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Declaring War on the Poor

by Brian T. Lynch, MSW

Thom Tillis is now Senator elect from North Carolina, having beaten Democratic incumbent Kay Hagan in the 2014 election. During his campaign Tillis berated the poor and suggested that those people who can’t help being poor, like the truly disabled, should rise up and opposed welfare for the unworthy poor. What he actually said was:

“What we have to do is find a way to divide and conquer the people who are on assistance,” 

North Carolina has 1.1 million poor. That’s 13.1% of its population. If these folks voted it would be hard to imagine Tillis getting elected, but Hagan and the Democrats have abandoned the poor and working class in this country as well. Now the poor are under attacks like this:

“We have to show respect for that woman who has cerebral palsy and had no choice, in her condition, that needs help and that we should help. And we need to get those folks to look down at these people who choose to get into a condition that makes them dependent on the government and say at some point, ‘You’re on your own. We may end up taking care of those babies, but we’re not going to take care of you.’ And we’ve got to start having that serious discussion.” – Thom Tillis

Watch for the U.S. Senate to put Tillis on the Health, Education, Labor and Pensions Committee to replace Kay Hagan. He is destine to become the chair of the Children and Families Sub-committee with his attitudes. His appointment would amount to a declaration of war on the poor.

So how should sensible people respond to divisive attacks like this on the poor and vulnerable? Should we begin making similar distinctions between the worthy and unworthy rich? Should we affirm those who earned their great wealth and provide social benefit but rescind all advantages given to those who use their inherited wealth to squeeze the people and their government for still more?

How we respond to these questions will define who we are as a nation.

Oklahoma Earthquakes Shaking Up Fracking Politics

by Brian T. Lynch, MSW

Earthquakes in Oklahoma are shaking up the politics of its natural gas friendly state government. According to a June 27th article in Energy Wire, Oklahoma’s Corporation Commission, under public pressure, will start collecting information and test data on underground injection wells.

The problem is that Oklahoma have become seismically active. Between the months of October and May Oklahoma had more magnitude 3.0 or larger earthquakes (189) than California (with 139). Other reports state that the number of quakes in Oklahoma is double the number in Caliphornia. The locations of the quakes closely correspond with fracking sites. State regulators say to need more evidence of the correlation despite the stack of scientific, peer reviewed studies supporting the correlations.

Energy Wire report:

The U.S. Geological Survey reported 40 earthquakes greater than magnitude 2.5 around the world yesterday as of midafternoon — six of them were in Oklahoma and three were outside this suburb of Oklahoma City.

“You can hear them coming,” said Mary Ternes, who lives near Edmond. “You can hear the rumble and then the house shakes.”

The largest quake so far measured 5.7 and killed two people back in 2011, but the risk of higher magnitude quakes is growing.

While Oklahoman’s are beginning to come out in significant numbers to public hearings to complain, state officials and regulators are taking starting to take the first step to address their concerns.

Energy Wire:

New rules on injection wells, approved by Republican Gov. Mary Fallin last week, will require operators to perform more frequent mechanical integrity tests of disposal wells and keep daily records of the amount of fluids they inject and the pressures they use.

Meanwhile, Skinner said, state regulators have told operators to shut in several injection wells for minor violations such as excessive pressure. The Corporation Commission also held formal hearings on two injection wells proposed near existing faults and asked the operators to do additional monitoring as a condition of approval. Previously, most injection well permits were approved administratively.

According to The Oklahoman newspaper about four-hundred worried resident of Edmond, Oklahoma came out to a meeting this past Thursday evening to express their fear and concerns. Many of them had been awakened by a magnitude 3.5 quake near Edmond in the wee hours of that same morning.

The Oklahoman report:

Oklahoma Geological Survey seismologist Austin Holland said there is no way to know what has caused the unprecedented increase in earthquakes in Oklahoma, although several studies have linked temblors to oil and natural gas activity, particularly wastewater injection wells.

 

Many residents were no happy with the answers they got at the meeting.

 

the problem isn’t just happening in Oklahoma it’s happening in Texas and Ohio and many other states where fracking operations are taking place. Alan Brundrett, the mayor of a small town call Azle, in North Texas, said his town has experienced an unusual number of earthquakes. He is upset by the lack of data and transparency of local fracking operations that make it hard to assess the issues.

