Category Archives: Regulation

Closely Watched Trains?

wva oil trainBy Peter Galuszka

The small town of Pembroke in southwest Virginia is used to seeing endlessly long unit trains of coal cars rumbling past. But last week, it got an unexpected surprise – trains of similar length hauling crude oil from North Dakota’s Bakken fields started going by.

According to Reuters, Pembroke is one of many Virginia towns that are being affected by CSX’s derailment and explosion of oil tank cars filled with Bakken oil a few miles east of Montgomery, W.Va.  on Feb. 16. The massive blast sent fireballs hundreds of feet in the air and forced the evacuation of nearby residents including a college. It also stopped all rail traffic on a major, east-west CSX line for days.

A similar derailment involving a CSX oil train happened last April in Lynchburg on the same rail mainline. Several tank cars caught fire down causing a fire and a spill into the James River.

So, after the West Virginia incident, CSX got in touch with rival Norfolk Southern to see if it could reroute oil trains on some of its lines.

This brings up another issue – who should be informed when new railroad trains hauling potentially explosive or otherwise hazardous cargoes suddenly show up in your backyard? Do they have to tell you so you can get the flashlight, thermos and sleeping bag ready for your immediate evacuation if necessary?

CSX says it has informed appropriate public safety officials of such route changes, but is loath to let the general public in where it is sending unusual trains. Security and proprietary information, you understand.

CSX needs to keep its tank cars rolling to big oil terminal in Yorktown near the Chesapeake Bay. That site had been an Amoco refinery for years but the refinery shut down and was switched to an oil water terminal now owned by Houston-based Plains All-American.

The facility receives Bakken shale oil cars and loads the crude on barges that are then pushed or towed to East Coast refineries, notably in the Philadelphia area. Presumably, if petroleum exports from the U.S. start again, the Yorktown site would be excellent embarkation point.

So, instead of having tank cars with Bakken crude trundling from Charleston, W.Va. through the New River Gorge and on to Lynchburg, they will go on more southerly NS lines through places like Pembroke and Roanoke. Then they will be switched at Petersburg to CSX lines and go north to Richmond and east to Yorktown.

It looks like Richmond could potentially get it either way. On the usual route, oil trains pass by downtown on an elevated bridge which would be quite a mess if a derailment happened there. According to the Forest Ethics Website, all of downtown Richmond to about one half of a mile on either side would have to be evacuated if a major derailment with fires and explosions came.

With the temporary rerouting, Richmond would still be in serious jeopardy in case of a derailment. If I’m reading the map correctly, trains would still pass through the city.

So, you have to ask yourself – why does CSX get away with keeping all this secret? They claim they let “appropriate” public safety officials know, but the Richmond Times Dispatch last year quoted a Richmond fire officer in charge of hazardous situations as saying he had a hard time learning from CSX what a “worse case” scenario would be in the event of a Richmond derailment.

Part of the problem is PR. Bakken shale oil comes from controversial hydraulic fracturing. The uptick in production has turned America’s energy picture on its head. It has also made for big jumps in oil rail traffic. Another problem is that Bakken oil tends to be more explosive than other types.

According to the Association of American Railroads, oil shipments by rail jumped by 9,500 carloads in 2008 to 500,000 shipments last year. Accidents are way up. In 2013, tank cars carrying Bakken crude somehow got loose in Lac-Megantic, Quebec. They rolled through the small town, derailed and exploded. The blast killed 47 and wiped out half of downtown.

According to a recent probe by the Associated Press, a federal study predicts that oil shipments will rise to 900,000 shipments this year. The study predicts that trains hauling petroleum will derail 10 times a year over the next two decades. They could possibly cause $4 billion in damages and kill hundreds of people, the AP reports.

What to do? Build pipelines, I guess, but that’s been highly controversial as well as the experience with Dominion Transportation’s efforts with a $5 billion gas pipeline through the state and the controversy over the Keystone XL show.

Better, newer, safer tank cars? Maybe, but the West Virginia and Lynchburg derailments both involved new “1232” models. The same type also caught fire recently in Timmins, Ontario.

