Monday, December 24, 2012

Clean Line asks FERC to have regions pay for its "Merchant" Line

Somebody in recent Northern Illinois Letter to Editor’s War with RICL once said “We can’t have it both ways”.  This is exactly what RICL needs to be told.  You can't have it both ways.  It looks like they have a bit of an identity crisis going on.  They don’t know what they are. 

Is RICL a Merchant Transmission Line or a Cost Allocation Powerline? 

RICL, pick one!

Back in last summer RICL won approval from the Federal Energy Regulatory Commission (FERC) to be a Merchant Transmission LINE (MTL).   RICL explicating understood and guaranteed they would be considered a Merchant Transmission Line.  RICL agreed as an MTL, they would be accepting the risk.  Costs would not be allocated to consumers across the entire region.  Let’s remind RICL what was in FERC’s approval.

1.      Commission precedent distinguishes merchant transmission projects from traditional public utilities in that the developers of merchant projects assume all of the market risk of a project and have no captive customers from which to recover the cost of the project.  

2.      To approve negotiated rates for a transmission project, the Commission must find that the rates are just and reasonable.15 To do so, the Commission must determine that the merchant transmission owner has assumed the full market risk for the cost of constructing its proposed transmission project.

3.      Rock Island affirms that it will assume the full market risk of the Project and that it will have no captive customers.

4.      Rock Island meets the definition of a merchant transmission owner because it assumes all market risk associated with the Project and has no captive customers. Rock Island has agreed to bear all the risk that the Project will succeed or fail based on whether a market exists for its services. Rock Island also has no ability to pass on any costs to captive ratepayers.

RICL was very specific with FERC and FERC put in RICL’s approval.  So why is RICL now having this identity crisis?  Does this Texas company need a Dr. Phil moment? 

RICL was approved to be a Merchant Transmission Line.  

RICL is not a Cost Allocation public utility.

Hans Detweiler has been proclaiming this powerline will bring cheap power to Illinois, but he has always refused to say how much this energy will be costing the consumers.  This gives the appearance Hans is walking the line being careful in what he says and how he says it so as not to be held liable for fraud.    The fact is Hans Detweiler and RICL has never said how much this electricity will cost us or how the company intends to pay for this powerline.  Residents, like me, were daring Hans to say something with Letter to Editors in papers across Northern Illinois, but Hans always skirted the issue.

Last summer just after RICL won approval from FERC, RICL had dialog with PJM, the regions energy cartel, asking permission to change from the current merchant model to a more traditional cost allocation model were consumers over the entire region are forced to pay for the powerline.  The ink wasn’t even dry on FERC’s approval and RICL was already trying to change to rules.  All this time RICL is attempting to deceive the Illinois public that it is a merchant line.

Apparently RICL didn’t like the answer PJM gave them.  On December 10, 2012 Clean Line Energy filed a petition with FERC to allow them to have the costs for the RICL powerline be allocated to the ratepayer across the entire region from Illinois to New Jersey.

This company hasn’t built one powerline, set one lattice tower, strung one mile of cable, or even gotten approval from the Illinois Commerce Commission, but Jimmy Glotfelty has the audacity to tell FERC great progress has been made.  Jimmy wrote FERC;

Clean Line has achieved several key milestones in the development of its projects, including signing a Memorandum of Understanding with the Tennessee Valley Authority and obtaining certification as a transmission-only utility in both Kansas and Oklahoma. Two of the Clean Line’s projects, the Rock Island Clean Line and the Plains & Eastern Clean Line, have obtained approval from the Commission to charge negotiated rates and enter into negotiated agreements with anchor-tenant customers.

RICL forgot to tell FERC it is receiving mounting opposition from Illinois residents.  RICL has forgotten what it agreed to this summer with FERC.  RICL has forgotten or never knew a lot of things about honesty and transparency. 
Hans Detweiler has told us the virtues of a Merchant Transmission Line and consumers won’t be held to pay for this powerline for the windmills, but now RICL is now arguing a powerline for the windmills is worthy of cost allocation.

The Commission also recognized that different regions of the country may have different practices in populating their regional transmission plans when considering projects that are cost allocated and those that are not.

When has Illinois residence been forced to pay for a powerline specifically for the “virtues” of wind energy?  Never.  What ever happened to the virtues of economically priced energy?  Hopefully FERC commissioners understand overpriced wind energy and the misguided beliefs of RPS Public Policy Requirements is not worthy to change RICL to cost allocation before RICL transmits 1 kilowatt of energy.  Jimmy Glotfelty goes on to claim;

Order No. 1000 requires that Compliance Plans “ensure fair consideration of transmission needs driven by Public Policy Requirements as well as by reliability needs and economic considerations.”

Again, this attempt to make renewable portfolio standards as “public policy” to justify consumers pay for a Merchant Transmission Line is a joke.  Any moron can justify a need for a powerline when costs are not an issue and overpriced or under demanded electricity is not a factor.  The fact remains, this energy is not needed.  Economically priced natural gas coupled with increased energy conservation makes energy priced below what RICL can provide.   If RICL wants to follow the Cost Allocation Model, then reapply to FERC.

"The Commission should also require the PJM TOs to modify their compliance filing specifically to allow merchant transmission projects to be eligible for cost allocation for the economic and public policy benefits. If a merchant project is submitted for inclusion in the RTEP as a Supplemental or other non-cost allocated project, the project sponsor should be allowed to propose that the project be studied as a solution to identified transmission needs. If these studies show regional benefits, some portion of the project cost should be eligible for cost-allocation through the process identified in the PJM TOs’ Compliance Filing."