 

According to an Al Jazeera report:

Brundrett said the Texas Railroad Commission would not draw a link between fracking activities and earthquakes in the meeting, but promised to investigate the matter further.

Ramona Nye, who handles media relations for the Railroad Commission, told Al Jazeera in an emailed statement that the agency “does not have the jurisdictional authority to shut down an injection well based only on the presence of a nearby earthquake.

“There has been no scientific proof that a specific well or wells have caused the Azle-area earthquakes,” she said, adding that the commission had hired a seismologist in April who is working to determine any links between fracking and earthquakes.

 

State geologists in Ohio have already made the case that the quake activity there is the result of fracking activity.

 

According to a report from International Business Times:

Fracking involves pumping water, sand and chemicals down into wells and horizontal pipes to crack open rock and extract oil and gas. Often, the wastewater created is dumped back into the ground, which according to the U.S. Geological Survey, is linked to a sixfold increase in earthquakes from 2000 to 2011. [snip]

ast month, Ohio regulators indefinitely shut down Hilcorp Energy’s fracking operation near the Pennsylvania border after five earthquakes, one of 3.0 magnitude, rattled Ohioans.

 

According to Oil Price.Com, an oil and energy news site:

In March, 2014. there was a study entitled “Potentially induced earthquakes in Oklahoma, USA: Links between wastewater injection and that 2011 Mw 5.7 earthquake sequence,” [snip]The study

focused its research on seismic activity in Oklahoma over the past two years and concluded that a 4.8-magnitude earthquake centered near Prague on 5 November 2011, was “induced” by the injection wells. Two subsequent earthquakes, including a 5.7-magnitude “event” the following day, was the biggest in contemporary state history, were caused by the first earthquake and existing tectonic stresses in the earth.

 

The growing body of scientific evidence and the growing public concern about fracking are reaching a critical mass and even the most business friendly politicians are starting to feel the ground shift.

 

 

Webliography

“Dark Pools” Caste a Shadow Over Stock Prices

We now know that the universe is filled with dark matter. This strange substance cannot be seen, heard, felt or touched, and doesn’t interact in any way with ordinary matter. Even so, its presence can be felt by its gravitational influence. It is the enormous amount of dark matter that causes galaxies to form and to spin as rapidly as they do.

While dark matter may ultimately be beneficial to the cosmos, “dark pools” in the financial markets doesn’t seem like a good idea. When large investors buy large blocks of stocks outside of public view, they do so to obtain a tactical advantage. The market effect of dark trading is that the real value of openly traded stocks is less certain. This is another example of how the playing field is tilted away from mom and pop investors and towards the rich and powerful.

http://www.reuters.com/article/2014/04/11/us-sec-darkmarkets-idUSBREA3A0CP20140411

 

 

WASHINGTON/NEW YORK (Reuters) – U.S. securities regulators are considering testing a proposed reform that could drive business to major…

REUTERS

Coal Ash Disaster Turns Capitalists into Socialists (Again)

by Brian T. Lynch, MSW

Commentary:

Coal ash is what’s left after coal is burned. It’s a toxic stew containing heavy metals including arsenic, lead and mercury.  For many years Duke Energy has mixed coal ash with water and pumped this cocktail from coal fired power plants into huge open pits. In February, one of the sludge pits located in North Carolina began releasing millions of gallons of toxic coal ash into the Dan River, a source of public drinking water for thousands of people.

coal-ash-spill.jpeg3-1280x960

 Photo and article: http://www.salon.com/2014/02/26/north_carolina_might_finally_crack_down_on_duke_energy_after_disastrous_coal_ash_spill/

Duke Energy spent millions over the years to keep government from properly regulating their waste products.  For all those decades the stockholders and upper management of Duke energy have profited from this arrangement. Now that the inevitable has occurred, clean up effort will take years and cost a billion dollars. Millions more will have to be spent to correct the improper disposal problems that Duke Energy has practiced for decades.

