In California, Proposition 65 requires that retailers and manufacturers disclose the use of any chemicals that may pose an environmental health risk. Sounds like common sense, right? Except go to virtually any retail or commercial or office building in California and pasted on the front door will be a sign that reads: Chemicals are used in this building known by the State of California to cause cancer or other environmental hazards.
Now, does this warning help you very much?
Of course not, because it was not designed to inform but to insure that building owners have a legal defense when they gets sued. The California’s Office of Environmental Health Hazard Assessment (OEHHA) maintains a list of such chemicals required to be included in a Proposition 65 warning as a short cut of “gotcha” starting points for rookie lawyers eager to score their first settlement.
Why it Costs So Much to Do Business Today
In October 2011, OEHHA added the chemical commonly known as “TDCPP” or “Tris” [Tris(1,2-dichloro-2-proply) phosphate)] to that list of Proposition 65 required disclosures. Tris is used widely as an approved flame retardant in home furnishings (couches, chairs, pillows, and ottomans) as well as automotive products (seat padding, overhead liners, foams, and infant car seats). Once a chemical is added to the Prop 65 list retailers and manufacturers have one year to come into compliance. So after October 2012 these Tris users and makers are eligible for lawsuit target practice.
In practical terms, adding Prop 65 warnings to Tris products forces manufacturers and users to balance two competing risks. One set of rules requires the use of approved flame retardants in furniture, bedding, auto products and infant clothing and Tris is approved for that purpose while another now labels the use of this flame retardant a cancer risk under Proposition 65.
So which is it?
Are products made with Tris safe or not?
If I can’t find a product without Tris does this mean I don’t buy furniture, bedding, auto products or kids clothing?
The same OEHHA that added Tris to the Proposition 65 list of chemicals is now accepting public comment on its proposed “No Significant Risk Level” (NSRL) for TDCPP of 5.4 micrograms per day. This means that daily exposure below this level would be exempt from Proposition 65. OEHHA’s decision on whether to adopt this NSRL will not be made until after the public comment process closes in July 2012 but manufacturers have already had to incur the cost of compliance with the Prop 65 listing in order to have them in fully effect by October 2012. This is a PERECT example of how California has become unfriendly to business, unfriendly to taxpayers, unfriendly to common sense.
So what do you think manufacturers of kids clothing will do—risk being sued by the trial bar if their product does NOT have the required label or take their chances? Drop the use of Tris and use another approved flame retardant? Quit making the product all together? Go out of business? That is what happened to the company that makes the ubiquitous red plastic gasoline cans we see almost everywhere. you may have one in your garage to fuel your lawnmover. The company was sued after some idiot poured gasoline using one of its cans on a fire and was burned by the fire ball he created. The punitive damages awarded bankrupted this small Miami Oklahoma company which was forced to lay off its 120 employees and shut down. The makers of Tris and any retailer that sells a product using Tris now have the same big target on their back.
So what should the label read?
“PROPOSITION 65 WARNING: The State of California requires that this cute onesie contain a flame retardant. The flame retardant chemical “Tris” used in this product is approved for use as a flame retardant in children’s clothing, furniture, bedding and automotive products, but it is also listed on the Proposition 65 list of chemicals known to the State of California to cause cancer and other environmental health problems. If this product exposes your kid to less than 5.4 micrograms per day don’t worry. Longer exposures may cause cancer. Change your kid’s clothing often to restart the clock on your daily exposure readings. If your kid gets cancer while wearing this product you may be able to sue the manufacturer and the store that sold this cute onesie to you. The State of California has sovereign immunity from lawsuits such as these even though we require the use of the cancer causing chemical contained in this product. Trial lawyers are standing by to take your call. Anything you win in damages from any such lawsuit is fully taxable by the State of California at the maximum rate allowed by law.”
- Sign the Petition to California Lawmakers: Repeal the Flame Retardants Rule (laurasrules.org)
- Viewpoints: Change safety standards for toxic furniture (sacbee.com)
- Burning Questions: An FAQ on Flame Retardants in Furniture (laurasrules.org)
- Is Your Couch Trying to Kill You? – Bloomberg (bloomberg.com)
- More From California (urethaneblog.typepad.com)
- EPA vows investigation of flame retardants, which Tribune investigated (junkscience.com)
The cap on greenhouse gas emissions in California imposed by AB32 California’s Global Warming Solutions Act does not go into effect until 2013, but already there is maneuvering by state officials to get their hands on the pot of hoped-for gold at the end of this rainbow. It is not that we can’t use the money. California has struggled with huge budget deficits for a decade.
