By The River

U.S. Rep. Tim Holden, D-Schuylkill, who is my congressman, and U.S. Rep. Todd Platts, R-York, who represents a district on the other side of the Susquehanna River, both voted against the Obama Administration's climate/energy bill that passed the House narrowly on Friday.

With Platts, what can you do? Only eight Republicans were willing to buck the tight GOP party discipline and vote in favor of the first serious U.S. effort to stop global warming. That party is firmly controlled by the energy industry and the global warming deniers.

But Holden was a disappointment. I've searched for any statement by him defending his vote, but haven't been able to find one. I imagine he voted against the bill in a misguided effort to save anthracite coal mining jobs in his district. If mining jobs make up more than 1 percent of the total jobs in his district, I'd be surprised, but you can never rule out an attack of "magical thinking" up there about reviving the anthracite coal industry.

Holden knows he can go against the wishes of liberal Democrats like me because we know that if he is replaced by a Republican, it will be some Bible-thumper who wants to cut taxes for the wealthy. But Holden should also consider what votes like this will do to his efforts in the future to get help from the Obama Administration on any number of other issues.

But at least it passed, and now it goes on to the Senate. U.S. Sen. Arlen Specter had better beware about voting against this bill. His likely Democratic primary challenger next year, Rep. Joe Sestak, was among the Pennsylvania Democrats who voted in favor of the global warming bill. Specter's poll numbers still show him leading Sestak, but with a large number of undecideds. Specter can't take Democratic votes for granted.

Posted by David at 10:46 AM | Permalink | Comments (0) | TrackBacks (0)

I'm spending Thanksgiving weekend with my parents in Holland, Michigan. One of the problems I always deal with at this time of year is what to get two 81-year-olds for Christmas.

This year I had an inspiration. I offered to replace all the traditional incandescent lightbulbs in their house with energy-saving compact fluorescent bulbs. I did the same in our own house in Harrisburg, Pa., and the savings on my electric bill were noticeable and immediate. I'm probably saving 10 percent on my bill. With CFL's you get the same light for less electricity .

My parents liked the idea, so I jumped in the car and headed for Menard's, a regional home improvement store, and Home Depot. Turns out Menard's had the better prices and selection.

Before I left, I inventoried the bulbs in the house. I counted 30, but it turned out I missed a couple. I needed eleven 100-watt equivalent CFL's, nine 60's, four 3-way bulbs that went up to 150 watts, and five candelabra bulbs for a
light fixture in the dining rooms. Check these carefully to determine their wattage and what type base they have. You don't want to replace five 25's with five 40s and have the room lit up like a prison yard. I assumed they had
the pencil eraser size candelabra base, but instead they had the 'Edison' base like on a regular lightbulb.

I paid $82 for the bulbs. I didn't get the candelabras because I wasn't sure if my mother would like their shape. I'll keep looking for those.

The only problem we had was that three of the light fixtures were too small for the slightly larger CFL bulbs. The tiny overhead light in the library was slightly too small for even one of the new mini-100's I found at Menards. I thought I had it, then heard an ominous cracking sound. I removed the broken bulb and out the incandescent back in. Two of the three-ways were simply too large to fit in old lamps. I had to put the old bulbs back I those, too. But in 27 of the light fixtures, the new bulbs worked fine.

One note: when you go to a store like Menard's, you will see both 'daylight' and 'soft' CFL bulbs. Get the soft. The light the produce is most like the light from incandescent bulbs. Also, tell your parents that CFL bulbs can take as long as a minute to come to full brightness, although it is typically much less.

You'll feel quite satisfied when you're done, having helped your parents save money and spared the Earth some greenhouse gases. And Santa will know you've been a good boy.

Posted by David at 12:13 PM | Permalink | Comments (0) | TrackBacks (0)

There was a fascinating story in the New York Times the other day about corruption and potential corruption in the wind turbine industry in upstate New York. It seems the players in the wind industry have figured out they can use payoffs to further their corporate goals and overcome local opposition to the erection of giant wind turbines.

The payoffs could be as blatant as a municipal official being told to look on the back seat of the car, where two company logo polo shirts and an envelope stuffed with cash were waiting for him. Or it could be the local elected official who has cut a wind turbine lease deal with an energy company who then votes to allow the turbines to go up elsewhere in the town as well.

