State Lawmakers
QUESTION NEED FOR TRANSMISSION LINE
Request PSC to increase ratepayer accountability
2018 has been a very productive year for municipalities, counties,individuals and organizations hoping to hold the Cardinal Hickory Creek high capacity expansion transmission line at bay while trying restore comprehensive energy planning practices in Wisconsin.
Eight opposition groups have been fully aware that for each of the 10+ expansion transmission lines rejected across the US, state lawmakers have done extensive research and publicly voiced their concerns about the proposals. Until this week, such vocalization had not surfaced despite citizen dedicating many hours to meetings with lawmakers, researching their questions and discussing energy conditions and future priorities.
Acceleration of wider public awareness began in January. For months, transmission builders had refused to supply Dane County fundamental cost-benefit analysis like that affecting expansion line decisions across the county. In response to this bold inaction, County Supervisors voted resoundingly to completely oppose the Cardinal Hickory Creek proposal by a margin of 33-0-2.
Five weeks later, the cover article1 in Madison WI’s widely read weekly newspaper, Isthmus, painstakingly disassembled transmission proponent claims exposing a dearth of need, excessive incentives for transmission builders to “put steel in the ground,” and a wealth of superior, locally based, solutions to engage. In his article, The grid to nowhere, author Mike Leneham summarizes, “Today, Wisconsin brings up the rear in energy innovation. New York has undertaken a sweeping program called REV (“Reforming the Energy Vision”)... [that] restructures rates and incentives to transform utilities from monolithic builders and producers into “platforms” that connect users of power with disparate local energy sources (think Lyft or Airbnb).”
On March 2, about 200 citizens and elected officials convened for a day long conference in Dodgeville, WI titled, “Stop CHC; Harnessing Our Local Energy Futures.” Fourteen panelists including three national experts described preferred local measures and techniques necessary for increasing public awareness2.
Two weeks after this informative and coalescing event, Grant County became the 11th county in Wisconsin to formally ask transmission builders to tell electric customers the benefits they would receive if the same millions transmission builders wanted to build, finance and operate over 40 years was invested, instead, into energy efficiency, load management and local power. Adding concern that a city sized substation targeted for Montfort would attract more expansion transmission lines to the area, County supervisors adopted their resolution by a margin of 13-3.
Last week, crowning these accomplishments, Wisconsin State Representatives Travis Tranel and Todd Novak released a news announcement3 and a letter to the Public Service Commission (PSC). Citing data that, “rates in Wisconsin are some of the highest in the nation [creating a] troubling trend that the PSC should work diligently to reverse,” the lawmakers expressed concern that Cardinal Hickory Creek, “will lead to increases in utility rates without a clear long-term benefit to the average consumer.“
To avoid waste of energy dollars and a host of negative impacts on affected lands and communities, the state officials, once again, called upon the Public Service of Wisconsin to “conduct a thorough review of the proposed Cardinal Hickory Creek transmission line project [in order] to explore all possible viable alternatives to the proposal and confirm that it is, in fact, necessary.” Even in the very unlikely event of inadequate power supply the lawmakers reasoned that, ”alternatives which would improve service without such a large capital investment be strongly considered.”
Public awareness is spreading quickly that utilities are only touting, razor thin, potential benefits based on electricity use inexplicably increasing. Indeed, many electric customers typically vacuum up more pennies per month than Cardinal Hickory Creek could potentially, “save.” And, unlike bulk transmission lines that averaged 73% fossil fuel and 8% wind generation in 20164, enhancing rebates to slash use and CO2 with energy efficiency measures is faster, more cost-effective and guaranteed.
With seven expansion lines installed in Wisconsin over the last 10 years and a state grid rated #7 in reliability5, Wisconsin cities, towns, villages, counties believe that now is time to use any spare energy dollars we have to improve home and local self-sufficiency rather than fuel more utility debt and soaring rates and fees. Comments made by Representatives Tranel and Novak concur, “Homeowners and small businesses can't afford increases in electrical rates; our small businesses in southwest Wisconsin need to remain competitive and higher electric bills are a tremendous liability. “
The key question, of course, is whether the Public Service Commission of Wisconsin pick up the mantel and do the comprehensive cost-benefit analysis the state representatives are calling for now that the transmission builders plan to submit their application without the quantitative analysis? Based on commission reviews of expansion lines in recent years, this would be an overdue improvement. It has been 20 years since the commission oversaw such thorough analysis. Conducted under state laws prior to 1998, utility applicants helped their valued customers by supplying them easy to understand, head to head comparisons of all spending options before the commission granted the applicants permission to proceed with making applications.
