Bacon's Rebellion

  • Can We Build Our Way out of Congestion?

    Posted on

    by

    James A. Bacon

    The 2007 Urban Mobility Report contends that, in theory, it is possible for regions to build their way out of congestion. In regions where traffic growth exceeded the growth in road capacity by a wide margin, congestion got worse faster than in communities with a smaller gap. In the short run, it appears, you can mitigate congestion by adding capacity, as shown in the chart above. (I’ll defer discussion of the problem of “induced demand” and what happens over the long run when that new capacity enables dysfunctional land use patterns.)

    Here’s the problem: Adding new transportation capacity is really expensive! Here’s how the Urban Mobility puts it:

    It would be almost impossible to attempt to maintain a constant congestion level with road construction only. Over the past 2 decades, only about 50 percent of the needed mileage was actually added. This means that it would require at least twice the level of current-day road expansion funding to attempt this road construction strategy. An even larger problem would be to find suitable roads that can be widened, or areas where roads can be added, year after year.

    As regions urbanize, acquiring the rights of way to expand roadway capacity increases exponentially. And here’s a factor that the study does not mention: As large developing countries like China and India become major consumers of construction materials, they drive the global cost of those materials. The real, inflation-adjusted cost of road building is more expensive than it used to be. As the cost rises, the Return on Investment declines.

    What worked in the 1950s — building Interstate highways with inexpensive construction materials and acquiring cheap right of way by running roughshod over the property rights of poor communities — won’t work today. Transportation strategy must adapt to the reality that adding capacity is more expensive than it used to be. Unless we want to tax ourselves into oblivion, we have no choice but to pursue other strategies.

  • TTI’s Multi-Pronged Approach to Congestion Mitigation

    Posted on

    by

    James A. Bacon

    The Texas Transportation Institute has published the 2007 Urban Mobility Report, the most comprehensive study of traffic congestion conducted anywhere in the country. The main conclusion offers few surprises: Traffic congestion is getting worse almost everywhere.

    “There is no ‘magic’ technology or solution on the horizon because there is no single cause of congestion,” says study co-author Tim Lomax, a research engineer at TTI. “The good news is that there are multiple strategies involving traffic operations and public transit available right now that if applied together, can lessen this problem.”

    The report recommends a multi-pronged approach to addressing traffic congestion:

    • Create more travel options. Mass transit, telecommuting, and congestion pricing that allows travelers to bypass congestion when time is critical.
    • Add capacity. The traditional solution. There’s no getting around it. But it’s only a partial solution.
    • Manage demand. “Transportation system demand and land use patterns are linked and influence each other,” says the study. “Among the tools that can be employed are better management of arterial street access, incorporating bicycle and pedestrian elements, better parking strategies, assessing transportation impact before a development is pproved for construction, and encouraging more diverse development patterns.” Got it? Tim Lomax, Mr. Traffic Engineer, says land use is critical. (Now, if we could just sell him on the concept of Balanced Communities.)
    • Increase system efficiency. Make micro-level improvements to intersections, traffic signals and freeway entrance ramps, and do a better job of managing special events and traffic accidents. Less sexy than opening a new four-lane bypass, but a lot more cost effective.
    • Construction management and maintenance. Road construction projects designed to mitigate congestion are themselves a cause of congestion. Provide contractor inventives to complete work ahead of schedule, or penalties for missing construction milestones. Use design-build strategies. Undertake maintenance in tandem with construction projects to minimize delays.
    • Congestion pricing. Use variable-pricing tolls to allocate access to scarce roadway capacity.

    Although Virginia’s transportation strategy is overwhelmingly geared to adding new capacity, whether roadway or mass transit, Virginia is inching towards Lomax’s multi-pronged approach. Congestion pricing is coming to the transportation arteries of Northern Virginia, and perhaps, later, to Hampton Roads. Attention is being given to land use at last, though little concrete has been accomplished yet. On the other hand, there seems to be a strong bias in favor of highly visible mega-projects as opposed to micro-projects that would offer a higher return on investment.

    Finally, I would add one critical component to Lomax’s list. States need to move to a beneficiary-pays system for raising transportation dollars. That means (a) a gasoline tax (or, better, Vehicle Miles Driven tax) to pay for roadway maintenance, (b) congestion tolls to allocate scarce roadway capacity and fund corridor improvements, (c) privately funded projects to build new bridges and limited-access highways, and (d) Community Development Authorities and Tax Increment Financing to help pay for projects where developers expect a big increase in property values.