If it's happening in New York, you can be sure it's happening in Pennsylvania.

In Pennsylvania, local government is, if anything, even more fragmented. Few rural townships have zoning ordinances, just about the only way a local government can put brakes on wind turbine development in Pennsylvania. With the Rendell Administration pushing wind development and no state siting regulations to determine whether a turbine is appropriate for a particular location, it falls to three-member township boards to make that decision.

While many local elected officials take their jobs seriously and aren't steamrollered by the wind companies, others are suckered by the promise of jobs (turbines create just a handful, and they often go to outsiders) or tax revenue (minimal, far less than a house of the same value). The real winners are the wind companies themselves and the local landowners who lease ground for the turbines.

How wind turbines can tear apart a community was something I wrote about for The Patriot-News in Harrisburg before I abruptly left that beat a year ago. Now Helen O'Neill of Associated Press has written a chilling story about how wind development in in a small New York community and how it has torn apart families. Another O'Neill, Eugene, would have loved this story. Elderly father controls the land and takes the wind money, leaving his bitter sons with wind turbines that are driving them mad with the soft whup, whup, whup of the blades and the shadow flicker they create.

There is an important place for wind energy, properly sited. But it mustn't be forced down the throats of small towns in the name of "energy independence" that the turbines won't do much to alleviate. Pennsylvania needs to make wind turbine siting a state-level process with tough rules that allow a community to just say no. And law enforcement needs to be alert for the possibility of corruption.

I think back to 1979 and a trial I covered for the Shamokin News-Item in U.S. District Court, Williamsport. Several former members of the Shamokin Area School Board were on trial for bribery and extortion, essentially for shaking down a Harrisburg architectural firm for kickbacks on the construction of Shamokin Area Elementary School.

The money wasn't left on the backseat of a car in this instance. Instead, a meeting in a local restaurant was arranged. Money was placed inside a menu and slid across the table to greedy, outstretched hands. Comical, almost. And different hands are still at the ready someplace in rural Pennsylvania where the wind industry wants to do business.

Posted by David at 07:17 AM | Permalink | Comments (0) | TrackBacks (0)

Imagine you are living a peaceful, rural life in beautiful Bedford County and a large Texas natural gas company arrives one day. They tell you to get off your land, and oh, here's a check. Would you be upset?

That's the situation faced by several land owners near Clearville, Pa., which is about 20 miles east of Bedford, Pa. Spectra Energy of Houston and its partner, New Jersey Resources, wants to seize land via eminent domain to create an underground storage facility for 17.7 billion cubic feet of gas. Among the customers would be the growing number of gas-fired power plants in the Northeast. This is known as the Steckman Ridge project, and work to build pipelines to the site is already underway. Spectra, the former Duke Energy Gas Transmission, plans to open the facility on April 1, 2009.

You, as a homeowner, might be upset both about the land grab--even with court-determined compensation, which may or may not be what you think the land is worth--and because you might be blocked from a royalty windfall if new natural gas deposits are discovered in the Marcellus Shale layer that is the subject of increasingly frenzied energy exploration in Pennsylvania.

This story was first reported last month by the Altoona Mirror, which has also provided links to key court and regulatory documents in the case. The Johnstown Tribune-Democrat also wrote a good story, as did the Bedford Gazette. The Gazette doesn't provide its stories online. I happened to pick up a copy when I stopped with my family at Ed's Steakhouse in Bedford on Saturday night returning from vacation in Michigan, which was how I first learned this was going on. This story hasn't gone statewide, in part because the state's larger newspapers are increasingly retreating into their core territories in the misguided belief that "readers" aren't interested in news outside their home municipalities.

Small town newspapers can report the heck out of stories like this, but as I learned covering the Centralia mine fire for the Shamokin News-Item from 1976-86, you remain a voice crying in the wilderness unless the big city newspapers, TV stations, and Associated Press pick up on your work and do their own reporting.