Lynn Good CEO

Safely storing coal ash should have been a cost of doing business for Duke Energy all along, but they have deferred that cost to boost their profits. Now Duke Energy’s president and CEO, Lynn Good, thinks taxpayers should bear the cleanup costs. She said, “Ash pond closure has been a plan for very long time. And because that ash was created over decades for the generation of electricity, we do believe that ash pond disposal costs are ultimately a part of our cost structure.” She believes the burden of this clean up should be shared by everyone equally.  (Corporate socialism? Again?)

Corporation are legally obligated to maximize profits for their shareholders. This would be fine if they were also legally obligated to paid the full cost of doing business without cutting corners. Cleaning up toxic spills is far more expensive than preventing themand regulations to enforce safe disposal are less expensive in the long run. But asking the victims of their environmental crimes to pay for cleaning up their mess and fixing their problem should not be an option.

(See also: http://www.politicususa.com/2014/03/14/republican-hypocrites-force-nc-taxpayers-pay-duke-energys-toxic-coal-ash-dumping.html )

Obama to Expand Executive Authority, Says Ezra Klein

by Brian T. Lynch – January 30, 2014

Yesterday evening Ezra Klein spoke at Drew University in Madison, New Jersey, as their guest lecturer. Ezra Klein is a journalist, blogger (Wonk Blog), political analyst and occasional guest star on MSNBC’s news opinion shows. At age 29 he is one of the most influential journalists in Washington, and he is currently creating his own internet news organization in collaboration with Vox Media.

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Klein focused his remarks on the broad structures of modern American politics that explain the context for President Obama’s State of the Union address the night before. The President’s address, he started, was notable for what it didn’t contain. It didn’t contain any reference to getting any big new initiatives passed in Congress.  President Obama has conceded that anything he proposes would be blocked from passage. Instead, Obama proposed plans to accomplish what he can through executive orders. He is using, and perhaps expanding his executive powers. The other remarkable feature of the President’s address was the specificity and scope of these executive plans. Klein spoke to both of these issues.

By objective measures, according to Klein, the U.S. Congress is the most polarized it has been in a long time. He pointed out that polarization is not synonymous with rancorous debates or disagreements. Polarization is a measure of the overlap between two political parties, the less overlap, the greater the polarization. He pointed out that in the 1950’s and early ’60’s the Democratic party was comprised of moderates, liberals from the North and conservatives from the South. The Republican party was also a blend of conservatives, liberals and moderates. Under these conditions there were pitched debates both between and within both parties. There were also ways to forge compromises between like minded representatives within each party.

The dynamic that blended the two parties this way was race, according to historians Klein cited. Once the civil rights act was passed and progress was made in racial integration, the Democrats lost the South and the two parties began reshuffling. Liberals moved into the Democratic Party and conservatives moved into the Republican Party. This resulted in less overlap and lead to the polarization we have today.  In Klein’s view, the most conservative Democrat today has less in common with the most liberal Republican in that party, and vice versa. There is so little overlap that compromise is nearly impossible to achieve.

Party polarization and the inability to compromise leads directly to congressional stalemate (which Klein begrudging called “gridlock”).  Under current conditions, when a minority party helps the majority pass legislation it makes the majority party look strong and effective, thereby improving their chances of being re-elected. Conversely, when the minority party obstructs the majority, it makes the majority party look ineffective and powerless causing voters to switch allegiances and elect the minority party.  This, according to Klein, explains why the current congress is unable to act.

Without structural changes, such as the rise of a third party, Klein sees little hope for improvements in congress. The most powerful branch of government, the legislative branch, is at an impasse. According to Klein, that doesn’t mean nothing will be getting done. As he sees it, when congress can’t exercise its powers, the authority and power of the other two branches of government grows to fill the void.  This isn’t necessarily a bad thing (but it does seem to require greater vigilance on our part). This brought Klein to his second observation about Obama’s State-of-the-Union address; the detailed account of where the Administration would be taking actions without the Congress.

The first two years of the Obama presidency saw the passage of more huge and important pieces of legislation than at any other time since the Lyndon Johnson administration. These are game changing initiatives with far reaching implications for American society. For example, the ACA has many little noticed, but broadly stated provision that will eventually re-invent (and improve) how treatment of common illnesses will be approached by doctors in the future.

