Monthly Archives: December, 2011

Illinois as Smart Grid Metrics Pioneer? Really?

The dome on the Illinois State Capitol in Spri...

Illinois State Capitol via Wikipedia

Exelon and Constellation Energy have won approval for their merger, but now they must live with the terms of the deals cut to win that approval and also deliver on the smart grid performance metrics imposed in a recent legislative contest of wills.

The political brawl that played out in Illinois from the legislative battle over smart grid is typical of the Land of Lincoln where everything is political and everything has its price. But while the outcome is not what was planned or predicted it may end up being an interesting lab experiment on whether smart grid can earn its keep.

In full disclosure I spent five years working for the Illinois Commerce Commission as Manager of its Public Utilities Division and then my last year as General Manager of the agency. I learned to navigate the Illinois political calculus including “freeze exceptions” for hiring state employees which served as a pretext to send me a list of patronage candidates to consider. If I agreed to hire one from the list I got my freeze exception. If not I had to wait. I was never forced to hire anyone but there clearly was a cost for not doing so.

I also learned that just because utilities were regulated by the Illinois Commerce Commission did not mean they were helpless subjects to be trifled with. There was always a political way to fix a problem. That is the situation with Exelon’s need to move forward with smart meter deployment and smart grid implementation. It was not a matter of whether this was a good idea only how much it would cost to implement—and to win the approval needed to do so. Ameren thought it could piggyback on a good deal and ended up being caught in the crossfire.

The problem was smart meter deployment got caught up in other issues including anger over power outages from storms that made customers mad and put politicians on the defensive. Then Governor Pat Quinn, an unabashed ratepayer advocate and frequent opponent of utilities for more than 30 years, played his role true to type. Then there was the utilities fear that the ICC might not approve their smart meter costs as “prudent” after the fact so they wanted approval in advance. No dice said the Commission. Add to that the political sparing between the Governor and Legislature and you have the classic makings of a Chicago-style food fight.

When the utilities went to the Legislature over the heads of the ICC to get legislative approval—the fight was on! Everyone who wanted or needed to score points found reasons and ways to do so. Governor Quinn scored by vetoing the bill. Take that!

But that enraged the Legislative leaders who cobbled together another political deal with a veto-proof majority and sent it back to the Governor. To get that veto proof majority the trailer bill, as these things are called, was loaded with favors for those who delivered the votes to rub the Governor’s nose in the mess.

But a funny thing happened–the bill finally passed sets performance standards for smart grid implementation! In street language this might be called “stink control” in the halls of the Illinois General Assembly this is getting the people’s business done.

So the utilities (Commonwealth Edison and Ameren) will get their smart grid deployment but the amount was reduced from $3.2 billion to $2.6 billion and they must spend one-half on upgrading the transmission grid to reduce power outages.

Yes customers will pay more—that was never in doubt. But while the performance metrics have more to do with predefining the terms of regulatory approval to reduce the discretion the ICC may exercise, they do make Illinois one of the few states with such bold, legislatively approved performance metrics.  Stay tuned to see how this works out before judging whether Illinois is setting a model for anyone else to follow.

The price the utilities are paying for this new ‘model of smart grid accountability’ is that they must use the smart grid approved revenue to fix the outage problems that give politicians headaches AND THEN still perform to make smart grid work.

$1 Trillion Spending Bill and No BS Regulations

President Obama will quietly sign a $1 trillion omnibus spending bill passed by Congress to avert a government shutdown.  No one wanted to Scrooge Christmas with a conflict over a mere trillion dollars spending.  But getting the spending bill passed did allow the Republicans to attach a few riders that put coal in the President’s Christmas stocking including:

  1. Blocking enforcement of federal light bulb efficiency standards
  2. Prohibiting the White House from hiring additional climate change staff
  3. Blocking US EPA livestock operations and manure management systems emissions regulations
  4. Transferring EPA’s air quality permitting authority to the Department of the Interior.

But there will still be fireworks over the price the President must pay for an extension of the payroll tax cut.   A deal in the Senate between Leaders McConnell and Reid is in trouble in the House at this writing because House Republican freshman again told their leaders to forget it.

“Two months, really? Come on!”

So the House is expected to pass a year-long extension of both the payroll tax cut and emergency federal unemployment benefits to solve the matter rather than just pushing the fight into the new year. This is what the President said he wanted but the question is what he will be forced to pay for the extension. House Republicans are also want a two-year “doc fix,” or delays in pay cuts to Medicare physicians. All three measures are currently set to expire December 31.

And then there is still the matter of the Keystone XL pipeline approval.  The Senate bill required the President to decide the matter within 60 days instead of deferring it past the election, but House Republicans now fear the President will just reject the deal to spite them calculating that even if it irritates his labor supporters they have nowhere else to go and won’t likely work against him.  But approving the pipeline now would enrage the President’s environmental constituency.   While they too have nowhere else to go they will make the President’s life miserable between now and the election.

I bet the President wishes now he would have told Hilary to sign off on the Keystone Pipeline deal and let her take the heat for the decision while he took credit for the 20,000 new jobs.

