Blog Posts

How FirstEnergy is Systematically Dismantling the Former Allegheny Energy

7/21/2013

Interesting article in the Pittsburgh Post-Gazette. It seems like the locals are a bit miffed at the way Ohio-based FirstEnergy has been slowly cannibalizing former Pittsburgh energy star Allegheny Energy.

That echoes an anonymous sentiment I saw in an online forum yesterday, where it was said that FirstEnergy is wrecking what used to be a good company. It's all about the stockholder dividends anymore. FirstEnergy doesn't give a damn about its customers, or the communities where it does business.

FirstEnergy made all sorts of glittering promises to regulators and communities in order to get its merger approved, and has been systematically violating its promises ever since.

FirstEnergy just doesn't care if you don't like it, little customers. The company has a monopoly in this state, step in line and take what you are served.

But, FirstEnergy's monopoly state franchise isn't irrevocable. Look what's happening in another town that got fed up with a different out-of-state utility conglomerate...

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What is Market Manipulation?

7/20/2013

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Electric market manipulation is becoming mainstream news lately. In the comments section of my post about renewal of the PJM Market Monitor's contract this week, manipulative banksters JP Morgan and Barclays were mentioned. Just to be clear, JP Morgan and Barclays have been accused of manipulating electricity markets in California, other western markets, and midwest states. They have not been accused of manipulation in PJM (at least not in these big, high profile cases). Is that a good thing or a bad thing? Does it mean that these banksters haven't been playing games and skimming on PJM's electricity market, or does it simply mean that they haven't been caught yet?

The Wall Street Journal had a big, splashy article about market manipulation the other day. It's got some really great graphics that explain one way that these banksters have manipulated the market in such simple terms that anyone can understand it. Bankster offers electricity in the next day market at a really low price, then jacks up the price when it comes time to actually sell it. The buyer decides not to buy it after all, because it's too expensive. Bankster collects what's known as a "make-whole payment" from the buyer in exchange for being ready to supply power.

Maybe the WSJ's graphic designer needs to go work for FERC or Monitoring Analytics to make their reports and explanations of market manipulation sexy enough for water cooler chat, too.

Here's FERC's attempt to be scary with talk about fraud and attempts to deceive. Any ordinary consumer reading this would still have no idea what market manipulation really is.

Here's the PJM Market Monitor's 2012 State of the Market Report. Boring! You'd have to be a real geek to even enjoy flipping through it. But wait, Monitoring Analytics has produced a "Press Briefing" version that includes some explanation of what they do and what happened in 2012 as represented by a bunch of graphs!

Where's the comic book version?

There isn't one. Therefore, if it wasn't for our friendly, neighborhood banksters, we wouldn't even be discussing market manipulation in the first place. And market monitors and regulators wouldn't be today's pop culture rock stars. And try though they may, FERC and Monitoring Analytics seem to be incapable of dumbing this stuff down enough so that the average consumer can understand it, much less find it interesting.

The WSJ article explains one scheme that was uncovered. There are probably hundreds more going on right now, and hundreds more being devised. As soon as the regulators close one loophole, the banksters start manipulating another. It's a never-ending battle.

Deregulation and competitive markets don't benefit consumers. It actually costs them money.

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WV PSC Refuses to Dismiss Potomac Edison Investigation and Orders Monthly Monitoring, Public Comment Hearings -- Punitive Fines a Future Possibility

7/19/2013

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The WV PSC issued an Order today refusing to dismiss the Potomac Edison/Mon Power general investigation of billing and meter reading practices as requested by the companies.

The PSC was unconvinced by the companies' claim that the matter has been resolved and should be dismissed. The Commission believes the data Staff and FirstEnergy filed indicate the need for further investigation and do not justify dismissing this matter as resolved and therefore FirstEnergy's request to dismiss is denied.

The Commission made the following FINDINGS OF FACT:

1. The Commission opened a general investigation into the meter reading, billing and customer service practices of FirstEnergy. June 7, 2013 Commission Order.
2. FirstEnergy reported that 5.3 percent of its customers received two consecutive estimated bills and a further 2.2 percent received three consecutive estimated bills in the May 2013 billing cycle. July 1, 2013 FirstEnergy Filing at 8.
3. Approximately 44 percent of FirstEnergy customers in West Virginia were unable to resolve a billing problem in their first customer service call in 2013. Id. at 12.
4. Staff reported that it has received an increasing number of informal complaints regarding FirstEnergy billing practices. July 15, 2013 Staff Reply.