The Governor and Legislature have made billions of cuts in a futile effort to balanced spending with falling revenue in a sinking or stagnant economy. For politicians, the gold from carbon taxes offers relief from the pain of disappointing special interests each eager to protect their part of the pork barrel that is the California State Budget. Some estimates are that the carbon tax will produce between $1 billion and $3 billion in the early years and perhaps as much as $14 billion by 2015 when it is fully implemented. Last year the state budget deficit was $9 billion—so you see why this is seen as the easy way out—tax the polluters!
In all candor California voters are part of the problem. We allow ourselves to be seduced into all manner of silly initiative ballot measures that adopt policies, impose costs and target increasingly scarce resources to pet causes. This is no way to run a railroad—but it is the way California is governed.
We have also made the state revenue picture worse by the steeply progress nature of our tax system which, paradoxically, depends heavily on capital gains taxes and economic growth from the very people the Governor and Legislature now want to ‘soak’ again to get out of the current mess. It does not take a Cal-Berkeley economist to understand that when the economy sucks and capital gains are reduced that when you target those who are successful they simple change their voting residence from California to Texas or Florida and —POOF! This double whammy of bad economic luck and bad public policy is strangling the Golden State, driving up the cost of doing business here, driving away successful people tired of game, and worse no longer working to produce the economic growth, opportunity and revenue California depends upon to live into its 21st century potential.
But carbon taxes are going to kick in in 2013 and California hopes to be in the gold again. There are just a few problems with this calculus:
- California does not allow the construction of coal fired generation in the state so there are no coal plants to tax. The once thru cooling water rule will force many older natural gas plants to shut down and most be replaced with much more efficient and less emitting new gas plants. Neither nuclear power nor hydropower produce carbon emissions and thus are exempt and all that wind and solar also beats the carbon tax. So what’s left to tax?
- Well technically this is NOT a tax it is a fee. This makes a big difference and complicates life for politicians. A tax in California requires a 2/3 vote of the State Legislature or a Referendum so AB32 imposes a “fee” set administratively each year by the California air Resources Board so no requirements that politicians must ‘vote’ to raises taxes even if they could get a 2/3 majority in the Legislature which all agree would be impossible. But a ‘fee in California also has limitations under a 1991 California Supreme Court Decision in the Sinclair Paint v California case where the court ruled that the proceeds from a fee can only be used to mitigate or offset the health or environmental impact of the industry affected. Let the game begin!
- Eureka! Charge out of state power plants selling into California! You can imagine how happy Utah and other states with cheap coal fired generation are to hear of that ‘California dreamin’. But what if those power producers decide to sell their energy to other states? Since California is a net importer of about 20% of its electricity requirements it may have trouble meeting peak demand unless the price goes up enough to cover not only the competitive market price but also the carbon tax thus socking California rate payers with their own carbon tax. Or alternatively California will have to build more power plants to satisfy its own demand.
- Carbon Taxes and Offset Policies in Europe and the Northeast Are Not Working! Another problem is that the carbon allowance markets now in operating in Europe (European Trading System) and the Northeast (RGGI) are struggling to survive with falling prices for carbon allowances. Make no mistake they have raised a lot of money. In the case of RGGI more than $900 million over the past several years but the states have different policies on how they use those funds and many have just suctioned them up and spent them to reduce deficits or fund pet causes.
This is the situation is facing California now. The carbon tax is not a tax it is a fee. But fee revenue must be spent on things directly related to the health and environment effects giving rise to the fee. No problem says Governor Jerry Brown we’ll spend the AB32 money on the high speed bullet train project. As you can imagine this is going over like methane in a crowded room as the bullet train project is so far over budget, so expensive that is can easily consume all the money the ‘fee’ produces and then some.
