In the wake of PJM's recent incomplete and inaccurate "analysis" of the cost benefit study for the Transource Independence Energy Connection, both PJM and Transource have been bloviating in the media about the relevance of their recent "findings." It's almost like Tweedledee and Tweedledum got together to devise a new joint public relations strategy to assuage the public concern. (And wouldn't that make for some interesting data requests!)
Look, fellas, it's NOT WORKING. I'm not sure who you were trying to kid with all that doublespeak, but it's only further enraged and inspired the public to speak out against the project (and now PJM) in opposition.
Let's start with Steve Herling's Op Ed in the York Dispatch, since it inspired a bunch of new public comment in opposition to the project yesterday in Franklin County. Mr. Herling's Op Ed is a distinct contrast to what he said during the TEAC meeting on September 13. But if you didn't attend that meeting (or listen in over the phone) you might not realize how much doublespeak it contains.
Mr. Herling starts out recognizing there is "public interest" in the project. He thinks it's a recent development. It's not, not at all. The public has been concerned about this project since it was brought to their attention more than a year ago. Opposition was overwhelming and immediate. Mr. Herling just hasn't been paying attention until now, when it's becoming more of a likelihood that this project will be denied by the states. Too little, too late, Mr. Herling!
Trying to explain PJM's purpose and the project's necessity to the public at this late stage is like trying to bail out the Titanic with a tea cup. Good luck with that, but chances are the ship is going down and if you don't scurry to the lifeboat, you're going down with it.
Mr. Herling thinks he's making the electrical system efficient, economical and equitable (alliteration at its finest, probably not the work of Mr. Herling but some PR wordsmith).
Let's start with Steve Herling's Op Ed in the York Dispatch, since it inspired a bunch of new public comment in opposition to the project yesterday in Franklin County. Mr. Herling's Op Ed is a distinct contrast to what he said during the TEAC meeting on September 13. But if you didn't attend that meeting (or listen in over the phone) you might not realize how much doublespeak it contains.
Mr. Herling starts out recognizing there is "public interest" in the project. He thinks it's a recent development. It's not, not at all. The public has been concerned about this project since it was brought to their attention more than a year ago. Opposition was overwhelming and immediate. Mr. Herling just hasn't been paying attention until now, when it's becoming more of a likelihood that this project will be denied by the states. Too little, too late, Mr. Herling!
Trying to explain PJM's purpose and the project's necessity to the public at this late stage is like trying to bail out the Titanic with a tea cup. Good luck with that, but chances are the ship is going down and if you don't scurry to the lifeboat, you're going down with it.
Mr. Herling thinks he's making the electrical system efficient, economical and equitable (alliteration at its finest, probably not the work of Mr. Herling but some PR wordsmith).
After all, it would not be fair for customers in one area to consistently pay higher prices than others do simply because the system’s design prevented some customers from accessing the lowest-cost electricity.
For many years, some customers in the mid-Atlantic region, those in areas of Maryland, Northern Virginia and the District of Columbia, have had to pay comparatively higher prices than customers in other areas have, because bottlenecks in the interstate transmission system have not allowed an efficient flow of the lowest-cost power into the zone.
Oh no! You really didn't say that, did you Mr. Herling? Poor, poor, pitiful Washington DC and its affluent suburbs! Because these special people don't want to have their air fouled by electric generators to serve their insatiable need for electricity, it's up to the folks in "the country" to foul their own air generating power for the cities, and then sacrifice their homes and businesses to new transmission corridors that ship it there. All so those special folks in D.C. can save a few pennies on their monthly bills. Maybe if D.C. stops wastefully keeping its cities lit up all night, they could save more than a few pennies (and there are other benefits that could happen in such a scenario, such as a dark night sky with actual stars in it)! This argument falls completely flat in the sacrifice zone. We already know we're politically disenfranchised from what goes on in D.C. and the stunning arrogance of telling us we need to sacrifice for them has been a galling lump in our throats for decades. This argument convinces no one, probably not even these special people you're so concerned about. The special people have closed all the dirty generators in their own region, believing what you tell them about others farther away that are happy to sacrifice to supply their needs. We're not. Haven't been for years.