Klein pointed out that most laws are written in general legalese that still requires Executive Branch interpretation and the creation of rules and policies to create an operating administrative framework. The 2,000 page Affordable Care Act, he said, has already generated tens of thousands of pages of rules, regulations and policies in a still unfolding process actuating the law.  It is the creation of policy and administrative regulations that gives chief executives in state and federal government their most effective way to exercise power.

President Obama just announce that this is exactly what he intends to do. I will uses his executive powers to permanently shape  the policies and interpretations of the legislation he got passed in his first term. He intends to accomplish the goals for which he was elected through the constitutional powers he has as the administrator-in-chief of the federal bureaucracy.

(Note: Once in place, the rules and administrative codes created to animate laws are, by intentional design, hard to alter. This is actually the role and purpose of a bureaucracy, to be a bulwark against the capricious dictates of power or transient swings of populist politics. Bureaucracies are often maligned for being cumbersome and slow to change, yet this is also their greatest contribution towards stable and coherent governance. This fact is little understood and seldom appreciated.)

Much of the beltway media has interpreted the President’s address as an admission that he is already a lame duck president, but nothing could be further from the truth. Klein believes that the rest of his term will produce enormous changes and benefits through executive actions. Because these changes will be happening in the nitty-gritty of agency bureaucracies it will be difficult for the beltway press to report on the changes.

The Washington media, according to Klein, has a structural bias towards the much easier reporting on Congress. The legislative branch is centralized, accessible and filled with characters and conflicts that sell the news. Administrative law is dry, decentralized and much less accessible. Still, this is where Klein sees the real action over the next few years. Perhaps this is where he intends to focus his attentions as he moves to create his new internet news venture with Vox Media. Time will tell.

In Defense of Bureaucracy

by Brian T. Lynch, MSW

images

People often accuse the Federal  government of being an entrenched bureaucracy, which it is. They blame the bureaucracy for all of the government’s problems, but the truth is a bit more complex. After all, it isn’t the bureaucracy passing sweetheart legislation, it is our elected un-representatives. The bureaucracy may write the rules but it does not runs the show.

Believe me, having worked in the bureaucracy my entire career, I can tell you it isn’t in charge. It is subject to enormous political pressures from elected executives, representatives and even the courts. No rules are passed without political sign off. Elected official send their political appointees deeply into the bureaucratic hierarchy to infiltrate and transform their missions. Politicians often say one thing and do another, using the bureaucracy as their cover. In truth, bureaucracies are only as good as the politicians we elect to run them.

Obamacare is a great illustration of this. In states where the chief executive wants it to work the bureaucracy has created workable systems and overcome large obstacles to make it work.  In states where the chief executive would like to see it fail the bureaucracy has made a hash of things.  I call it planned incompetence. The bureaucrats were given a mixed mandate to create a faulty system to prove the politicians position that Obamacare doesn’t work and that government doesn’t work.  Bureaucracies are tools that can be used for good or evil by people in power. Bureaucracies are the interface between ordinary citizens and political rulers.

Did you know that the modern bureaucratic government structure was established by an enlightened English King (one of the Henry’s) to assure that his erratic, sometimes irrational sons could not, on a whim, destroy the good government administration he created to serve his people?  We don’t think much about it today, but bureaucracy still serves a vital, useful purpose in assuring the smooth and planful administration of government.

The very characteristic most often criticized, its slowness to respond, is also its primary benefit.  It methodically operationalizes the dictates of our political rulers to maintain continuity and order in government administration, not that it always succeeds. But if we didn’t have it we would be subject to every impulse  of the chief executives and this would lead to real chaos in government services. So while I am quick and well experienced to criticize the bureaucracy, I am less inclined to condemn it.

Four Graphs on What Hurts the Working Class

We never hear any reference to the working class these days. The media and our politicians only speak of the “middle class” as if that covers everyone who isn’t either poor or wealth. Even references to the poor are scarce. The working class exists. They are sandwiched between the poor and the middle class and they are being squeezed into poverty. It is cruel to ignore them and the terrible pain they are suffering. What has happened to them, aside from being ignored can only be touched on by the four graphs that follow. These were presented in a conversation I had with conservative friend of mine who has forgotten the working class exists. There are many factors hurting the working class. This conversation was only about four factors, wage suppression, the upward redistribution of wealth, working class decent into poverty and declining upward mobility. Post this is my way of addressing what I believe is the most hurtful factor of  them all… public silence.