Federal rules require railroads to tell local officials where they are carrying Bakken crude, which is more explosive than other types. Railroads like CSX claim the information is proprietary, according to Reuters. That’s rather pointless. If the goal is to keep “proprietary” information from competitors, Norfolk Southern, CSX’s biggest competitor, already knows about it because it has agreed to let CSX use its rail lines.

And don’t ask some public officials. West Virginia officials have gone along with keeping much of the information secret. Mountain State officials responded to an Freedom of Information Act request by redacting much of the data they finally gave out.

Not only do the railroads need to clean up their act, they should be forced to be more forthcoming about where the next evacuation might be.

The McDonnell Saga Is Far From Over

maureen mcdonnell sentencedBy Peter Galuszka

Former Virginia First Lady Maureen McDonnell has been sentenced to 12 months and a day in federal prison, but the GiftGate saga is far from over.

She will appeal as has her husband, former Gov. Robert F. McDonnell, who was sentenced to two years in prison last month. The now estranged couple was convicted of public corruption felonies, making McDonnell the only Virginia governor, past or present, to be convicted of a crime.

The next step is for the former governor’s appeals to be heard at the U.S. Fourth Circuit Court of Appeals in May. The issue is whether so-called “honest services fraud” for which both were convicted, should be interpreted broadly or narrowly.

During their trial, U.S. District Judge James Spencer took the broad approach, instructing the jury that there did not have to be a very strict “quid pro quo” for them to return a guilty verdict. He reiterated his stand on Friday by overruling a slew of motions from the defense relating to the issue.

The appeals could have far-reaching consequences, as I reported with a colleague on Bloomberg News this week. Charles James, a former federal prosecutor who works at the Williams Mullen law firm in Richmond, says the case “could be the next case to further restrict the use” of the honest-services fraud statute.

If the Robert McDonnell’s appeal is successful, then it would have a big impact on his wife, as well as loosen the interpretation nationally of how far “honest services” should go.

If the government is successful, then expect a crackdown on public official hankie-pankie.

At Friday’s sentencing, eight character witnesses described Ms. McDonnell, 60, as an empathetic, self-sacrificing woman who would do anything for her children and husband.

That image stands in marked contrast to the image defense lawyers for her husband painted during the trial. Incredibly, her own lawyers piled on with the idea that Maureen McDonnell was a naïve but abusive woman who hated being First Lady. She was so frustrated with her husband ignoring her for his political career that she got entangled with Jonnie (the serpent) Williams, who ran Star Scientific, a Henrico company that made and marketed vitamin supplements.

Williams gave the financially strapped McDonnells about $177,000 in gifts, loans and trips while the McDonnells set up meetings with state officials to the products of his money-losing firm. Ironically, the main product was Anatabloc, a skin cream, which has since been ordered off the market the Food and Drug Administration.

At the top of this blog, you see a teaser story that the convictions were corrupted by Williams’ dubious integrity. That’s nonsense, of course. Prosecutors use inside testimony, especially in organized crime and drug cases, all the time.

The bigger issue is whether “honest services” means bribery or whether it is a normal part of setting up appointments by public officials to consider projects that might benefit their city, state or country. This will be the key issue in the appeals.

Meanwhile, the soap opera has been weirdly painful, fascinating and entertaining. It’s also been rather crass. The former governor tries to come off like a Boy Scout yet refused a chance to cop a plea in exchange for Maureen not being indicted at all. She was not a public official, but non-public officials have been convicted in the past of honest services fraud.

Both defense teams made Maureen the scapegoat. She was portrayed as a greedy and unstable hustler who brought her husband down.

Before delivering the sentence to Maureen, who gave a tearful, first-time statement asking for mercy, Spencer made bitingly critical remarks of the defense lawyers. “The ‘Let’s throw Momma under the bus’ defense morphed into the ‘Let’s throw Momma off the train defense,’” he said. Ms. McDonnell seemed to be two very different people and Spencer had trouble figuring it out.