  • Dominion Takes a Big Step in the Right Direction

    Posted on

    by

    James A. Bacon

    Dominion Virginia Power is getting the message — at last it’s taking substantive steps to promote conservation and energy efficiency. The power company has asked the State Corporation Commission for permission to bring to Virginia a number of strategies implemented successfully in other states. A series of programs would:

    • Enroll 4,000 residential customers in four different energy-saving pilots that would (a) control air-conditioning during peak-demand times, (b) inform consumers about their real-time energy consumption patterns, (c) promote programmable thermostats that allow customers to control their use of electricity, and (d) educate customers about the value of reducing energy use during peak-demand times.
    • Provide free energy audits and energy efficiency kits to 250 existing residential customers and 50 small commercial customers.

    • Incentivize large commercial, industrial and non-residential customers to reduce load during periods of peak demand, by using their generators, to produce up to 100 megawatts of electricity. This would supplement an existing program in which large commercial and industrial customers already reduce demand by 275 megawatts during peak-demand periods.

    Additionally, in partnership with Home Depot, Dominion will distribute 1.4 million energy-saving compact fluorescent light bulbs (CFLs) at significantly discounted prices. CFLs cut energy usage by 75 percent.

    These initiatives, which are expected to begin early next year and continue through 2009, are designed to complement efforts by the SCC to determine the feasibility of reducing electrical consumption by 10 percent by 2022 — a target established by the Virginia General Assembly in electric utility re-regulation legislation adopted earlier this year.

    Said Dominion CEO Thomas F. Farrell II in a prepared statement: “These pilots will gather valuable information about what customers are willing to do and what programs may be most effective in achieving sustainable energy savings. … It is important that our company learn as much as possible through implementation of the pilots so that we can design programs with the greatest customer satisfaction, market participation and energy savings.”

    Some people will never be satisfied with anything that Dominion does. But this looks to me like a good indication that attitudes within the Dominion hierarchy are changing. The SCC is exceedingly cautious and won’t implement any conservation measure without testing it first, so there is no avoiding the pilot test phase. Unless I see evidence to the contrary, I presume that Dominion will implement the tests in good faith.

    While these pilot programs are a very big step in the right direction, they hardly begin to exhaust the conservation possibilities. For starters: Dominion should be working with Northern Virginia technology groups to phase in more energy-efficient computers at the energy-hogging server farms that are so ubiquitous in the region. (A Dominion spokesman told me that another 23 server farms are on the drawing boards!) We don’t need to pioneer anything — just follow the lead established by California tech companies. Question: Where is the Northern Virginia Technology Council on this? This program would be a natural for that group.

    Another option: Reform SCC regulations to allow Dominion to earn a favorable rate on investments made in energy efficiency. By energy efficiency, I refer to improvements that enable the company to squeeze more electricity from the same number of BTUs expended in coal- and gas-fired plants, and to waste less electricity in transmission and distribution. My understanding — and I’m willing to stand corrected — is that Virginia does not treat such investments as favorably as investments in new generating capacity. We can’t blame Dominion for neglecting these investments if they don’t make an adequate return. If we need to change the rules to change Dominion’s behavior, let’s change the rules.

    Of course, these measures don’t even touch the realm of renewable energy sources. Much remains to be done. But Dominion should be commended for moving as far as it has. Clearly, the terms of debate are changing. No longer will Virginia meet its electricity needs solely through adding capacity. Now the state will seek a balance between conservation/energy efficiency/renewable fuels on the one hand and investments in power plants and transmission lines on the other. Once we’ve established that principle, it’s a matter of finding the right balance.

  • Dominion and Eminent Domain

    Posted on

    by

    James A. Bacon

    In a recent post, “Transmission Lines and Electricity Imports,” I wrote that I wouldn’t have a big problem with regional electric transmission lines if Dominion (or any other electric power company) purchased its rights of way through voluntary negotiations with the landowners whose land the transmission line crossed. My problem was Dominion’s use of eminent domain to compel people to settle.

    Jim Norvelle, director of media relations for Dominion Resources Services, responds as follows: “We negotiate with individual property owners all the time. In fact, we have been successful 96 percent – 97 percent of the time in reaching an agreement with those landowners on transmission line rights of way. We only use our eminent domain authority as granted by the state as a last resort.”

    I also stated that eminent domain recompenses the landowner for the right of way only, not the loss in value to the surrounding land, such as a farm or estate, when its viewshed is wrecked.

    Norvelle responds: “True, the compensation does not cover what someone may perceive to be ‘visual blight.’ But in many hearings before the State Corporation Commssion on previous transmission lines we have successfully presented witnesses and studies that have shown any loss of property value is limited to about the first four years after the line is built. After that time the value returns to its pre-line level.”

    Fair enough. Here are my follow-up observations.