Q:  I always thought of the owners as the producers of the jobs that the workers have. You say that it is the workers who are the producers. Have you ever been employed by someone on welfare?

A:  Owners coordinate the workforce, but it the employees who do the work that makes the products or services. So in a real sense, the workers ARE the producers. And this has nothing to do with welfare at all.  Jobs are not a product. Stuff is a product. Things to sell or trade is a product. Workers are key to making stuff or offering stuff yet when they want a fair share of the value they create they are treated like thieves. Read this and you will know what I am talking about even if you don’t agree:

http://aseyeseesit.blogspot.com/…/fair-wage-for-days…

hourly GDP vs Wage graph

I also just ran across this table (below) that shows were all the Hourly GDP wealth has gone since the mid-’70’s.

CEO Compensation

Source:  https://scontent-a-lga.xx.fbcdn.net/hphotos-prn2/1480602_10200873563747333_1576469932_n.jpg

Q:  Why should it matter how much a C.E.O. makes if their workers remain on the job? It’s one of the great things about this country. You can work where ever and for whom ever you want.  Someone please explain to me why it is greed for C.E.O.’s to make deals to be paid as much as the market will bear but it is ok for workers to make deals to make as much as the market will bear.

 A:  It may not matter to you at all, but anyone who wonder why they can’t have collective barganing while the CEO is making 400 times their salary might have questions, especially since this is strictly a feature of the US economy and others around the world are paid better than we are relative to their economies.

Don’t forget, almost  40% of people who work full time are poor. I’m not sure what percentage of the poor they account for, but it is clear when we speak of the poor we are not speaking only of people who are disabled, elderly, retired or unemployed.

Working and Non working Poor bar graph

http://upload.wikimedia.org/wi…/en/7/74/Pov_crossnatl.jpeg

Note here that in the US, the number of working poor (blue bar in right hand column) is twice the number of non-working poor. So when you and I talk about the poor, you are defining it as welfare recipients while I broadly define it as everyone living below the poverty line, the majority of whom work full time. That’s partly why we have a disconnect on this topic. In my understanding, most poor people work.

Q:  I wonder how many of the poor who are now C.E.O.’s would agree with you? Or would they say : “Work hard towards your goal, as I did, and you can achieve anything.”.  Isn’t this what made our economy great?  Not people who wanted a wage so they could be comfortable in the position they have today?  Flipping burgers at McDonalds is not supposed to be a permanent career goal. Even the management at McDonalds wants people to move up. Or am I wrong about incentive and ambition?

A:   There are 17,000 companies with 500 employees or more. There are 43 million poor. If 20% of CEO’s started out as poor children that would mean there are only about 4,200 CEO openings for 43 million potential applicants. It’s a safe bet that far fewer than 20% of CEO’s come from poverty. In fact, less than 20% of children born to poorest families will make it into the middle class in their lifetime. Less than 8% will make over $140k/year, which is approximately the income line where the richest fifth starts. Of those at the top, only the smallest fraction will become a CEO. I believe that if you really understood the economic situation in America you, of all the folks I know, would be a big supporter of the working class.

Upward Mobility bar graph

source: http://www.pewtrusts.org/…/Eco…/PEW_Upward%20EM%2014.pdf

As for incentive and ambition, a good paying job that makes one economically self-sufficient is the highest motivator.  But a self-sufficient wage for a single earners is over  $30,000/year whereas the median wage for a single earners is less than $26,000/year. In other words, the incentives are less than optimal in today’s economy, and no amount of hard work or individual effort will make a difference for most people until even low wage workers receive a fair wage for a days work.

Obamacare – Is It For Good or Evil?

Like anything else, you can use a thing or abuse it. The Affordable Care Act is being shredded for political reasons in many states to create proof that it doesn’t work. It’s a shambles in the hands of those who want to use it as a cudgel with which to beat up Obama.  More enlightened states are taking every advantage of the ACA and in doing so they are better serving their citizens and improving their state budgets. Here below is a snippet from an article in the Washington Post:

How we got Obamacare to work

By Jay Inslee, Steve Beshear and Dannel P. Malloy, Published: Washington Post, November 17, 2012

http://www.washingtonpost.com/opinions/how-we-got-obamacare-to-work/2013/11/17/3f2532bc-4e42-11e3-be6b-d3d28122e6d4_story.html

[snip]  In our states — Washington, Kentucky and Connecticut — the Affordable Care Act, or “Obamacare,” is working. Tens of thousands of our residents have enrolled in affordable health-care coverage. Many of them could not get insurance before the law was enacted.

