Unless Skelly is proposing that rates are negotiated without the specter of tax credits, and then the value of the tax credit is subtracted from the agreed upon rate. That value doesn't change because of tax credits. It's the highest cost a merchant can negotiate that is also attractive to the customer, a mutual agreement of the value of the project to the customer. A fair rate for merchant transmission service is set by market. The rate charged for a merchant project is negotiated between the customer and the transmission owner, not set by regulators. An ITC will help reduce the cost of the transmission service, and therefore more lines would get built, and more renewable energy projects will follow. These are typically built outside the conventional planning process, and their economics rely on generators paying the developers of merchant lines to deliver their power across long distances to get to market. The other type of transmission lines that get built are called “merchant” lines. Perhaps Skelly should ask someone who is an expert on these things before making crap up? I was going to write a tutorial here, but then I figure why bother? You don't care about the mechanics and I don't work for Michael Skelly.Įven worse is Skelly's take on merchant transmission rates: Utility ratemaking and taxes are complicated things. Tax credits are completely separate things. The cost of the transmission project is the cost of the transmission project, sans tax credits. It cannot be fed into the RTO project cost estimate BEFORE is is planned. The tax credit comes AFTER a project is put in service and is not guaranteed. So, in other words, Skelly thinks that receiving a tax credit for 30% of the project's cost would lower the cost of the project at the regional planning level. However, in the ensuing years, both utilities and independent developers have been sorting through the nettlesome siting, permitting, cost allocation and grid connection challenges. you folks are just so nettlesome!Ī decade ago, we as a country did not have such a fantastic opportunity set in front of us. Western Spirit? You mean some other company did it better than Skelly? That's also not success. The project got chopped up and a portion bought up for an entirely different purpose. And furthermore, there is no developer who is "carrying forward" the Plains & Eastern Clean Line. One condition was that the project had to have customers. DOE never issued a "permit." It issued a participation agreement based on certain conditions. The project (and the non-permit "permit") were cancelled. Except there were no customers and the government cancelled its participation in the project, so there wasn't actually a permit after all. He says he "successfully permitted a three-state" transmission line. Who's going to give this guy another $200M to spend on crackpot transmission ideas?įunny he doesn't mention his failure in his comments. Michael Skelly's reputation will precede him. The avoidance of taxes is the only intellectual pursuit that carries any reward.What's an "early stage transmission development company?" Is that what happens when you register a corporate name in Delaware, throw up a one-page website announcing you are "Coming Soon!", but you don't have any employees or funding, just another grandiose brain fart? How soon is too soon to once again begin tilting at windmills after being kicked squarely in the mouth by spectacular, flaming failure? (right click on the highlighted title) (a left click will get you nowhere) Thanks to Paul for many of the clever cartoons and photos I use here on Pappy's Place. I found a great new political commentary written by Louis la Vache, aka Paul Cruce, entitled Right Turns Only. I intend to avoid those with law degrees in favor of those who have been in some kind of business that provides a service or produces a product. I intend to vote for candidates who have never spent one day in the U. They should be able to see now the money is wasted. I know Oil Producers and others, who depend on government regulators and politicians for permits and exemptions, donate heavily to those who might be elected. I think the cartoonist has captured the moment with great clarity.īritish Petroleum, aka B.P., gave a million bucks to the Obama campaign according to some reports. I almost threw up when I heard the President end his endless nothing of a speech about the oil spill with the story of little Malia.
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