Archive for October, 2014

1937: Krugman’s Victory Dance

Wednesday, October 15th, 2014
How to NOT balance a budget

How to NOT balance a budget

As a Krugman fanboy, I’ve been getting a big kick out of his victory dances of late– rubbing it in the faces of the rightist ideologue economists, the austerians from the Austrian School of Economic Destruction. His latest end zone taunt is a blog post entitled, simply, 1937. (If it really were a football game, he’d have a yellow flag thrown in his face for excessive taunting. Yet the crowd roars for more! The dance goes on to be a huge hit known as The Macro-ena! Ok, sorry.)

As he has so patiently (and not-so-patiently) explained over lo these many years, 1937 was a particularly inauspicious year in applied macro-economics as the Roosevelt administration rapidly pulled back from its alphabet soup economic stimulus programs. It was a futile attempt to balance the budget. As everyone who took Econ 101 should have learned, it had the exact opposite effect, throwing the economy right back into a depressionary tailspin, making budget balancing just that much more difficult/impossible. FDR essentially snatched defeat from the jaws of victory. Obama repeated the mistake, rapidly drawing down his somewhat successful–if under-amped–Recovery Act, thereby muting the incipient recovery.

But at least it was something.

The Europeans got straight up austerity from the get-go resulting in all the unmerited, self-inflicted suffering of sky-high unemployment that continues to this day.

Indeed, the oh-so-much-smarter-than-Americans Germans are relearning that lesson–again, and again, and again– even as we speak.

The lessons of 1937 have been a long-running theme of Krugman’s. Every time he references it, I keep thinking back to a very prosaic, but telling remnant literally written in the landscape in an older neighborhood of Norman, Oklahoma…

…I present, my 2013 photos, “1937: The End of Road for the Works Progress Administration’s Work”:

How to NOT balance a budget

How to NOT balance a budget

 

Or, maybe “The Depression that Wasn’t Ended Now”:

IMG_20130506_154428_182

Where was Obama’s Recovery Act when our pedestrian infrastructure needed some help? This is looking pretty shovel-ready to me!

 

I keep thinking Krugman could use these as a centerpiece/banner graphic for his blog….!

MGE’s Pump & Dump Rate Scheme

Wednesday, October 8th, 2014

Tomorrow is the big showdown at the Public Service Commission to shut down MGE’s outrageous, America-hating rate scheme.

Tomorrow there will be a rally at 9 am at the PSC offices in addition to testimony. Here’s the WhoWhatWhenWhereHow scoop by the RePower folks, followed by my comment:

Madison Gas & Electric proposes big changes to billing rates in 2015 that will increase electric bills for most customers, limit your ability to lower bills through energy efficiency, and penalize clean energy. The MGE billing scheme does not reflect community values and should be withdrawn by MGE or rejected by the Public Service Commission.

The Proposal

Every MGE customer will see a higher fixed charge each month coupled with a slightly lower energy rate. For example, the monthly charge for residential and small commercial customers would rise from $10.29 to $19 (85%), while the electricity rate would decline from 14.4 cents/kilowatt-hour (kWh) to 13.3 cents/kWh (-8%).

The Facts

  • The City of Madison, City of Monona, City of Middleton, Town of Blooming Grove, Wisconsin Community Action Program Association, WI AARP, NAACP and the Coalition of Wisconsin Aging Groups and nearly 50 local businesses have opposed the rate proposal.
  • 80% of MGE residential customers will see their electricity bill increase and will harm most seniors, apartment dwellers and those who conserve energy.
  • The proposal to increase the fixed rate and lower variable rate means that you will have less control over your own future energy bills. (Conservation does not cut the fixed rate)
  • Almost 88% of MG&E’s current energy comes from fossil fuels, most of which is coal.  A recent report, The Coal Truth, by RePower Madison details how MGE proposal is a ratepayer bailout disguised as a matter of circumstances beyond the control of the utility. In reality, MGE has “doubled down” on their dirty coal investments.
  • The rate changes will have a disproportional effect on low-income households. Bill Marcus, an expert witness hired by the City of Madison testified that “the MGE proposal will negatively impact equity in the City of Madison”.
Actions You Can TakeRePower Madison is a citizens group whose immediate goal is to persuade MGE to drop their rate proposal and support customer options for rapid expansion of renewable energy and energy savings.We recommend the following immediate actions:

  • Submit your concerns online at www.tinyurl.com/mgeratehike. Online public comments are due before October 8th and a public hearing is scheduled for October 9th at 9:30am at the Public Service Commission (610 N. Whitney Way Madison)
  • Visit and like our facebook page at www.FB.com/repowermadison.  While there, you can RSVP to testify orally and attend our picket at the public hearing on October 8.
  • Local businesses are encouraged to sign a letter opposing this rate case available at –www.wisconsinbusinessalliance.com/mge
  • Share this information with your members, and forward this email to your friends, for their information.