People keep asking us why our states have been successful. Here’s a hint: It’s not about our Web sites.

Sure, having functioning Web sites for our health-care exchanges makes the job of meeting the enormous demand for affordable coverage much easier, but each of our state Web sites has had its share of technical glitches. As we have demonstrated on a near-daily basis, Web sites can continually be improved to meet consumers’ needs.

The Affordable Care Act has been successful in our states because our political and community leaders grasped the importance of expanding health-care coverage and have avoided the temptation to use health-care reform as a political football.

In Washington, the legislature authorized Medicaid expansion with overwhelmingly bipartisan votes in the House and Senate this summer because legislators understood that it could help create more than 10,000 jobs, save more than $300 million for the state in the first 18 months, and, most important, provide several hundred thousand uninsured Washingtonians with health coverage.

In Kentucky, two independent studies showed that the Bluegrass State couldn’t afford not to expand Medicaid. Expansion offered huge savings in the state budget and is expected to create 17,000 jobs.

In Connecticut, more than 50 percent of enrollment in the state exchange, Access Health CT, is for private health insurance. The Connecticut exchange has a customer satisfaction level of 96.5 percent, according to a survey of users in October, with more than 82 percent of enrollees either “extremely likely” or “very likely” to recommend the exchange to a colleague or friend.

In our states, elected leaders have decided to put people, not politics, first.

[Read more here: http://www.washingtonpost.com/opinions/how-we-got-obamacare-to-work/2013/11/17/3f2532bc-4e42-11e3-be6b-d3d28122e6d4_story.html ]

_______________ … _______________

If you feel  that the media isn’t doing a good job of covering the positive side this story and isn’t reaching the ACA doubters and haters you know, then do something about it. Point them to this article or refer them here to read something that is directly from the chief executives of states where the ACA is working.

Carbon, Climate and a Mirror to Our Future

by Brian T. Lynch, MSW

If you asked most forward thinking Americans to name a disruptive challenge we face today, global warming would be high on the list. Climate changing levels of carbon dioxide have been released into the air and the impacts on weather, on raising ocean levels and melting glacier are underway. The most socially responsible among us are already reducing their carbon footprint by recycling, buying more efficient cars, better insulating their homes, buying Energy Star appliances, using florescent or LED lighting.  More and more people are also taking advantage of incentive programs to install rooftop solar or wind power generation systems.

The impact from these early pioneers of change is still quite small relative to the problem, but it is significant.  So significant, in fact, that the industries which release carbon dioxide to produce the energy we buy are feeling threatened.  After all, every time you replace an incandescent light bulb with an LED bulb you reduce their revenue.

Our power generation and distribution companies can adapt by getting into the LED lighting business for example, or they can maladapt by killing government regulations and initiatives to reduce carbon emissions.  It appears they have chosen to do both.  Some energy companies are investing in wind, solar or other renewable energy technologies while others are busy hatching plans to manipulate the democratic process in order to scuttle government incentives and regulations that threaten their bottom line.

When the power generation utilities think about the disruptive challenges we face as a nation they quite literally see a mirror image of what the rest of us see. The threats they see include “demand side management” (DSM) which refers to consumer energy conservation measures, and “distributed energy resources” (DER) meaning residential power generation such as rooftop solar systems.  This is explained in an national industry report released this past January by the Edison Electric Institute.  Entitled, “Disruptive Challenges, Financial Implications and Strategic Responses to a Changing Retail Electric Business,” the report describes how disruptive consumer conservation and residential energy generation can be to their business. To help electric utility executives better understand the disruptive forces of socially responsible citizens it offers this useful flow chart: [http://tinyurl.com/m5py4rg]

Vicious Cycle from Disruptive Forces Graph (2)