The Commission was unconvinced by FirstEnergy's desperate posturing attempting to show that everything is hunky dory, and tells the company who's boss:

"The Commission also takes this opportunity to emphasize that the purpose of this proceeding is to ensure that FirstEnergy takes the steps necessary to provide reliable service and accurate billing. The Commission will not prematurely rush this matter or
close the proceeding until FirstEnergy demonstrates that its billing accurately reflects customer usage on a consistent basis and has implemented responsive service practices."

The Commission intends to stop FirstEnergy's reign of terror, therefore FirstEnergy must now be monitored like a wayward teenager:

"In this case, the Commission believes that it should immediately begin collecting data to allow it to monitor certain aspects of FirstEnergy customer service. This data will assist the Commission and the parties in this proceeding by generating a statistical benchmark for determining improvement or decline in service quality and providing empirical data that demonstrates whether the problems have been resolved as contended by FirstEnergy."

Beginning August 15, 2013, and continuing for one year, the required monthly submissions should include the following information:

1. Current customer contact center metrics collected by FirstEnergy.
2. The number and percentage of customers with two or more consecutive estimated bills rendered.
3. The current number of budgeted meter reader positions and the current number of meter readers employed.
4. The current status of the project to re-number meters and adjust meter routes.
5. The steps taken to adjust or improve the current enhanced estimation algorithm.
6. The number and percentage of meter rereads.
7. The number of complaints handled by the customer contact center with a breakdown by complaint type.
8. The number and percentage of customer complaints resolved on the first call to the FirstEnergy call center.
9. The number of customers placed on a deferred payment plan and note the percentage of those with two or more consecutive estimated bills.

The Commission also ordered:

"Further, Staff must review the reports FirstEnergy will file and promptly submit an analysis of the new data after three and six months of those filings. The Commission, however, expects Staff to continue to investigate this matter beyond the analysis prescribed by this Order and recommend further steps as needed.

The Commission will monitor the monthly filings and expects FirstEnergy to demonstrate improvement consistent with its representations in the July 1, 2013 filing that the underlying problems are resolved. The Commission will determine the need for further action after approximately six months of statistical filings and will issue a subsequent Order that may either call this matter for an evidentiary hearing or prescribe an appropriate alternative. The Commission will also hold public comment hearings in the FirstEnergy service areas after it receives and reviews the first two monthly reports."

The Commission reasserts its authority and hopefully strikes a little fear in FirstEnergy's flippant little corporate heart by reciting possible future outcomes:

"The Commission cannot at this time conclusively determine what future action might be necessary if
current trends continue, possible future interventions may include (i) requiring more costly monthly meter reading instead of bimonthly readings, (ii) fixing minimum meter reading staff levels and practices, (iii) creating financial rate penalties tied to statistical performance or (iv) requiring FirstEnergy to retain a consultant to revise its integration process."

The Commission has even issued a press release.

It's time to stop playing around now, FirstEnergy, quit denying there is a problem, and get down to the serious business of making amends with your customers.

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PJM Renews Market Monitor Contract

7/18/2013

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Meet the new boss, same as the old boss.

PJM and Monitoring Analytics signed a new contract the other day. After a bit of a kerfuffle earlier this year where the PJM Board of Managers sought to issue an RFP to evaluate other proposals to provide market monitoring services for PJM, it appears that not much has changed after all.

There's a new "Protocol for Improved Interaction" where PJM and the Market Monitor promise to play nice and share their deepest, darkest secrets. It looks like each party had to promise to make an increased effort to keep the other better informed, to include:

"The MMU will notify PJM (Andy Ott) in writing (through email) when it becomes concerned with specific market participant behavior which creates major issues for the PJM markets."

That should be really helpful so that the entities playing market games can be given one last warning so they can fire up the shredder before they get caught.

