SB 221 Passes Ohio Senate

The legislation was passed today unanimously (32-0) and will now move to the Ohio House.

An incredibly telling article was in this morning’s Plain Dealer <see story>. Despite the Governor’s energy bill primed for passage in the Ohio Senate, FirstEnergy has not backed off their go to market rhetoric. Having moved their generation fleet to an independent holding company, FirstEnergy claims its Ohio utilities can no longer be subjected to regulated prices.

As mentioned previously, expect a full out lobbying blitz on FirstEnergy’s part when the new energy legislation moves to the Ohio House. Stay tuned.

Strickland’s energy bill just got passed unanimously by the Ohio Senate. By most accounts, the amendments made improved the bill a great deal. Those who have a stake in Ohio’s electricity future should be pleased.

That said, the bill now moves to Ohio’s House. It is the opinion of many that passage in the house will be far more contentious and will likely be far more favorable to the interests of utilities. Please speak to your Representative about how important this issue is to you.

Strickland’s energy bill was passed unanimously by the Ohio Senate Energy Committee (see story). By most accounts, the amendments made improved the bill a great deal. Those who have a stake in Ohio’s electricity future should be pleased.

That said, assuming approval by the full Senate, the bill will move to Ohio’s House. It is the opinion of many that passage in the house will be far more contentious and will likely be far more favorable to the interests of utilities. Please speak to your Representative about how important this issue is to you.

Columbus –The architects of Gov. Ted Strickland’s comprehensive energy bill claimed Tuesday that utilities are trying to “gut” the legislation.

Mark Shanahan, Strickland’s top energy advisor, told the Ohio Senate’s Energy and Public Utilities Committee that amendments offered by utility companies would limit the ability of state regulators “to protect consumers against unjust and unreasonable rates.”

Listen to the governor describe his energy reforms

Read his speech announcing the plan

Review the entire legislation

The bill is designed to re-work Ohio’s electric deregulation laws and block the utilities from escaping state regulation in 2009 when the current rate caps expire. At that time, utilities would be able to base retail prices on volatile wholesale bulk power markets. That kind of system in other states has caused customers’ rates to spike by up to 70 percent.

The governor’s proposal would keep rate regulation in place unless utilities could prove to regulators that a robust competitive wholesale market for electricity existed in the region.

The Senate committee is in its third week of hearings on the legislation, and the outcome expected by the end of the year will determine monthly electric bills for years to come.

Shanahan said the revisions would “make sure that utilities have all of the ability to choose when and under what conditions they go to market.”

The changes would require that state utility regulators consider factors such as the value of power plants, the cost of comparable plants and the expected cost of purchased power when calculating new electric rates.

PDAlan Schriber, PUCO chairman

Alan Schriber, chairman of the Public Utilities Commission of Ohio, told lawmakers that most of the suggestions from Big Power were self-serving.

“Their criteria for competitive markets are basically weak,” Schriber said. “They are items they would be able to fulfill rather easily.”

He told lawmakers that the “logical place to begin” negotiating new rates with utility companies would be the rates that were negotiated under the rate plans set to expire next year.

Schriber’s and Shanahan’s appearances before the committee came less than 30 hours after the utilities unveiled a volley of amendments.

The major utility amendments would replace about 60 lines in the heart of the Strickland bill, which would give the PUCO broad, unspecified authority to determine whether a utility could go to market or remain under commission-determined rates.

“We believe the legislation proposed by the governor is unfair, unclear and unconstitutional on its face,” First Energy Chief Executive Anthony Alexander said in an interview Tuesday. “You can’t live with a scenario in which any regulatory body with economic regulatory authority could exercise that authority without any standards whatsoever.”

The utilities’rewrite of the legislation would require each company to submit a three-year rate proposal to the PUCO and then negotiate a final rate. That’s the process the commission used in 2005 to stop utilities’ from setting rates based on market prices.

What’s different in this proposal is that if the utilities don’t agree with what the PUCO determines are fair rates, they can hold competitive bidding. The results of that process would be used to determine rates if at least four companies bid and the competition led to bids for more than anticipated demand.

