I haven't written about the Transource Independence Energy Connection transmission project in quite a while, but now news articles are being cranked out about a possible settlement with Maryland state agencies and some landowner parties (including Harford County, Maryland, which technically isn't an affected landowner, but a stakeholder none-the-less).
A settlement may indicate that all parties have negotiated to come to a reasonable agreement on all issues. A partial settlement indicates that all (or some) parties have negotiated to come to a reasonable agreement on some of the issues presented. The talked-about settlement seems to fall into the latter category. There seems to be one Maryland party missing from the proposed settlement, the Maryland Office of People's Counsel. The OPC represents the interests of electric ratepayers in Maryland as a collective group. The OPC has opposed the project because of its cost to ratepayers compared to its benefit. The OPC has not agreed that the Transource project is a good deal for ratepayers. I agree, it's not. Not at all.
Early this summer, I watched much of the Maryland PSC Transource hearings (thank you, archived video!). It became clear to me (and I'm sure to Transource as well) that the Maryland PSC Commissioners were set to deny the project Transource had applied for. The big stumbling block appeared to be a Maryland law that requires existing assets to be considered before taking new right-of-way for a transmission line. Commissioners appeared to be considering opposition arguments that the project could be successfully constructed using existing transmission lines and rights-of-way. The problem with Transource in Maryland became crystal clear. The project was on the fast track to denial. The only way Transource was going to ever get this project approved was to fall on its sword and change the route to use existing transmission assets as much as possible. It was either that or denial. Take your pick, Transource.
Transource sucked it up and walked back all its baloney about how such a use of existing assets couldn't work. PJM went along for the ride. And the next thing you know, Transource and PJM had worked out the alternative suggested by state agencies and landowners to route the project on existing infrastructure. Next, Transource worked a cloak and dagger settlement process with individual parties that were concerned about routing. Routing was a huge issue, but it wasn't the only issue. Keep that in mind as the future unfolds.
Who could fault targeted landowners from accepting a guarantee that Transource would amend its application to prefer a new route that used existing rights-of-way that did not cross their properties? This is a victory for them, although not a victory for everyone. These landowners worked hard to highlight the fact that there was a better route for the project that spared their properties, and nobody, even Transource, can deny that fact. The landowners got part of what they worked for... a better route! They also set a very important precedent that will affect all PJM transmission projects in Maryland in the future! PJM had been ignoring Maryland's law about using existing infrastructure, paying it bare lip service in transmission applications. That is over for good now. A solid opposition strategy for any future transmission plans emerges from the rubble -- find an alternative that uses existing infrastructure. Because there's always an alternative. PJM has moaned and complained that the routing alternative could cost up to $100M more than the original route, and also reduce the savings for ratepayers by hundreds of millions of dollars. But, in the end, PJM seems to want this project so badly that cost and benefit don't matter all that much. Price and benefit are no obstacle. Will PJM be more mindful to give preference to use of existing assets before approving new greenfield projects in the future? It would be foolish not to, now that opposition has a new tool in their toolbox.
But routing wasn't the only concern of affected landowners on the eastern segment. They also objected to the economic reasoning for the project, doing much work to expose PJM's self-serving analysis and magic math supporting the project, and once exposed, these factors cannot evaporate. The routing change, being more expensive and less economically effective, hurts rather than helps PJM's continued support of this project. The routing change also does nothing for the OPC's position. The OPC doesn't represent landowner interests, it represents ratepayer issues, and those issues have only been magnified by the proposed settlement.
Another factor here is that no landowner parties from the western segment opposed the project at the Maryland PSC. Transource's route through western Maryland was very short, and snaked artfully through properties owned by individuals who would or could not oppose the project due to religious reasons. Transource thinks it has landowner opposition in Maryland tackled. The OPC is the one remaining wild card. What does Transource have to offer OPC in settlement? Even more costs for ratepayers with less benefit? The settlement isn't a good deal for Maryland ratepayers. If and how OPC will oppose the settlement remains to be seen.
The settlement isn't a guarantee that the Maryland PSC will approve it. It's just Transource's last hope for success in Maryland.
But wait! Transource must also receive approval from the Pennsylvania PUC before it may build the project. There is landowner opposition on the western segment in Pennsylvania, where the route hasn't changed, and Transource has nothing to offer these people, except a handful of grease to make it a little less painful. Kind of insulting, don't you think?