Let's face it, fellow consumers, we will never understand the Market Monitor's function, no matter how many unread copies of the State of the Market Report are riding around in our back seats. It's all a matter of blind trust.

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Clueless Blogger Silverstein Pretends He Knows What Consumers Want

7/17/2013

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The arrogant energy industry and their paid media pimps continually pretend they know what consumers want. They believe that if they write and publish enough lies that consumers will start to believe them.

Not.

Forbes "contributor" Ken Silverstein tells us that "Utilities would have an easier time building transmission lines if it were not for a feisty public, which generally feels that those ugly lines ought to be built somewhere else."

Really? This guys bills himself as "editor-in-chief for Energy Central's EnergyBiz Insider. With a background in economics and public policy, I've spent two decades writing about the issues that touch the energy and financial sectors. My EnergyBiz column has twice been named Best Online Column by two different media organizations." However, his NIMBY name calling merely showcases his complete ignorance of the dynamics of current transmission policy debate. Is he really this clueless, or is he merely posturing for the crowd to parrot power company propaganda?

Let's take a look at just a few of the facts Silverstein gets wrong:

1.    "...the transmission grid is aging and it needs to be updated and expanded so that it can fulfill the needs of consumers — many of whom don’t want those unsightly lines near them."

WRONG! The transmission grid was not designed to wheel energy from coast to coast to fill the pockets of greedy traders. The industry is not spending enough capital "upgrading" for any real need, but has been banging its head against a brick wall attempting to "expand." Let's look at just one example: While PATH was shooting blanks attempting to get its new build project approved, Dominion slipped in and quietly punked AEP/FirstEnergy with the rebuild of an existing line that completely obviated the PATH project.

Consumer issues center on NEED and COST. It's not about NIMBY anymore. How loud do you suppose Silverstein would squeal if someone routed a transmission line through his own backyard? Silverstein loves new transmission... as long as there's no personal sacrifice on his part involved and it's not in his backyard, therefore, Silverstein is the real NIMBY.

2.    "Inevitably, disputes emerge that typically center on the potential ecological harm that a given line may take. In other instances, the arguments are that the development is occurring in states that will not get the benefit of the added electricity, or that it would increase the usage of coal.

Such was the case when American Electric Power and FirstEnergy Corp. tried to build the so-called Potomac Appalachian Transmission High-Line, which would have stretched 275 miles from West Virginia into Maryland. The PJM Interconnection, which coordinates the transmission planning for the MidAtlantic states, has now withdrawn the project. It has done the same for Pepco Holding’s Mid-Atlantic Power Pathway, although both concepts could get resurrected once the economy is in full swing."

WRONG! PJM cancelled the PATH project because it was not needed, not because of cost allocation, environmental or coal-related issues. The opposition to PATH was ALWAYS based on the fact that the project was not needed.

PATH and MAPP are not going to be "resurrected," and neither is an energy-wasting economy that increases energy demand. Consumers in the PJM region are already on the hook for the quarter billion dollars wasted developing the unneeded PATH project, a project that will never provide consumers with any benefits. None. Zero. PATH and MAPP were part of an industry money-making scheme named Project Mountaineer and were never needed for reliability or market efficiency.

3.    "While the concerns and the subsequent legal battles are well intended, they oftentimes perpetuate uncertainty. That is, investors are skeptical because they can make more money in alternative investments while the delays impede reliability. And if brownouts or rolling blackouts occur, the financial toll can mount."

WRONG! Brownouts and blackouts? I haven't heard that kind of fear-mongering since PATH got shelved. Get a grip, Silverstein. You and I both know that is NEVER GOING TO HAPPEN. Silverstein goes on about new transmission needed for renewables and then tosses in the blackouts invective? Sorry, but the lights will not go out if renewables can't be transported coast-to-coast.

Investors are salivating at the prospect of plunking their dollars into transmission investments making double-digit returns, despite the industry's "the sky is falling" whining. As well, transmission projects can and do request formula rates and incentives that provide them with a continual return during the development and construction period. There's absolutely no risk to transmission investors. None. Zero.

Maybe Silverstein should do some research before he approaches a keyboard in the future. There's plenty of information to be had on this website. Maybe Silverstein could learn a few things about his topic here? And maybe, just maybe, he might want to consult a consumer before writing more folderol about what they want.