“It’s not unusual language. We tried to keep it as close to things that they proposed,” Alexander said. “The only real difference is that if you can’t agree on a price — and everybody is hoping this process can agree on a fair price. But if you can’t, then you have a mechanism with objective criteria that says OK if you meet these criteria. Then the competitive marketplace will in fact set the price.”

Geagua County Transmission Line Project supported by MICA

FirstEnergy has proposed a transmission line project that Brakey Consulting and the MICA group are in full support of. We hope, after reading the following, customers affected by this issue will contact their government representatives in support of the proposed “Stacey” transmission project.

The following is an excerpt of Bob Bohland’s summary of our past June MICA meeting. This excerpt pertains specifically to power quality issues being experienced by FirstEnergy customers in Geagua County.

BACKGROUND ON POWER QUALITY PROBLEMS IN MIDDLEFIELD

Historically; residential, industrial, and commercial customers of the Illuminating Company (the successor to the Cleveland Electric Illuminating Company-CEI) in the Middlefield, Burton and Newbury areas have been affected by general outages and poor electric power quality. Capacity of feeder lines was suspect; voltage regulation was very poor with unexplained voltage drops and fluctuations; and service reliability was terrible with frequent outages. Local investigation in the early 1990’s showed that these problems were usually systemic failures under the control of the supplying utility, CEI.

To obtain relief from these conditions and to create a better working relationship with CEI management many of the local industrial businesses formed the Middlefield Industrial Group. After deregulation in 2001, some of these manufacturing companies were reclassified under commercial tariffs. This resulted in a new organization known today as Middlefield Industrial and Commercial Association (MICA).

As a result of the MICA group’s improved working relationship with FirstEnergy and the Illuminating Company, power quality issues began to be improved. A new, 138 KV line called the Rachel Project, was contemplated several years ago to increase capacity. An application for approval of the new line was made to the Public Utilities Commission of Ohio (PUCO). This plan met with considerable resistance from local homeowners over whose lands the line would pass. Rachel was ultimately approved to be built by the PUCO sitting board.

With the acquisition of CEI by Ohio Edison, other less expensive means of correcting quality problems was begun. This included installing capacitor banks, adding voltage regulators and implementing improved line maintenance and tree trimming. Ohio Edison was highly successful in these efforts. Enough improvement was gained that capacity, which had been suspect, no longer presented a problem for the foreseeable future. It was determined that the Rachel Project transmission line construction was no longer needed and that proposal was eventually cancelled.

As a means of keeping abreast of these improvements and their effect on the local area, periodic meetings between MICA and FE/CEI were begun and have continued to be held. At the start, some skepticism may have been evidenced by some CEI/IC customers. As system improvements began to be made and power quality and reliability increased, support for CEI/IC’s efforts rose. The last such MICA/CEI/IC meeting was held on November 2, 2005

FIRSTENERGY 138 KV TRANSMISSION SUPPLY LINE SYSTEM PROPOSAL

Power quality, particularly reliability, has continued to fluctuate in the Middlefield area. In addition, demand for power in this area continues to increase beyond earlier predictions. This has led to FE/IC’s reprising a new transmission link, similar to the old Rachel Project. This new proposal may be called the “Stacy Project”.

At a June 15 meeting in Middlefield, John Flood opened the discussion for FirstEnergy and presented most of the information. He distributed a small brochure which contained the following documents (including a Table of Contents):

* Geauga County 138 KV Transmission Line Supply Project Summary.

* Ohio Power Siting Board Application Process.

* Geauga County 138 KV Transmission Line Supply Project Clearing and Construction Activities.

* Geauga County138 KV Transmission Line Supply Project Substation Property and Transmission Line Right-Of-Way.

* Geauga County 138 KV Transmission Line Supply Project Transmission Line Route Selection.

* Geauga County Elected Officials’ Address List.

* Sample Form Letter.

A map showing the location of the new transmission line was also provided. The new proposed 138 KV transmission line, tentatively called the “Stacy Project”, shows one route and a possible alternative, one of which will provide additional power into the Middlefield area, affecting the R-19, 20, 21 and 22 Mayfield circuits and the R-18 Sanborn circuit supplying the area.