    (1) Negotiations may appear to be voluntary, but the threat of government-backed coercion lurks in the background. Surely, the power of eminent domain shifts the negotiating advantage to Dominion. I would hypothesize that many landowners would settle for less than they think they deserve knowing that Dominion can acquire the land through eminent domain anyway. They know they can push only so hard on price before the case gets turned over to the eminent domain litigators.

    Furthermore, I would surmise, the burden of legal costs weights heavily. Landowners must pay the legal expenses spent negotiating or fighting eminent domain out of their own pockets. To them, the payments represent a dead loss. For Dominion, legal expenses are a cost of business. If the enterprise is regulated — Jim Norvelle, please tell me if I’m wrong — Dominion can incorporate the legal expenses into its rate base and be recompensed by rate payers.

    (2) I’d like to see those witnesses and studies regarding visual blight. I can imagine that some properties — woodland, remote farm fields — may well return to pre-line level in time. But it’s hard to believe that properties where a line crosses the viewshed of a home or estate would ever recover their value.

  • Another Data Point on the VW Deal

    Posted on

    by

    James A. Bacon

    In closing the Volkswagen USA deal, which will bring 400 jobs and a $100 million investment to Fairfax County, the Kaine administration committed $6 million in state funds to grease the skids — more than the state/regional funds invested in all other economic development projects across the state combined so far this year.

    The VW subsidies include $1.5 million from the Governor’s Opportunity Fund to assist Fairfax County with the project and $4.5 million in funds from the Virginia Economic Development Incentive Grant (VEDIG).

    That compares to $5.265 million for all other economic development projects across the state combined, including monies invested by the Virginia Tobacco Indemnification and Community Revitalization Commission. (I tallied these numbers from press releases posted at the Virginia Economic Development Partnership website.) The other, non-VW, economic development projects accounted for $724 million in total investment and 2,300 new jobs.

    As I’ve always maintained, corporate recruitment is an effective economic development strategy in parts of the state where a significant percentage of the workforce is either unemployed or underemployed, and where job creation is not overwhelming the ability of state/local governments to provide roads, infrastructure and public services. But, as argued in “The Bug in the Ointment,” it makes less sense for the state to subsidize job creation in Northern Virginia, where infrastructure is overloaded.

    I’m not blaming anyone in particular for this mismatch. Everyone is just doing their job. But that’s the problem: It’s time to re-think economic development priorities. Of all gubernatorial administrations in my memory, the Kaine administration is more acutely aware of the trade-offs between the traditional model of economic development and growth management issues. I’m surprised that the Governor signed off on the VW subsidy.

    Update: As I go through the deals announced in 2006, I see that the state made significant investments in a number of downstate projects: $19 million for SRI Inc., in Rockingham County, $5.9 million for Swedwood North America in Danville, and $6.6 million for ABB in Halifax and Bland Counties. I mention this because it would be unfair to imply that the Kaine administration is neglecting the interests of downstate Virginia.

  • Oh, the Pain, the Pain! Fifty State Employees (out of 119,000) Might Get Laid Off!

    Posted on

    by

    James A. Bacon

    The Kaine administration may have to lay off state employees to help close an anticipated $640 million revenue shortfall. The total number of jobs to be eliminated could number “several hundred,” according to the Washington Post. But Gov. Timothy M. Kaine hopes to accomplish most of the reductions through attrition and retirement. The number of lay-offs could be “fewer than 50,” according to the Times-Dispatch.

    Finding 50 employees to lay off shouldn’t be too difficult in a workforce that numbered nearly 119,000 in June. That’s up 8,300 since Kaine took office in January 2006.

    In fairness to Gov. Kaine, 85 percent of that increase can be accounted for by a hiring spree at Virginia’s institutions of higher education, which operate with considerable autonomy, not at state agencies under the governor’s direct control. When you deduct higher ed from the state employee count, however, the number of employees still has increased more than 1,140. On the other hand, the Virginia Information Technologies Agency shows a 647-person reduction in employee count, which, I presume, reflects the outsourcing of jobs to Northrup Grumman. The jobs are still there, they’re just accounted for differently. So, a fair number would be closer to 1,800.

    The much-maligned Virginia Department of Transportation has been the productivity star of the Kaine administration, reducing its head count by 512. Big gainers have been the Indigent Defense Commission, the Department of Health, the Department of Alcoholic Beverage Control and the Virginia Port Authority — the last two of which are business entities.

    Question One: Where are the promised productivity benefits from handing over IT functions to the much-touted VITA? From the rumblings I’ve heard in the trenches, VITA has increased agency overhead costs without adding much value.

    Question Two: What approach is the Kaine administration taking to its budget cuts? Is it applying the ol’ 5-percent-across-the-board formula, which afflicts every agency equally? Are the Kaniacs making special dispensations for investments and reorganizations that would cut spending down the road, or are productivity-saving initiatives sharing the pain with everything else?
    Question Three: I know student enrollments are up at state colleges and universities, but are they up enough to justify a 15 percent increase in the number of employees in the state higher ed system in less than two years?

