfectly acceptable approach to producing effective comments.
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