FirstEnergy got their quarterly grilling this afternoon, after releasing second quarter financial results that were less than impressive.

FirstEnergy's net profits were a minus 39 cents per share. 

FirstEnergy has been slashing operating costs, such as the cost of reading customer meters in West Virginia, Maryland and Pennsylvania, but now even that's not enough.  Won't it be interesting to see Potomac Edison try to pull its corporate keister out of the fire while cutting spending on meter services even further?  Maybe they ought to leave one of those open positions available... the one titled "Regulatory Magician."

In order to make up for his own poor management, useless figurehead Tony the Trickster has decided to cut employee benefits like health insurance and pensions, in addition to laying off hundreds of employees.  I didn't hear him making any personal sacrifices though.  Our pal Tony will still rake in $23M in compensation in 2013, to include company-paid financial planning and tax preparation services; personal use of the corporate jet; annual compensation and performance awards.  So while you're struggling to make ends meet or pay your badly estimated electric bill, just remember that the Alexander household feels your pain (in a vague, annoying sort of way kind of like the pain you might feel when getting a fish pedicure).

Despite earlier regulatory puffery where FirstEnergy threatened to back out of the Harrison plant sale unless it got everything it wanted at full price, apparently the company is now involved in settlement talks.

"Briefs and reply briefs were filed by the parties in July and with the conclusion of the regulatory proceeding, the commission may issue an order at any time. We are however, currently in active settlement discussions with all parties in this case, and we are very hopeful that we can reach an resolution through this process."

Going back on your word so soon, FirstEnergy?  I was really looking forward to watching you struggle with that "great asset" after your proposal was denied by the WV PSC.  A settlement would just ruin my fun.  :-( 

More later...

Last week, PATH held its "Open Meeting" to discuss its 2012 transmission revenue requirement true up and answer questions from interested parties.  Well, at least that's what the meeting notice said...

However, PATH couldn't (or wouldn't) answer questions, instead PATH made crap up.  Randy's never going to learn, is he?

Emboldened by a question from one participant about the cost of legal counsel to defend the formal challenges, Randy answered a question about how PATH-Allegheny could have possibly had 5.1 full-time employees on an abandoned project in 2012 by telling everyone that "most" of that time was spent answering information requests about its formula rate filings.

Let's see, Randy, 5.1 full-time employees at 2080 hours each equals 10,608 hours spent answering 270 individual questions, "most" of which PATH refused to answer because they were alleged to be harassing, oppressive, annoying and burdensome.  That equals 39.28 hours per question, including those where a refusal to answer was merely copied and pasted into PATH's response.  That's nearly a work week.  It took PATH one full work week to answer each question?

Right.

Stop making crap up when you're talking to accountants, okay?

And when given the opportunity to answer questions informally over the phone during the Open Meeting and save all those work hours in 2013?  PATH refused and asked interested parties to submit written information requests.

FirstEnergy subsidiary "Potomac Edison" submitted its most recent discovery responses in the General Investigation case before the WV PSC yesterday.  In its response to one of the Consumer Advocate's questions, "Potomac Edison" cites an "article" from this blog.

Of course, the invitation received was the infamous invitation to the Citizens' Public Hearing from George Rutherford that The Friddler lied about to the Jefferson County Commission, telling them that the invitation did not mention the Harrison plant transfer.

I'm so glad this blog could be of service to FirstEnergy, bringing them news that they "forward internally."

It wasn't too long ago, however, when FirstEnergy's PATH companies were complaining about this blog to the WV PSC:

Maybe I should start charging them admission?

The entities that stand to profit from building hundreds of billions of dollars worth of new high voltage electric transmission are at it again.  In the wake of FERC’s Order 1000 requiring cost allocation to be “at least roughly commensurate with estimated benefits,” and that those who receive no benefit shall not be allocated costs involuntarily, the industry has simply redefined the term “benefit” to suit their pecuniary purposes while toeing the line with FERC.  This is exactly what my Magic 8 Ball told me would happen, so we shouldn’t be surprised.

WIRES, which is a group of industry lobbyists and their sycophants, has bought a study prepared by The Brattle Group (proud industry whore since 1990) that supposedly identifies and analyzes a whole bunch of “new” benefits of building transmission that they feel will, when added to current planning evaluations, ensure that transmission wins every time!  *cha-ching $$$$* WIRES pretends that it is only concerned about the good of society.  Baloney.  It’s all about the money!