Governor Brown’s proposed state budget beginning July 1 2012 includes $1 billion from cap and trade revenue for the fiscal year. So far it is unclear how that money will be allocated, but $ 1 billion is too rich a pot of gold to be left to the whims of mere Governors so the pigs are lining up at the trough to be fed.
So where is all this going?
With California’s overbuilt electricity market awash in wind and solar resources even if there is new power plant construction it likely will be limited to a few clean natural gas plants or peakers that only run a few days a year. That will not produce much carbon fee revenue. Out of state power producers are likely to look for alternatives to doing business in California or raise their prices to recover the carbon fee in bids sticking it to California ratepayers.
The only other source of carbon fee revenue is gasoline prices and since California has a unique set of boutique fuels only sold in the Golden state you can bet fuel prices will get slammed. That makes the progressive carbon fee among the most regressive of revenue raising schemes going and risks alienating drivers and residents in the faster growing ‘warm side of the hill’ and in the Great Central Valley which demographically tends to vote Republican more than the foggy coastal urban centers.
Welcome to California!
There is one more thing—-the inconvenient truth is the Nunavut Government in Canada reports polar bear populations at an all-time high and climate scientists not intimidated by peer pressure to say so tell us that climate temperatures have not risen in more than a decade.
Holy Carbon Fee!
- The greenhouse effect of B.C.’s carbon-tax plan (theglobeandmail.com)
- Gillard the Lunatic. The light at the end of the tunnel, has been turned off due to the cost of the carbon tax. What is the total electricity bill ($AUD) at Parliament House/Canberra for: 12 months ? What is the quantifiable “Carbon Footprint” for Parliam (heavycalibre.me)
- Gillard & the “Carbon Tax” Lie. Remember the celebrations when it was passed ? Not “hugs & kisses” for the environment ? No ! Only for the money these corrupt Federal MP’s will be “skimming” & pocketing. Fraud, theft, misappropriation, racketeering, corru (heavycalibre.me)
- Queenslanders to pay $7 out of every $100 on electricity bills to cover carbon tax, Federal Government claims (wrc559.com)
- South Africa to Green its Economy in 2013 with Carbon Tax (greenprophet.com)
- Complaint lodged against ‘carbon tax collector’ ad – Business – Australian Broadcasting Corporation (exitbusiness.wordpress.com)
- Chevron seeks relief from carbon tax (theglobeandmail.com)
- Carbon tax “worst piece of economic reform” says outgoing chairman of the Future Fund (seeker401.wordpress.com)
- Cap-and-trade: One, two, pick up the cash (fresnobeehive.com)
In the ‘Don’t these Regulators have Something Better to Do’ department comes this over the news wires—both Coke and Pepsi decided to change the way they produce their soft drink products to use less 4-methylimidazole (4-MEI) – a chemical used to give the soft drinks their color which California added to its list of carcinogens covered by the warning labels provisions of Proposition 65. And since it makes little sense to produce one product for California and another for the rest of the country the change will be made across the board.
So is 4-methylimidazole really a carcinogen?
Not even the US Food and Drug Administration that never met a chemical it would not like to regulate was buying into this one. California said the chemical was linked to cancer in laboratory animals. But the FDA said you would have to drink more than 1,000 cans of Coke or Pepsi a day to get the same dose of the chemical that was given to the lab rats.
Do you see what I mean?
California is nearly broke yet it persists in doing dumb stuff like this which drive business crazy, increase the costs and hassle factors of doing business in the Golden state—and sends what in the private sector might be an actionable defamatory message about another person’s product.
The Coke spokesman said the company “wanted to ensure their products would not be subject to the requirement of a scientifically unfounded warning”.
It’s the real thing!
- No Cancer Warning Labels For Coke And Pepsi (medicalnewstoday.com)
- Oh, Good Lord… California Toxic Chemical Initiative Attacks Coke & Pepsi; Is There No Sanctity? (dougsboomerrants.wordpress.com)
- Coke, Pepsi change production process in California after cancer warning (theprovince.com)
- Coke, Pepsi change recipe in California after cancer warning (vancouversun.com)
- Coke‚ Pepsi to drop level of ‘cancer’ chemical (thehimalayantimes.com)
- Coke, Pepsi cut caramel to avoid ‘cancer in a can’ image (thehindu.com)
The California Supreme Court sided with the Initiative Process today.