The Middlefield system consists of five main 33KV lines; the R-19, 20, 21 and 22 Mayfield circuits and the R-18 Sanborn circuit. From the last meeting, we learned that an outage of one circuit can usually be temporarily corrected by redistributing the load over the other applicable lines, while maintaining voltage regulation within plus or minus 5 %. However, the system is not robust enough to withstand an outage of two 33 KV circuits at the same time. Everything that happens “up-stream” from these areas affects the Middlefield area’s quality and reliability. In the past, most of the problems existed with the very long R-19 and R-22 lines.

Mr. Flood’s presentation concentrated on the construction of the new 138 KV transmission line. He did not, nor was he expected to provide, a summary of the mechanical improvements that have been made since the last MICA/IC meeting. He, did however, assure his listeners that all (or most) of the improvements discussed at the last FE/MICA meeting have been successfully implemented. Obviously, FE/IC deserves credit for the improvements they have made, their plans to address the future power demands of the Middlefield/Burton/Newbury area and their plans to take care of their customer’s needs.

Mr. Flood has promised to respond in writing to any unanswered questions regarding those action items brought forward from the last meeting listed below. This might also include information showing the current comparison between available power supply into the area and the demand developed by the area. In the past, graphs were provided showing how the future demand and capacity for electricity in the Middlefield area compared.

• Helicopter aerial patrols – scheduled bi-annually after 2006.
• Detailed foot patrols – scheduled bi-annually after 2006.
• Monthly driving patrols.
• Additional faulted circuit indicators installed on Mayfield 36kV circuits.
• Annual Thermoscans on Mayfield lines after 2006.
• Installation of 36kV SCADA controlled line sectionalizers on Mayfield circuits to shorten effective length of the circuits and improve restoration efforts.
• Additional patrols as needed throughout the year to identify causes and take corrective actions, based on system events or circuit trippings.
• Installation of additional voltage line regulators by May 2006.

• Installation of additional SCADA controlled sectionalizers on the Mayfield circuits.
• Overall rebuild and rehabilitation for R-21 and R-22 Mayfield circuits scheduled to commence in 2008.
• Review R-19 and R-20 Mayfield for future rebuild in 2007.
• Exploration of new supply options for the general area to plan for future load growth.
• Tree trimming on a four-year cycle.

At the previous meeting, high wind storms, snow storms and falling limbs and trees along with switching problems and procedures were said to be the cause of most of the quality problems. Added to these were a large number of mechanical failures where line splices failed for no apparent reason. Poor communications also added to the severity of the problems.

Infrared sensing has been used to attempt to find “hot” spots on the lines, especially at splices. However, some splices seem to have failed without generating “hot” spots. An investigation was to have determined if a manufacturing defect in the splices may have been responsible. In any event, many splices have been “jumpered” out with crimped connections. The two other circuits, lines R-20 and R-21, seem to have fewer problems.

During past years, capacitor banks were installed to provide backup power and to correct poor power factor. Five motor operators were provided for remote switching of circuits. Remote switching allows for improved diagnostics and quicker correction of circuit faults. Sectionalizers open and lock-out circuits. These prevent the substations from opening, thus preserving greater portions of the line. Improved voltage regulation is planned by putting a new regulator on the end of line R-22, closer to load. By the end of 2005, the sectionalization will be improved. Upgrade work is in progress on the R-18 line out of the Sanborne substation

As indicated above, improved maintenance was planned. Main feeders will be inspected every two months (ongoing) to prevent pole fires and replace cracked insulators. Additional improvements were also planned for the 4800 volt, 4 KV, and 13 KV lines. State-of-the-art sectionalizers and regulators are planned for the 33 KV lines.

Construction of a new 138 KV transmission line is not without its challenges. The objection of some land owners to the new Stacy Project is the same as it was for the Rachel project. To that end, FE is soliciting assistance from those industrial companies that will be helped by the new transmission line. FE is asking that company officials write state and local elected Geauga County officials to urge support for the new transmission line. A list of those officials, their names and addresses and a copy of a typical form letter were provided. The line is fully funded. The proposed completion date is 2010 depending upon how easily right-of-way problems are overcome.