Her lawyers had asked for no prison time and 4,000 hours of community service. Federal guidelines could have given her more than six years but prosecutors asked for only 18 months in prison.

Spencer split the difference, mostly because he gave Mr. McDonnell a light sentence. He was more culpable since he was a public official, not to mention a former state prosecutor and the state attorney general.

He cut Maureen some slack, too. By sentencing her that extra day, he gave her the opportunity to get out in only 10 months for good behavior since that’s the rule under federal prison guidelines.

Propping Up Coal at the Taxpayers’ Expense

W._Va._coal_mine_1908By Peter Galuszka

It’s always curious when big business and their bankrolled politicians complain about how the government and its regulations stymie the “magic of the free market.”

Then they turn around and keep protectionist policies that give certain industries big favors such as tax credits.

That’s what the General Assembly has done with a bill that would have reduced tax credits doled out to utilities that burn coal mined in Virginia. The original proposal backed by Gov. Terry McAuliffe was intended to help fill a $2.4 billion gap in the state’s biennial budget.

The idea quickly ran afoul of Dominion Virginia Power and the Virginia Coal & Energy Alliance. The original idea was to scale back tax credits but cap coal tax deductions at $500,000 in any given year. But after the utility and the coal industry lobbyists got involved, a bill to retain the tax credits was quickly approved setting caps at a more generous $7.5 million in a given year.

The credits stem from a law passed in 1999. Its purpose is to make it easier for big utilities like Dominion to choose thermal coal mined in Virginia over product mined elsewhere.

Coal production peaked in the state at 46 million tons. It’s now about 22 million tons or less. Coal employment has likewise dropped sharply over the years.

Much of the coal mined in Southwest Virginia is of high quality and some can be used either to generate electricity or make steel. The problem is its cost. Many of the seams in the state have played out and coal is increasingly thinner and is in  harder to reach areas. The cost of mining it has gone up.

For years coal maintained a price advantage over alternatives such as natural gas but thanks to hydraulic fracturing, that is no longer the case. Utilities like Dominion have been converted facilities to gas or are building new plants that use gas. Its last coal-related plant is a hybrid near St. Paul.

What’s causing this shift away from coal? High production costs and cheaper alternatives. Out West, in the Powder River Basin of Wyoming and Montana, coal is cheap and easy to mine. It does well. In other words, the free market is affecting  the declining Virginia coal industry  yet the General Assembly wants to prop it up at the expense of taxpayers and the budget.

By the way, Dominion and coal giant Alpha Natural Resources in Bristol are among the biggest political donors in the state.

Why Hide Details of Lethal Injection?

lethal injectionBy Peter Galuszka

It has to be one of the creepiest bills ever considered by the General Assembly.

Senate Bill 1393, sponsored by Sen. Richard Saslaw (D-Fairfax), would drop a veil of secrecy over how Virginia executes prisoners by lethal injection. Its backers, including Gov. Terry McAuliffe, are pushing it against a backdrop of global politics and questions of morality.

Virginia is one of 32 states that allow capital punishment. Since 1982, it has so far killed 110 prisoners, either by lethal injection or in the electric chair.

The preferred method is lethal injection. In the process, a doomed prisoner is strapped in a gurney and is given a series of three shots. One is to anesthetize; another is to paralyze; and the third is to stop his or her heart from beating. In some states, one drug may be used. Usually, there are witnesses to the execution, including members of the news media.

But Saslaw wants to start hiding crucial aspects of the gruesome practice. His bill would make information about lethal drugs. Companies that make or compound them would be exempt under the state Freedom of Information Act.

There are persistent national shortages of drugs used in the death process. According to The New Yorker, the sole American manufacturer of sodium thiopental stopped making the key, killer drug in 2011. Death penalty states looked to European manufacturers, but the European Union, which crusades against capital punishment, forbids European drug companies to export it if it will be used in executions.

Harried U.S. prison officials started shopping around to their counterparts in other states as shortages spread to other drugs. The situation seemed dire enough for Virginia to consider dusting off the electric chair, which it also allows for executions.

