Bacon's Rebellion

  • Tuitions Gone Wild

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    James A. Bacon

    It’s like a scene out of “Girls Gone Wild,” except instead of pretty co-eds misbehaving, it’s the college administrators. As a result of this year’s tuition and fee increases, Virginia undergraduate students can expect to pay on average 7.3% more in 2008-09 than they did the prior year. That translates into an additional burden of $499 more per student, according to the State Council for Higher Education in Virginia (SCHEV).

    The latest round of hikes perpetuates a decade-long trend of saddling students and their parents with ever-escalating bills for higher education. After adjusted for inflation, the annual average increase for in-state undergraduate tuition and mandatory fees is 3.1 percent at four-year institutions over the past decade, calculates SCHEV in its report, “2008-09 Tuition and Fees at Virginia’s State-Supported Colleges and Universities.“

    Eleven institutions complied with the requirements of of the General Assembly’s Tuition Moderation Incentive Fund, restraining their tuition hikes in order to qualify for $17.5 million to be shared by qualifying schools. But six of the largest universities — Virginia Commonwealth University, the University of Virginia, the College of William and Mary, Virginia Tech, George Mason University and the Virginia Community College System — opted out.

    The tuition-moderation fund will provide participating schools a total of $17.5 million for limiting in-state undergraduate tuition and instruction-related fee increases to no more than 4 percent in 2008-09.By contrast, Virginia Tech is goosing its tuition, fees and charges upward by 9.4 percent, W&M by 8.7 percent and UVa by 7.3 percent.

    The usual response of universities is that they jack up their fees to compensate for cuts in state assistance. There is something to that argument — but it’s only part of the explanation. This year, the General Assembly boosted state aid by 2 percent. Inflation over the past year has run about 5 percent. Clearly, the legislative assistance was inadequate to cover the higher costs. But, as has been the pattern for just about forever, the six largest universities hiked tuition and fees significantly faster than the inflation rate.

    Bacon’s bottom line: Tuitions and fees at Virginia’s most prestigious public institutions are out of control. Boy, am I glad two of my three children have graduated. Only one to go. But I shudder to think what a university education will cost in another eight years.

  • Is Tysons Beyond Redemption?

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    James A. Bacon

    Is Tysons Corner beyond salvaging? Has Fairfax County missed the window of opportunity to create functional human settlement patterns there? Or is Virginia’s largest business district doomed to a slow, lingering death by entropy?

    I haven’t studied the issue closely enough to pretend to know the answer. But I do worry that the opportunity to transform Tysons Corner into something more economically sustainable has passed us by. What’s different now than 10 years ago? For one, energy costs are higher, and about 98 percent of the people who work in Tysons commute there from somewhere else. For another, construction costs have escalated markedly. The cost of tearing down and rebuilding the business district in a more functional grid pattern — not to mention providing the connective transportation tissue to the rest of the region — has become impossibly expensive.

    There may be enough wealth-generation potential in the businesses congregated there that those impossibly high costs might yet be borne. The business base is overwhelmingly geared toward knowledge-intensive companies that pay high salaries and can afford high rents. But there are limits to how much companies will be willing to pay, especially with competing business centers like Reston/Herndon and Rosslyn/Ballston all too eager to whisk them away.

    Such are the thoughts I have as I catch up on the activities of the Tysons Corner Land Use Task Force, which has been meeting monthly since June 2005. The task force is supposed to submit recommendations for transforming the region, which by all accounts is crippled by limited ingress and egress from the rest of the Washington metropolitan region and terrible transportation circulation within.

    I have been goaded into thinking about this topic by a document submitted by a blogger who goes by the pseudonym Too Many Taxes. TMT passed along a press release from the Greater Tysons Citizens Coalition (GTCC) and has been stimulating some interesting dialog in the comments section of this blog. After many distractions, I am turning my attention to his correspondence.

    Let me lay the groundwork by stating that the Tysons Corner Land Use Task Force has a noble goal: laying out a vision for transforming the business district over the next 30 to 50 years into something far more hospitable and functional than exists now. The task force is saying all the right things. Development needs to be more compact. It needs to allow mixed uses. It needs to create gridded, pedestrian-friendly streetscapes. It needs to allow for non-automotive transportation options, from bicycles to mass transit.