The California Supreme Court handed down a unanimous decision today validating that the Proposition 8 supporters do have standing to appeal the decision by Federal District Judge Vaughn Walker declaring the proposition invalid because it violates the California and US Constitution. By upholding the right of the losing side in that Federal case to take their appeal to the US Court of Appeals for the ninth circuit, the court was not taking a position on the merits of the appeal but acting on the important procedural principle that when state officials decline to defend a law passed by the voters that the proponents of the initiative petition in question may act for the state in doing so.
To decide the matter otherwise would have sent a chilling message to the people of California that their votes don’t matter in initiative petitions if the Governor and Attorney General do not favor the measure in question. The Supreme Court reasoned that was not the intent of the people in permitting the initiative and referendum in the California Constitution.
That the court decided the matter unanimously sent a clear message to state elected officials that they do not get to pick and choose the laws they like, but have a duty to defend the laws unless and until the question of the validity of the measure is finally resolved.
It was a prudent and common sense decision.
Now the parties can argue the matter of Proposition 8 on its merits and no matter what the final outcome may be all will know they got a fair hearing on those merits and were not denied their appellate rights by a procedural trick by politicians seeking to substitute their personal views for those of the voters.
- What Is Prop 8? Gay Marriage Opponents Win California High Court Victory (abcnews.go.com)
- Prop 8: California Supreme Court says Amendment Proponents Do Have Standing to Appeal (pamshouseblend.firedoglake.com)
- California Supreme Court to decide Proposition 8 issue Thursday (mercurynews.com)
- Supreme Court rules Prop 8 supporters can defend the law (mercurynews.com)
- CA Supreme Court Issues Prop 8 Standing Ruling (bilerico.com)
On July 12th the California State University Trustees increased tuition by 12 percent for the fall term. This follows the 10 percent hike last year. Both tuition hikes are blamed on the $650 million in state budget cuts for the Cal State system. Undergraduate tuition at CSU goes up to $5,178 for fall 2011 or $948 more than it was in fall 2010.
But the budget cuts must not have hurt too badly since the trustees then approved the compensation package for the new university president at San Diego State, a part of the CSU system. The Trustees approved a $400,000 compensation package for Elliot Hirshman which was 33.6% HIGHER than his predecessor. Hirshman thus becomes the 29th officer of the Cal State system to make more than $240,000 according to the Sacramento Bee.
Governor Jerry Brown sent the trustees a nasty letter complaining about the size of the increase in salary and dissing them for setting a bad example for other public employees. Lt Governor Newsome, a member of the trustees voted against the increase and legislative leaders issued press statements with mildly masked threats of retaliation with even more cuts if he CSU trustees approved the package.
They did it anyway. Why?
The trustees argued that the market for university presidents is fiercely competitive and they must keep up or fall behind. And let’s face it, compared to corporate salaries for officers of organizations of similar size these salaries are not out of line for their level of responsibility.
But the problem is the universities want it both ways. They want to be subsidized by the tax payers arguing that the world class education for the next generation of leaders is at stake from persistent budget cuts. They want to protect their merit increases and bonuses and defined benefit pensions. We understand that since we all want the same thing.
But competition, the recession and a slow recovery forces business to make tough choices, rationalize costs, and scale back spending to reflect the realities of the economy we have. The universities hate doing that so they raise tuition and blame it on the State. The State complains as they are doing now but is secretly happy to see the tuition hikes because it enables the Governor and the Legislature to look good the next year by making more “cuts” in the university budgets. This is nothing more than a pseudo-tax increase on parents.
There is a solution for this!
IPO the California State University System and the University of California System, and free the universities to compete in the marketplace for students, research grants and faculty. The State can budget a fixed amount each year for grants to California higher education students for instruction and let them compete for a place in class. If they can’t find one in the CSU or UC system then the student and his parents can apply the grant to tuition at a private school or out of state.
No drama. No political games.
The universities are wealthy beyond measure in the creation of intellectual property and if they harnessed the patents and IP and encouraged the faculty to turn it into commercial, revenue producing products, services and expertise the endowment would grow and the faculty would get paid for the time they teach and be free to supplement that teaching stipend from their research work and consulting.