We find ourselves with RICL wanting Illinois residents to pay $70 per Megawatt hour or even more for wind energy from Iowa when the current price is closer to $30 per Megawatt hour.  Then RICL refuses to ratepayer the cost of this energy, their potential profit margins, or even the projected payback years for this project.  Clean Line Energy now wants ratepayers to pay for their merchant powerline.

This is ridiculous!   There are some states who have no Renewable Portfolio Standards or the standards are merely goals.  These consumers will be required to pay for RICL’s project while their states do not recognize the benefit.  RICL now desires to retain the “merchant” model but have captive ratepayers (consumers) liable for the cost of their project. 

Shall the ratepayers of the entire PJM region subsidize the RICL project?  America is on the edge of eliminating the Production Tax Credit for windmills and RICL thinks we need to subsidize this venture capital company.  Should West Virginia ratepayers fill the pockets of Michael Zilhka and the Ziff Brothers and pay for this powerline?  Should Illinois residents only pay for the Clean Line Energy powerline?

No.  This is wrong.  RICL was approved to be a “Merchant Transmission Line”.   They agreed and accepted the risks.  Michael Skelly, Jimmy Glotfelty and Clean Line Energy need to live by this agreement.   RICL can look at the BLOCKRICL.COM reference page.  There is a great link under “THE SOICIALIZATION OF RENEWABLE TRANMISSION COSTS”.   Georgetown Law Journal had a great article called It’s Electric, but FERC’s Cost–Causation Boogie-Woogie Fails To Justify Socialized Costs for

Still, the question remains why Clean Line Energy has made this petition to FERC.  Has FERC given a hint to Clean Line they are about to make a mandate on Renewable Portfolio Standards, a wink or maybe a tip of the hat?  No transmission project has been paid for by the entire region based on the virtues of renewable energy.  Clean Line has made claims their funding is secure and will be there should state approvals are complete.   Perhaps this is a sign Clean Line’s financing is not as strong as the company claims.  While Clean Line is keeping all financial numbers confidential in their petition to the Illinois Commerce Commission (docket # 12-0560)  asking to become a public utility, it is evident in the ICC has some concerns about the financing of the RICL project in its further line of questions.  Perhaps with the potential of losing funding   from the Production Tax Credit, Clean Line is desperately looking for additional sources to subsidize their projects and are seeing the ratepayers across the region as  the next best source.

Another possibility is this statement from FERC Commissioner John Norris.  He has indicated as a FERC Commissioner he will support ratepayers across a region subsidizing “Projects that provide access to location-constrained resources, such as our nation’s wealth of renewable resources, that previously had no or limited access to markets”.  The fact is these pass through states are a problem.   Just as states generally do not grant projects eminent domain for pass through projects that might benefit another state, all states have different RPS requirements or no requirement at all and state’s ratepayers should not be forced to pay for projects to meet political objectives of another state’s RPS. 

If FERC pushes Oder 1000 applies to a diverse array of Renewable Portfolio Standards, this will surely be a long and argues court battle.  Does one RPS trump another?  Does a state’s lack of an RPS mean any RPS trumps it or is a lack of an RPS an opinion that RPS’s are stupid and other states RPS should not be recognized.  And what happens five or seven years from now when  there is a new state’s public policy.  Coal is good.  Coal is bad.  Nuclear is good.  Nuclear is bad.  Wind is good…today….what about tomorrow? 

Will wind be considered unsustainable, too costly, and lose favor in the eye of popular opinion? 

Will there be a new flavor of the month? 

Clean Line is indeed the frontline in America’s Energy Battle. 

Like FERC Commissioner John Norris’s letter states, renewables are being added to energy portfolios purely on the basis of economics. 

I found myself surprised to be sitting with a group of utilities and businesses in the Southeast who face virtually no Renewable Portfolio Standards (RPS) or other government clean energy mandates, but are still looking for ways to get access to clean energy. They are doing it purely on the basis of economics
Those in the southeast deserve to be applauded.  This is the way it should be.  Renewables can compete on a level playing field with other forms of energy.  Renewable transmission does not need subsidizing from an entire region.  Innovation never comes through subsidizing an industry.  Perhaps Clean Line is attempting to force ratepayers to pay a portion of RICL’s sister projects that FERC has yet to approve.  If this is the case, it won’t be long before Clean Line is asking for regional subsidies for its RICL project.

Michael Skelly and Jimmy Glotfelty have had one do-over with the Illinois Commerce Commission for state approval.  If Clean Line and its RICL project wants to follow the Cost Allocation Model, they need to have a do-over with FERC.  It’s absolutely ridiculous RICL wants to change in midcourse from the Merchant model to cost allocation.  It is doubtful FERC is seriously about to force a uniform Renewable Portfolio Standard on all states without Congressional approval.  If RICL wants to follow the cost allocation model then reapply to FERC.  While RICL is preforming do-overs, Michael Skelly , Jimmy Glotfelty, and Jayshree Dasei can come back to Mendota, Illinois and have a do-over with an informational meeting with the Illinois stakeholders of this project. 

1 comment:

  1. Their potential profit margins, or even the projected payback years for this project.
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