WIRES and their well-paid former FERC Commissioner counsel have submitted this study to FERC because, “It is our expectation that this new analysis will be helpful to the Commission and to parties filing in compliance with the regional and interregional planning provisions of Order No. 1000.  Although Order No. 1000 compliance involves numerous additional dockets, we believe the report should at least be part of the record in the overarching rulemaking proceeding so that parties are able to access and use its contents.” 

Right, let’s allow WIRES buy some new FERC policy with our money.  You know how I know this report is made-up crap?  Because it uses sources such as Clean Line Energy Partners’ self-serving analyses and other industry-commissioned “studies,” as well as clueless NYT blogger Matt Wald and other biased media sources.  Any trained monkey can compile a whole bunch of dubious sources to come to pre-determined conclusions.   Congratulations, Brattle Group!  I wonder how much they charged WIRES for something a 3rd grader could have accomplished?

So, how speculative are all these new “benefits” that transmission planners must consider in order to force unneeded transmission?

WIRES says, “An analysis that ignores or rejects benefits that are not measured with precision implicitly assumes that the value of such benefits is zero. This will systematically understate the overall value of transmission investments.  It will also, in turn, lead to the unintended consequence of rejecting valuable transmission projects that offer a broad set of long-term benefits with total values that exceed project costs.”

Or, perhaps there’s a reason these “benefits” have historically been given a value of zero in order to ensure that only cost-effective and needed transmission projects are actually built?

Here are the “benefits” that WIRES insists be calculated, no matter how specious they may be:

1. Production cost savings;
2. Reliability and resource adequacy benefits;
3. Generation capacity cost savings;
4. Market benefits, such as improved competition and market liquidity;
5. Environmental benefits;
6. Public policy benefits; employment and economic development benefits; and
7. Other project-specific benefits such as storm hardening, increased load serving capability, synergies with future transmission projects, increased fuel diversity and resource planning flexibility, increased wheeling revenues, increased transmission rights and customer congestion-hedging value, and HVDC operational benefits.

Production cost savings are one of the traditional ways transmission “benefits” are derived.  However, “As noted earlier, production cost savings only measure the reduction in variable production costs, including fuel, variable O&M costs, and emission costs.  This means that production cost savings, even if the simulations capture the additional factors discussed above, will not capture the benefits associated with reliability, capital costs, increased competition, certain environmental benefits and other public policy benefits, or economic development benefits. These benefits provide additional value to electricity customers and to the economy as a whole.”

WIRES would rather have us concentrate on those hard to quantify “economy-wide benefits” that can be concocted out of whole cloth and come in handy to tip the scales in favor of questionable projects.  In addition, WIRES recommends that regions bundle a whole bunch of such dubious projects into “project portfolios” (as MISO has done).  When “benefits” of many projects are combined into an impossible to separate mega-project for regional transmission organization approval, WIRES believes this sleight-of-hand spread of “benefits” among a wider pool of consumers makes cost allocation easier. 

“We also suggest aggregating beneficial transmission projects into larger portfolios of projects to simplify the necessary cost allocation analyses, reduce misperceptions that benefits appear to accrue only to a limited subset of market participants, and facilitate less contentious cost allocation processes.”

And although the report fails to mention it, this combination of many small projects, owned by many different entities, into one big mega-project also allows for convenient re-separation of each smaller segment in order to sail through state or local approvals while shepherded by incumbent utilities that have developed relationships with communities, legislators and regulators.

Here are a couple of spurious gems from the WIRES “report” that had me snorting with laughter.  Do they actually think that intelligent people will fall for this dreck?

“For example, transmission lines that allow for increased imports of lower-cost generation from a neighboring region can provide benefits to both regions: the importing region through a lower cost of delivered power [to consumers] and the exporting region through increased revenues to the exporting suppliers. The increased export revenue can also be a benefit to electricity customers in the exporting region if these additional revenues are used to offset the cost of regulated generation assets or if wheeling out the revenues paid by exporting merchant generators can be used to offset the exporting region’s transmission revenue requirements.”

That’s right… new transmission simply levelizes electricity prices between regions.  While the importing region gets the benefit of lower electricity prices, the exporting region gets the “benefit” of higher electricity prices PLUS a share of the cost of the transmission project that raised their electric rates.  What a bargain!  All benefits to an exporting region go right into the coffers of generation companies.  And here’s a perfect example from the report:

“The economy-wide benefit of the deferred generation investments was estimated at $320 million, about half of which was estimated to accrue to customers in Texas, with the other half of the benefit to accrue to merchant generators in Louisiana and Arkansas.” 