For a while, Virginia did have a good supply of killer drugs but by 2014,it ran short or drugs went past their expiration dates. A solution is to use pharmacies to compound drugs for executions but it could expose the firms to lawsuits.

So, as is too often typical in Virginia, Saslaw & Company started pushing the rights of private companies over the public’s right to know. His bill has drawn criticism from the American Civil Liberties Union, the Virginia Coalition for Open Government and the Society of Professional Journalists.

Underscoring the horror of the drug drama is what happened last April in Oklahoma during the execution of convicted murderer and rapist Clayton Lockett. He was injected with the three-drug cocktail, but 10 minutes into the process, he revived as stunned onlookers watched. He died after another half an hour.

There is considerable evidence that lethal injection is not a painless way to go. In fact, the issue may be back before the U.S. Supreme Court again about whether injections are an unconstitutional “cruel and unusual” punishment. Another issue is why facts around execution must be made confidential.

There are larger issues about the ethics of capital punishment. Virginia, after all, follows only Texas when it comes to legally-sanctioned killing. Virginia does not have an unusually high crime rate (ranking No. 34 in violent crimes  per 100,000 population according to 2006 U.S. Census statistics). So why is it so intent on keeping capital punishment and hiding it?

 

In Politics: “Cherchez la femme?”

Fitzhaber and Hayes

Fitzhaber and Hayes

By Peter Galuszka

The two governors couldn’t seem more different.

One is a popular progressive who dressed in an “urban cowboy” style of boots, jeans and down jacket and ran a state as green as a rain forest.

The other favored Joseph A. Banks suits and helmet hair-dos while pushing a “God, Mom and Apple Pie” persona that appealed to Republicans.

Oddly perhaps, especially on Valentine’s Day, women seem to be their downfall. Cherchez la femme?

Until his sudden resignation Friday, John Kitzhaber was into his fourth term as Oregon’s governor and had been highly regarded by liberals nationally for his support of populist ideals and goals involving sustainability. A former emergency physician, he won points for his low key style.

The problem was his fiancée, Cylvia Hayes, who lived with him at the governor’s mansion in Salem and acted as the state’s de facto First Lady. She is under investigation for allegedly using her position to win contracts for “green” energy projects she was pushing. As probes grew, Kitzhaber resigned.

the McDonnells

the McDonnells

Sounds a lot like the case of Robert F. and Maureen McDonnell, the former first family convicted of corruption last September.

In that case, the former First Lady of Virginia (FLOVA in code), was smitten with a fast-talking vitamin producer and salesman and convinced her husband, Bob, to arrange meetings with top state officials to help.

The couple was convicted of a variety of felonies after a six week trial. McDonnell was sentenced to two years in prison and his wife is due to be sentenced Feb. 20.

Coincidentally, both governors were high fliers in their respective camps. Kitzhaber represented a particular kind of progressive Oregon way of thinking that is strongly influential throughout national politics and journalism.

McDonnell’s good looks and projection of patriotism went down so well with Republicans that he was once on the short list of 2016 GOP possibilities.

And, both women involved raise issues of what role First Ladies (officially married or not) have in state government. Are they public figures? How much influence should they really have? Are ethics laws tough enough? Do they apply to spouses? Ms. McDonnell’s lawyers suggested that she was being set up to take the fall for her husband as part of a “throw Maureen under the bus” strategy.

Issues like these are certain to come up when Maureen McDonnell appeals her conviction. Similar questions may evolve in the Hayes case as well if she ever faces criminal charges.

Silting, Resilience and Climate Change

by James A. Bacon

Atchafala delta, 1984

Atchafalaya delta, 1984

Louisiana’s coastline is shrinking. Humanity’s impact on the state’s massive but fragile wetlands — levees accelerating Mississippi River water flows, the criss-crossing of marshes with canals — has aggravated the natural phenomena of subsidence and sea-level rise to inundate some 1,900 square miles of coast land over eight decades. It’s an object lesson for Virginia, much of whose low-lying Tidewater region also could end up waterlogged as sea levels rise. We’ve seen the maps — I’ve published some on this blog. A hundred years from now, there could be little left of Norfolk and Virginia Beach in a storm surge but a bunch of islands.