Transource must also update its preferred route in Pennsylvania, and bluster its way through the claims about reliability it lamely tried to raise as a shield against denial before seizing on the routing change necessitated by Maryland's law. And here's the huge brick wall staring them in the face... the Transource project will cause hundreds of millions of dollars of increased electric costs for Pennsylvania ratepayers while providing them no benefit at all. Routing is much less of an issue in Pennsylvania, where the PUC may only be put in the precarious position of choosing whether to toss one group of landowners under the bus in order to favor another group of landowners who are satisfied with a changed route. Routing is a sideshow in Pennsylvania, mere lipstick on a pig. Pennsylvania also has a powerful and dedicated consumer advocate representing its state's ratepayers, and those ratepayers aren't getting any benefit from the proposed settlement. In fact, they're not even getting a handful of grease. They're getting nothing at all.
Increased costs and decreased economic benefit is going to do a number on PJM's cost/benefit ratio. PJM's magic math was called into question in the original application and evidence was introduced showing it was unrealistic. A second look may reveal even more magic math as PJM struggles to absorb the additional costs of the re-routed project and decreased economic benefit. PJM's math is going to go under the microscope. How does a project using existing rights-of-way (no new land costs, no major environmental studies, no siting issues) and even existing transmission structures (fewer new towers) end up costing more? And how much money has Transource wasted, just completely wasted, on trying to route and engineer its original route? Remember, Transource has spent the past several years harassing landowners along the original routes with surveys, turtle hunts, right-of-entry lawsuits, and easement options. It wouldn't surprise me to find that Transource's pursuit of its original route has wasted more than $100M. Why was this money wasted? Because PJM and Transource imprudently failed to follow Maryland law and thought they could bully their way through approvals. Ratepayers paying for the Transource project will pay all of Transource's costs for its botched original route, in addition to re-routing and re-application. How could this project still possibly be economically beneficial? How far down the tunnel are PJM and Transource, and will they ever come out to take a breath and acknowledge what a colossal waste of time and money this project has become?
There is no benefit from the Transource project. It should be rejected by both state utility commissions because its entire premise of market efficiency has become a costly joke. Pretending it's not because Transource fell on its sword regarding a routing issue is nothing more than lipstick on a gigantic, gluttonous pig.
Congratulations to the eastern segment landowners who successfully saved their farms and taught PJM a valuable lesson that will benefit everyone in the future! And renewed support and encouragement to the western segment landowners who will continue to fight for their own interests (and mine as a ratepayer on the hook for this porcine boondoggle)!
It isn't over until it's over. Just remember, canceling this project outright benefits EVERYONE. Fight on!
Addendum: While I was writing this, the proposed settlement was publicly filed at the MD PSC. You can read it here.
A settlement may indicate that all parties have negotiated to come to a reasonable agreement on all issues. A partial settlement indicates that all (or some) parties have negotiated to come to a reasonable agreement on some of the issues presented. The talked-about settlement seems to fall into the latter category. There seems to be one Maryland party missing from the proposed settlement, the Maryland Office of People's Counsel. The OPC represents the interests of electric ratepayers in Maryland as a collective group. The OPC has opposed the project because of its cost to ratepayers compared to its benefit. The OPC has not agreed that the Transource project is a good deal for ratepayers. I agree, it's not. Not at all.
Early this summer, I watched much of the Maryland PSC Transource hearings (thank you, archived video!). It became clear to me (and I'm sure to Transource as well) that the Maryland PSC Commissioners were set to deny the project Transource had applied for. The big stumbling block appeared to be a Maryland law that requires existing assets to be considered before taking new right-of-way for a transmission line. Commissioners appeared to be considering opposition arguments that the project could be successfully constructed using existing transmission lines and rights-of-way. The problem with Transource in Maryland became crystal clear. The project was on the fast track to denial. The only way Transource was going to ever get this project approved was to fall on its sword and change the route to use existing transmission assets as much as possible. It was either that or denial. Take your pick, Transource.
Transource sucked it up and walked back all its baloney about how such a use of existing assets couldn't work. PJM went along for the ride. And the next thing you know, Transource and PJM had worked out the alternative suggested by state agencies and landowners to route the project on existing infrastructure. Next, Transource worked a cloak and dagger settlement process with individual parties that were concerned about routing. Routing was a huge issue, but it wasn't the only issue. Keep that in mind as the future unfolds.