Building transmission to import renewables from coast-to-coast is not economic, and when given a choice between high-priced renewables or affordable "dirty power" utility bills, consumers overwhelmingly vote with their wallet.  In spite of also being motivated by its collective wallet, WIRES just doesn’t get it:

“In such cases, despite the fact that both transmission and retail electricity rates may increase, the transmission investment can reduce the overall cost of satisfying public policy goals.”

Sometimes, new transmission has unintended effects.  Perhaps our Pollyanna environmental warrior friends, who are backing transmission expansion that they optimistically believe will result in renewable energy super-highways, should take a lesson:

“Similarly, the CREZ projects in Texas have also provided new opportunities for fossil generation plants to be located away from densely populated load centers where it may be difficult to find suitable sites for new generation facilities, where environmental limitations prevent the development of new plants, or where developing such generation is significantly more costly.”

In addition, new transmission can perpetuate environmental and social injustice whereby the poor and politically under-represented continue to bear a disproportionate share of the burden to supply the needs of the rich and politically connected in their own or other regions.

WIRES tried to give their dubious “report” more credibility by having it peer reviewed.  Despite being able to choose its reviewers and having sole power to approve or disapprove the content of the review, WIRES still couldn’t prevent a little sanity from sneaking in at the end of the report.  The peer reviewers opined: 

“The electric power system is a complex, interconnected whole. While the interconnection may be argued to be the transmission system, the whole incorporates generation (both central and distributed), storage (again central and potentially distributed), distribution in all of its complexity, and the interaction with end users at all levels and at all levels of complexity in use and control.

It is difficult, if not impossible, to fully evaluate the benefits of transmission without reaching into the competing benefits of investments in other sub-systems of the power system. Technology is not standing still in terms of the transmission system or in terms of the other sub-systems of the power system. Two examples of changes whose impacts upon asset growth in transmission have yet to be quantified are:

• The impact of significant investment in distributed generation and potentially storage within the distribution system. These changes are being brought about by public policy decisions combined with a dramatic expansion in communications and controls allowing for the development of distributed energy systems that interact with the larger utility system

• The impact of sensing and control of the transmission system that allows for dynamic reconfiguration of the topology of the transmission system. Often referred
to as “line switching,” the benefits have been known by system operators for decades. It is only with increased monitoring, advances in analytic techniques, and computation speed that these concepts can be brought into the operational time frame.

Technological changes are adding points of pressure to the power system in general and specifically to the transmission sub-system as the interchange network that allows the system to remain balanced.”

While WIRES is trying to hurry along the filling of its members’ pockets, the electric utility industry is undergoing a sea change that’s going to make most of this new transmission obsolete before it becomes used and useful.  But these guys don’t care if a huge investment in unneeded transmission is left for their grandchildren to repay, as long as the money comes rolling in today.

If we’re going to make up a whole bunch of new transmission “benefits” that must be considered in any regional planning cost-benefit analysis, how about if we also now consider the true cost of building new transmission?  WIRES thinks that the true cost of building transmission is contained in the annual transmission revenue requirement of any particular project.  However, that does not consider the true costs to communities, individuals, landowners, ratepayers, or society as a whole.  But where are we going to get the money to hire an industry whore economist to make up a bunch of crap like WIRES did?  Oh, not to worry… the way transmission opposition is expanding lately, it’s only a matter of time before some transmission routing doofus uses his etch-a-sketch to draw a line through the backyard of an economist or two (or maybe that’s already happened, or maybe the opposition leadership is quite capable of preparing their own cost-effective analysis and report -- The Costs of Electric Transmission: Identifying and Analyzing the True Cost of Transmission!)  If you want to be part of our brain trust and help us identify the true cost of new transmission, just let me know!

Stupid people are annoying.  Especially when they have a seat in the West Virginia House of Delegates, or edit local newspapers.

The Journal (or "the urinal" as it's more popularly known) ran a story the other day claiming that Potomac Edison's Maryland customers were paying much less for electricity than the company's customers in West Virginia.

Of course, that's wrong.  But, it took two days for The Journal to get around to correcting its error.

Larry Kump is still clinging to his misinformation.