The affected land owners, who include a York couple, are fighting back. Some of them have retained a Pittsburgh lawyer, and they have succeeded in persuading the Federal Energy Regulatory Commission to at least consider a rehearing of its original approval of the project. Eminent domain papers have already been filed against them by Spectra Energy's local lawyer, Charles Rubendall of Harrisburg. There is an unseemly rush to all this that seems driven by Spectra Energy's self-imposed deadline of opening the facility next spring.

No one argues that the Northeast needs more natural gas, although it needs a massive effort to improve the energy efficiency of homes and commercial buildings even more. The question here is fairness to the landowners involved. Spectra Energy has the right under the Natural Gas Act to take their property, but the sad history of energy development in this country is that little people will get trampled by large corporations if someone isn't sticking up for their rights.

Posted by David at 06:38 AM | Permalink | Comments (0) | TrackBacks (0)

I received a call late today from Glen Thomas, the former aide to Gov. Tom Ridge and chairman of the Public Utility Commission. Thomas said I was incorrect in writing that he was the gatekeeper for the Ridge Papers in the Pennsylvania State Archives and that he had no control over access to them.

Ridge's archivist, Dr. Nicolette Parisi, told me about a year ago that I had to see Thomas if I wanted to view Ridge documents related to the birth of electric competition in 1996. I subsequently sent inquiries to Thomas but got no response. He says he never received them, but that it wouldn't have mattered anyway because he was not the gatekeeper.

Thomas is presently a consultant, and among his clients is the organization that represents power plants in Pennsylvania that aren't owned by one of the regulated utilities. He formerly was a lawyer for the firm of Blank, Rome, but denies he was a "utility lawyer." That's kind of a generic term for a lawyer who does specialized work relating to regulated or unregulated purveyors of electricity, gas, water, or telecom services, and it is a frequent career path for ex-PUC commissioners with law degrees. But if he wants to not be thought of as a utility lawyer, I'll grant the point. Thomas said he no longer practices law in any case.

In the end, the Ridge Papers are still locked away for about 25 years while being stored at public expense in the state archives, and we don't know what happened behind the scenes back then between Ridge and Enron's Ken Lay, and Texas Gov. George W. Bush.

Posted by David at 10:16 PM | Permalink | Comments (0) | TrackBacks (0)

Public Utility Commission member Tyrone Christy last week came closer than any other high-ranking state official to declaring electric competition to be a fraud.

In case you've forgotten, electric competition was born in the mid-1990s, fathered by several academic theorists (kind of like the three potential fathers in the new film "Mamma Mia!", but not nearly as funny) and midwifed by the corrupt Texas corporation Enron, especially in Pennsylvania. Ken Lay himself called on Gov. Tom Ridge in Harrisburg to press his case, and for a good measure had his friend George W. Bush, then governor of Texas, phone Ridge to tell him Enron was okay. Fishy? You be the judge. Ridge's papers on the birth of electric competition in Pennsylvania are stored at taxpayer expense in the State Archives, but are locked away at his demand for around 25 years (Gov. Casey's, by contrast, opened almost immediately). The state's new Open Records Act, another bad joke, specifically exempts records stored in the Archives.

Electric competition seemed like a good idea in 1996. Consumers in Pennsylvania were struggling under ever-rising electric rates in the 1990s. In many cases, these were due to the soaring cost of nuclear plants, especially Philadelphia Electric's Limerick plant. People of good intelligence believed that if only a free market for electricity could be created in place of regulated monopolies, power prices would fall dramatically. It made sense in Economics 101, but apparently not in the real world. In fact, prices have gone up sharply. The lowest estimate of what Pennsylvania's will pay after the end of rate caps in 2009 and 2010 is about 35 percent higher than they pay now. PPL Corp. told the SEC that its profits will rise about $850 million in 2010 after the rate cap expires.

Here is what Commissioner Christy had to say at the July 17 PUC meeting about the wholesale power market:

"The [PUC] is pushing Pennsylvania's economy into a competitive wholesale market that exists in name only," he said. "The reality is that the wholesale market consists of a series of artificial PJM [regional power pool] pricing mechanisms that produce the highest possible prices for power...The Commission needs to change direction and take steps to insulate Pennsylvania from this dysfunctional market as best we can."