Despite a decade of steady requests asking the PSC to personally make up for utility discontinued practice, the agency has chosen to not conduct the analysis internally while placing the responsibility on grossly under-funded public intervenors.6 For the recent $600 million+ Badger-Coulee expansion transmission proposal, nationally recognized transmission and alternatives specialists, Peter Lanzalotta and Bill Powers, found that all of the potential benefits transmission builders were estimating for Badger-Coulee could be alternatively met with any of these three investments alone or in combination: $4 million in modern load management measures, or $9 million in targeted energy efficiency or $19 million in local substation-supporting community solar facilities7.
In order to avoid unnecessary utility debt and rate/fee hikes going forward, our three utility Commissioners will need to adjust their vision8 for Wisconsin and welcome in-depth staff and intervenor input into the decision making for Cardinal Hickory Creek and in oversight of billions in anticipated requests distribution line upgrades in the coming decade.
The agency could greatly economize the evaluation of No Wire Alternatives by clarifying language in the application requirements for high voltage lines so that applicants are instructed to provide quantitative, head to head comparisons of benefits of all alternatives rather than the current language allowing verbal assessment. Five lawmakers suggested language to the PSC to accomplish this goal in 20169. Now is the ideal time to follow-through on that request.
NOTES
Five Little Impressions
FROM BIG TRANSMISSION BUILDERS
SOUL Response to Recent Letters
From Transmission Builders
in WI Community Newspapers
WHAT UTILITIES SEEK TO IMPRESS:
1: That transmission builders more than sufficiently
demonstrate need for expansion transmission lines. <jump>
SOUL: The referenced “planning” is conducted and
“approved” by private interests who would profit from
it. Essentially, a capital spending wish list, the exercise
ignores non-transmission energy spending paths.
2: While electricity use is not growing, likely it will. <jump>
SOUL: In quoting a Public Service Commission' document,
the transmission builders are quoting their own projections
and those of utilities who collectively own one of the
transmission builders proposing the 345 kV Cardinal
Hickory Creek [CHC] expansion line.
3: That CHC is needed to supply adequate power as power
plants retire. <jump>
PSC: "Wisconsin currently has surplus capacity... [from] a
strong generation construction program beginning in the late
1990s, effective energy efficiency and conservation programs,
and moderate demand growth... Wisconsin is forecasted to
maintain an adequate and reliable electric supply.
4: That transmission expansion is a bargain because of
regional cost-sharing and is “expected” to save money.
SOUL: If only 17 of the more than 50, proposed. cost
shared lines are placed into service, Wisconsin ratepayers
would be spending $620 million per year over the next 20
years-- more than $9 billion total.
5: That CO2 reduction depends on "increasing access" to
remote renewable energy and this will be cheaper as
well. <jump>
SOUL: It is penny and CO2 pound foolish to "increase access"
to wholesale power that is 73% fossil fuel and 8% wind
generation when energy efficiency and local power cut
CO2 faster and cost much less.
BACKGROUND:
Public Review of the Cardinal Hickory Creek line to date
In September, 2014, American Transmission Company (ATC), ITC Holdings (ITC) and Dairyland Power Cooperative (DPC) notified owners of land near potential routes for a 345 kV, high capacity, expansion transmission line through Southwest Wisconsin and Northeast Iowa. Enclosed was a map of an 1,800 square mile study area showing no potential routes and inviting landowners, “to attend an informal open house to learn more about the project.”
The letter does not notify readers that need for the project has not been determined or that state-required alternatives have not been considered. The letter states only that, “studies indicate the project would deliver benefits” without identifying the studies1.
The most accurate sentence of the nine sentences warns readers that the open houses will contain, “no formal presentation.”