    The impetus for the task force is the expectation that the commonwealth of Virginia will somehow find the $5 billion or more required to extend a heavy rail spur from the existing Metro rail system to Dulles airport, passing through Tysons Corner on the way. In theory, the rail line will provide much of the transportation capacity needed to serve the region, and the combination of Metro stations and higher building densities bestowed by Fairfax County will provide property owners the financial inducement to re-develop their land in line with this new vision.

    But there are problems that just won’t go away. Higher densities are fine — as long as Fairfax County and the commonwealth of Virginia can find the means to pay for the correspondingly high levels of roads, utilities and other public services required to support such a population. Higher densities are not OK if they fail to generate revenues streams to pay for the additional infrastructure required.

    That brings us to the GTCC press release, which points out that Tysons Corner as currently developed has 45 million square feet of commercial, retail, hotel and governmental/institutional space and some 7,900 residential units. Those numbers pale in comparison to some of the scenarios being discussed. Says the press release:

    At the last public outreach meetings in February 2008, citizens were asked to comment on two prototypes with stated density levels of 96 and 127 million square feet. Since the February meetings, County staff has analyzed the 127 million figure to result in an “Intensity Potential” of 146 million square feet. In comparison, the Task Force is considering a recommendation that would have an intensity potential of 220 million square feet.

    In other words, different density scenarios under discussion call for anywhere between three and five times the current density. We’re talking mid-town Manhattan, if I’m not mistaken.

    In 2000, the area supported 65,500 jobs, according to the Bureau of Census. Presumably, tripling density would increase the number of jobs by a like amount — to close to 200,000 people. Quintipling density would put the number over 300,000. If transportation is bottlenecked now, what would it be like if five times the number of people were commuting in and out of the area? Such a vast number would swamp the capacity of a single rail line and four above-ground Metro stations to serve the district. In other words, to paraphrase Ed Risse, the prospects for achieving a balance of population and transportation capacity seem remote.

    In theory, allowing developers to build more residential housing would help alleviate transportation congestion. According to a 2007 market analysis, 17,500 residential units would be added under the “moderate” growth scenario, 25,000 under the “strong” scenario. While some of those residents undoubtedly would work in Tysons Corner, most of them would not. According to the 2000 Census, only a third of the 11,300 residents in Tysons worked locally. If that ratio stayed constant, the added residential units would take only 3,000 to 8,000 commuters off the roads. Mixed use is part of the solution for Tysons, but only a small part.

    One more point: The task force is counting on higher densities to provide property owners the incentives to re-develop along the lines laid out by the proposed comprehensive plan. But the business district has a track record between 1994 and 2006 of absorbing 600,000 of office space per year on average. To fill the tens of millions of square feet contemplated would take decades. Property owners cannot generate a competitive return on capital if they have to wait that long for a payback.

    In an April letter to the task force, property owner Dan Clemente touched upon the desnity problem. “As it exists today, throughout this quadrant, all of the property is currently developed with sound business uses; the densities being proposed in this plan are not high enough to justify the economic costs involved with disrupting these going concerns. That being the case, this design will frustrate if not make impossible the planning staff’s goals of consolidated development.”

    While the planning staff could solve Clemente’s problem by increasing his density, it could not do so politically without increasing the density of other property owners as well. But to do that would create a massive overhang of development rights that would allow developers to build far more office space than the district could possibly absorb in an economically justifiable length of time.

    From my vantage point, it looks like Tysons Corner is locked into its dysfunctional human settlement patterns. The cost to transform the district into something more inviting and sustainable is so high that it cannot be economically justified. If Tysons cannot be transformed, it will enter into a long, slow decline relative to other business districts with better urban design.

    I hope I’m wrong. In a sense, Tysons is “too big to fail.” Northern Virginia, and by extension all of Virginia, has too much riding on the success of the business district as a cent
    er of economic activity. But I hold out little hope for its long-term future.

  • We Don’t Rank on the Rove-O-Meter

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    James A. Bacon

    Let’s see, Richmond as Chula Vista, a large, 220,000 population or so suburb of San Diego? Or maybe Aurora, Col.?