Want some examples? Try to wrap your brain around the idea of "Locational Marginal Pricing." This sets the price of all wholesale power bid into the market at the price of the HIGHEST, not the lowest price bid. It's a great deal if you own a power plant, as the people who sit on the governing board and committees of PJM in Valley Forge tend to do. If you own a small, inefficient plant, you get a price that lets you survive. If you own a cheap, huge, coal-fired or nuclear plant, you reap a bonanza. It is supposed to encourage the building of more transmission capacity.

Or there's the infamous Reliability Pricing Mechanism, or RPM. That, in effect, requires ratepayers large and small to make payments to owners of power plants to encourage them to upgrade old power plants or build new ones. But there's no requirement they do so, so the money, like the payments auto dealers used to extract for undercoating, can go for who knows what.

Christy obviously knows, as I do, that there are powerful people out there who are heavily invested in the delusion of electric competition and are waiting, slobbering even, to collect their huge profits come 2010. They want you to believe there is nothing that can be done except to deal with the higher prices. Other people truly believe that electric competition will somehow become real and make the high prices go away. Some of them sit on the PUC, which last week (Christy's comments on the market are from his dissent) voted down a proposal supported by state Consumer Advocate Irwin Popowsky to require West Penn Power, which serves State College among other places, to take steps itself to provide customers with the lowest price for power possible after its rate cap ends.

Instead, a plan favored by the power plant owners and middlemen was approved that will require West Penn to outsource its power acquisition to middlemen who will deal mainly with the big power suppliers. The middlemen will add layers of profit and cost that will come out of consumer pockets, and the public will have almost no ability to determine whether they are truly getting the cheapest possible power. That's competitive information, after all, and these are private businesses. Just write your check and shut up.

Sonny does a yeoman job in protecting the public interest in utility issues, but he can't do this one alone. It is regrettable that the most visible champions for extending the electric rate caps, which would at least delay the catastrophe, are Sen. Lisa M. Boscola, D-Lehigh, and Sen. Vincent Fumo, D-Philadelphia. Boscola is committed to the issue but not a particularly effective advocate, and Fumo is weighed down by legal problems and in the last six months of his Senate term. He has done great things for consumers in the past, but his day is over and a new champion in the Legislature is needed.

Any volunteers?

Posted by David at 11:33 PM | Permalink | Comments (0) | TrackBacks (0)

So warns the Wall Street Journal. And why should it stop there? We're in the middle of a perfect storm of declining supplies, increased demand from China and India, a continuing fear around the world that the Bush Administration will attack Iran, and rampant speculation on Wall Street that apparently has been great for some pension funds but which is killing everybody else.

And of course, there is little to no chance of the Bush Administration doing anything beyond proposing more drilling--which might lower the price of gas in eight or nine years, but then again, might not. Not until (oh, let's go out on a limb) President Obama takes office in January is anything likely to change. In the meantime, a lot of poor and lower middle class people are going to spend the winter without any heat.

Posted by David at 06:31 AM | Permalink | Comments (0) | TrackBacks (0)

I ran into Fran Mansberger while picking up some groceries with my wife at the Weis Market in New Cumberland this past Sunday. Fran is executive director of the Industrial Energy Consumers of Pennsylvania, whose members are the steel mills, cement plants, hospitals of the state. In other words, places with really big electric bills. A large steel mill can use as much as 750 million kilowatt hours of electricity per year. My own home, by comparison, uses about 16,350 kwh in the same period. You get the drift.

Fran said the big players in the state economy are worried about the coming expiration of electric rate caps in Pennsylvania at the end of 2009 and 2010. In relative terms, it will be as bad or worse for them as for homeowners. She sent me some numbers when she got home, grocery carts not yet being equipped with Internet and e-mail. She also offered to send a blueberry recipe she liked, having noted the four pints in our cart that were destined for a pie and general good eating.

Anyway, I looked at the numbers she sent and saw her point. Depending on who their local utility is, the large industrial customers are looking at post-rate cap increases ranging from a minimum of 45 percent in the PECO Energy service territory around Philadelphia all the way up to 136 percent in the Allegheny/West Penn Power territory that includes State College. PPL industrial customers are looking at a 72 percent increase, Met-Ed industrial customers about 97 percent.