At open houses, public relations employees with little or no training in related fields, escort visitors individually to maps and then to comment cards. No written materials pertaining to need, review process or alternatives are on display. Though cost and energy planning impacts affect millions of Midwest electric customers, this open house, narrow-cast, restricted information technique is repeated to even fewer property owners as potential transmission routes are narrowed.
For the proposed, Cardinal Hickory Creek 345 kV expansion line, local governments did not take this information withholding technique sitting down. More than 30 Southwestern Wisconsin municipalities and two counties adopted formal resolutions asking for traditional cost-benefit analysis before the application is submitted2. Sadly, state laws does not require transmission builders to acknowledge information requests and they didn’t utter a word. Four municipalities invited the transmission builders to answer questions at a jointly held town board meeting. All three builders turned down the invitation stating, “We simply do not have the resources to accommodate that scenario...any presentation would be duplicative of the information on our project website and what was shared at our open houses.” 3
So why does the Public Service Commission of Wisconsin (PSC) refer to this stage of the public review process as the “Public Information” phase?
The crucial application the transmission builders must submit to the PSC at the end of this stage has one, principle goal: to demonstrate that the transmission line is in the best interests of the public. By withholding fully accountable, written information, the public is unable to consider its interests and make detailed, informed comments that, legally, the applicants would have to incorporate into the application. In truth, excess of discretion in laws directing the PSC and applicants has allowed transmission builders to turn the “Public Information” stage into a theatrical distraction. The result is the public is unable to affect the key document accounting for their interests.
Having announced the application will be submitted this month, the three transmission builders have scrambled and written two letters4 to the editors of community newspapers promoting five, false impressions. Below are quoted applicants’ statements, in red, organized by theme followed by corrections and missing information of greater interest to the public.
Sought impression 1
Transmission builders more than sufficiently demonstrate need for expansion transmission lines proposals by conducting comprehensive cost-benefit analysis.
Quotes
- The need for CHC “was identified through a regional planning process...”
- “The WI PSC requires utilities to submit significant data and studies including a cost-benefit analysis for the new transmission line projects.”
- “In the distant future, Energy Efficiency and local generation may alter the energy system but the region's utilities have a responsibility to ensure the system serves energy demands today and well into the future.”
- “Energy Efficiency... does not deliver the same benefits” as high voltage transmission expansion.
The referenced Midwest Expansion Transmission Planning (MTEP)5 is conducted by regional utilities under the auspices of MISO, a non-governmental organization whose primary duties involve scheduling power deliveries in the electricity market. A read through of MTEP materials reveals the exercises examine no other ratepayer spending paths other than buying more transmission lines. Theses utility-funded capital spending documents are not reviewed externally. They are internally “approved”6 by a majority vote of companies that would profit from the spending they propose7. Using these documents to justify public need is comparable to the Wisconsin Road Builders Association doing “planning” for the Wisconsin Department of Transportation.
The applicants offer no description of the cost-benefit analysis they conduct in part because it falls very short of the traditional, comprehensive analysis requested in more than 100 municipal government and 11 county resolutions since 20118. These public interests ask the applicants to show electric customers the benefits they would receive if the 40 year total cost for financing, building, operating maintaining and securitizing a new transmission line was spent, Instead, on energy efficiency, load management and development of local power.9 To date, all transmission builders in MISO have not risked comparing benefits arising from the same dollars flowing exclusively to their competition in “No Wire Alternatives (NWA’s)”. All of the “benefits” transmission builders have posed to date assume multiple expansion transmission lines will be built and, in no way, explore the alternative spending path alone.
More than 10 expansion transmission lines have been rejected by state public service commissions after the cost-benefit analysis of No Wire Alternatives was conducted. By this concrete measure, Energy Efficiency has greater relevance today than transmission expansion.10
In these PSC decisions, energy efficiency, load management and local power proved to meet all of the benefits applicants posed for expansion transmission lines like Cardinal Hickory Creek. By steadily reducing use of grid supplied power over time, energy efficiency, load management and local power reduce system congestion making power flow less costly, they increase system reliability by directly lowering peak demand and they dramatically reduce CO2 emissions by lowering dependency on regionally transported power that averaged 73% fossil fuel generation and 8% wind generation in 201611.