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Barbie Isn't Happy

7/17/2013

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"FirstEnergy Moves Up In Market Cap Rank, Passing Mattel" says the headline.

Barbie isn't happy. She wants to punish FirstEnergy.

Maybe she's the anonymous person who made this suggestion in today's Martinsburg Journal:

From Jefferson County:

Potomac Edison/FirstEnergy has a public image to restore. In fairness to the customers, the ones who recieved overwhelming bills of a 120-day usage for one month's billing period should be shown restitution. That would be the first step to restoring their reputation and consumer confidence in their customers.

Lesson for today: Don't mess with 54-year old fashion dolls. They're mean.

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Hope for the Future

7/17/2013

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I received a great, big dose of hope for the future while hosting a MIT grad student doing research for her dissertation on energy markets over the past 4 days. It's nice to know that the lights in my nursing home may stay on after all!

With the utility industry facing a big problem with an aging workforce that is not being replenished, its nice to know that the next generation of energy professionals are going to bring fresh, new ideas to the 100 year old utility business model.

Out with the old, in with the new!

Here we are melting during a cookout/party last night where Canay got to meet the folks who made StopPATH happen and talk with them about just what it is that consumers want. It was 97 degrees in the shade, and about 150 degrees standing over the grill. We all felt fortunate that Potomac Edison kept the air conditioner running. I've never had so much help in the kitchen cleaning up from a party on the patio!

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WV PSC Smells a Potomac Edison Rat

7/16/2013

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The staff of the West Virginia Public Service Commission filed their comments and initial staff memorandum yesterday regarding the general investigation of Potomac Edison's and Mon Power's billing and meter reading practices. You may read the memo here.

The staff gets really, really close to determining the probable cause of the most recent problem.

Of particular note is that on about April 1, 2012 MP and PE changed over from the prior Allegheny Power billing system to the billing system of FirstEnergy.
Within the eleven months prior to the initiation of the general investigation, customers of the Companies filed approximately 750 Requests for Assistance (RFAs) related to billing practices in addition to nearly seventy formal complaints.
Staff noted a significant increase in RFAs concerning the Companies' billings beginning in January 2013, particularly RFAs directly related to estimated bills.

Ut-oh, FirstEnergy! Maybe the company should tell the PSC what happened now, before the staff figures it out for itself? Maybe the staff needs just a little help? The longer this goes on, the harder it's going to be for FirstEnergy to admit to the real problem and create a story for why it's being covered up.

The PSC isn't convinced that all the problems are "in the rearview mirror."

A major Staff concern is the future impact on MP and PE customers affected by recent problems whether storm related, related to meter reading staffing problems, or route renumbering projects that have been unreasonably billed. Since both estimation methods generally rely on historical usage data, how is MP, in the customer example of Attachment 3, going to produce reasonable usage estimates for that customer in the forthcoming "winter heating season" given the obviously bad usage data that has been generated? How for all other similarly affected MP and PE customers?

Staff is very concerned that the unreasonable billings sent to customers who previously received bills based on unreasonable estimates will be self-perpetuating. As both the estimation methods generally rely on historical usage data, it seems likely that MP and PE will produce unreasonable usage estimates in the future because they are relying on historical bad usage data the utilities based on bad estimates. Staff does not currently agree that the Companies' recently implemented initiatives, set forth on Page 14 of its report, are sufficient to resolve this proceeding without further investigation.

The staff isn't buying FirstEnergy's storm-related excuses for not reading customer meters:

The Companies report that it reassigned meter readers to assist in storm restoration after Super Storm Sandy caused damage on October 30, 2012, which would account for MP averaging 27% of customers receiving consecutive estimated bills in November 2012 and PE averaging 23%. In December 2012, PE
continued to average 23% of customers receiving consecutive estimated bills and MP
averaged 31%. While Super Storm Sandy went through West Virginia on October 30, 2012 FirstEnergy's responses and responses to individual complaints indicate that meter readers were reassigned to assist in storm restoration which presumably accounts for the November 2012 27% for MP and 23% for PE, but fails to explain why December 2012 was even greater for MP at 31% and the same for PE at 23%.
Technical Staff believes the trends shown on Attachments 1 and 2 are indicative of problems with the Companies' billing practices and cannot be attributed solely to the Summer 2012 Derecho and Super Storm Sandy. The foregoing table and Attachments 1 and 2 indicate that MP and PE have current billing problems that are not likely to disappear because the causes of those problems occurred in the past such as from the Derecho and Hurricane Sandy.