Atchafalaya delta, 2014

Atchafalaya delta, 2014

But, wait, the process of shrinking land mass is not inevitable. Portions of the Louisiana coast are expanding. That’s exactly what you’d expect to find in the Mississippi River delta as the nation’s mightiest river deposits massive volumes of silt and sediment into the Gulf of Mexico. An article in Atlantic CityLab shows satellite photos of the Atchafalaya River, which empties west of the Mississippi, in 1984 and 2014. This delta complex is growing at the rate of one square mile per year.

Writes John Metcalfe: “Scientists are quite interested in studying these processes, as they believe they might help counter today’s leading cause of coastal deterioration: rising sea levels.”

There is a widely held assumption that Virginia could lose hundreds of square miles of wetlands as local subsidence and rising global sea levels conspire to flood the Tidewater marshlands. But is inundation inevitable? The James, Potomac, Rappahannock, Susquehanna  and other tributaries dump large volumes of sediment into the Chesapeake Bay — so much so that the silt clouds the waters, blocks sunlight and disrupts the bay ecology. But eventually the sediment settles to the bottom, contributing to the build-up of mud and muck.

It would be interesting to know: Which process is occurring more rapidly in the Chesapeake Bay — sea level rise or sedimentation? A related question: How is the sediment distributed? Accumulation of silt in the middle of the Bay just makes a shallower bay. But accumulation in the marshlands might support the creation of new land mass that we see in the Atchafalaya delta.

craney_islandDredging the sediment build-up in Virginia’s shipping channels costs tens of millions of dollars a  year. Much of the dredge material has been directed to Craney Island, a man-made land mass that has transformed the coastline of Hampton Roads. We have a lot of raw material to work with.

Last summer, Governor Terry McAuliffe appointed a Climate Change and Resiliency Update Commission to prepare Virginia’s coastal communities for the impact of climate change. It strikes me that the sedimentation issue is ill understood and little discussed. How likely are Virginia marshlands likely to survive incremental sea-level rise as the deposition of silt raises the bay bed? To what extent can Virginia productively re-route sediment from channel dredging to build up the most vulnerable sections of the coastline?

There is a strong bias among those who fret about Global Warming toward solutions that entail re-engineering the nation’s energy economy in order to reduce the carbon dioxide emissions implicated in rising temperatures. Any changes we make in Virginia will have an infinitesimal impact on global temperatures, even if, as widely asserted, CO2 emissions are driving them higher. To survive global warming and rising sea levels, we must make our communities more resilient. That’s where our actions can make a difference.

The Governor’s commission is scheduled to submit its recommendations by June 30 this year. Let us hope that it incorporates the insights scientists are gleaning from Louisiana’s Atchafalaya delta.

Does Anyone Really Understand this Dominion Deal?

pig_in_pokeby James A. Bacon

I’m still trying to figure out the legislative deal that Dominion has struck with the General Assembly. The grand bargain moving through the legislature freezes base rates for five years and requires the utility, not customers, to bear the risk of power plant closures due to federal carbon regulations. The bill has accumulated a lot of extraneous ornamentation — rate cuts reflecting lower fuel costs, promises to build more solar power, assistance to low-income families to weatherize their homes — but the main piece is the rate freeze.

The bargain responds to new Environmental Protection Agency rules regulating carbon dioxide as a pollutant, which, if carried out, would shut down several of Dominion’s coal and oil fuel plants. According to a State Corporation Commission (SCC) staff report, the changes could cost Dominion Virginia Power customers between $5 billion to $6 billion. The same rules would impose tremendous costs on customers of Appalachian Power Co. as well.

On the face of it, the legislation looks like a good deal to Virginia electricity rate payers. They get to lock down low electric rates for five years, while Dominion absorbs the financial risk of power plants shutting down. During that time, the SCC would audit Dominion’s books but not engage in rate setting.

But is it a really good deal for rate payers? I don’t know. I have questions for which I have seen no answers in the press accounts I have read.