When Wisconsin lawmakers stopped requiring comprehensive cost-benefit analysis in 1998, it did not take long for transmission builders to develop seven expansion transmission lines in our state.12 In 2017, our state grid ranked #7 in the US in power grid reliability based on minutes of power outages per year.13 To date, none of these expenditures have been tested for cost-effectiveness while our Focus on Energy efficiency program has audited and shown to be highly cost effective year after year after year.
Sought impression 2:
The use of electricity in Wisconsin may not be growing but it is likely to grow in the future and CHC is needed to accommodate this eventual growth.
Quote
- “The assertion that electricity usage is declining is not true. While the rate of growth has slowed the Public Service Commission of Wisconsin and Energy Information Administration are predicting modest growth for the foreseeable future.”
The applicants attribute the Public Service Commission of Wisconsin with making independent energy predictions; it does not. The PSC’s most recent Strategic Energy Assessment for 2016-2022 only publishes the projections of Wisconsin “electricity providers14” including growth projections made by ATC and by utilities that own ATC. Novice energy researchers know the that EIA does not produce planning documents with forecasts for individual states.
Basing future predictions on ten years of prior use is common utility practice. This historical use data from 2006-2016 suggests that WI electricity use going forward will remain essentially unchanged or slightly decline15.
The historical peak use from WI 2005-2015 suggests need for transmission improvements will decline at the rate of about .4% per year16 and not grow as the applicants contend.
Comparing the steady decline in demand determined by historical use to the steady growth predictions made by ATC and state utilities, 17 shows that utilities are predicting a greater than 30% difference in demand by 2028. If transmission builders require this much growth to justify hefty capital spending, modest spending to control growth is even easier to justify.
The applicants cite no existing reliability or "lights out" issues. Ones they pose for the future are in other states for the most part18. and are fully dependent on much faster growth than the applicants are currently projecting19. Of course, no parties know what the future actually holds but when all possibilities are considered, odds favor electric reliability remaining strong in Wisconsin for many years.
Sought impression 3:
CHC is needed to supply adequate power as coal power plants retire, the power of which will be replaced by remotely located wind power.
Quotes
- “...old generation sources are being retired while news sources take their place.”
- ’Recently more than 1,200 megawatts of generating capacity was removed from service in Iowa.”
- “...in Wisconsin since November, utilities have announced plans to remove more than 1,200 megawatts of coal generated electricity production from the grid.”
- “...wind energy is a growing source of replacement power as developers build wind farms and expand generation capacity by thousands of megawatts.
Wisconsin utilities are required to report possible power plant retirements and additions to the Public Service Commission. Consistent with PSC reporting, transmission builders do not state there will be insufficient electricity available or that Cardinal Hickory Creek would have any role if a shortage were to ever occur.
WI utilities report they want to add 200-700 MW of new generation from 2016-2022 and retire 520 MW of generation by 202020. The amount of extra power or, “reserves” is projected to remain above 13% through 2022. Generation retirements in other states or “from the grid” as loosely argued transmission builders are not an obligation of electric customers of Wisconsin.
The PSC summarizes, “ Essentially, Wisconsin currently has surplus capacity... [the] result of a strong generation construction program beginning in the late 1990s, effective energy efficiency and conservation programs, and moderate demand growth... Wisconsin is forecasted to maintain an adequate and reliable electric supply.”21
All the applicants have to do to factually establish that consumption of remote wind power in Wisconsin would increase as a result of building CHC, is to cite utilities’ interests in purchasing more of this power. They do not provide this simple evidence nor could they for the Badger-Coulee proposal and the six expansion lines added to the state before Badger-Coulee.
Through the vast web of existing lines including dozens22 of high voltage expansion lines added in the Midwest over the last 10 years, wind power flows, ubiquitously, to all destinations. By utility-defined policies, all added transmission lines must be “open access” and serve all types of generation. As energy use has flattened, Wisconsin utilities are minimally using power flowing into the state. 23 Increasing our dependency on out of state wholesale power for environmental reasons is extraordinarily inefficient. In 2016, the Midwest grid averaged 73% fossil fuel generation and 8% power from wind24 --a small amount that has crept up only few percent after many billions invested in expansion lines since 2005.”25
Sought impression 4:
Transmission expansion would be a bargain due to regional cost-sharing and is “expected” to save money.