You mention the authority of the Federal Energy Regulatory Commission like they approved this project. They did not. It's not even on their radar. FERC has nothing to do with transmission siting and permitting. FERC's only jurisdiction is over interstate transmission rates, and that has not become an issue with Transource... yet. FERC's jurisdiction does, however, extend to the actions of PJM. FERC expects PJM to follow its own FERC-approved manuals and tariffs while it conducts its business. Maybe Mr. Herling should look a little closer to home when talking about the authority of FERC, to make sure he's crossed all his t's and dotted all his i's. What does PJM's operations manual say about annual re-evaluations of market efficiency projects... and what information must PJM include in just such an analysis? Maybe Mr. Herling should be saving up his doublespeak for FERC.
And then he says this:
You mention the authority of the Federal Energy Regulatory Commission like they approved this project. They did not. It's not even on their radar. FERC has nothing to do with transmission siting and permitting. FERC's only jurisdiction is over interstate transmission rates, and that has not become an issue with Transource... yet. FERC's jurisdiction does, however, extend to the actions of PJM. FERC expects PJM to follow its own FERC-approved manuals and tariffs while it conducts its business. Maybe Mr. Herling should look a little closer to home when talking about the authority of FERC, to make sure he's crossed all his t's and dotted all his i's. What does PJM's operations manual say about annual re-evaluations of market efficiency projects... and what information must PJM include in just such an analysis? Maybe Mr. Herling should be saving up his doublespeak for FERC.
And then he says this:
PJM recently completed its annual review of the Transource project. Our thorough analysis of the many factors that go into benefits and costs concluded that the benefits continue to justify the costs.
The analysis considered factors such as recent load and congestion forecasts, current cost estimates, power flow projections, topology, interregional modeling, future fuel prices and generation interconnections.
No, it did not. At the meeting, Mr. Herling admitted that he did not have updated cost estimates for Transource's part of the IEC. The cost increases used in the analysis only came from other utilities tasked with updating their substations for the addition of IEC. IEC's costs have not been updated since 2015! That is NOT "current cost estimates." Mr. Herling said Transource is getting ready to put its project out for bid and when the bids are shared with PJM, it will update the costs. But there's more to deriving a cost than just a bid on materials. PJM must plug these costs into a formula to derive a revenue requirement for each of the first 15 years of the project. The formula contains interest rates, operations and maintenance costs and many other factors that will also have to be adjusted to produce a realistic projected revenue requirement. When Mr. Herling stated that PJM could update the costs after bids were received I do hope he was intending to complete the entire process. And, even if he is, a transmission project like IEC is paid for over a period of 40 years, not 15. PJM guesses at the "benefits" over 15 years, compares it to the costs, and then hopes that the other 25 years of project life will follow the same pattern. What happens if PJM's projections are wrong? Do we get our money back? And what happens if IEC ends up costing more than the projected revenue requirement? Will the company or PJM eat the excess? Of course not! We will. We the ratepayers of PJM are asked to accept all the risk of inaccurate projections.
The issue of generation interconnections also came up at the TEAC meeting. Mr. Herling admitted that PJM did not use recent retirements in its analysis, and did not include new generation either.*
And then there's the whole reliability issue that first appeared on PJM's analysis of September 13.
The issue of generation interconnections also came up at the TEAC meeting. Mr. Herling admitted that PJM did not use recent retirements in its analysis, and did not include new generation either.*
And then there's the whole reliability issue that first appeared on PJM's analysis of September 13.
During our recent review, PJM found that the Transource project also will address significant reliability issues that are emerging on the regional transmission system, including the potential overload of a key high-voltage line that carries electricity across the Pennsylvania-Maryland border.
Without the additional transmission capacity provided by the Transource project, the system could face serious violations of federal reliability standards, which would require additional measures to address.