The PSC staff wasn't convinced by FirstEnergy's billing fish story, so the investigation will continue.

After reviewing the Companies' report and their responses to discovery requests, Staff believes it requires additional information in order formulate final recommendations in this general investigation proceeding. Staff is seeking this information through a separately filed second set of discovery requests. Staff will continue to review this matter and submit final recommendations in accordance with a procedural schedule to be established by the Commission.

Don't miss your opportunity to help the PSC staff out by submitting your own comments!

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PJM's New Transmission Feeding Frenzy

7/12/2013

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The smartly renamed RTO Insider brings us word of a new feeding frenzy that has erupted at PJM:

PJM’s first competitive transmission project under FERC Order 1000 attracted proposals from five utilities and three independent developers.

The proposals – to correct stability issues at Artificial Island, home of the Salem and Hope Creek nuclear plants, in Hancocks Bridge N.J. – ranged from a new 230 kV line and station (estimated cost $54 million) to two new 500 kV lines (a projected $1.5 billion price tag).

Ever seen one of those TV clips where sharks go berserk feeding on the incapacitated corpse of a helpless animal? The similarities are stunning. Transmission builders are hungry, hungry, hungry for new projects where they can plunk down their "transmission spend" and spin the Wheel of Regional Cost Allocation and Incentive Returns to win big!

RTO Insider provides a run down of the proposals and a link to the July 10 PJM TEAC slide deck with more details and maps of each proposal (beginning on page 61). I'm loving the way that RTO Insider makes the job of babysitting PJM so much easier for me! No more random, inconvenient urges to go wade through PJM's webmaze to see what's new, and then going through all the trouble of running my find through the geek translator. RTO Insider does all that for you! Go get yourself a subscription now... because if you don't, I may know something you don't.

According to the RTO Insider's proposal list, all the proposals for Artificial Island include new transmission lines of various sizes.

It's just colorful lines on a map right now, isn't it? It looks like someone at PJM had fun with their mouse and an RGB color chart, drawing proposed transmission lines across Maryland, Delaware and New Jersey.

Reality Check: Each one of those lines runs through hundreds or thousands of backyards. Real people, real property, real lives. Will PJM spend any time contemplating the people whose way of life they are blithely sacrificing for the needs of others? Will PJM consider the likelihood of opposition, environmental considerations, land values, or the welfare of affected individuals when choosing the winning proposal? Will PJM notify the affected communities that there is a problem that needs to be solved by building new transmission lines in their area? Will PJM consult with the communities to allow those possibly affected by the new project to weigh in on the proposal that is selected?

Of course not! What do you think this is, a transparent democracy? PJM will make its selection based on cost, or engineering, or other considerations (like which transmission company schmoozes best). And then the winning bidder will begin planning their project and greasing the proper palms, carefully keeping their plans under wraps until they are ready to pull the rip cord and hold their public "open houses." At that point, the transmission owner tells the people that the mysterious, unseen, regional transmission authority has ordered the company to build this project across the peoples' land and that there's nothing the transmission owner or the people can do about it. The transmission owner's hands are tied and the peoples' fate is sealed! What a load of crap!

These front-loaded fait accompli approaches never work. The people will always want to backtrack to where the decision to build the transmission line was made in the first place. They want to determine for themselves that there truly is no other option. Meanwhile, the transmission owner pours buckets of ratepayer cash into astroturf front groups, dishonest TV commercials, smarmy land agents, political palm greasing, and celebrity spokeswhores, trying to convince the people, and ultimately the state regulators, that the project really is needed.

There's got to be a better way.

Good luck with that, PJM.

Residents of Maryland, Delaware and New Jersey -- we'll get to know each other real soon, won't we? *sigh*

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