Quotes
- “Cost of for the project will be shared by consumers across the multi-state region not just those in Wisconsin. Wisconsin Electric customers will pay for 10 to 15% of the total cost however the economic benefits of the line are expected to outweigh project costs. MISO’s most recent review of the MVPs including Cardinal Hickory Creek reaffirmed that the benefits exceed the cost by improving access to lower-cost generation and reducing congestion on the system .
- “To expand access to lower-cost power.”
- Everything from economics to a desire for cost competitive clean energy are changing the energy mix.
- “[CHC] has not and is not being proposed as a one-dimensional project it is being proposed to improve electric reliability access the lower-cost power and access to renewable energy resources that are increasingly cost-competitive.”
Those questioning Cardinal Hickory Creek point out the high, long-term costs, the non-guaranteed benefits, the whole validity of transmission expansion spending path and observe that utilities have yet to go on record asserting that accessing wind power can lower electricity rates.
No bargain exists in the cited cost-sharing percentages as electric customers additionally assume percentage of costs for many other expansion lines built from Louisiana to Manitoba, Canada26.
Lets look only at the costs for the 17, Multi ValueProject or “MVP” lines of which Cardinal Hickory Creek is one. Partial costs for 5 “MVP” lines already in-service are currently estimated to average about $134 Million per year for Wisconsin utilities/electric customers over the next 20 years.27 Note that 20 years is only part of the typical 25-40 year amortization period over which costs are paid by customers.
Based on these estimates, if the 17 lines go into service, Wisconsin electric customers would pay about $620 Million per year in shared-costs over the next 20 years, or more than $9 billion. Over 40 years, the “10-20%” bargain the applicants are touting just for MVP lines like Cardinal Hickory Creek would likely exceed, $12 billion,and these costs are partial28.
Though repeatedly asked in municipal resolutions, transmission builders will not reveal more than the construction period costs in the publicity. Other costs include long-term financing, operation, maintenance and securitization costs over the 40 years required for electric customers to pay down the high interest loans.
Addressing a larger portion of the transmission expansion projects added since 2005, Wisconsin electric customers have been spending an average of $428 million a year.29 This amount is still smaller than electric bills in Iowa estimate at 19% of the average residential electric bill which company observes are expected to increase.30
A good way to appreciate the lost value from directing $428 million per year towards transmission is to compare it to the $60 million annually set aside for Focus on Energy efficiency rebates. These rebate dollars guarantee energy savings, lower peak demand, allow more efficient homes farms and businesses to be built or remodeled, help offset the cost of on-site solar about 10% and reduce CO2 emissions at a fastest pace per dollar.
Since 1998, instead of ceasing evaluation of non transmission alternatives, had Wisconsin legislators allowed an additional $60 million to be channeled into a larger energy efficiency rebates pool every year, these benefits would have materialized: 31
In contrast to these audited and guaranteed benefits, transmission builders are offering only potential benefits with their assets protected from losses. Imagine a bank forgiving you a loan when you can’t make payments. These are the terms the transmission line owners/operators are granted with electric customers paying back their high interest loans and other costs. Because of electricity market rules created by FERC in collaboration with utilities, no transmission builder can put into writing guaranteed savings for customers, guaranteed CO2 emission reductions over time or guaranteed fewer power outages. Thus CHC applicants state that, ”economic benefits of the line are expected to outweigh project costs.” Without learning what these “project costs” include, there are clear indications that customers are already coming out on the short end-- and before payments for Badger-Coulee and many other “approved” expansion transmission have been added to our bills.
By 2014, the Pubic Service Commission was acknowledging that “expected” net savings above costs were not materializing. Explaining our rapidly increasing rates and fees, the agency observed that Wisconsin had, “entered a construction cycle with significant investment in electric generation and transmission facilities... and utilities are now recovering associated construction costs in [higher] rates.32”
An examination of US Energy Information Agency (EIA) data shows that from 1998 when the Wisconsin legislature stopped requiring comprehensive cost-benefit analysis, Wisconsin rates rose from 13% below the national average to 12% above. Starting in 2005 when long term costs for the first of seven expansion transmission lines were added to electric bills, household electricity rates have been climbing at a record pace of 3.5% per year.