For more information www.repowermadison.org or email to Info@RepowerMadison.org

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….And here’s the comment I submitted:

Dear Commissioners,

Please scrutinize closely the MGE rate case. It is, quite frankly, appalling. So appalling that I oppose it in the strongest terms.

I am a real estate investor in the Madison Gas & Electric service territory. I am also a decorated veteran, having served overseas as a commissioned officer for four years and discharged honorably, and having attained the rank of captain. As someone who volunteered service to do my part in forming a “more perfect union,” I am horrified that there are corporations such as MGE who are actually militating against the “general welfare” of the citizens I risked my life to defend. I also see a direct link between energy gluttony and the wars we keep fighting. For that reason, I have invested heavily in energy conservation ever since I was discharged.

Their rate proposal denies the dangers of climate change that even the Pentagon has warned is an imminent threat to national security. Indeed, by MGE’s own admission, this proposal actually militates against American citizens who strive to do the right thing by our environment.

Gregory Bollom, MGE’s assistant vice president of energy planning, conceded this point at a Madison city committee meeting in July:

“If you’re a low-energy user, you will probably have less ability to reduce your bill than someone who is a high-energy user,” Bollom told the Sustainable Madison Committee. “We are reducing the incentive for people to reduce their energy use. I’m not going to quibble with that.”

This is the stuff of morons. It does not belong in Madison, Wisconsin, the home of one of the world’s top-flight research institutions.

An enlightened corporate leadership would institute an actuarily sound, progressive rate structure that strongly encourages wasteful users to waste less and reward those who have invested wisely in efficiency and thereby use modestly. “Actuarily sound” means that fixed costs get covered by usage rates while protecting the steady rate of return required to raise capital for said fixed costs (capital infrastructure). This is important because we know that it is the wasteful users who are driving the “need” for more lines and other infrastructure. So those who demand more power should also be paying for the extra infrastructure required to supply it. Thus the need for progressivity in the rate structure. If the usage rates are properly structured–actuarily sound, progressively increased according to usage–that “need” would soon be obviated, as the wasteful would get wise tout de suite. Or they pay for their willful ignorance. The choice would be the customer’s and entirely the customer’s. Consumer free choice and free enterprise–yes, including investments in efficiency and renewables–is what built this country. Why is MGE undermining free enterprise?

MGE’s rate scheme, by eliminating any progressivity, actually *rewards* waste. It undermines all efforts to do the right thing and create a better, energy independent America. This is important to me, because I’m tired of seeing my friends, my former comrades-in-arms get sent off to fight in fossil fuel wars. Sick. And. Tired. Of. It.

Progressive, actuarily sound rates that cover all costs–fixed included–is the most climate-friendly, peaceable way of properly accounting for climate-damaging, war-causing resource usage.
Fixed charges–of any amount–only aid & abet profligate use.

Furthermore, the idea of fixed v. usage costs is fiction. Much of the fixed cost increases goes to ATC’s wasteful expansions of unnecessary power lines. Unnecessary because they were/are being built on assumptions of ever-increasing fossil burning. That hasn’t happened. Electric consumption has gone down. Why? People are making the connections between their personal energy use->fossil burning->climate destruction. They should be rewarded for making that connection and acting to remedy it, not punished.

It’s also an incredibly cruel thing to do to people who thought ahead for their retirement and invested mightily in energy efficiency in their homes. Now they are on modest fixed incomes and getting slammed by these rustbelt rednecks in charge of our ‘community’ utility. Retirees’ investments in conservation are now set to be vaporized on behalf of energy addicts and their dealers.

There isn’t really a middle ground on this. Either we make the decisions to protect the climate–now–or else. (Please read your McKibben! Heed your Hansen!)

Where does the PSC stand?