Who could fault targeted landowners from accepting a guarantee that Transource would amend its application to prefer a new route that used existing rights-of-way that did not cross their properties? This is a victory for them, although not a victory for everyone. These landowners worked hard to highlight the fact that there was a better route for the project that spared their properties, and nobody, even Transource, can deny that fact. The landowners got part of what they worked for... a better route! They also set a very important precedent that will affect all PJM transmission projects in Maryland in the future! PJM had been ignoring Maryland's law about using existing infrastructure, paying it bare lip service in transmission applications. That is over for good now. A solid opposition strategy for any future transmission plans emerges from the rubble -- find an alternative that uses existing infrastructure. Because there's always an alternative. PJM has moaned and complained that the routing alternative could cost up to $100M more than the original route, and also reduce the savings for ratepayers by hundreds of millions of dollars. But, in the end, PJM seems to want this project so badly that cost and benefit don't matter all that much. Price and benefit are no obstacle. Will PJM be more mindful to give preference to use of existing assets before approving new greenfield projects in the future? It would be foolish not to, now that opposition has a new tool in their toolbox.
But routing wasn't the only concern of affected landowners on the eastern segment. They also objected to the economic reasoning for the project, doing much work to expose PJM's self-serving analysis and magic math supporting the project, and once exposed, these factors cannot evaporate. The routing change, being more expensive and less economically effective, hurts rather than helps PJM's continued support of this project. The routing change also does nothing for the OPC's position. The OPC doesn't represent landowner interests, it represents ratepayer issues, and those issues have only been magnified by the proposed settlement.
Another factor here is that no landowner parties from the western segment opposed the project at the Maryland PSC. Transource's route through western Maryland was very short, and snaked artfully through properties owned by individuals who would or could not oppose the project due to religious reasons. Transource thinks it has landowner opposition in Maryland tackled. The OPC is the one remaining wild card. What does Transource have to offer OPC in settlement? Even more costs for ratepayers with less benefit? The settlement isn't a good deal for Maryland ratepayers. If and how OPC will oppose the settlement remains to be seen.
The settlement isn't a guarantee that the Maryland PSC will approve it. It's just Transource's last hope for success in Maryland.
But wait! Transource must also receive approval from the Pennsylvania PUC before it may build the project. There is landowner opposition on the western segment in Pennsylvania, where the route hasn't changed, and Transource has nothing to offer these people, except a handful of grease to make it a little less painful. Kind of insulting, don't you think?
Transource must also update its preferred route in Pennsylvania, and bluster its way through the claims about reliability it lamely tried to raise as a shield against denial before seizing on the routing change necessitated by Maryland's law. And here's the huge brick wall staring them in the face... the Transource project will cause hundreds of millions of dollars of increased electric costs for Pennsylvania ratepayers while providing them no benefit at all. Routing is much less of an issue in Pennsylvania, where the PUC may only be put in the precarious position of choosing whether to toss one group of landowners under the bus in order to favor another group of landowners who are satisfied with a changed route. Routing is a sideshow in Pennsylvania, mere lipstick on a pig. Pennsylvania also has a powerful and dedicated consumer advocate representing its state's ratepayers, and those ratepayers aren't getting any benefit from the proposed settlement. In fact, they're not even getting a handful of grease. They're getting nothing at all.
Increased costs and decreased economic benefit is going to do a number on PJM's cost/benefit ratio. PJM's magic math was called into question in the original application and evidence was introduced showing it was unrealistic. A second look may reveal even more magic math as PJM struggles to absorb the additional costs of the re-routed project and decreased economic benefit. PJM's math is going to go under the microscope. How does a project using existing rights-of-way (no new land costs, no major environmental studies, no siting issues) and even existing transmission structures (fewer new towers) end up costing more? And how much money has Transource wasted, just completely wasted, on trying to route and engineer its original route? Remember, Transource has spent the past several years harassing landowners along the original routes with surveys, turtle hunts, right-of-entry lawsuits, and easement options. It wouldn't surprise me to find that Transource's pursuit of its original route has wasted more than $100M. Why was this money wasted? Because PJM and Transource imprudently failed to follow Maryland law and thought they could bully their way through approvals. Ratepayers paying for the Transource project will pay all of Transource's costs for its botched original route, in addition to re-routing and re-application. How could this project still possibly be economically beneficial? How far down the tunnel are PJM and Transource, and will they ever come out to take a breath and acknowledge what a colossal waste of time and money this project has become?
There is no benefit from the Transource project. It should be rejected by both state utility commissions because its entire premise of market efficiency has become a costly joke. Pretending it's not because Transource fell on its sword regarding a routing issue is nothing more than lipstick on a gigantic, gluttonous pig.
Congratulations to the eastern segment landowners who successfully saved their farms and taught PJM a valuable lesson that will benefit everyone in the future! And renewed support and encouragement to the western segment landowners who will continue to fight for their own interests (and mine as a ratepayer on the hook for this porcine boondoggle)!
It isn't over until it's over. Just remember, canceling this project outright benefits EVERYONE. Fight on!
Addendum: While I was writing this, the proposed settlement was publicly filed at the MD PSC. You can read it here.
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