Who elected this nincompoop?  Go away, Larry.  You can't fix what's wrong with Potomac Edison, and in fact, you are only making things worse.  Any day I wake up and agree with Toad Meyers disturbs the natural order of things.  I'm busy.

A friend sent me a link to this article on Grist yesterday.  The five most important names in renewable energy that you’ve never heard of not only improperly ends a sentence with a preposition, but the author just plain, old makes crap up.  While waxing poetic kissing the rear ends of FERC Commissioners current and future, Bill White,  manager of the National Clean Energy Transmission Initiative for the Energy Future Coalition, contends that only Big Wind can save us:

This, of course, is incorrect, but still an arguable opinion (and it is, read the comments).  However, next Bill demonstrates his mastery of FERC finance:

What an idiot (and you will notice he gets called on his misunderstanding of ROE in the comments as well)!  ROE = Return on Equity = the percentage of yearly return (interest) investors earn on their equity (investment) in transmission projects.  It has nothing to do with how long it would take to recoup the costs of a project.  That's called depreciation, Bill.  The two have only a cursory connection in that depreciation pays back a portion of the investment every year, plus interest (ROE) on the outstanding balance.  The length of time it takes to recoup an investment is directly tied to its depreciable life.  Investments should be paid for during their used and useful life.  I'll do Bill a favor and stop there without even mentioning salvage value.

Now, don't you feel stupid, Bill?  You should.  You should also feel stupid about all those other brainless things you said in your Grist rant, like the fact that state regulators, who are complaining about FERC returns, are "misguided." What makes a financial genius like you qualified to judge the actions of professional regulators?

Yup, ol' Bill just doesn't know what he's talking about.  Crash and burn.

The media's favorite, new energy story centers on how traditional utilities are panicking over the ever-shrinking pool of customers created by on-site renewable generation and energy efficiency.  Now the New York Times has also jumped on the bandwagon.  This is it utility friends, change or die!

The smart companies are finding new niche markets that will secure their longevity.  The stupid companies are wasting a whole bunch of money trying to lobby solar out of existence.  Do I have to start handing out  my own series of Utility Darwin Awards?

I'm so happy that the media has now picked up on something we wrote in June 2012.  In comments to the FERC, consumer groups put utilities on notice:

"Because transmission is such a long-term asset, we must be extremely mindful of how new projects relate to each other to achieve comprehensive energy policy goals. If we continue to approach transmission as a hodgepodge, knee-jerk reaction to serve short-term goals and provide sustainable revenue streams to investor-owned utilities, we risk setting ourselves up for a possible future where a huge investment in transmission becomes the financial responsibility of a shrinking pool of ratepayers. Technological advances and affordability are making it possible for an increasing number of consumers to produce their own power and feed it into the local distribution grid by making their own smart, fuel-free, power producing investments. Energy efficiency and demand management gains continue to shatter future demand projections, further decreasing the need for billions of dollars of investment in new transmission infrastructure."


It only took just over a year to get this observation mainstreamed into the pages of the New York Times.    Perhaps NYT isn't getting timely information while worshipping at the alter of for-profit utilities?

In the wake of the WV PSC's refusal to dismiss its investigation of billing practices, FirstEnergy subsidiaries Potomac Edison and Mon Power have now mounted what's known as a charm offensive.  A charm offensive is a public relations campaign designed to build trust and mollify a perturbed public in order to repair a company's image.  In FirstEnergy's case, the company is  trying desperately to sweep away the mess its former Allegheny Energy subsidiaries have made of billing and meter reading in the wake of their merger with FirstEnergy in 2011.

Unfortunately, FirstEnergy's charm offensive is being carried out by a squinty-eyed, loquacious fabulist who is not well-liked, either by the public or the media.  Our friend Todd is carrying too much flaming baggage from the PATH project, and other dubious claims he has spun for the public in recent memory.  Nobody believes a thing Todd says anymore.  Looks like FirstEnergy is going to have to find a more charming spokesperson.

Here's what Todd told WV Metro News the other day:

"Customers started complaining to the PSC several months ago after meter readers with both companies fell behind following Superstorm Sandy. Meyers said they were helping with the power restoration efforts. Bills were estimated for some customers for consecutive months and the estimates were based on the previous mild winter. When the actual readings took place, customers received very expensive bills."

