Sunday, August 4, 2013

Appalachia, Save Thyself



For all of the mountains turned to rubble and streams turned to orange in the coalfields of Appalachia, one consolation for the region has always been to have some of the lowest electricity rates in the nation.  With coal being literally under their feet, Appalachian utilities have delivered cheap and reliable electricity for about as long as King Coal has been firing up the boilers that make the steam that spins the generators that juice the wires that light up our lives in so many magical ways.

But everything is relative.  Rates in this region may be lower than in other parts of the country, but they have been rising over the past few years, due mainly to price hikes in coal and retrofitting of coal-fired power plants with smokestack scrubbers and the like, to meet environmental regulations. 

Another thing that has been rising in recent years in a region that is known for high poverty rates: even higher poverty rates.  Of course this has gone hand-in-hand with higher unemployment, a` la the Great Recession.


Snapshot: Appalachian Poverty by the Numbers (2010)


  • US Poverty Rate: 13.8%
  • Appalachian Poverty Rate 15.6%
  • Appalachian County with Highest Poverty Rate: Wolfe County, KY (42.2%)
  • Appalachian County with 2nd-Highest Poverty Rate: Owsley County, KY (41.5%)
  • Number of Appalachian KY Counties with Poverty Rate 20% or above: 45
  • Number of Appalachian Tennessee Counties with Poverty Rate 20% or above: 16
  • Number of Appalachian Tennessee Counties with Poverty Rate Above 30%: 2

Source: Appalachian Regional Commission

Even as rates climb, an electric bill might not yet be a particularly burdensome budget item for middle to upper income households.  But as income inequality continues to widen, more and more Appalachian households are asking hard questions about how they keep their lights on while trying to pay for other basic necessities.

A 2008 Economic Opportunity Study determined that residential energy bills are upwards of 26% of the budget of households in poverty, while households with incomes higher than the eligibility ceiling for emergency utility assistance (LIHEAP) spent about 4% of their income on utilities.  And lest anyone assume generally wasteful energy habits on the part of poor people, the study shows that energy consumption in low-income households is somewhat less than in higher-income households.  This, despite the fact that low-income housing is typically much less energy efficient than the houses of rich people.

If at some point higher-income homeowners want to get a better handle on rising utility bills, they have the financial means to do this, typically by taking out a loan to weatherize their house.  Depending on terms and extent of the upgrades, this type of loan more than pays for itself over time in reduced energy bills.  However, between the down payment and credit score requirements of conventional loans, this is rarely a realistic option for lower-income homeowners. 

This is the reality that the nonprofit organization Appalachian Voices is working to change.

Based in the North Carolina high country town of Boone, App Voices has been organizing to protect the region's natural resources and beauty since 1997.   Yet beyond taking stands against various unsavory and unsustainable practices of the region's extractive industries, this multi-state organization promotes a very practical alternative economic vision that undermines the classic "jobs versus environment" argument.

The recently launched Energy Savings for Appalachia Campaign aims to develop energy efficiency and related jobs to shore up the long term economic and environmental health of Appalachia.  App Voices Energy Policy Director Rory McIlmoil explains that the basic plan is to work with member-owned rural electric cooperatives in North Carolina, Virginia, and Tennessee to develop more broadly affordable energy efficiency financing programs that lower electricity bills while strengthening the region's energy services industry.

"We're reaching out to co-ops and their members to look at financing models that reduce demand and save money for the cooperatives as well as their members," says Mr. McIlmoil, who recently did some co-op hopping around to a number of east Tennessee electric cooperatives, trying to get a sense of how open their managers are to developing new energy efficiency programs.  "The initial response is encouraging," he says.  "We're definitely not getting blown off, particularly in Tennessee."  He says that the co-ops do have concerns about the administrative costs of a new loan program.  But they also recognize that they have a large customer base that could benefit from a low-interest, nothing-down, weatherization loan where members qualify based on electric bill payment history rather than income and credit scores (see, for example, Electric Cooperatives of South Carolina's quite successful Help My House Loan Pilot Program).

While it may seem counter-intuitive for an entity in the business of selling electricity to put any effort into helping its customers use less energy, there are clear benefits to a utility that promotes energy efficiency.  No utility has enough of its own generating capacity to meet the needs of its customers during peak demand periods during the dog days of summer, winter's deepest freezes, and other extreme weather events.  During these localized events it is common practice for a utility to purchase power from other utilities outside its local or regional grid to supply the deficiency.  This external power has been subject to the same upward pressure on costs as home-grown power, plus the premium placed on it during peak demand.  So any measures a utility can take to shave demand becomes a return on investment during peak demand.