    For your viewing convenience, I have extracted, condensed and consolidated the data from Jan. 2006 and June 2007 so you can analyze the numbers yourself. Click here to see the Excel file. (Higher ed institutions are shaded in light yellow.)

  • CONNECTING THE DOTS

    Posted on

    by

    James A. Bacon

    No “Shape of the Future” column this week but here is an exercise in connecting-the-dots on the path to understanding the shape of the future.

    Yesterday and today WaPo devoted much of the front page to a two part series of great significance.

    “Coming of Age: Graying of ‘Suburbs’.”

    The stories, maps, graphs, pictures and captions (“Frank Brown, 66, has worked at Hollin Hall Automotive Service Station since 1992. Every morning, he helps Ruth Ann Harvey, 84, up the hill to work. Harvey, whose family has owned the shop since 1960, is behind the register six days a week. The full-service station is a favorite among elderly drivers, who don’t have to get out of their cars to pump gas.” “Rita Turner of Falls Church, seated, whose neighbors call her the Queen Mum, sold her car because she thought she was too old to drive. Now she must depend on others, such as driver Shobha Sahgal, to get her errands done.”) tell a compelling story.

    Also see “Shape of the Future” column of 30 July “The End of Family as We Knew It” concerning the demographics of Dooryards and use of the word Household.

    (Warning: For anyone who is aware of the importance of understanding of scale of components of human settlement patterns, the use of “community,” “village” and “neighborhood” in these WaPo stories is confusing in the extreme.)

    In today’s WaPo Business Section (that is the “how to make and manage money” section) devoted most of the front page to two stories:

    “Rejuvenating Loudoun: To Attract Young Workers, County Looks for Ways To Shed the Perception That It’s a Bit Middle Aged” and “Perks Give Area Firms a Silicon Valley Feel: Whether Posh of Quirky, Extras Help Lure Talent To the High-Tech Sector.”

    Those who understand what they read at Bacons Rebellion should have no problem connecting the dots to grasp the necessity of Balanced Communities in sustainable New Urban Regions (aka, functional human settlement patterns.)

    PS:

    A regular reader e-mailed us last week and asked that we outline a simple way those who claim “I do not understand” to grasp the metrics of functional vs dysfunctional human settlement patterns. If this is a case where “you get WaPo but you don’t get it” then Civilization as we know it may be lost because these stories provide a wonderful primer. Here are some thoughts that will be expanded upon in TRILO-G:

    Mobility and Access Crisis:

    The level of Mobility and Access for those too young, too old or otherwise unable to use an Autonomobile.

    (NB: “otherwise unable” includes economic as well as physical limitations. This is important since the percentage of Households that can afford and safely use one – much less more – Large, Private vehicles will decline dramatically as energy costs and vehicle complexity continue to escalate.

    Just as alarming is the complexity and cost of the Large, Private vehicle support system as it grows to meet Business-As-Usual demands.)

    Affordable and Accessible Housing Crisis:

    Percentage who can live in the Community where they are employed. (NB: “Community” as defined in GLOSSARY.)

    Helter Skelter Crisis:

    Absence of unreasonable subsidies to achieve Balanced Communities. (NB: “unreasonable subsidies” can be defined by democratic processes once all of the location variable costs are fairly allocated.

    In addition to the Loudoun stories noted above, See Jim Bacon’s “Bug in the Ointment” posted earlier today.)

    EMR

  • Economy 4.0: Measuring Prosperity

    Posted on

    by

    James A. Bacon

    Stop any 10 people on the street in Virginia and ask them, “Who has a higher standard of living — the inhabitants of Roanoke County or Loudoun County?” I would wage that all 10 of them (assuming you could find 10 who had actually heard of both counties) would say Loudoun County. Oh, sure, Roanoke is surrounded by beautiful mountains and all that, but the economy of the Roanoke Valley isn’t exactly setting the world on fire. By contrast, Northern Virginia is where the job creation is, the entrepreneurial success is, the material prosperity is. And Loudoun is at the epicenter of growth in Northern Virginia.

    But let’s take a look at the numbers. According to the Bureau of Economic Analysis:

    2005 Per Capita Income
    Roanoke/Salem………….. $35,140
    Loudoun/Leesburg………..$41,193

    First impression confirmed. Loudoun County’s per capita income is 17 percent higher.

    Now, do this: Go to the CNN cost of living calculator, and see what you have to earn in Loudoun County to get the same standard of living as Roanoke County. It’s $45, 695. In other words, adjusted for the cost of living, Roanokers are 10.9 percent better off than Loudounites! (The gap looks even worse if you take into account the highly progressive nature of the federal tax code that punishes regions, like Northern Virginia, with high nominal salaries and wages.)