Customers have been complaining for a lot longer than "several months," although Potomac Edison has only acknowledged some of the complaints in recent months, after the PSC opened an investigation in response to public outrage and legislative anger.  The company's problems started following the "superstorm" of the 2011 Allegheny/FirstEnergy merger, and the ensuing spending cuts and stunning incompetence that brought bi-monthly meter reading to a screeching halt.  The PSC has called foul on Todd's excuse that meters were not read because personnel were "helping with power restoration efforts," or that estimates were made based on any logical process at all and were not, instead, made up out of whole cloth.

Todd insists that Potomac Edison should be granted more time to actually do the job that you're paying them to do every month, and that you should overlook continued erroneous billing and skipped meter readings while they "work through the issues individual customers have with double billing and estimated meter readings."

I don't think so, Todd.  Potomac Edison has had months already to clean up its act, and years to have gotten it right in the first place.  The public is done being patient.  The public has become quite bloodthirsty and a sacrifice must be made to appease them.  How about we start with Todd and his "out of whack" charm offensive?

I blame the coat rack.

This Nanton Coat Rack is "designed to look like a transmission tower, the Nanton Coat Rack by Palette Industries not only comes with a unique shape, but some profound meanings: a good design can work like a transmission tower, to carry good ideas and important information from people to people."

Oh, so that's the problem... our geeky power company friends must have pieces of tower trash like this decorating their own living rooms at home and they merely want to share with us by also installing a tower in our living rooms.

No thanks.  Tacky.  Your towers carry bad ideas, harmful EMF, lower property values, eminent domain and higher prices for consumers.

P.S.  Who decorates like this?  Really?

Apparently WV's Director of Energy, Jeff Herholt, showed up at legislative interims yesterday to talk about WV's 5-Year Energy Plan.  Hilarity ensued.

A story in The Journal says:

Coal production has fallen by about 25 percent since 2001. The closing of coal-fired power plants has played a significant role in this decrease, Herdolt said.

"We don't struggle over whether our state should use coal or not," Herdolt said. "Other states, that's not the case."

Coal's inability to compete with the price of natural gas has also affected production; however, Herdolt added, there is not a "compelling drive" for utilities to completely abandon coal for natural gas.

And then a clown car roared into the meeting and several legislators poured out:

Sen. Ron Stolling, D-Boone, questioned why coal isn't lucrative enough for even power plants inside West Virginia to use the state's product. Herdolt said price is the problem. About 50 percent of the coal-fired power plants in the state use coal from other places, according to Stolling.

"It's all price," Herdolt said. "We had a lot of coal in storage. We had a mild winter last year, (and) we had a storage buildup."

Some lawmakers were concerned by what they heard at the meeting. Sen. Craig Blair, R-Berkeley, said he wanted to hear more about utilizing coal for energy by way of liquification. Referring to a TransGas coal-to-liquid plant in Mingo County, Blair said he wonders why the state isn't promoting it more.

"We're talking about a lot of jobs in West Virginia, but we're also talking about lower energy prices," Blair said. "Low energy prices give opportunity for the ability to attract businesses to the state."

Sen. Art Kirkendoll, D-Logan, said the state should be more proactive with projects like the coal-to-liquid plant.

"We're sitting on our thumbs waiting for these investors to come in with $2 billion," Kirkendoll said. "Why don't we go get the investors?"

In the next act, a daring trapeze act was attempted by someone with a brain:

The commission also heard from John Christensen, a member of the Berkeley County Economic Development Authority and employee at Mountain View Solar in Berkeley Springs. Christensen was there to make a case for fostering of the solar industry in West Virginia.

Christensen referred to HB3080, which would provide a 1 to 1.5 percent carve-out for solar technology in the state's energy portfolio.

"All the states that have this carve-out are doing great," Christensen said. "We want to be big. ... We want to be involved bringing more jobs to West Virginia."

But it wasn't enough to deflect attention away from the continual capering of the clowns:

But lawmakers questioned the worth of solar with its lower energy production in the state and its cost. Blair, who said he is supportive of renewable energy, said there should be a significant return on investment from the state, and he said it's just not there with solar.

"When government gets involved, and they start issuing tax credits ... you're subsidizing something," Blair said. "It should be cost-effective to start with."

While the Eastern Panhandle doesn't have a direct role in much of the state's energy production, Delegate Paul Espinosa, R-Jefferson, said he believes residents should know about energy issues.

"It's certainly something I think we need to be informed about and be supportive of an energy industry that can be profitable for our state," Espinosa said.

And the music played on...