Occupy Labor

Port of Oakland

Port of Oakland via Wikipedia

The press reports here in the San Francisco Bay Area tell us the cost of the Occupy movement to the city governments in Oakland and San Francisco now total about $ 1 million each in additional police, public works and cleanup costs. But that is only a fraction of the true cost of this hard to categorize movement.

I was downtown San Francisco yesterday and the size of the Occupy crowd had dwindled to a handful in front of the Federal Reserve Building.  The policy now prohibits tents and camping out but still permit the peaceful protest as long as the crowd does not block ingress and egress from the building.

In Oakland it is a different story, after the siege of downtown Oakland that resulted in violence and force many small businesses to close, the City finally shut down the camp.   There are still day protesters but it is a shadow of the former presence.  The erratic handling of occupy situation has now resulted in a recall petition against Mayor Jean Quan for bungling the first big problem on her watch.

Occupy the Port of Oakland Escalates the Conflict

But the problem gets both worse and gains clarity in what is happening at the Port of Oakland near Jack London Square where the Occupy Movement has relocated in change of tactics now focused on shutting down the Port of Oakland in order to ‘punish the 1%’.

This shift in tactics seems to suggest both the waning of interest and the digging in by the hard core of the movement.  It has been subtle but apparent that the Occupy movements in Oakland and San Francisco were aided and supported by selected labor unions including the Teachers and Service Workers unions and perhaps others either encouraging or choreographing, it is not clear, events to support their own political agendas.  That there was embarrassment for the liberal progressive politicians that originally supported them as the demonstrations went on was thought to be regrettable collateral damage.  That small business who clearly do not fit the label of the 1% were horribly affected as the movement drove customers away was often only a sidebar story on the evening news outshouted by the protesters.

But the move on the Port of Oakland is different.  Either the Occupy Movement has been reduced to its radical core now uping the ante in an effort to keep it going—or—the parts of the labor movement which originally supported occupy are now hearing loudly and clearly the complaints of other voices in the labor movement like the Longshoremen that closing the port entrances with Occupy protests is going to cost workers their paychecks for Christmas.  In the first few days of the Port tactics the San Francisco Chronicle reports that the average daily cost for cargo disruption at the Port of Oakland is now about $4 million in lost revenue and pay for 750 workers at the Port sent home. Police reports say there may have been as many as 3,000 protesters at the Port entrance and that the Occupy ports tactic change was spreading to 11 other West coast ports.  This is not coincidence.

The Occupy Movement is at a critical point because its original message calling attention to income disparities and the hardships the rotten economy is visiting on the 99% resonated with many.  We get it. But the longer it goes the more muddled the message.  This is NOT the left wing version of the Tea Party as some on the Democrat side had hoped.  The Tea Party had a message and a clear philosophy of lower taxes, less government spending and debt and less intrusion in the lives of ordinary Americans.  The Tea Party members also were quickly assimilated in the broader fabric of American politics.  The Occupy crowd has overplayed their hand and is increasingly seen as doing more harm than good for their message.

The Good News is Durban is a Dud!

As expected not much progress is being made in Durban on solving the world’s carbon emissions challenges.  Kyoto Protocol became effective in 2005, requiring greenhouse-gas reductions in nearly every developed nation.  The US recognized the unsustainability of a treaty that excludes the fastest growing polluters China, India, Russia and Brazil because they were emerging markets while requiring the established markets to effectively write them big checks so they could keep growing and pollute more.

Reducing greenhouse gas emissions is a worthy goal, but one nation or block of nations alone cannot solve that problem.  Signing up for a giant wealthy transfer from developed countries to emerging and undeveloped countries was a tough guilt-tripped sell in the booms times of the global economy.  It is a non-starter now that the global economies except for those emerging markets are in the ditch.

So the Kyoto Protocol’s first commitment period will end in 2012 and there is nothing to replace it laments the assembled delegates in Durban.  GOOD!  We can now all quit pretending it was a good idea in the first instance. Canada, Japan and Russia all signed onto Kyoto the first time but now realize they scored few green points for such a commitment and don’t plan on continuing the charade by re-upping for another five years of greenmailing.  The EU said it was willing to sing-up for a second five year commitment—-IF and ONLY IF everyone else did so.  Fat chance of that!

The best that can be said of the Durban conference is that thousands of delegates will have improved the economy of Durban by their whining and wining.  The release of another round of leaked emails about climate scientists behaving badly when the science did not fit their politically correct views soured the event further with reminders of the first Climategate scandal.  They now face a second round of red-faced bluster knowing that there are still more than 220,000 documents to be leaked.

If the world is serious about reducing greenhouse gas emissions then everyone must take action on their own to do so.  We don’t need a treaty for that—we need resolve.  Gaining consensus about that resolve also means that the cure cannot be worse than the disease.  Kyoto was worse than no treaty at all.  It tried to guilt the 1% nations into paying reparations to the 99% as penance for their economic growth and success.  The US made the right decision to just say no to such a dumb idea.  The EU played politics for domestic consumption but now cannot continue to hide the stupidity of its decision.