    That simple comparison leads me to the key insight of the second installation of “Economy 4.0: Measuring Prosperity“:

    Thanks to the federal tax code, affluent Virginians are subject to high taxes on every extra dollar they earn. Strategies geared to increasing incomes are worthwhile, but they are pushing the rock up-hill. A more effective way to raise comparative living standards in Virginia may be to hold down living costs.

    In “Measuring Prosperity,” I also discuss the implications of the “time famine” on living standards, the vulnerability of living standards to rising energy costs, and the impact of environmental degredation on the stock of Natural Capital.

    Bottom line: Public policies that increase incomes are good. But public policies that increase incomes while simultaneously driving up living costs, consuming more energy and degrading the environment by perpetuating dysfunctional human settlement patterns are misguided and counter productive.

    Can anyone say, “Fundamental Change?”

  • Economy 4.0: A Bug in the Ointment

    Posted on

    by

    James A. Bacon

    About 10 days ago, I posted a brief piece, “Questions about the Volkwagen USA Deal,” that questioned the wisdom of using $6 million in state subsidies to bring 400 high-paying Volkswagen USA headquarters jobs to Fairfax County. That question was the perfect segue into the second installment of my “Economy 4.0” series, which asks the core question, what exactly are we trying to achieve with economic development — job creation for the sake of job creation, or better places to live? As I expanded my arguments, what started as an introduction to an essay about the metrics of prosperity became a detailed case study. So I hived it off into a story of its own.

    Here’s my argument in a nutshell: In a regional economy like Northern Virginia characterized by chronic labor shortages, the only way that VW can fill 400 new jobs is to bring 400 wage/salary earners into the region. While corporate VW will pay taxes and its employees will pay taxes, they also will require public services and infrastructure. Northern Virginia’s infrastructure, especially schools and roads, is already overloaded. Someone will have to pay a lot of money in up-front capital costs to accommodate the newcomers. Therefore, the creation of those 400 jobs is a mixed blessing.

    Some might argue, well, those are very high-paying jobs. Surely those people will pay their own way. There’s no denying that the VW jobs are the kind of jobs that economic developers salivate over. At $125,000 per year on average, VW headquarters employees will earn twice the regional average and three times the state average. But we must consider two things. First, through the multiplier effect, those jobs generate another 100, 200 or maybe more retail- and service-sector jobs in the economy. That means even more people will move into the region — teachers, policemen, hair dressers, Seven 11 clerks, etc., who certainly will not be earning $125,000 a year.

    Secondly, it is theoretically possible that governance structures and human settlement patterns in Northern Virginia are so dysfunctional that even jobs paying $125,000 on average do not pay for themselves! According to Virginia Employment Commission data, Fairfax County is projected to increase the number of jobs by roughly 250,000, or 21.9 percent, between 2004 and 2014, but population growth in the county has slowed to the 6.0 to 6.5 percent range. In other words, three out of every four new employees will work in Fairfax County but live somewhere else.

    That’s the jobs/housing imbalance that Ed Risse is always warning us about. The result is more people crowding onto more increasingly overloaded roads and driving ever longer distances. How much will it cost to upgrade the transportation network to handle those additional employees, and how long will it take to recoup that cost in tax revenues? The fact is, we don’t know. No one is asking the question, so we clearly don’t have the answers. Absent hard data to the contrary, we have to consider the possibility that the Commonwealth of Virginia spent $6 million to subsidize Northern Virginia in an entirely self-destructive enterprise of digging itself into a deeper hole.

  • Aux Armes! La Jacquerie du Lard Est Ici!

    Posted on

    by

    James A. Bacon

    So much for trying to improve my search engine rankings in Google-France… To a native French speaker, the headline might be understood as “To Arms, the Peasant Rebellion of the Bacon Is Here.” Bacon, as in the salted pork variety. (Let’s see what sense Google’s logic algorithm makes of that!) I suppose I could have written, “La Jacquerie du Bacon,” using Bacon as a proper name, but that didn’t look right to my Anglo eyes either.

    What I like about the word “jacquerie” as opposed to French word “rébellion” is that it implies a peasant uprising — a rebellion of the dispossessed, as opposed to a dissension among the elites.

    Anyway, yes, the Sept. 17, 2007, edition of Bacon’s Rebellion is now online. You can read it in its fullness and plentitude here. Unless you check your B.R. blog every day, you might miss the next issue. You don’t want that, so subscribe for free here.