By helping electric cooperatives implement and grow energy efficiency financing programs for low and moderate income homeowners, Appalachian Voices aims to juice the small but growing energy services industries in the region, including home energy audits, weatherization retrofits, building materials and energy efficient appliance sales. 


Don't call it "jobs versus the environment" anymore.  Don't even call it a "green economy."  Call it "jobs that save the mountains, and money on your electric bill."




Wednesday, July 24, 2013

Green Tea Spilling Over the Southeast

  "We're not radical environmentalists. We're not even environmentalists.  We're conservationists."
           - Lloyd Daugherty, Tennessee Conservative Union                                         

                                               (Fox News Video Link)


“As a conservative and a business owner, I am extremely disappointed by the approach of a few legislators who want to raise taxes on the solar industry,” said Robbie Thomas, president of Efficient Energy of Tennessee, with operations in Jackson and Knoxville. “The state of Tennessee is better than this."
                   - Tennessean, 7/26/2012

Photo by J. Miles Cary - Knoxville News-Sentinel

"We care about our environment. We just believe that things should be done in a conservative way....  We believe this giant utility monopoly deserves some competition... and consumers deserve a (solar power) choice to protect the environment."
          - Debbie Dooley, Atlanta Tea Party Patriots

Visit NBCNews.com for breaking news, world news, and news about the economy


"The radical promise of solar power for a Tea Party activist... or a lefty like myself is decentralizing that power so that (a utility) isn't controlling all the power - people are actually controlling their own fate with that power."                    - Chris Hayes, MSNBC


(Thanks to SACE and JW Randolph at AppVoices for the leads)

Sunday, July 21, 2013

green|building a better Chattanooga

Consider the following dilemmas:
  • You have a business.  You have a brain.  You have a certain green consciousness.  But your company doesn't even have a recycling program, much less a sustainability plan.
  • You want a green job. You have decided to get certified as a type of building energy auditor known as a HERS rater.  But you don't have the startup capital for some of the most expensive tools of the trade, such as a blower door or a duct blaster.
  • You have arrived at the threshold of the American Dream: about to build a house.  You have a tight budget. You have a certain green consciousness.  But you are not sure you have the money to build an energy efficient home. 
But if you live in Chattanooga you have all of this.  And more.

Green|spaces is a sustainability hub for the city -- an incubator, facilitator, and promoter of best practices in green building, as well as eco-friendly living and working in general.  This nonprofit organization has been one of the main vehicles for making Chattanooga's widely acclaimed economic revitalization a distinctively green enterprise.

With the sensibility of a true architect (not surprising, with more than a few on their Board), green|spaces starts from the premise that how we build, live in, and work in buildings has enormous consequences well beyond the quality of the buildings themselves.  While their brand of sustainability is grounded in green building, green|spaces also consciously integrates economic and social sustainability into its programs.  "Anything less is, well, unsustainable," explains Development Director Dawn Hjelseth.

Green|space's three main program areas address the above dilemmas:
  • Green|light is a third party certification of green business practices.  "This program doesn't require companies to change their core business model, but rather asks them to address everyday operations," said Program Director Tesia Gorka Jones. "We verify that companies complete a set of tasks - everything from starting a recycling program to carpooling to changing lightbulbs - that gives them a direct path to greening their company in a way that grows their business."
  • Home Energy Rating System (HERS) energy audits and training of HERS raters: Chattanooga's recent change in building codes requires all new construction to pass a third party blower door/duct blaster test for tightness of the building envelope.  This positions the nonprofit to be a key source of technicians and technology for builder compliance.  Green|spaces offers HERS rater certification classes, Duct Envelope Tightness (DET) verifier training, as well as blower door and duct blaster rental.
  • The better built program is a third party green building verification for new construction.  This home-grown set of standards was developed by local architects, realtors, contractors, and homeowners to address sustainable materials, methods, site planning, water efficiency, indoor air quality, and energy efficiency.  The homes are built by certified contractors who attend a two-day training.  The houses must test out at a 75 or lower HERS rating. Overall, the better built bar is not as high as a LEED certification, but the "better builders" say their homes will be at least 25% more energy efficient than a new house built to standard codes.

video


Wednesday, June 19, 2013

Putting Green Lipstick on a Tax Pig


UPDATE BELOW: 6/27/13
Nashville – Hold on, hippie Democrat treehuggers.  Stop assuming a Republican-ruled Tennessee General Assembly doesn’t want to “promote North American energy independence and to conserve limited natural resources.”  Clearly you have not read their “findings,” right there in the first paragraph of SB 1000/HB 62, a business property tax bill recently passed by the legislature and signed into law by Republican Governor Bill Haslam. 
 