I suspect several things would happen. First, the attitude of the faculty would become much more entrepreneurial. Second, teaching would be a priority for those who choose to teach. Third, students would find many great learning opportunities from the start-ups and work experiences created from that research and entrepreneurship and find taking yoga or underwater basket weaving much less attractive. Fourth, tax revenue and state GDP would grow again as these incubators for learning got back to the business of teaching students what they need to know to be productive citizens.
There ends the rant.
- CSU tuition now twice 2007 cost (sfgate.com)
- Cal State board to vote on 12 percent tuition hike (seattletimes.nwsource.com)
No Budget, No Payday!
That was the stunning decision yesterday by California State Controller John Chiang. Under California law the State Legislature must adopt a balanced budget (Proposition 58) and they must do so by June 15th by a simple majority vote instead of the previously required 2/3 vote (proposition 25).
Yesterday the other shoe dropped when State Controller John Chiang, also a Democrat, said the Legislature failed to meet the tests under both Proposition 58 to pass a balanced budget and Proposition 25 to do so on time. Therefore, he was just following the law (Proposition 25) and ordered that the Legislators would forfeit about $260 per day in salary and $142 in tax-free travel and living expenses. Under Prop 25 that money is forfeited meaning it cannot be later paid back once the budget is adopted.
Since the Legislature is a full-employment act for politicians with members making $95,291 getting cut off cold-turkey is the voters’ equivalent of a furlough, and legislators are not accustomed to being disciplined especially by other Democrat elected officials.
The Democrat Legislative Leaders were furious believing Governor Brown stabbed them in the back. The Republicans were largely quiet observing the age old political proverb—‘when your opponent is committing suicide, let him’.
Brown told the Legislative leaders to go back to the budget negotiating table and try to talk the Republicans into a short-term extension of the current sales and income tax increases and to allow voters to decide whether to extend them further. Otherwise he told the Legislature to send him a budget with cuts deep enough to close the $9.6 billion gap.
The Controller’s action was refreshingly gutsy and the blogosphere was alive with calls of “Chiang for Governor.” In the short-term Chiang’s action strengthens the hand of Governor Jerry Brown in getting the Legislature to act responsibly enough to allow State Treasurer Bill Lockyer to sell the bonds needed to keep the state in cash.
Republican have resisted calls for a tax extension arguing that past use of that strategy has resulted in the Legislature spending all the money and then some. The problem Republicans have is voters surveyed have repeatedly said they want the opportunity to vote up or down on taxes. So if Republicans continue to hold out they risk irritating voters on a core issue. But voters also passed Prop 25 reducing the vote needed in the Legislature to approve the budget to a simple majority thus depriving the minority party—almost always Republicans in California—the ability to hold the budget hostage. So Democrats have the votes but not the will to adopt a balanced budget making deep cuts, but they don’t have the votes to call a special election on the tax questions.
Checkmate as usual—but this time no paycheck as usual.
- California State Controller Sticks Lawmakers’ Face In It (cehwiedel.com)
- California Controller to Pols: No Pay for You! (reason.com)
- Chiang Cuts Off Legislators Pay As California Budget Saga Continues (economy4abc.blogspot.com)
- California Budget Rapture is Near (civicchoices.wordpress.com)
- California Voter Revenge Hits Politicians Hard! (civicchoices.wordpress.com)
- Jerry Brown vetoes budget – Democrats ‘dismayed’ (sfgate.com)
A fist fight between opposing views on the State budget broke out at the California Legislature just before the Democrat-sponsored State Budget was approved anyway and sent to Democrat Governor Jerry Brown. But Brown vetoed the budget sent him by fellow democrats saying it was full of gimmicks and did not solve the problem.
He told them to talk the Republicans into allowing voters to decide whether to extend the current temporary sales and income tax increases as a bridge and to find more cuts in budget categories or else.
This is Jerry Brown at his finest!
He knows every legislative and political trick in the books and he obviously surprised the Democrats by not rolling over for their latest attempt to kick the can down the road.
Why were they doing it?