    “It’s not a big town,” said Republican political maven Karl Rove of the former Capital of the Confederacy on CBS’s “Face the Nation” this Sunday.

    Or how about Tim Kaine being an OK but not especially remarkable governor? “He’s able but undistinguished,” added Rove, who was head of George W. Bush’s “Brain Trust,” which itself might be considered a misnomer.

    Of course, Kaine is being considered as a possible running mate with Barack Obama just as Republican Congressman Eric Cantor is being considered as a possible running mate with John McCain. However, leading conservative editorial pages, such as the Wall Street Journal, tend to leave off Cantor’s name when they review possible candidates. One could also describe Cantor as OK, but undistinguished, but at least Kaine seems to get mentioned more freely and without caveat as being VP material.

    My question is: where is the outrage among all the conservatives who read and write on this blog?

    Aren’t you offended that this Rove character has insulted the sanctity of Richmond, which should be considered on the level of Charlotte, Raleigh, Birmingham, Atlanta or any urban center of the Old South? After all, Richmond is more than 220,000 people — it is the center of a region with more than one million people. Even more important, it is a state of mind. Just read Jim Bacon who has perhaps done more to encourage his own imaginative idea of “Richmond” than dapper, white-suited Tom Wolfe, the famous author.

    I love and hate Richmond. I love its physical beauty and its multifaceted cultural diversity. Name me a place its size that has more home-grown music or Class V whitewater downtown. I also hate Richmond for its smug, pompous and irrelevant would-be ruling elite. I have lived elsewhere in the South and have enjoyed its open, friendly nature. Except for Richmond, which is cold, exclusive and snobbish. And, Richmond is actually a cesspool of poverty — a point that was made tellingly at a seminar hosted by Style Weekly magazine last week.

    But whether you love it or hate it or both, Richmond sure as hell isn’t North Las Vegas. Karl Rove thinks it is.

    What are we going to to about this?

    Peter Galuszka

  • If California Can Do It…

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    James A. Bacon

    Maybe it’s the desperation born of a $15 billion budget deficit this year, but extraordinary things are happening in California. According to the Sacramento Bee, an “unlikely coalition” of environmentalists, builders and local governments agreed Wednesday on legislation that would stop using state transportation money to subsidize “sprawl.”

    California’s SB 375 would use the $5 billion in transportation money the state allocates each year to encourage compact development. The bill also would change how regions make transportation decisions to encourage development that increases affordable housing and reduces commute times, emissions and gasoline consumption. Additionally, the law would amend the California Environmental Quality Act to reward projects that improve air quality and energy conservation.

    “We cannot continue to do business as usual,” said Ray Becker, chairman of the California Building Industry AssociationBecker said. “We all agree in one way or another to change the way we do business to be able to come together in this historic agreement.”

    Such an agreement could never happen in Virginia, where productive dialog between key constituencies — legislators, local governments, the building industry, environmentalists and conservationists — is next to non-existent.

    Gov. Timothy M. Kaine struck out when he called a special General Assembly session to discuss transportation without first forging a consensus. If he wants to take another swing at the problem, he would be well advised to see how the warring parties were brought together in California… then try something similar. What we’re doing now is not working.

    (Hat tip: Ted McCormack)

  • The Nexus Between the Cost of Bunker Fuel, DVDs from Asia, Grapes from Chile and Highway Construction in Virginia

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    James A. Bacon

    Peter Galuszka raises a fascinating issue that has received little play yet in the popular media, or even in the business press that I have seen: the impact of rising fuel prices on international trade. Insofar as Virginia’s economy is intertwined with the global economy, and insofar as various advocacy groups are pressing for multi-billion dollar transportation investments to Hampton Roads predicated on the assumption that past trade patterns will continue into the future, we need to pay attention.

    In “The Corner Office,” the business blog he writes for B/Net, Peter asks if shipping fuel price hikes will “scuttle globalization.” He presents some fascinating data:

    The workhorse of the World Economic Globalization Fleet is the typical 800 or 1,000-foot container ship usually launched in South Korea or Japan. One ship can carry about 2,000 tons of bunker fuel and burns from 20 to 30 tons every day at sea.