In real terms, that large steel mill I mentioned can expect to pay an additional $30.7 million per year in the PPL territory and $37.1 million if they are Met-Ed customers. A typical hospital, Fran said, which uses 70 million kwh per year, would pay PPL another $2.9 million and Met-Ed another $3.5 million. A mid-sized industrial facility using 35 million kwh per year would pay PPL another $1.4 million and Met-Ed another $1.7 million.

That's money going to a few large and already quite profitable electric utilities and their shareholders instead of into plant improvements and employee wages and benefits. The electricity doesn't get any better. It just gets way more costly. Which is why Sen. Fumo and some other members of the Legislature are talking about finding a way to limit annual increases to 5 percent or less.

Perhaps in response to these numbers, PPL yesterday send out a news release offering to help industrial customers manage and reduce their power bills during periods of high demand and congestion on the transmission lines. Prices typically soar at these times. The release didn't detail how this would be accomplished. But clearly, the utilities are worried about big customer backlash.

Posted by David at 09:25 PM | Permalink | Comments (0) | TrackBacks (0)

Say what you will about Sen. Vince Fumo, D-Philadelphia. He has his faults, but he has a real interest in protecting telephone and now electric consumers from the large corporations which dominate these crucial industries in Pennsylvania and elsewhere.

While too many legislators think of utilities mainly as nice companies who donate money toward a community park or whose lobbyists treat them to a round of golf, Fumo sees them for what they are--profitable businesses who stand to get a lot more profitable if, in the case of electric companies, the rate caps currently protecting Pennsylvania citizens and businesses from huge rate increases are allowed to expire.

This is a fair issue for the General Assembly to address. Pennsylvania is facing an enormous wealth transfer after 2009 and 2010 from citizens and businesses large and small to a few large and already profitable electric utilities and their shareholders. PPL Corp. of Allentown, which serves the part of central Pennsylvania where I live, has reported to the SEC that it expects its profits to zoom by more than $800 million in 2010, the first year after its rate cap ends. Right now, PPL says customer bills will rise about 35 percent, but that number has been creeping upward. Because electricity is a vital commodity that fuels nearly everything in our modern economy, directly or indirectly, the increase will be hugely inflationary.

Fumo, accompanied by fellow Democrats Sen. Lisa M. Boscola, James Ferlo, and Sean Logan, called the utilities "greedy" and urged his fellow legislators to create a new system whereby electric rates could go up annually by the rate of inflation or 5 percent, whichever is less. Fumo posted a lot of good data on his website about the rate caps and how they came about. If you have PowerPoint installed on your computer, the slide presentation is particularly good.

Unfortunately, the rate cap issue is one that is hard to quickly explain to the public, and even moreso to the average legislator. You can't explain why rate caps were necessary and why they ought to continue, at least with any degree of accuracy, in a quick soundbite. If you try to explain why the structure of the wholesale power market is unfair to consumers and real competition won't ever develop, your listeners will be nodding off after about 20 seconds, before you even get to the fascinating and crucial issue of locational marginal pricing. Quick! The NoDoz!

On the other hand, it is an easy issue to oversimplify. Power industry spokesmen are fond of fitting their arguments into a conservative "government is dumb" mold that probably resonates with Limbaugh types. ''Government" capped electric rates since 1996. Of course prices are going to go up you foolish consumers! Yes, and they leave out the part about how in return for the rate caps the utilities collected billions from their ratepayers for investments like nuclear plants that supposedly would be uneconomical under competition, but which in fact are cash cows now.

Fumo and his allies won't likely be able to put through their permanent rate cap--more accurate a limited rate increase--plan unless the Democrats recapture the state Senate this fall. And maybe not even then. I've found over the years that on utility issues, party labels don't mean as much as they do on other things.

Posted by David at 08:11 AM | Permalink | Comments (0) | TrackBacks (0)

I've long predicted that as the end of electric rate caps for the largest utilities in Pennsylvania drew closer, members of the General Assembly would begin to get anxious and look for ways to forestall or even prevent what will be a massive wealth transfer from the public and businesses large and small to a few large corporations and their shareholders. Rightly or wrongly, that is what it will be, and the consequences will be immense.