Voters approved a ballot Initiative last election that stops legislative paychecks if they fail to approve a balanced budget on time. So the Legislature approved a budget they called balanced in time—the first time in decades—to meet that paycheck deadline betting that fellow Democrat Jerry Brown would let them get away with this smoke and mirrors trick.
The Governor knew he would have to live with a flawed budget and thus would get all the blame for making draconian cuts needed to make up for the gimmicks the Legislature approved. So in vetoing the budget he told them to try again.
So angry was Senate President Pro Tem Darrell Steinberg that he announced he was halting Senate consideration of Governor Brown’s appointments and there would be no further confirmations for an indefinite period of time.
Pressure on the Legislature to approve a realistic state budget is compounded by bad economic news. California employers shed 29,200 jobs from payrolls in May after several months of job growth had boosted California’s estimated revenue for the year. California’s unemployment rate still fell to 11.7% from 11.8% in April, according to Bureau of Labor Statistics.
California was not alone in this bad economic news as only 54,000 jobs were added in May and the national unemployment rate grew to 9.1%. First quarter job growth averaged 220,000 jobs a month. Add falling home prices and lower retail sales and consumer confidence numbers and you see why Governor Brown was tired of waiting for the Legislature to do its job.
A POX ON BOTH YOUR HOUSES
Jim Boren, an editorial writer for the Fresno Bee, summed up the nasty mood pervading the State with this editorial:
“Here’s more evidence that we need a part-time Legislature in California: It took lawmakers almost six months to come up with a phony budget, which Gov. Jerry Brown vetoed within hours of its passage. Part-timers couldn’t have done any worse, and likely would have solved the problem.
The Sacramento political establishment scoffs at the thought of a part-time Legislature for many reasons. If lawmakers are part time, their staffs would be part time. The public relations professionals and lobbyists, who operate full time, would have less work.
A full-time but dysfunctional California Legislature works for everyone except the taxpayer. We have a system in Sacramento that has morphed into a moneytree for the political class.”
And so it goes.
- Calif. Gov. Jerry Brown vetoes state budget (marketwatch.com)
- Uncertainty reigns as Jerry Brown vetoes ‘questionable’ California budget (csmonitor.com)
- Gov. Jerry Brown vetoes Democratic budget bill (abclocal.go.com)
- Jerry Brown Vetoes California Budget, Cavanaugh on 10 O’Clock News Again Tonight (reason.com)
Proposition 25: No Budget, No Paycheck! The California Legislature has five days to complete work on a state budget or risk missing the Constitutional deadline. What’s new, you ask, they have missed the deadline in 24 of the past 25 years.
What’s new is that THIS TIME as a consequence of Proposition 25 approved in the November 2010 election if the Legislature fails to approve the budget on time the State Controller must stop paying them. California lawmakers are paid $95,291 per year in addition to a daily expense allowance of $141.86 on days the Legislature is in session so each day the budget is late after June 15th will cost them $403.93. Since most of the legislators consider it their full time job this is a serious consequence, but there is more—-any compensation withheld is considered forfeited and cannot be paid retroactively.
Proposition 11: Redistricting Hits Home. Proposition 11 approved by California voters in 2008 gave authority to the California Citizens Redistricting Commission to redistrict State Legislative seats, Congressional Districts and seats on the State board of Equalization. As you can imagine, the Legislature hates this idea because it undermines the careful gerrymandering done to protect incumbents. It worked too—in the November 2010 election not a single incumbent legislator was defeated. But this week the California Citizens Redistricting Commission released the first draft redistricting maps using new census data and input from citizens across the State.
Shock would be a mild term for the legislative reaction. Virtually no district was the same since the plan was to assure that the election contests are competitive. Independent analysis of the first draft of maps from the California Citizens Redistricting Commission by the Public Policy Institute of California said the proposed boundary changes would more than doubles the number of competitive congressional and legislative seats. PPIC says the Assembly would gain 7 competitive seats for a total of 16; the Senate would see a gain of 6 competitive seats for a total of 9. The US House of Representatives would gain 5 competitive seats for a total of 9 out of 53.
PPIC defines “competitive” as any voter registration within 5% for Republicans and 10% for Democrats because it says Democratic voters crossed party lines more often than Republican voters.