First question: How real is the threat of power-plant shutdowns in the next five years? For all I know, the threat may be very real. But, then, maybe, given the glacial pace at which the EPA moves, and the ability of Dominion (and other electric utilities) to stall through lobbying and lawsuits, perhaps Dominion has reasonable expectations of fending off the shutdowns during that time-frame. Similarly, Dominion could be taking a calculated gamble that, if the power-plant shutdowns can be delayed two years, a Republican will be occupying the White House in 2017. A Republican president likely would reverse the EPA regulations through executive action just as the current occupant imposed it through executive action.

Of one thing we can be sure, Dominion can better assess its risks than Virginia’s politicians can. There is a dramatic asymmetry of information. Dominion has access to legions of lobbyists, lawyers, engineers, accountants and energy economists who keep the top brass fully informed of the risks and rewards associated with every action. Virginia’s lawmakers can draw upon the expertise of the SCC, but even the SCC doesn’t have access to all the information that Dominion does — and there’s no assurance that lawmakers would appreciate the significance of that information anyway. One thing we can reasonably assume: Dominion would not back the legislation working its way through the General Assembly unless it were advantageous to Dominion.

Second question: What happens if power plants get shut down after five years? While the rate freeze would end in 2020, the next rate review for Dominion would not be held until 2023, reports the Richmond Times-Dispatch, which quotes Edward Petrini with Virginia Committee for Fair Utility Rates as saying that effectively means Dominion is getting an eight-year rate freeze. But Dominion would absorb the financial risk of power-plant shut-downs for only five years. Could the costs of shutdowns in years six through eight be dumped onto rate payers?

Third question: What would likely happen to electric rates in the absence of a freeze? Would they head up or down? It makes no sense for Dominion to take on added risk unless it benefits from a freeze in base rates. This logic implies that Dominion expects that base rates would decline over the short run in the absence of a freeze. (Over the longer-term, rates assuredly will rise as non-compliant power plants are phased out.) How much will a freeze on base rates benefit Dominion? We don’t know. Is that amount, whatever it is, reasonable compensation for Dominion’s extra risk? We don’t know.

These are all basic questions to which lawmakers should know the answers. Alas, if they do, they haven’t seen fit to inform the public, and Dominion’s Keep Rates Low web page doesn’t address the issues. I don’t share the knee-jerk antipathy to Dominion that many pundits have — the utility has done a good job of ensuring reliable, low cost power — but I also have no illusions that Dominion is doing anything other than looking out for Number One. I find it inconceivable that Dominion would voluntarily (a) agree to a rate freeze that lowers revenue and profits, (b) take on the financial risk of power-plant shutdowns, and (c) make costly commitments to build solar power and weatherize homes. Something doesn’t add up.

I’m not saying that the legislation is a bad deal for the public — I’m saying the public doesn’t understand the deal. We don’t know if it’s a good deal or not. Lawmakers are buying a pig in a poke.

Dominion Resources Is on a Tear

acl pipeline map By Peter Galuszka

Dominion Resources has been on a tear recently.

It’s been muscling through a dubious law in the General Assembly that would allow it to avoid State Corporation Commission rate audits for six years.

And, it has been throwing its weight around in less populated sections of the state. It is suing to force its way on the land of private property owners to survey its $5 billion Atlantic Coast Pipeline project that would take fracked natural gas from the Marcellus Shale formation in West Virginia and Pennsylvania on new routes to the southeast.

Property owners, particularly those in Nelson and Augusta Counties, are fighting in federal court in Harrisonburg.

What’s most interesting about this case is how the Commonwealth of Virginia, which swaddles itself in the ideals of the American Revolution of individual rights , somehow ignores the rights of small property owners when a big utility with deep pockets for political donations is involved. One wonders where all the conservatives are who were huffing and puffing over the Kelo case a few years back

And (bonus question) what do the two situations have in common? Republican State Sen. Frank Wagner of Virginia Beach, that’s who. He introduced the bill for Dominion to sidestep SCC oversight with the excuse that Dominion has deal with the impacts of a yet-to-be-finalized set of new federal carbon emission rules.

