“The Magnitude of the Rate Increase Is Staggering”

In June 2007, Robert Driscoll, CEO of Mirant Mid-Atlantic, operator of several coal-fired power plants in Maryland, wrote a letter to PJM Interconnection criticizing every aspect of PJM’s planning for PATH.  The entire letter is very interesting to read.  Here is the link.

It is very interesting to see what Mr. Driscoll had to say about the impact of the cost of PATH (referred to in the letter as the “A-K project, because PATH goes from Amos power plant to Kemptown, MD) on electric rates in the PJM region, which includes WV.  Here is what he says in item 2 of a list of PATH’s problems:

2. The A-K Project will impose unreasonable costs on PJM transmission customers without resultant savings in generation costs. The A-K Project is estimated to cost $1.8B. Whether a project of this magnitude can be built to budget is doubtful, but even if the project stays within its budget, the magnitude of the rate increase is staggering. Assuming that AEP requests the same carrying charge that APS requested for the 502 Junction – Loudon project[TrAIL], the annual revenue requirement for the A-K Project is approximately $378 million. The total revenue requirement for all transmission owners in PJM is approximately $1.664 billion. Thus, the A-K Project will cause transmission rates to increase approximately 22 percent on average. In addition, because FERC has held that PJM must socialize the costs of RTEP projects greater than 500 kV to all zones, some transmission customers will see rate increases significantly higher than 22 percent due to the A-K Project. A rate increase of this magnitude is not consistent with PJM Manual 14B which provides that RTEP will avoid the imposition of any unreasonable costs on transmission customers (page 54).
Furthermore, assuming that the A-K Project is designed to move generation from the west to east, it is simply not cost-effective to build this line when there is no evidence to the contrary that generation can still be built in the east without the need for a $1.8 billion project to move the power to market. For example, for the same $378 million annual payment, approximately 1,500 MW of clean, state-of-the-art gas-fired combined cycle power plants could be constructed near load in the east. That amount is nearly twice the capacity proposed for retirement in the PEPCO zone and approximately 10% of the capacity currently in the queue for the Mid-Atlantic region.2

The A-K proposal is not a prudent use of capital. (emphasis mine)

This is not some environmentalist NIMBY.  This is the CEO of a company that runs coal fired power plants.  Need any more reasons to oppose PATH?  Click on the link above and read the whole letter.