Proposition 14: Open Primary Elections. Adding insult to this injury, the voters also approved a new primary election rules advancing the top two vote-getters to the General Election regardless of party. Meaning two Democrats or two Republicans or two Tea Party types could be nominated by voters. This seriously messes with the ability of the political parties to engineer the elections, but since a growing share of California voters are officially “decline to state” or independent it forces the candidates to broaden their appeal rather than courting only the base in their own party. The objective is to encourage a more centrist set of candidates and to breakdown the partisan gridlock that has held up decision in the Legislature.
- California Redistricting Commission Releases First Draft of New District Maps (elections.firedoglake.com)
- Fair redistricting? It is to laugh (maureenholland.wordpress.com)
- California Voting Map Stirs Criticism (online.wsj.com)
- California to get first look at new political maps (sfgate.com)
- Controller Announces No Pay for Legislators Absent Balanced Budget by June 15 Deadline (yubanet.com)
- Controller to legislators: No budget, no pay (sfgate.com)
That was the headline from the cleantech blog I opened May 27, 2011 as I surveyed my email inbox, sipped my first cup of coffee and tried to wake up. There were other stories about the decision by the California Public Utilities Commission to approve a revised rate design for electricity rates, but this ‘Victory for Solar Friendly PG&E Rates’ symbolized this morning the inherent conflicts in utility rate design—it is almost always a zero-sum game.
“The California Public Utilities Commission voted down proposals by PG&E that would have been a big step backward for solar customers. The two major victories were 1) the CPUC opted to maintain its 4 tier rate structure, wherein high usage customers are given a strong price signal to conserve electricity or invest in solar to offset the cost of high usage, and 2) PG&E will not be allowed to implement a fixed customer charge,” the blog story from Vote Solar read.
On the warm side of the hills where a growing share of PG&E’s customers live and try to make a living sufficient to feed their family and afford their rising utility bill, the reaction was very different.
The CPUC action in this rate design case split the differences between the parties. It did allow PG&E to reduce the rate tiers but did not permit the increase in the customer service charge. This PG&E rate re-design proposal came about because of outrage in Bakersfield over high utility bills as PG&E was installing smart meters. This outrage has come to be known as the Bakersfield Effect because it brought customers out into the street ‘totally ticked off’ blaming their smart meter for the high bill caused by the socially engineered rate design.
PG&E’s spokesman Tom Bottorff said after the CPUC decision that PG&E customers who use large amounts of electricity will pay 17.6 percent less than they do now under the new rate design approved but will still pay nearly three times as much as the Tier 1 customers.
For years Tier 1 rates have been called “lifeline rates” designed to provide low cost rates to the first block of energy use to benefit poor, seniors and others in need. But apartment dwellers in San Francisco and homes in the foggy Bay Area use less electricity and thus benefits from the tiered rate structure because they don’t use their air conditioners in summer. On the warm side of the hills or in the central valley portion of PG&E’s service territory it is a different story. There the steeply progressive nature of PG&E’s residential rate structure hits hard whether you are low income or not. PG&E had proposed to reduce the tiers even more than the CPUC approved and more evenly distribute the cost of service by moving a portion of the revenue requirement to a larger customer service charge paid by all residential customers—about $3.00 per month which would have affected the folks in the fog.
The next paragraph in the Vote Solar cleantech blog post revealed the truth about the rate design contest that the CPUC had just resolved:
“Why does this matter? Because rate design, or the process of setting electricity prices, is one of the most important factors in the financial decision for energy customers to go solar. Since much of a solar energy system’s value comes from the utility payments it is offsetting, electricity rates have a significant impact on a solar customer’s return on investment.”
“In the PG&E rate case, the utility had proposed eliminating its 4th residential tier – effectively moving its highest consumption customers into a lower tier and raising rates for others. This closely follows PG&E’s decision to eliminate Tier 5, which recently penalized existing PV owners and makes the changing price dynamics for solar even more extreme – not helpful when you’re trying to encourage investments with long-term payoffs. We modeled the impact of these proposals across a variety of consumption levels, PV system sizes and geographic locations under the two rate scenarios. The modeling showed that most PV customers would lose bill savings in a big way under PG&E’s proposed changes. The graph below illustrates the impact to a typical Tier 4 customer:
Furthermore, PG&E proposed a fixed $3.00 charge in lieu of its existing minimum charge. On policy grounds, Vote Solar opposes flat charges like these because they represent a lost opportunity to incentivize energy conservation and customer investment in PV; in other words, no amount of customer activity would be able to reduce that charge. And the net effect of the proposal would be to drive up rates for low usage customers and reduce rates for high usage customers.”