The only data PJM provided on this issue was a list of line and transformer overloads. There were no dates on any of these possible violations. The reliability issue was pushed to the very end of the meeting, where there wasn't any time for questions or discussion. How very convenient! Did PJM perform its duty here when presenting this issue? No, it just ended the meeting promptly. But I have lots of questions about this new development! Are overloaded lines and transformers easily solved by rebuilds/replacements of aging components, or is a new transmission line the only solution? If so, why the IEC project, which was never designed (or bid) as a reliability project? There are distinct rules for new reliability projects, and simply re-purposing an unneeded market efficiency project is nowhere to be found. If there are truly serious reliability problems developing, PJM has a duty to take immediate action to solve them. What PJM should not do is sit idle and watch these violations develop and hope that a market efficiency project will solve them, especially when the market efficiency project is likely to be cancelled or denied. Does Mr. Herling think if he ignores the reliability issues long enough that he can later say that a new transmission project (just like IEC) must be built to solve them, when action now to upgrade old components would solve the problem cheaper and faster? This wouldn't be the first time PJM ignored old, failing components while pushing for a new transmission line to "solve" the problem.
And here's Mr. Herling repeating Transource's most recent lie:
And here's Mr. Herling repeating Transource's most recent lie:
The interstate high-voltage transmission system is a shared resource, and consumers including homeowners, tenants, businesses and industrial plants throughout the PJM footprint benefit from a robust network that provides reliable and affordable electricity across the region.
Aggressive AEP mouthpiece Toad Burns also had a version of this for reporters at yesterday's hearings in Franklin County. Todd was quoted somewhere as saying he came to the hearings to listen. I gotta call B.S. on that one... Todd had no interest in "listening" at hearings in Franklin County earlier this year. I suspect that maybe he only came yesterday to perform for the press and utter this nonsensical statement about regional benefits.
The idea of new transmission in one part of PJM benefiting the entire region is one that has a long and tortured history in the courts. Circa 2005, in order to set up a way to spread cost recovery for big projects over as many people as possible in order to make everyone's share less noticeable, PJM began using a "postage stamp" method of cost allocation for a suite of big projects code named "Project Mountaineer." These four projects were intended to increase the export of coal-fired electricity from the Ohio Valley to eastern PJM cities by 5,000 MW. Under the postage stamp method, every utility in PJM was assigned a portion of the costs based on its percentage of load for the prior year. PJM and FERC reasoned that every part of the system received some benefit from these new projects in eastern PJM, although they could not quantify these benefits. Some utilities in the western part of the region, who were paying a large percentage of the costs due to their load, believed they were not receiving a corresponding amount of benefit. The case ended up before the 7th Circuit, who remanded it back to FERC (twice!) requiring FERC to quantify the benefits, at least roughly. It never happened. Instead, FERC and PJM devised a new cost allocation scheme where ultra high voltage projects (double-circuit 345kV, 500kV and 765kV) would be allocated 50% postage stamp and 50% DFAX, where cost causers and beneficiaries are assigned costs commensurate with their use of the project. In one memorable analogy from the 7th Circuit's opinion, it was said:
The idea of new transmission in one part of PJM benefiting the entire region is one that has a long and tortured history in the courts. Circa 2005, in order to set up a way to spread cost recovery for big projects over as many people as possible in order to make everyone's share less noticeable, PJM began using a "postage stamp" method of cost allocation for a suite of big projects code named "Project Mountaineer." These four projects were intended to increase the export of coal-fired electricity from the Ohio Valley to eastern PJM cities by 5,000 MW. Under the postage stamp method, every utility in PJM was assigned a portion of the costs based on its percentage of load for the prior year. PJM and FERC reasoned that every part of the system received some benefit from these new projects in eastern PJM, although they could not quantify these benefits. Some utilities in the western part of the region, who were paying a large percentage of the costs due to their load, believed they were not receiving a corresponding amount of benefit. The case ended up before the 7th Circuit, who remanded it back to FERC (twice!) requiring FERC to quantify the benefits, at least roughly. It never happened. Instead, FERC and PJM devised a new cost allocation scheme where ultra high voltage projects (double-circuit 345kV, 500kV and 765kV) would be allocated 50% postage stamp and 50% DFAX, where cost causers and beneficiaries are assigned costs commensurate with their use of the project. In one memorable analogy from the 7th Circuit's opinion, it was said:
The incidental‐benefits tail mustn’t be allowed to wag the primary‐benefits dog.
And this analogy holds true today in response to PJM's and Transource's bogus argument that citizens in York and Franklin counties benefited from some unnamed transmission project in Indiana several years ago. Which project was that, exactly? Or are you both just speaking in generalities in a doublespeak attempt to confuse people? There's a whole new debate we can have over who benefits from certain projects, if you want to open that can of worms. But, I don't think you do. That debate has happened enough times already to give a judge nightmares, and the outcome does not support your new, bogus argument.
