Vermont Tiger

Burlington Telecom: The Critical Conditions Part 4

by Chris Campion

This is the 2nd condition of the Certificate of Public Good, which BT admits it has failed to comply with: 

“BT shall at all times conduct its operations consistent with Board rules or regulations, as amended from time to time, this CPG, and Vermont law, including all applicable provisions of the City of Burlington Municipal Charter 24 V.S.A. App. Chapter 3.”

BT is admitting that has not conducted itself consistent with its Certificate of Public Good.  If you admit to non-compliance with Condition 2, do you really need to admit non-compliance with any other Condition?

Lighting Up

by Art Woolf

On September 4, 1882, one hundred and twenty-eight years ago today, Thomas Edison flipped the switch at the Pearl Street generating station in lower Manhattan (near Wall Street) and the first commercial electric generating station began operation, truly chaning the world.

What impact did this have on the standard of living?  Brad DeLong and Larry Summers explain:

Bulletin

The Freeps and WCAX both carry stories this morning about the Public Service Board report called "Proposal for Decision," written by Mr. John Bentley.  The report deals with the woes of Burlington Telecom.

Regular visitors to this site can skip these stories as they will have been made aware of the report and its findings by reading Chris Campion's excellent series of posts which began appearing here on Tuesday.

We now await reports from the Freeps, WCAX, and other media parties on the ISO New England report regarding the consequences – in terms of the cost and reliability of electrical power in the state and the region – of closing Vermont Yankee.

Sometime after Labor Day ... maybe.

It's Arithmetic and It's Scary

by Tom Licata

“What is critical to keep in mind is that this situation is part of a broad, multiyear process driven by national and global realignments. It's a secular phenomenon that needs to be better understood and navigated -- by recognizing its structural dimensions…. Unfortunately, the approach in too many industrial countries [and states such as Vermont] has been to kick the can down the road, seemingly hoping for a series of immaculate economic recoveries.”

 
Yes, I understand that this - from Mohamed El-Erian, CEO of Pimco - is a mouthful.
 
But, it is a mouthful that needs to be understood, especially by gubernatorial hopefuls Lt. Governor Dubie and Senators Shumlin or Racine, other Vermont legislative candidates and Vermont’s various public stakeholders and business leaders.
 
What we are experiencing today is nothing short of the structural changes that transpired during the 1920s through 1940s; which were followed by decades of unprecedented prosperity and growth in the United States.  Today’s structural changes will not be followed by such good fortune.

Good News on Housing

by Art Woolf

For the last two decades, I've been publishing my Vermont Housing Affordability Index in The Vermont Economy Newsletter.   And affordability has been improving for the past few years, as I noted here.   My measure of affordability, and my view that housing affordability has improved recently, has been challenged by several housing advocates, and by Doug Hoffer, who is now the Democratic candidate for state auditor (see his comments last year on my analysis here and this year's, in audio, here).

In The New York Times, my friend and fellow economist Karl Case essentially agrees with me:

Do the math. Four years ago, the monthly payment on a $300,000 house with 20 percent down and a mortgage rate of about 6.6 percent was $1,533. Today that $300,000 house would sell for $213,000 and a 30-year fixed-rate mortgage with 20 percent down would carry a rate of about 4.2 percent and a monthly payment of $833. In addition, the down payment would be $42,600 instead of $60,000.

Sounds like a pretty good deal for potential homebuyers.  And remember, as bad as the housing price decline is for homeowners, it means that young people have more opportunities than they would have had if prices had stayed at their stratospheric levels of four years ago.

Reality Check

Politics by Emerson Lynn 

ISO-New England is an “independent system operator” established by the federal government in 1997 to oversee and to assume responsibility for the reliability of the electricity demands in Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont.

On Monday, the organization essentially said the reliability of New England’s electric grid would be put at risk if Vermont Yankee were not part of the region’s baseload power providers.

The issue came up because ISO-New England earlier this month conducted its fourth “Forward Capacity Market” auction, which is its effort to secure a commitment from the region’s energy providers as to what level of power they will be able to provide in future years. This particular auction was for 2013-2014 and it procured 37,501 megawatts for a market that needs an estimated 32,127 megawatts of capacity.