Edison Electric Institute, Washington, D.C. – www.eei.org

Another study conducted for PacifCorp was released in March of 2013 by The Cadmus Group, Inc., another D.C. based firm. This industry study looks at the potential impact of consumer conservation on corporate energy sales over the next 20 years in states served by the Pacific Power and Rocky Mountain Power Companies.  The Cadmus Group defined DSM this way:

Demand-side management involves reducing electricity use through activities or programs that promote electric energy efficiency or conservation, or more efficient management of electric energy loads. These efforts may:

  • Promote high efficiency building practices
  • Promote the purchase of energy-efficient ENERGY STAR® products
  • Encourage the transition from incandescent lighting to more efficient compact fluorescent lighting
  • Encourage customers to shift non-critical usage of electricity from high-use periods to after 7 p.m. or before 11 a.m.
  • Consist of programs providing limited utility control of customer equipment such as air conditioners
  • Promote energy awareness and education

http://www.pacificorp.com/env/dsm.html

This report suggests that energy conservation efforts and residential power generation over the next twenty years will reduce these energy company sales by up to 15%. About 76% of this reduction will come from residential customers, mostly from conservation measures.  Numbers like these are causing energy companies everywhere to start defending their business model. The Arizona Public Service Company,  for example, recently  funded non-profit agencies to start what looks like a grass roots attempt to turn public opinion against both rooftop solar and the states’ publically elected Arizona Corporation Commission, which has final authority over utility rates.  Rooftop solar initiatives are a prime target for utility companies both because of its rapid growth and the direct way these installations impact utility company profits.  The reason why conservation efforts and residential power generation may be scary to utility companies from a business perspective becomes clear when you look at the bigger picture.

The history of U.S. energy use is one of annually increasing demand. Population growth and consumer  purchases of more energy reliant products guarantee increased electric demand well into the future. It remains a growing market, but the rate of growth is slowing. This has been true since the 1950’s. According to the U.S. Energy Information Administration, “The growth of electricity demand (including retail sales and direct use) has slowed in each decade since the 1950s, from a 9.8-percent annual rate of growth from 1949 to 1959 to only 0.7 percent per year in the first decade of the 21st century.”  The following chart shows how the increase in electric demand is declining in this country.

US ElectDemand Declining

US. Energy Information Agency http://tinyurl.com/nnz9rgg

Meanwhile coal continues to be the biggest fuel source for power plants. The use of coal accounts for about 42% of the electricity we generate.  Coal is expected to remain predominate though 2040, although its share of the energy generation mix will fall to around 35% of the total as natural gas and renewable energy soruces grow. This means that for the foreseeable future carbon emissions and growing electricity demand will still be with us if nothing changes. Of course nothing ever stays the same. The real question is whether the energy utilities, reacting to market forces, will dominate the direction we take in producing carbon based energy or whether pressure to save the planet will rise to a point where we can achieve meaningful reductions in green house gas emissions.

Solar Success Generating Friction With Utility Companies

The rapid growth of rooftop solar in the US has caught the attention of electric utilities companies who now see distributed power as a threat to their business model.  In the past ten years the number of rooftop solar instillations taking advantage of net metering (explained below) has grown 60 fold to cover over 300,000 homes nationwide.  The following graph from the U.S. Energy Information Administration depicts the growth of rooftop solar. The full EIA report can be viewed here: http://www.eia.gov/electricity/monthly/update/?scr=email

Res_Net_Meter_small

Source: U.S. Energy Information Administration, Annual Electric Power Industry Report (Form EIA-861)

While the number of homes with rooftop solar is still less than 1% of all residential customers, the trend suggests this mix will rapidly change in the coming years. At present, all but four states have passed laws permitting net metering incentives for homeowners. California presently leads the nation in the number of homes with rooftop and other home based power generation. The next graph shows how net metering  instillations are distributed among the states.

 Participation_Rates_small

 Source: U.S. Energy Information Administration, Annual Electric Power Industry Report (Form EIA-861)

 The economics behind the jump in solar instillations is largely influenced by an 80% decline in the cost of solar panels over the last 10 years and by the Energy Policy Act of 2005, which requires all public utilities to offer net metering to customers upon request.