The world public is skeptical that this enterprise is worth the cost and aggravation because of the overreach of political pandering and the Climategate scandal revelations that the ‘incontrovertible scientific evidence’ isn’t so incontrovertible after all.  That should not be interpreted as lack of public resolve, but rather public realistic public resolve.  Our politicians have nearly bankrupted us with their mismanagement of the economy—let’s not give them control over the earth!

The Occupy Movement, the Cultural Revolution and Andy Stern

If you have had trouble figuring out what the Occupy movement is all about and why it seems to have emerged out of nowhere and be everywhere, you are not alone.  I get that the economy is rough.  I get it people feel disaffected and want to protest.  I get the concept of the 1% and the 99%.  But that is not enough to explain either the speed, intensity or the duration of this protest movement.

The other issue with Occupy I found fascinating was reaction of elected officials to the movement.  First there was Nancy Pelosi quick to criticize the Tea Party movement but now she seemed to be almost thrilled with the Occupy movement.  I could not tell whether she saw it as a Democrat counterweight to the Tea Party or what?  Then other politicians weighed in at the Federal level trying to make clearer distinctions.

It was tough to call the Tea Party names then turn around and praise the occupy movement.  The Tea party protesters tended to have a clear message and demands.  The Occupy movement seemed to be waiting together to reach consensus about their demands.  Their conclusion was if you are not down here freezing your butt off with us 99% you are the 1%.

The lingering pressure from local business disrupted or shut down by the Occupy movement encampments in many large cities put the local officials who at first praises the occupy protesters and then tired of the hassles they were causing.  Here in the Bay Area we have had occupy protests in all three major cities:  San Jose, San Francisco, Oakland.  San Jose and San Francisco officials got it right telling the Occupy folks you can protest all you want but no camping overnight (San Francisco relented on this while the Mayor election was going on but after Mayor Lee was re-elected the camping is being curtailed), no blocking merchants or streets, no violence—and we mean it!   That actually seemed to work best since everyone knew where the bright line between acceptable free speech protest was and where it ended.  In other locations, like Oakland the line kept moving and the police found themselves ordered to close the encampment one day and then apologize for doing so the next.  The protesters were angry and confused, the police were furious at their weak politicians for not supporting them, the Mayor looked like a fool, merchants were forced to shut down because the public was too uncertain about the safety of downtown Oakland to go down there.  It got out of control fast.

What is this about?

There have been many reports about the nature of the protesters.  In many cases these people seemed like they were right out of the Berkeley free speech movement.  In other cases it felt like beneath the surface there was a subtle form of organization and choreography going on.  Some reports said labor unions were paying some organizers.  Other reports accused George Soros sponsored organizations of fomenting and supporting the Occupy movement.  Hopefully enough unbiased journalists are covering this story that someday we will have a better picture of the movement origins, organization and operational objectives.

By I have my own opinions which I confess are conjecture and may be wrong.  But it started to come together for me around several themes I think are driving this including the following:

  1. The President’s policies have failed and his approval poll numbers show him as likable but weak, ineffective and vulnerable.  Obama’s decision to essentially abandon governing in favor of near full time campaigning has not changed his approval numbers.  He is running scared.
  2. The President’s base is terrified and angry. The labor unions, environmental groups and other groups who invested heavily in him in 2008 are disappointed that he has delivered so little for them.  They are angry and fearful that he will do what Bill Clinton did and pivot to the center to win re-election throwing them under the bus.  They are terrified because they have nowhere else to go and a loss in 2012 will un-do everything they worked so hard to achieve.
  3. The occupy movement is a message to Democrats to stick with the agenda.  It is a tactic of the unions, environmental groups and any other left leaning causes sharing the same frustrations.  It is a hang together or hang separately call to action. It is a classic Saul Alinsky tactic of vilifying your opponent—the 1% —and trying to win back the affection of the blue collar labor union members who are telling their leaders they have had enough of the jobs killing, coal hating president.
  4. The reason is the only thing the unions fear more than a loss in 2012 is a revolt by their own union members—the 99%.  They see the President as a failure and can’t believe that the Obama they elected is now throwing them and their need for jobs under the environmental bus with his job killing regulations, opposition to domestic energy production and low energy prices that will bring back the high paying, union jobs in manufacturing, housing, transportation and services across the economy.
  5. And then along comes Andy Stern’s op-ed in the Wall Street Journal (how ironic) praising China and its political and business model.  Why can’t America be more like China, Stern writes. He praises the jobs created by China’s massive growth.  He praises the growth in tax revenues and wages.  If only America had a plan as assertive and clear as China things would be better. At first I wondered if this was veiled criticism of the Obama Administrations, but as I kept reading it seemed to me that Stern was longing for the comfort of a benevolent socialist as if THAT is what he thought he had elected in Barack Obama only to discover after the fact that while Barack’s heart was with him his lack of experience made it doubtful Barack could deliver—he could only vote present.  Or should I re-phrase that by saying Barack Obama has merely been “occupying” the White house for the last three years.

So there you have my theory on the origins and meaning of the Occupy Movement. 

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