Burlington Telecom: The Critical Conditions Part 3

by Chris Campion

As we continue our review of the Burlington Telecom Proposal for Finding by the PSB, we note that Condition 56 of the CPG states:

In no event shall any losses or costs, in the event the enterprise is abandoned or curtailed, incurred by BT be borne by the City of Burlington taxpayers, the City of Burlington Electric Department ("BED") ratepayers or the state of Vermont, nor shall the City of Burlington expend any funds received from the State of Vermont to cover any losses or costs, in the event the enterprise is abandoned or curtailed, incurred by BT, as provided in 24 V.S.A. App. 3-438(c)(1).

BT argues that BT has not abandoned or curtailed business – but the Proposal for Finding states that “…such a result would be absurd as it would permit the use of taxpayer funds up until the moment of abandonment or curtailment, at which point it might be impossible to prevent taxpayers from bearing the burden of significant losses and costs”.  (p.14 of the Proposal for Finding.)   In other words, stating that you haven’t violated Condition 56 when it is clear that BT did not have sufficient cash flow to cover its operating expenses (as admitted by BT in its non-compliance with Condition 60) is like stating your house isn’t on fire because no one has yet called the Fire Department. 

But hey - let's rally round the BT fire.  One wonders what city administrators can possibly thinking, urging the public to subscribe to a telecom service that they themselves were funding in violation of the CPG - when telecom services already existed, everywhere in Burlington, for decades.

Building a Straw Politician

by Art Woolf

I just received an email alert for the Vermont's Public Assets Institute's new blog post with the catchy title

Cutting School Budgets Could Get Expensive

The post begins by building the most unrecognizable straw man I've ever seen:

As the opening day of school approaches, local school officials gear up for the next budget season, and some campaigning politicians continue to insist that education is a luxury we can no longer afford,

I hope that the next PAI post will identify some of these campaigning politicians.  Even one would do.  No one that I've heard speak has ever said anything remotely like "education is a luxury we can no longer afford."  Several campaigning politicians (and some non-campaigning non-politicians, including me) have been saying that being one of the highest per pupil spending states in the nation is a luxury that Vermont can't afford, but that's very different than the PAI statement.

And there's more.

Careful What You

wish for.

Today, a wind farm.  Tomorrow, a nuke plant.

Life Without Yankee Would Be ...

expensive, chaotic, and occasionally dark. (regards to Thomas Hobbes)

That, anyway, is the conclusion of ISO New England which is the "independent, not-for-profit corporation responsible for the reliable operation of New England's electric power generation and transmission system ..."

Among the relevant data points in a  release issued earlier this week:

•    The studies completed so far have shown that with or without Vermont Yankee, the system in Vermont has reliability issues that must be addressed; without Vermont Yankee in service, those issues are more severe and could affect neighboring areas. The potential reliability issues could include thermal overloads on high-voltage transmission lines and voltage instability, either of which could damage equipment, compromise grid stability, or cause uncontrolled outages.

    •    ISO New England does not have authority to require Vermont Yankee to operate without the appropriate permits and licenses, but it does have the responsibility to ensure a reliable power system. This responsibility requires the ISO to develop alternative solutions that will ensure reliability in the area of the power system that includes parts of Vermont, New Hampshire, and western and central Massachusetts beginning as early as March 2012 if Vermont Yankee can no longer operate.

    •    These alternatives could include interim solutions such as emergency generation brought into Vermont temporarily, more expensive generation from outside Vermont, and demand-side resources. Long-term solutions would include transmission line upgrades as well as other possible solutions, such as private development of new generation, increased energy efficiency, and new sources of imported power. All these options will come at an additional cost. Vermont has little in-state generation apart from Vermont Yankee, which represents more than half of the generating capacity in the state. In 2009, Vermont’s peak consumer demand was 985 MW.

The $19 Million Choice

 Politics by Emerson Lynn

Congress is about to cut Vermont a check for $19 million, and the money is to be used to prevent the layoffs of teachers in our public school system. 

A simple thanks would be the natural response from most states.

Not in Vermont.

The governor does not want to use the money to hire back teachers who have lost their jobs. He would prefer to use the money to pay down the teachers’ pension fund obligations and to reduce property taxes.

Republican gubernatorial nominee Brian Dubie is in firm agreement.