The enlightened language in the bill’s introduction would make it seem that this red state wants to be green, at least when it comes to tax valuation of property that generates power from renewable sources -- solar panels, for example.   The great green solons declare in the bill itself that without downward valuation for tax purposes, “… investment in property to generate electricity from ‘green’ sources will be unreasonably discouraged, denying the citizens of Tennessee the environmental benefits associated with the greater use of these domestic renewable energy sources for power generation.” 
 

With this apparent marriage of traditional Democrat concerns for the environment with Republican concerns for low taxes, it would seem that extraordinary statesmen have gotten us all to hold hands as Tennesseans walk down the shining path of a bold new green economy.

Except that this bill, devised by Republican leaders in the state comptroller’s office, just raised taxes 2500% on property that generates electricity from solar, and 6000% on wind sources.

Meanwhile, oil, gas, and coal-related enterprises that own certified “pollution control” property will continue to enjoy the negligible property taxation afforded by that certification, a subsidy which will no longer apply to green energy property, thanks to the above legislation.

In 2010, immersed in federal clean energy dollars from the American Recovery and Reinvestment Act, then-Governor Phil Bredesen got religion for the economic development possibilities of renewable energy, particularly solar.  One of the key green items ticked off of Bredesen’s legislative agenda in that last year of his term was to include green energy property in the same low valuation/low tax category that had existed for pollution control equipment since 1985. 
 

Although a formal 1986 Attorney General Opinion had questioned the constitutionality of that original law, that Opinion was functionally ignored.  Ever since, per the 1985 law, all manner of Tennessee industries that create air and water discharges have had the Dept. of Environment and Conservation certify their various and pricey smokestack scrubbers and water treatment equipment, in order to have their value capped at no more than .05% of their salvage value, for tax assessment purposes. 

So in 2010, the Democratic governor invited the renewable energy industry to the pollution control tax break party, since for the previous 25 years nobody had called the cops to break it up. Then last year, holding the Governor’s mansion and majorities in both legislative chambers, Republicans decided to disinvite the greens. 
 

Extraordinary statesmen were not to be found in the optics. It may have seemed to certain well-placed partisans that certain Dems had too much ill-gotten green at this party.  Almost immediately after leaving the Governor’s mansion Democrat Bredesen ventured into the utility-scale solar business.  Speculation was perhaps unavoidable that certain Republicans, now in administrative position to engineer a clawback, may have begrudged Bredesen tailoring a parachute for a soft tax landing in his shiny new Silicon Ranch.

The next chapter was written in State Comptroller Justin Wilson’s office.  David Hawk in the House and Randy McNally in the Senate were dispatched to co-sponsor the 2012 bill that would do away with the .05% salvage value assessment for renewable energy property, replacing it with 33.33% of installed cost of the property.  Alarm bells were sounded across the state by the Tennessee Solar Energy Industries Association (TenneSEIA), who managed to contain the fire by getting the bill sent to “summer study,” giving both sides time to regroup.

The noisy and sustained blowback was an indication of how relevant the solar industry has become in the Tennessee economy, with no small aid from an array of state and federal incentives.  According to GTM Research and the Tennessee Solar Institute, the state has gone from less than 1 kilowatt of installed solar photovoltaic (PV) capacity in 2008 to about 29 megawatts in 2012.  There was a 60% increase in Tennessee’s installed solar from 2011 to 2012, moving the state’s rank from 22 to 16 in that category, with over 6000 jobs in sales, supply, manufacturing, and installation.

Perceiving the bill as a serious jobs killer in an already anemic economy, a fair number of not-necessarily-Democratic solar business leaders were now up in arms, perhaps blindsiding the administration.  The Office of the Comptroller appeared to run for cover behind State Attorney General Robert Cooper, who was asked to revisit the question of the constitutionality of the pollution control valuation cap.  Predictably, the A.G. reaffirmed the law’s sketchiness last fall.  The Comptroller’s Chief of Staff, Jason Mumpower, insisted that his office was only trying to help the green energy industry by “correcting a technical matter in the tax code” while preserving some incentives for renewables. 
 

Mr. Mumpower has been mum on whether he wants to give that same kind of help to fossil fuel-based industries with pollution control equipment.  He apparently doesn’t mind that dirty energy will continue to enjoy the same unconstitutional tax break that he says he worries about clean energy having. Because it’s unconstitutional.