Today at 11:30 a.m., several Senate Democrats, led by Sen. Vince Fumo of Philadelphia and Lisa Boscola of Lehigh County, are holding a news conference in the Capitol Media Center about the end of the rate caps and what it will mean to consumers.

Rate caps were part of the deal for electric competition that the General Assembly approved in 1996. As each of the state's electric utilities were restructured for competition, they had their rates capped in exchange for the right to bill their customers for their so-called "stranded costs"--assets like nuclear plants that it was wrongly assumed would lose value under competition. You've been paying for those "stranded costs" since the late 1990s, even though their value has soared in many instances. So don't shed a tear for the utilities. They gave as good as they got.

PPL's generation rate cap will end Dec. 31, 2009, while those of PECO Energy, Metropolitan Edison, and Pennsylvania Electric will end Dec. 31, 2010. When rate caps ended in Maryland and Pike County, Pennsylvania, in 2006, electric rates shot up by about 72 percent. Pike County, served by a tiny electric utility owned by New York's Con-Ed, had a rate cap expiring at the end of 2005. I won't get into everything it did wrong in this column, but consumers, the school district, and small businesses were devastated. And it could happen again.

PPL has estimated in an SEC filing that its profits in 2010 after its rate cap ends will soar by more than $800 million. PECO, Met-Ed, and Penelec (the latter two are owned by FirstEnergy Corp. of Ohio) haven't released a similar figure, but you can be sure their profits will be about the same. They've all been doing quite well under rate caps--PPL has reported record profits by and large. It is a fair question whether they need the extra income when it will pose so much harm to the state's economy. It is also a fair question whether the genie can be put back in the bottle at this stage.

But the General Assembly will try, or at least make noises in that direction. Stay tuned.

Continue reading "The coming war over electric rate caps" »

Posted by David at 05:55 AM | Permalink | Comments (0) | TrackBacks (0)

I'm of two minds on the current price of motor fuels and heating oil.

On one hand, paying between $4-5 per gallon for gasoline is giving the greatest jump start to auto fuel economy America has seen since the aftermath of the original Arab oil embargo in 1973. People are seeking out and buying new and used cars with high gas mileage, especially the Toyota Prius. My wife, as I mentioned in a previous post, was contacted by the Toyota dealer that sold her the Prius she purchased in 2005 and asked if she maybe was interested in selling it back. My cousin Jeff in Michigan was on the lookout for a used Volkswagen diesel car, which he says gets about 50 mpg. Even though diesel costs more than gasoline, approaching $5 per gallon, the savings would be considerable.

But on the other hand, high heating oil prices, if they stay at current levels (again, on the road to $5 a gallon), will kill poor people next winter. Yes, kill them. There will be fire deaths, freezing deaths, and carbon monoxide deaths all linked in one way or another to the fact that people of modest means can't afford to heat their homes at $5 a gallon. Do the math: maybe 750 gallons of heating oil per heating season for a typical house, even more for the uninsulated rental slums occupied by too many of the poor in America. That's at least $3,750. Try paying for that--and for food costing much more than last year--on a part-time paycheck from Wal-Mart.

There was an interesting story on CBS Marketwatch.com yesterday about a hearing before the House Energy and Commerce Committee in Washington. Four Wall Street traders testified under oath that if speculation was eliminated from the oil market, the price of crude oil would quickly drop to its marginal cost of $65-70. To put that in perspective, a barrel of crude traded yesterday for about $136. The traders who testified said the drop would occur quickly if Congress acted to rein in the speculators. Gasoline would quickly go back to about $2 per gallon.

The role of speculation in the current oil crisis has been discussed, first quietly and now more loudly, for the past six months. It's one thing for people to bid up stocks to unreasonable levels, as happened in the 1997-2000 Internet boom. No one really got hurt when share prices were rising, and when the inevitable crash occurred later in 2000, many Americans were untouched. An oil bubble, though, hurts everyone across the board. There are few winners and many losers. It is a massive wealth transfer. Even if you don't drive, you pay for it in more costly food and home heating fuel.

It will be interesting to watch whether Congress can take reasonable measures to stop oil market speculation.

Posted by David at 06:48 AM | Permalink | Comments (0) | TrackBacks (0)