Net metering allows consumers to directly subtract the kilowatts they generate from the kilowatts they use at the retail rate they pay for electricity. If they generate slightly more electricity than they use they are credited and can carry over that positive balance for a time so they can use it to  offset periods where they use more power than they generate. Additionally, net metering requires that rooftop solar systems may not be designed to generate more power than the average use for a given home. In other words, a rooftop solar system cannot be used to generate more power than the homeowner typically uses in a year. The exact details of how net metering works varies from state to state, but the concept is the same.

The problem, as framed by the energy companies, is that they are buying back electricity from customers at the same retail rate that they are selling it rather than buying it at the wholesale rate they pay power generation companies. The marginal difference between the wholesale rate and retail rate includes the expenses associated with transmission, distribution and maintenance of the electrical infrastructure (in addition to the utility company’s administrative expenses and profits). They claim that rooftop solar customers are no longer contributing their fair share towards these essential costs, shifting this burden to the utility companies and their non-solar customers. In their view, the per/customer cost of maintaining the power system will rise as the number of non-solar customers fall. Additionally, grid operators say they face additional costs associated with modifying the distribution system that allows electricity to flow both directions.

Solar and renewable energy advocates say the energy companies arguments are specious and disingenuous. They say that the utility companies their real agenda from the beginning has been to preserve their profits and basic business model.

 In a recent article by EE News’s Climate Wire, Bryan Miller of the Alliance for Solar Choice is quoted as saying the alleged cost burden for upgrading the utility grid for two way transmissions isn’t true because solar companies are already paying for any legitimate circuit upgrades needed to connect solar customers to the grid. He also pointed out that the peak hours of solar generated power corresponds with periods of peak demand.  This relives transmission congestion which saves money utility companies money.  Peak shaving more than offsets grid interconnection costs, according the Mr. Miller.

Other advocates have pointed out other value added savings for utility companies.  Distributed generation by rooftop solar customers reduces line transmission losses.  According to one source, in California, the largest solar market, distributed generation is cutting transmission losses by up to six-percent.  Because solar generation peaks during  peak demand periods, utility companies need to buy less electricity on the spot markets at higher wholesale prices.  Additionally, customer based solar instillations improve the renewable energy mix for utilities relieving them of costs related to meeting federal guidelines for improved efficiency and greater use of renewable energy over time.  On balance, advocates claim that rooftop solar delivers more value than it uses while utility companies argue that government grants and tax breaks offering up front incentives for solar conversion are better than ongoing rate-based incentives.

The net metering debate in California could set a precedent for the rest of the nation.  In a recent article published by Greentech Solar, both sides in the net metering debate seem to be coming together in a bill ( AB 327 ) that would modify net metering for future rooftop solar customers. In the case of California, the net metering regulations passed in that state were set to expire. Also, a provision in the law specified that the net metering would not be available to customers once the total of distributed generation reached 5% of the utilities total electricity.  The agreement that is emerging would keep in place the net metering arrangement for those who already have it and preserve their rate structure. It would also remove the 5% cap on the net metering arrangements, but establish a different rate structure for new net metering customers going forward. If passed, AB 327 would require the California Board of Public Utilities to come up with a new  rate structure that is more acceptable to the energy utility companies.  The bill states that after January of 2017:

 […] all new eligible customer-generators shall be subject to the standard contract or tariff developed by the commission and any rules, terms, and rates developed pursuant to subdivision (b) of this section, and shall not be eligible to receive net energy metering pursuant to Section 2827. There shall be no limitation on the number of new eligible customer-generators entitled to receive service pursuant to the standard contract or tariff after January 1, 2017″.

Early adaptors of rooftop solar or other consumer based energy generation systems are likely to have an financial advantage over those who come later. In general, net metering based on retail energy rates is considered an incentive program to encourage development of solar, wind and other renewable energy sources. The upfront conversion expenses for consumers will remain substantial in the near term. Government grants, tax breaks and current net metering structures are designed to overcome these barriers. Just how much value distributed solar energy has for utilities is still an open question complicated by the fact that laws and regulations vary from state to state. Advocacy groups are needed in every state to balance the interests of consumers and environmentalists against the interests of the big utility corporations.

Correctional note of 9/6/2013: The emerging agreement on California’s AB327 bill would keep the net metering rate structure in place, not eliminate it as I mistakenly stated prior to this update.  Also, a few technical corrections were made to the net metering paragraph.