The steady climb cannot be blamed on inflation or unexpected cost increases because the price utilities pay for electricity, the wholesale cost, was dropping 50% while rates and fees soared. 33 That “expected” savings are not arriving can be seen when the $428 million per year in partial, new transmission expansion costs are superimposed with rates34.
Sought impression 5:
That CO2 reduction depends on "increasing access" to remote renewable energy and this will be cheaper as
well.
Quotes
- Expansion transmission lines like Cardinal Hickory Creek, “expand access to lower-cost power.”
- Cardinal Hickory Creek “will access the lower-cost power and access to renewable energy resources that are increasingly cost-competitive.”
- “Everything from economics to a desire for cost competitive clean energy is changing the energy mix.”
Promoters of the wind industry have suggested that adding wind power to the grid automatically lowers the cost of electricity. In their letters to community papers, Cardinal Hickory Creek applicants carefully phrase that expansion lines “increase access to lower-cost power.... and [to] renewable energy resources that are increasingly cost-competitive.”
The “lower-cost power” cited by transmission builders is from natural gas and coal generation which determines market price a very high percentage of the time35. There are short-lived circumstances when wind forces wholesale prices momentarily down, but there is no evidence that increasing access to renewable generation causes the cost of electricity to drop36. On the contrary, on-site and community solar do lower household electricity costs with savings coming from avoided rate increases and lower charges for peak use over time.
Should remote renewable resources become “cost-competitive,” the slim savings would be saddled with many costs other than high voltage transmission. Upgrading the local lines for the 98 MW Quilt Block wind farm in Lafayette County cost ratepayers $18.6 million.37
As this concise assessment of factors reminds us,38 its important to remember that the over-arching environmental goal is not adding remote wind farms and utility-scale infrastructure, but reducing CO2 emissions as quickly as we can over time. To be operating some day with 100% renewable energy as more people and cities are imagining will cost many times less if we are operating with 50% less power. What we refer to as, “energy” in the totality of making and using power is a actually greater part waste and heat (65%) than “energy” (35%)39. Experts suggest that another half of the 35-40% that makes it to our outlets is wasted there40.
Our largest energy need is for greater efficiency at both ends-- generation and end use. The electricity itself, is not expensive; the cost of the electrical system is. Wholesale power cost only makes up about $30 of an average $110 per month electric bill while the system costs to pay for existing transmission lines and power plants make up about $45-$6041. When half the cost of a critical commodity goes to paying off past debt, success will clearly come faster whittling away at the source of the debt rather than adding to it.
It is penny-wise and dollar/CO2 pound foolish to shave tiny amounts from wholesale costs which are the potential “energy savings” transmission builders speak of.42” We need a whole system that works better, not an expanded system to potentially deliver a tiny bit less fossil fuel generation in the “mix.43” As the transmission builders observe, everything from economics to customers’ desires are changing. With accurate information in hand most customers are concluding now is the time to start making the “size” adjustment in the right direction.
NOTES
STOP CHC
Harnessing Our Local
Energy Futures
Session I
Meeting Our Priorities with Household and Local Solutions
Session II
Shortfalls in Transmission Review Process and Busting Utility Myths
Session III
Confronting the Harmful Land and Economic Impacts of Transmission Expansion
Evening Speakers
Pat Raimer
Trustee, Village of Montfort, WI
Keryn Newman
StopPATH WV, Shepherdstown, WV
Participation, Politics, and Public Opinion
Dave Clutter
Driftless Area Land Conservancy, Dodgeville, WI
Protecting the Natural Habitats and Local Economies of the Driftless Area from Unnecessary Transmission Expansion
Bill Powers
Powers Engineering, San Diego, CA
Local-Based Energy Futures and the Obstacle of Transmission Expansion
The grid to nowhere
An argument against building giant transmission lines
BY MICHAEL LENEHAN
MARCH 1, 2018
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