The fact of the matter is that York County does not benefit at all from the IEC. Not one penny! And it probably didn't benefit from a project in Indiana either. Whether or not Franklin County benefits from the IEC is debatable. Have PJM's cost allocations changed in relation to the IEC's cost/benefit analysis? No, they haven't. And they won't. The cost responsibility analysis is locked in time, although if updated today it may have very different results. And here's the ultimate bottom line... Franklin County does not benefit anywhere near commensurate with the sacrifice it is being asked to make.
Mr. Herling says stakeholders need to "understand" the project's purpose and benefits. As if maybe they finally "understood," then opposition would subside? Fat chance, Mr. Herling. Your attempt at the Information Deficit technique doesn't work. It is precisely because the "stakeholders" DO understand the rhetoric and hubris of PJM, and the profit-seeking motives of Transource, that they oppose this project. And these stakeholders aren't going away. They're going to be in your face until you do the right thing.
About the only thing in Mr. Herling's opinion I can agree with is that applications for the Transource project are now under consideration by the Maryland Public Service Commission and the Pennsylvania Public Utility Commission. And I believe the commissions also fully "understand" what this project is about. Ultimately, the states have the final say here, and you're not helping yourself out by saying one thing and doing another, and ignoring a recent PA-PUC Order for Transource to update its costs before your recent analysis. That was a pretty bold move. Don't think the regulators are buying your doublespeak.
And, ultimately, because of PJM's refusal to acknowledge that the IEC isn't going to happen, it's enabling Transource to run up our tab unnecessarily. The one thing missing from Mr. Herling's Op Ed is the fact that PJM serves consumers, not member utilities. Guess Mr. Herling needs to "understand" that.
The fact of the matter is that York County does not benefit at all from the IEC. Not one penny! And it probably didn't benefit from a project in Indiana either. Whether or not Franklin County benefits from the IEC is debatable. Have PJM's cost allocations changed in relation to the IEC's cost/benefit analysis? No, they haven't. And they won't. The cost responsibility analysis is locked in time, although if updated today it may have very different results. And here's the ultimate bottom line... Franklin County does not benefit anywhere near commensurate with the sacrifice it is being asked to make.
Mr. Herling says stakeholders need to "understand" the project's purpose and benefits. As if maybe they finally "understood," then opposition would subside? Fat chance, Mr. Herling. Your attempt at the Information Deficit technique doesn't work. It is precisely because the "stakeholders" DO understand the rhetoric and hubris of PJM, and the profit-seeking motives of Transource, that they oppose this project. And these stakeholders aren't going away. They're going to be in your face until you do the right thing.
About the only thing in Mr. Herling's opinion I can agree with is that applications for the Transource project are now under consideration by the Maryland Public Service Commission and the Pennsylvania Public Utility Commission. And I believe the commissions also fully "understand" what this project is about. Ultimately, the states have the final say here, and you're not helping yourself out by saying one thing and doing another, and ignoring a recent PA-PUC Order for Transource to update its costs before your recent analysis. That was a pretty bold move. Don't think the regulators are buying your doublespeak.
And, ultimately, because of PJM's refusal to acknowledge that the IEC isn't going to happen, it's enabling Transource to run up our tab unnecessarily. The one thing missing from Mr. Herling's Op Ed is the fact that PJM serves consumers, not member utilities. Guess Mr. Herling needs to "understand" that.
*For discussion of FSA's see recent RTO Insider article. We'll tentatively believe their reporting on this issue, although they somehow missed the elephant stampeding through the meeting room trumpeting about there being no update of Transource's costs for the project. It wasn't even mentioned. Maybe RTO Insider's perspective is a bit off here, judging from the text it included on its Facebook post touting the article yesterday. "In a rare occurrence, half a dozen residents opposed to PJM's largest-ever congestion-reducing transmission project attended last week's Transmission Expansion Advisory Committee..." -- complete with photo of the creatures in action. Sort of reminds me of the hushed narrative you hear on nature films about creatures doing their thing while unaware they're being observed and talked about by superior creatures. Perhaps like the infamous honey badger footage... *warning, strong language*
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