    Now, giving a voice to the oppressed, we offer the following for your blog reading pleasure:

    A Bug in the Ointment
    The relocation of Volkswagen USA to Fairfax County is a P.R. bonanza for Virginia. But is the region, already buckling under growth, prepared to handle the influx of 400 more jobs?
    by James A. Bacon

    Measuring Prosperity
    There are two ways to increase the standard of living: Increase income and reduce the cost of living. Virginia policy makers focus on the one and not the other.
    by James A. Bacon

    Chambers of Secrets
    A first-hand look at the old and new in London and in Richmond illustrates why legislative bodies remain living things.
    by Doug Koelemay

    Loosening the Beltway
    Congestion on the Washington Beltway will ease at last when a private consortium builds new lanes, upgrades the roadway and uses variable-pricing tolls to establish free-flowing traffic.
    by Leonard Gilroy

    Virginia Values
    State Republicans don’t have to apologize for “Virginia values” like liberty, limited government and the primacy of civil society. They just have to articulate them in a way that resonates with voters.
    by Norman Leahy

    The Highwaymen
    The politicians have turned traffic cops into a scourge. They plague Virginia’s roads, arresting citizens for arbitrary laws and plundering their wealth under the guise of “abuser fees.”
    by Mike Smith

    (Image credit: Wikipedia.)

  • Transmission Lines and Electricity Imports

    Posted on

    by

    James A. Bacon

    In a recent post, “Virginia’s Growing Energy Gap,” I argued it doesn’t matter where Virginia gets its energy from, as long as it’s from a secure region of the world like North America. (The recent bombing of a Mexican pipeline by a group linked to Venezuela’s socialist despot Hugo Chavez may force me to rethink which parts of the world qualify as secure.) But I do find it strange — and somewhat troubling — that Virginia imports one third of its electricity from other states.

    According to the Virginia Energy Plan, Virginia’s electricity imports have climbed significantly since 2000. Some imports come from Dominion’s Mount Storm power generating complex and some from out-of-state generating sources in the AEP and Allegheny power systems. But most of the increase, I believe, appears to coincide with Dominion’s strategy of buying electricity from the Midwest and wheeling it into Virginia through the PJM transmission pool — a practice that gained momentum during the power company’s flirtation with deregulation.
    Dominion is a proponent of what I call the Big Grid energy strategy, of building a dense network of electric transmission lines in order to shift electricity long distances to those regions where it is most needed. But the approach has major drawbacks. First, as demonstrated by massive blackouts in the Midwest and Northeast earlier in the decade, the system is subject to catastrophic failure. Second, it requires building high-voltage transmission lines — such as the line that Dominion proposes for Virginia’s northern piedmont — which people don’t like running through their back yard.
    I wouldn’t have a problem with the transmission lines if Dominion negotiated the rights of way with the individual property owners whose land it crossed. But Dominion doesn’t want to do that — it wants to utilize the power of eminent domain to compel landowners to sell their right of way. What’s more, as I understand it, landowners would be compensated only for the land in the right of way itself. They would receive no compensation for the loss of property value caused by visual blight on land surrounding the transmission line. That may seem like an arcane point to some, but consider: How would you feel if you paid $5 million for a farm, valued largely on the beauty of the surroundings, and Dominion ran a transmission line through it? Dominion might pay you $100,000 for the right of way, but the value of your farm might decline $1 million or $2 million in value.
    The alternative to Big Grid is a distributed grid that integrates a legion of small and independent power contributors into the mix: wind mills, solar, biomass conversion, cogeneration and so on. By keeping the power source closer to the consumer, distributed generation does not experience the electricity leakage that occurs with long-distance transmission, nor it is as vulnerable to a catastrophic, system-wide failure.
    If electric utilities are willing to pay the full cost of building electric transmission lines, then, I say, “Let ‘er rip!” However, I have no sympathy with those who would say, “But that would be too expensive.” Expensive to whom? To Dominion and its Northern Virginia customers? How about the people who own piedmont real estate?
    If Northern Virginians want more electricity to build more energy-hogging server farms that yield big tax revenues for municipalities, why don’t they build power plants locally? Could the reason be that nobody in Northern Virginia likes power plants? Could it be that Northern Virginians prefer, for aesthetic reasons, to import their electric power?
    Here’s the stand off: Northern Virginians don’t want power plants in their midst, and piedmont inhabitants don’t want transmission lines running through their land. Here’s the trick: The onus is on the Northern Virginians to find a solution because they’re the ones who want the electric power. They can build big Dominion-style power plants in their own back yards, or they can evolve to a system of distributed energy, or they can pay the piedmontese the full cost of running a transmission line through their region. They have no right, through the agency of Dominion, to simply take what they want.