MGE is now desperately touting a series of “Town Hall-style” meetings to get them out of this pickle of their own making. Approximately 9 years ago MGE held a series of just such meetings all across Madison. There were over a hundred people in attendance at one meeting alone (even though it was inconveniently scheduled at midday on a weekday). People of all backgrounds showed up, ranging in age 8 months to 80+ years. They were all impassioned, knowledgeable and armed with better ideas for delivering clean energy in conjunction with conservation pricing and other strategies. No one testified for more CO2 emissions or more megalomaniacal power lines. Typical was one woman, with a baby in her arms, who gave a most enlightened & impassioned testimony about how we’ve got to start planning *now* [i.e., nine years ago] for reducing our impact on the climate. That the science was well settled. That we can no longer deny the science through our profligate energy policies. She was unbelievably eloquent and *nice* about it. The old gray MGE execs just sat there, stone faced. Clearly, they didn’t want to hear it. A town hall in the sense of an open minded democratic process, it was not.

I gave testimony as well. I was pointed and concise about the importance of a progressive rate structure to reduce demand while maintaining their bottom line through actuarial science.

The gray MGE execs scowled. Again, they didn’t want to hear it.

This was nine years ago.

They did nothing in the interim to change their CO2 spew as usual. Indeed, they doubled down on fossil thinking.

The point is, they have heard all of this before. They have heard it from a variety of people, some paid by advocacy organizations, but mostly just citizen ratepayers doing their civic duty, expressing concern and better ways of doing things. MGE has had their opportunity–over many years–to do the right thing.

They have done nothing.

They chose to ignore reasonable solutions that quite openly acknowledged the necessity of getting a return to shareholders. Now the gray men in gray suits have gotten themselves in a pickle. A quite avoidable pickle. A pickle forewarned.

As for their shareholders, by & large, they don’t care how the dividend check arrives. Fixed charge, no fixed charge (but with a progressive, actuarily sound rate structure)–it doesn’t matter to them. They just want that check to arrive, on time and in a predictably steady amount. And it is perfectly doable with an actuarily sound, progressive rate structure. Indeed, how a shareholder’s dividend is generated is entirely not their concern in the amoral world of the limited liability joint stock company. Only the people’s representative, you, the regulator, the Public Service Commission can force the right, moral choice. Which is why they need to hear from you in the strongest terms possible that they, MGE, need to protect our climate and our ratepayers–not just their lazy, ignorant accountants who can’t calculate out a reasonable rate structure.

Being an energy geek since the 1973 Arab Oil Embargo, I have a bad habit of buttonholing the lower-downs at MGE when I get a chance, to find out why the stupidy of the higher-ups continues. One of them, an engineer, basically just shrugs his shoulders, rolls his eyes knowing that better solutions exist. Tiring of this, he gave me one of his utility trade magazines to shut me up for a while. That magazine issue of eight or so years ago was all about innovative demand-managing rate structures that could respond to a dynamic energy environment (dynamic in the sense of either more competition, more emissions regulation, opening the grid to non-utility participants, all of the above, etc.). So the knowledge of how to stay profitable while driving down carbon spew and better managing the grid (etc.) for all comers is out there. It is well documented even in their energy industry trade group! This isn’t just the stuff of crazy hippies, as Paul Fanlund and Gary Wolter would have us believe.

They’ve heard polite, well informed testimony. They’ve heard pointed, well informed testimony. For *many* years. The research and case studies of innovative, conservation-oriented rate structures in place over decades is well-documented by their own trade organization.

At what point do we the people stop giving them the benefit of the doubt?

You heard their own executive speak out against conservation and renewables in the quotes above. You are obviously quite aware of RENEW’s analysis which further confirms MGE’s militantly anti-climate, anti-ratepayer plot.

In the end, it is a bait & switch. For decades, MGE has been encouraging their customers to conserve and install renewables. (See, for example, any number of MGE bill inserts over the last twenty-plus years; see also their gleeful–and very public–celebration of conservation & renewables here.)

Now they want to crush those who followed their investment advice?

As a long time real estate investor who has invested tens of thousands of dollars in conservation measures on several properties, not only do I believe that you should reject their fixed rate plot against their ratepayers, you should also report them to the Securities Exchange Commission for their pump & dump scheme.

I would think that it’s pretty clear that their plans are not benevolent.

Please reject the entirety of MGE’s rate scheme.

Sincerely,
Michael D. Barrett

….

Madison, WI