For all of the seeming injustice of getting kicked out of the pollution control party, a tax break of questionable constitutionality does reek of market risk, especially now that a spotlight is shining upon it.  But along with renewed skepticism of the pollution control tax cap, Attorney General Cooper’s Opinion also offered a “constitutionally defensible” alternative: since wind and solar energy property can only intermittently generate electricity, i.e. when the wind is blowing and the sun is shining, it can be rationally seen to have an intrinsically lower value than other electricity-generating property, such as a coal-fired power plant, which can operate 24/7/365.

Rather than get in a prolonged dogfight, in the end TenneSEIA decided the bottom line was the bottom line, which was already eroding due to waning investor confidence in the market, partially a result of the political uncertainty about state government attitudes and actions toward clean energy, legislative rhetoric notwithstanding. 
 

With the output of a solar system generally estimated at 12.5% of its maximum generating capacity (i.e. if it could generate electricity 24/7/365), TenneSEIA negotiated a property valuation cap of 12.5% of installed cost.  Wind remains calculated at 33.33%.

The solar folks bravely took their medicine and hopefully repaired to a less turbulent market, or at least one where there is less chance that “investment in property to generate electricity from ‘green’ sources will be unreasonably discouraged” by reckless partisans.


Published 6/20/2013 at MetroPulse.com

UPDATE 6/27/2013: Working in tandem with TenneSEIA throughout this legislative saga has been the grassroots organization Statewide Organizing for Community eMpowerment (SOCM).  Their Green Collar Jobs Committee has been doggedly tracking the progress of this bill and lobbying against it for over two years.  In the aftermath of the compromise on green energy property, SOCM continues to peel back legislative layers to try to understand the status of the pollution control property tax as it applies to non-renewable energy equipment, e.g. smokestack scrubbers.  "There haven't been any answers as to why other pollution control equipment is still allowed to be taxed at the unconstitutional level," said SOCM member Lauren Bush.  "Maybe they are trying to create an unlevel playing field now that solar is competitive."  More information forthcoming as the onion gets smaller.

Monday, June 17, 2013

Third Time's a Charm?




I have only one problem with Gerald Witt’s otherwise excellent Knoxville News-Sentinel report on Knoxville’s $5M emergency utility assistance problem: he doesn’t get around to mentioning until the thirteenth paragraph that in the previous year it was a $3.3M problem.  Separating these two numbers so far apart in the story kind of buries some critical context.  In fact, to me it is the essence of the story.

This problem is a lot like saying, “We are paying $5.00 for a gallon of gas today.”  But just how bad this is really hits home when we realize we were paying $3.30 per gallon last year.  We are talking about a 66% increase in cost in one year – for keeping folks’ lights and heat on when they get in a jam.  Full disclosure: I have been in one of those jams in the last year and gratefully availed myself of these resources.

This problem surfaced publicly when Knoxville won a Smarter Cities Challenge Grant from IBM worth $400,000.00.  The company sent a high-level team to Knoxville this spring to analyze the city’s emergency energy services and propose better ways to improve the energy efficiency of Knoxville’s older, leaky housing stock in low-income areas.  The team reported out its initial findings late last month and said their full report will come later this month.

In Gerald Witt’s story he quotes an IBM team member, who said the array of local agencies, charities, and governments who deliver these services are managing poverty but not fixing the problem.  She and others also said, somewhat predictably, the problem has no single cause.

Amen on the first point.  Yes and No on the second point.

It would be flaky to say there is a single action that would make Knoxville’s leaky, old, humble housing stock less of an energy and money sink – for homeowners as well as emergency assistance providers.  On the other hand, it would seem the most important single aspect of this problem is staring us right in the face: poverty.

The rising cost of energy alone does not explain such a dramatic jump in the cost of emergency utility assistance, but coupled with a rising poverty or near-poverty rate, it could.  While no poverty statistics are available for 2012 (the year emergency assistance jumped to $5M), according to the Census Bureau’s American Community Survey, the Knox County poverty rate climbed from 12.6% in 2010 to 14.2 % in 2011, even as the still painfully high unemployment rate has been very slowly creeping downward.  It would seem that “demand” for emergency utility assistance has been pent up over the course of this recession, with the floodgates finally bursting in 2012.

Beyond statistics, real world, Great Recession experiences such as my own help to paint this picture.  A combination of budget cuts and lack of seniority led to the loss of my teaching job in 2009.  Although I managed to cobble together some short term contracts and part time gigs since then, a lack of stable and adequate income was steadily eroding my financial position.  Of course the electric bill is always tied for first place with mortgage and groceries in terms of priority payments, even when money runs out before the month does.  So it wasn’t until last year that it all caught up with me and I was forced to find help to keep my heat on, even though my 100+ year-old house had been weatherized in recent years. 

Thank-you, Thank-you, Thank-you Project HELP, and Tennessee Valley Unitarian Universalist Church.