  • The Catastrophic Consequences of a Concave Coastline

    Posted on

    by

    James A. Bacon

    One of the issues the Virginia Energy Plan grapples with is development of Virginia’s offshore natural gas reserves. That’s an interesting issue, but not half as interesting as the questions arising from the map displayed above. Look at the wedge of continental shelf allocated to Virginia. How come it’s so small? Why does our share get narrower as it extends further into the ocean?

    As the old real estate saying goes, they’re not making any more land. But the federal bureaucrats in the Minerals Management Service are handing out more land — it just happens to be underwater. This is no esoteric matter. These administrative boundaries govern which state has authority over offshore natural resources. In Virginia’s case, our slice contains an estimated 56 million barrels of oil and 327 million cubic feet of natural gas. If the boundaries were drawn differently, it could be a whole lot more.

    How did Virginia wind up with the short end of the pie wedge? Here’s what the energy plan says: The Minerals Management Service established the boundaries using “an equidistance methodology for the purpose of managing offshore resources.”

    The equidistance methodology expands the area attributable to states with convex coastlines and decreases the areas attributable to states, such as Virginia, with concave-shaped coastlines. Use of equidistant boundaries reduces the Commonwealth’s ability to influence decisions about offshore resource development.

    Those offshore resources include not only oil and gas but sand, other minerals and renewable energy sources such as wind and tidal power, which in the long run could far exceed oil and gas in importance to the Virginia economy.

    Virginia got the short end of the stick on this one. Administrative boundaries that extend due east would have yielded Virginia a much larger share of the continental shelf. Where were our congressmen when these decisions were being made? Is there some way to appeal the inequitable distribution of offshore territory and resources?

  • How Much Energy Conservation Is the Right Amount?

    Posted on

    by

    James A. Bacon

    The Virginia Energy Plan has set the goal of reducing the rate of energy consumption per capita in Virginia by 40 percent from current projections, in effect stabilizing per capita consumption, not reducing it. Total energy use would continue to grow along with the population.

    While praising many aspects of the plan, the Southern Environmental Law Center criticized the report for its modest conservation goal. Write Trip Pollard and Cale Jaffe in a prepared statement:

    The plan also deserves praise for recognizing the importance of energy efficiency as the “least costly and most readily deployable energy resource.” However, it recommends a target of reducing electricity use in Virginia by only 3900 MW by 2022. A recent analysis shows Virginia ranks dead last in the U.S. on per capita investments on energy efficiency, meaning far greater energy savings should be achieved.

    How much conservation is it reasonable to expect Virginia to achieve? Virginia has one of the more electricity-intensive economies in the 50 states, and there are abundant opportunities for conservation and energy efficiency. But we cannot write a blank check. With many competing uses for our resources, we cannot afford to squander funds on any old program with a political constituency.
    Earlier this year the General Assembly set a goal of reducing retail electric consumption by the year 2022 by 10 percent of 2006 levels through conservation and energy efficiency. That would defer or postpone the need for about 3,900 megawatts of electric genration capacity, equivalent to four or five large power-generating stations.
    That does not strike me as especially ambitious, but I don’t have the data to say one way or another. Here’s the question I always come back to: What’s the Return on Investment? The Energy Plan does not say explicitly, but it does provide some numbers to work with. The report assumes that electric companies and consumers would invest about $300 million a year over the fifteen-year life of the program. Annual savings would amount to between $15 million to $50 million per year, depending on the assumptions made.
    Let’s see, if we invest $300 million and generate $15 million a year in savings, that’s a 5.0 percent Return on Investment, equivalent to investing in a money market fund. Not terribly attractive. Saving $50 million a year would yield 17 percent, which is very competitive, the kind of return that the private sector looks for.
    Presumably, those numbers mask a wide range of returns on individual projects. Rather than commit to a specific statewide number, I would suggest, consumers and power companies should be allowed to make investments in line with their personal expectations. And instead of setting artificial statewide goals, the state should focus on (a) creating the legal and regulatory conditions where the marketplace rewards investments in conservation and energy efficiency, and (b) fixing energy-inefficient human settlement patterns that result in unnecessary expenditure of energy for driving and home heating/cooling. Then the state should step aside and let individual households and businesses figure out how to maximize their own good through conservation and energy efficiency.
    As a practical matter, what does that mean? I hope to elaborate in future posts.

  • Virginia’s Growing Energy Gap

    Posted on

    by

    James A. Bacon

    According to the recently released Virginia Energy Plan, Virginia suffers from a major energy gap: We consume far more BTUs of energy than we produce. As the report notes, “Virginia’s energy production is expected to decrease over time as the amount of coal mined in Virginia decreases. This will result in a growing gap between what Virginians use and what the state produces and will increase the drain on Virginia’s economy through increased payments for imported energy.”

    The Energy Plan does not provide a dollar value for that gap, but we can infer (assuming energy expenditures account for roughly 10 percent of Virginia’s $319 billion 2006 gross domestic product) that we could be talking about a $15 billion economic impact.