In 2004, Wagner also carried water for Dominion and other power companies by getting a law passed that would allow a “public service company” to survey private property without getting permission.

This is the basis of several hundred lawsuits Dominion has filed against small landowners. In the pipeline case, it will be interesting to see whether the natural gas is used for the common good of American customers or will end up being exported to foreign countries. Dominion insists it won’t,  but time will tell.

Another oddity is that Dominion is demanding access to survey a pipeline route when it hasn’t formally applied for  the project with the Federal Energy Energy Commission. Imagine if some private landowners showed up at the front door of Dominion’s downtown Richmond headquarters and demanded access to the building because they were thinking about building a natural gas pipeline? (Somebody call security!)

Here’s an opinion piece I wrote for this morning’s Washington Post.

“Putinomics” Comes to Virginia

Several weeks ago, I was shocked to read a story in the TD that Dominion, Virginia’s dominant electric monopoly, was suing several land owners as a result of their refusal to allow a survey team to access their land to measure for a potential pipeline that Dominion and several other firms want to build.  The land is privately held, i.e. not in the public domain, private property and privacy are essential elements of a democratic and capitalistic society.  I was later informed that 10 years ago, the Virginia legislature in effect granted the right of eminent domain to Dominion, a private corporation.  Conceptually, eminent domain is used by governments to obtain property for public use such as schools, highways, and hospitals.  This is a prime example of anti-capitalist behavior on the part of Dominion and all of those “capitalists” in the General Assembly.

Today,  the TD reports that the electricity monopoly is playing accounting games with the legislature in an attempt to pass on inflated costs to its customers as it closes older power plants. Companies depreciate capital investments over a number of years.  Dominion failed to mention the original costs of these plants and that the charges that they have taken to their profits as legitimate depreciation.  The present book value can not be the same as replacement costs.  These costs are amortized over many years.

Perhaps Dominion should take the approach utilized by Lloyd Blankfein of Goldman Sachs to justify taking part in the huge A.I.G. bailout.  Lloyd said: “We do God’s work.” Vladimir Putin could not have said it better.

– Les Schreiber

Smooth Ride Ahead for Uber, Lyft

Is that a smile I see under that Lyft mustache?

Is that a smile I see under that Lyft mustache?

It looks like Uber and Lyft will be a permanent part of the Virginia transportation landscape. Legislation essentially legalizing the two ride-for-hire companies has passed both houses of the General Assembly, and Governor Terry McAuliffe has indicated his willingness to sign the bill.

The legislation proposes entirely reasonable regulations that will allow the transportation-network companies (TNCs) to preserve their business models intact, while providing basic protections for riders. Companies must ensure that all drivers are at least 21 years old and properly licensed, and have been screened for criminal backgrounds and sex offenses. Drivers convicted of driving under the influence or other moving violations would be disqualified. Additionally, drivers are required to maintain an $1 million in liability insurance.

Far from putting a damper on the emerging industry, the regulations could legitimize Uber and Lyft in the minds of consumers. At the same time, the new rules are not so onerous that they would discourage competitors from entering the market. This is a victory for everyone.

“The legislation … provides the perfect balance of public safety measures while fostering innovation,” said Del. Tim Hugo, R-Centreville, a co-patron. “Improving transportation for Virginians takes more than just building infrastructure; it requires us to embrace new technology to better meet citizens’ transportation needs.”

Hugo has it exactly right.

There is more to Uber’s technology than apps that connect riders with drivers. Those apps can, and have been, readily replicated. The real secret sauce is Uber’s proprietary algorithms that tell the company how many cars to have on the road at a given point of time and where they should be positioned.

The next step. It is in society’s best interest for these ride-for-hire apps and algorithms to migrate to lower price-points. The end goal is for Uber, Lyft or other companies inspired by them to provide rides in vans or buses for just a couple of dollars. That will put them in competition with municipal bus companies, which carry a lot more political clout than the taxicab industry. That will be the true test.

– JAB