There you have it!
The reason the solar lobby in California vigorously opposed PG&E’s rate design proposal had nothing to do with the public concern about rising utility bills and EVERYTHING to do with keeping rates as high as possible on the warm side of the hills to improve the competitive position of solar energy companies.
You see solar still costs more even though its costs have been dropping—than other power generation supply options. But PG&E and other investor owned utilities in California are required to procure 33% of the electricity consumed from renewable sources even if they cost more. That is one factor driving up utility rates. So the best hope of solar companies to make a profit and be sustainable is to keep the 33% RPS pressure on utilities to buy the output of their projects and keep the rates high to make solar look more cost effective.
It’s enough to make you green—-with envy. You can be sure this Vote Solar bragging is not taking place in Bakersfield or elsewhere in the Central Valley—but safely in the fog of their 300 Brannon Street, San Francisco office.
- Consumers Win Partial Victory Over PG&E Rate Proposal (yubanet.com)
- DRA Declares Proposed Residential Customer Charges on Electric Bills Are Illegal (yubanet.com)
- PG&E rates to drop for heaviest utility users (sfgate.com)
In a 5-4 decision in Brown versus Plata the US Supreme Court upheld a lower court injunction ordering California to release about 46,000 convicted felons over the next two years to relieve overcrowding.
The decision split the court along its traditional liberal versus conservative lines with Justice Anthony Kennedy, often the swing vote between these blocks deciding in favor of the proposed sweeping release of prisoners. The conservative justices lead by Anton Scalia were scathing in their criticism of the majority decision saying the courts had overstepped their power and put themselves into a role of supervising the California prison system that was beyond their skill and authority and having failed at that they now propose to solve California’s overcrowding problem by letting the criminals out of jail.
That California prisons are a broken institution is not at issue. The prison system has been swamped by laws like three strikes, determinate sentencing and mandatory minimums aggressively incarcerating people in response to public outcries over violence, drugs and gangs.
But this is not just a California problem. The Pew Center on the States reports that more than one in every 100 adults is now confined in an American jail or prison. The Pew Public Safety Performance Project tells us what we know all to painfully that soaring costs of failed criminal justice systems are hitting the states hard when they can least afford it and worse those policies and systems are not solving the problem of crime, violence, drugs and gangs in any meaningful way.
But there is a worse demographic outcome even than these. We are wasting a generation of people who could have been productive members of society. One in 30 men between the ages of 20 and 34 is behind bars, for black males that number is one in nine. Men statistically are 10 times more likely to be in jail, but the rate of women being jailed is rising much faster than for men with the rate for black women in their 30s now 1-in- 100. Overall, 1 in 53 people in their 20s is in jail, and 1 in 837 of those 55 and older is in jail or still in jail.
The other problem is politics. Demand for action against crime is an easy way for politicians to pander to the voters, but the soaring costs of keeping all these people in jail longer and turning them out more hardened criminals isn’t working. The prison guards union is very powerful in California politics and often has been an obstacle to changes in the prison system. The problems facing California prisons today are not new but that does not make them easier to solve.
The question is whether releasing 46,000 felons over the next two years to comply with the court order will do anything to solve the fundamental problem causing this high incarceration rate as a consequence of a failed set of social policies, family relationships, and the corrosive influence of drugs, gangs and guns in our civic life.
We know the answer to that question don’t we? We just don’t know how to solve the real problems.
- California Must Release 40,000 Prisoners (outsidethebeltway.com)
- Supreme Court orders California to free up to 46,000 prisoners (telegraph.co.uk)
- What are California’s best options for reducing state prison population? – 89.3 KPCC (news.google.com)
- Top Court Sets Stage for Felons to Go Free (online.wsj.com)
- California must cut prison population by 33,000 (sfgate.com)