    Narrowing that gap is a goal of the energy plan, which calls for a combination of conservation, energy-efficiency and energy-production initiatives. The plan publishes the following goals to achieve by 2017:

    • Reduce the rate of growth of energy consumption by 40 percent of the currently anticipated increase in per capita energy use, effectively keep per capita energy use stable.
    • Increase in-state production of energy by 20 percent over what is currently projected, including investment in electric generating capacity, bio-fuels, coal and natural gas distribution capacity.

    In future posts, I will delve into the details of how the energy plan proposes to meet those goals. Here is my question at the outset: Does it matter if Virginia has an “energy” gap any more than it matters that we might have a gap in bulldozers, cashews, hedge funds or any other product/service? As long as Virginians produce things that others don’t — microchips, cigarettes, automated controls, IT services — and as long as we can trade those things for energy, why does the gap matter? One could argue that investing public dollars in closing the gap would skew resources towards less efficient economic uses, thus creating a net loss to the economy. Is the Virginia Energy Plan nothing more than a state-level industrial plan in which politicians and bureaucrats pick winners and losers?

    I would argue that energy is different from tobacco, microchips and wireless technology companies in three important ways. First, dependence upon foreign sources of oil makes us uniquely vulnerable to hostile countries that would use oil as a political weapon against us, and vulnerable to supply disruptions in unstable parts of the world. Second, the production of energy in whatever form has adverse consequences on the environment (although, clearly, some sources of energy are more benign than others). Third, the state already regulates the electric power industry; it only makes sense to articulate what goals we hope to achieve through that regulation.

    Bottom line: The Virginia Energy Plan is a legitimate endeavor, not another exercise in the state meddling where it doesn’t belong. Coming up… Conservation and energy efficiency.

  • Is Debt An Option to Cover the Budget Shortfall?

    Posted on

    by

    James A. Bacon

    Uh, oh, I’m on public-policy overload right now! We’ve got the Governor’s energy plan, a GOP health care initiative, and an ongoing war of words over the budget. Let’s start with the budget…

    When last I reported, senior GOP legislators in the General Assembly had urged Gov. Timothy M. Kaine not to dip into the General Fund to address this year’s revenue shortfall. (See “Don’t Touch the Rainy Day Fund.”)

    The Governor responded assertively. First, the revenue shortfall meets the constitutional trigger to use the Rainy Day Fund. Second, he has requested state agencies to tighten spending, and he plans to announce mid-year cuts. Third, he is exploring some options, including “changing the timing or manner of capital spending.” And fourth, he is holding onto the option of using reserve fund revenues if he absolutely needs to.

    Now Sens. Walter Stosch, R-Henrico, and William Wampler, R-Bristol, have shot back: What’s this about changing the “manner” of capital spending? “As we all know, there are only two means of financing capital projects — cash or debt. Given that we are currently using cash, we read your response as indicated that debt is now an option.”

    I am interested to see the Governor’s retort to that piece of deduction. You can read the complete letters here:

    Sept, 10, 2007, letter from Del. Vincent F. Callahan, R-McLean, Del. Lacy Putney, I-Beford, Sen. William C. Wampler, and Sen. Walter A. Stosch.

    Sept. 11, 2007, letter from Gov. Timothy M. Kaine

    Sept. 12, 2007, letter from Sens. William C. Wampler and Walter A Stosch

Now Available

Book cover of 'Dust Mites: A Second American Revolution' by James A. Bacon, featuring astronauts planting a flag with a blue and white emblem on a lunar landscape, with Earth visible in the background.
For sale on Amazon.com

The year: 2075. The American colonies on the Moon are getting restless under Washington’s tyrannical rule….

This second edition of “Dust Mites” has a snazzy new cover, includes helpful lunar maps, and is 5,000 words tighter than the original. The sequel, “Trogs,” is scheduled for publication this summer.

Advertisement

Advertisement

Advertisement

Advertisement

About

Bacon’s Rebellion is Virginia’s leading politically non-aligned portal for news, opinions and analysis about state, regional and local public policy. Read more about us here.

Fund the Rebellion

Shake up the status quo! Your contributions will be used to pay for faster download speeds and grow readership. Make a one-time donation by credit card or contribute a small sum monthly.

Can’t wait until tomorrow

For your Bacon’s Rebellion fix?

Enter your email address to receive immediate notifications of new posts by email.

SUBSCRIBE

Search Bacon’s Rebellion

Categories

Archives

The Jefferson Council

Protecting Thomas Jefferson’s Legacy at the University of Virginia

Forgot Your Password?

Shoot me an email and I’ll generate a new password for you.

Latest