Is it too obvious to say the way to fix this energy efficiency problem is to fix this poverty problem? If all of Knoxville’s considerable number of drafty houses (about 10,000 in low income areas) get weatherized, and yet those households are still occupied by unemployed or underemployed people, there may be short term relief but eventually we will be back where we started. This is a jobs problem at least as much as it is an energy efficiency problem.

There exist some promising models that take a whole systems approach to fixing these problems.  Fundamentally they involve coordination among a diverse set of stakeholders, expanding the small, traditional network of poverty managers to include workforce development, community education, and finance entities.  In dozens of cities this “local energy alliance” model has seen respectable energy efficiency gains coupled with sustainable economic development.  It happens by requiring that much of the retrofits are done by hiring and training unemployed people in family wage green building trades from the same communities in which much of the weatherization work is done.  One of the keys to sustaining this development is the establishment of a revolving loan fund for low-cost energy efficiency loans that pay for themselves through energy savings, with the loan payments aggregating back to the fund to pay for more retrofits.

In their presentation of their early findings last month, Big Blue’s team strongly implied that some version of an energy alliance model be adapted to fit Knoxville’s situation.  It remains to be seen whether this recommendation will land on the shelf with at least two other proposals to the city in recent years to implement similar models.

Here’s hoping the next phase is not another landing, but a long-overdue takeoff.

Sunday, May 19, 2013

To Sell or Not to Sell – That is the TVA Question (again)



 


Welcome back.  Time for a new deal in that game that has been around since the New Deal: Why Don’t We Sell-off the Country’s Largest Publicly-owned Utility?

As you will recall, at least once every few years we come back to this table, whenever another dealer is ready to play with the TVA cards again, in hopes of making bank for the federal government.  Or kill creeping socialism.  It all depends on whether the cards are dealt from the left or the right.  

Ever since Dwight Eisenhower first coined the “creeping socialism” phrase to characterize the Tennessee Valley Authority, the dealers have mostly come from the right.  But the left was dealing the last time this game made headlines, and now the Barack Obama budget proposes a hard look at "reducing or eliminating the federal government's role in programs such as TVA” in order to “help put the nation on a sustainable fiscal path."

While TVA’s 9–person Board of Directors is federally appointed, the utility receives no direct federal money.  All of its coal plants, nuclear reactors, and hydroelectric facilities are maintained through the sale of electricity, and borrowing through special bonds with attractive repayment rates.  With TVA’s $23B in outstanding bonds (mostly incurred from its nuclear program) counted as federal debt, and thereby implicitly backed by the government, this “company” is in “too big to fail” territory.

But perhaps not too big for taxpayers to unload – at least in parts.

In a recent interview with Reuters, TVA Chief Financial Officer John Thomas said there were two main stakeholders concerned with TVA’s future: the 155 utilities and cooperatives who buy power from TVA, and the people who own the company, i.e. US taxpayers.  That was a telling comment in terms of ignoring two other categories of stakeholders with at least as much riding on TVA’s future:  the end users of the power TVA produces -- who also live with the environmental byproducts of producing that power, and the people working in the region’s economy -- particularly the burgeoning clean energy economy, from attic insulation installers to solar panel salespersons to corporate sustainability officers.  

So now the deck has been cut and the cards shuffled yet again.  From the standpoint of an inclusive set of the main stakeholders, the deal comes down to a basic question:  Should the federal government sell publicly-owned TVA to a private, investor-owned company or companies?

As we look over the shoulders of the main players (taxpayers, distributors, end users, businesses, environmentalists), their hands are not always so straightforward to play.  Below is an attempted list of reasons to sell, or not, taking the interests of the main stakeholders into account.  The list is admittedly short and drafty.  As such, no claims of completeness or even accuracy are yet made. That will require further input from the stakeholders mentioned above (which happens to be just about everyone who reads this).




                                    SELL                                                     DON’T SELL

- Would move from internal regulation to some external oversight/accountability by a utilities/public service commission.
- Selling a non-profit utility to a for-profit company is likely to raise rates
- Financing moves from primarily bond debt to investor equity (stock).
- Bond financing becomes more expensive when special Federal bond rate is lost.
 - Avoid taxpayer liability for looming cleanup and equipment replacement for old coal plants.
- Management of flood control, navigation and recreation on waterways likely reverts to a federal government expense it does not currently incur.
- For all of its clean air advantages, the nuclear program is a massive environmental (nuke waste), safety, and financial liability.
- A non-profit utility can do economic development in a much bigger way when it is not required to make as much money as possible from selling electricity.




What do you think?  Ante up in the comments!