    According to Financial Express, bunker can run about $700 a ton, up by $200 a ton from this spring. Let’s do the math. A Norfolk-bound ship from Asia that may take 14 days for a one-way trip has a fuel bill of $294,000 instead of $210,000 a few months ago.

    Already, shippers are cutting back. One example: half a world away, some 14 ships running the busy route between Bangladesh and Singapore have suspended their trips because of high fuel costs, Financial Express reports.

    I explored the same angle from a different perspective in a May blog post: the impact of a lower-valued dollar and shrinking trade deficit on trade flows. A weaker dollar makes foreign products more expensive in the United States, hence less competitive. Cargo landing in Hampton Roads and heading west on Interstate 64 and U.S. 460 boomed during the decade-long reign of the strong dollar. Infrastructure projects were planned based on the assumption that past trends would continue. To what extent, I asked in May, would a weak dollar halt the largely one-way trade flows?

    Now, on top of a weaker dollar, we must consider the fact that the higher price for bunker fuel can add $80,000 to $85,000 to the cost of container ship traveling halfway around the world.

    I’m not sure what $80,000 translates into on a per-container cost. Wikipedia says that typical container ships have a capacity of 3,000 TEUs or 1,500 containers. (Some ships are twice that large.) That implies an added cost of roughly $55 per container. Compared to the value of the merchandise, that’s hardly crippling. But, as Peter points out, the evidence suggests that it’s sufficient to dent overseas shipping.

    To answer the rhetorical question atop Peter’s blog post, no, rising fuel costs don’t spell the end to “globalization,” which includes the flow of capital and the exchange of services as well as products that can be packed into shipping containers. But higher bunker fuel prices may alter global trading patterns in physical products.

    (And we’re not just talking about Nikes and big-screen TVs. In another vein, Ed Risse has written how the impact of rising fuel costs on the import of fruits and vegetables from other countries could reinforce the growing consumer preference for locally grown produce.)

    We Virginians need to pay attention. This is not an arcane matter of interest only to business school professors or big companies with global supply chains. Global trading patterns affect the long-range, multibillion-dollar transportation investments that Virginia taxpayers are being called upon to help finance. We can either anticipate the impact of rising fuel prices, or we can be blindsided by them.

  • GAS PRICES AND RELATED

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    James A. Bacon

    The WaPo series “Oil Shock” continued today. All in all a good series that has been running since 27 July. How can you not like a series that profiles your past life?

    The oil field profiled in the 29 July story looks EXACTLY like the oil lease North and West of Bakersfield where our family lived during the late 40s. That house in the background in the page A-8 photo with a few scraggly athel trees could our house. My father and mother were farmers. He also worked in the oil fields during World War II – too old for military service. The job in Central Valley “old field production” was a way station after being forced out of farming in the Santa Inez Valley. While living in Coalinga they decided to move to Montana where hunting, fishing and sub-irrigated meadows beckoned.

    But back to the series: Today’s story: “Gas Prices Applying Brakes To Suburban Migration; Reality Check on the American Dream” repeats much of what you have heard from Bacon and Risse for over 20 years. All the usual suspects say the usual things including the mouth pieces for Business-As-Usual and the Autonomobile. See the note on funding of transportation “experts” in THE PROBLEM WITH CARS.

    Ironically WaPo chose to feature a home in South Riding. South Riding started as a quasi New Urbanist Planned New Village. Of all the places in the eastern part of Loudoun County, South Riding still has the best shot at Balance and “community” at the Village scale. There is a range of building types, a plan with the original intent of becoming an “English Village” and a core of First Families that believe in creating something better than more dysfunctional human settlement patterns. Full disclosure: The South Riding governance structure is a former client of SYNERGY/Planning.

    In the end, the story is more He Said, She Said journalism — with a small “j” — but at least it mentions the problems even if it papers over most of them with Geographically Illiterate foolishness such as we will not “all decide to live in apartment houses.” Who in the world said “everyone” would or should? Only the strawperson spinners of the Autonomobile crowd. A Balanced (Alpha) Community could have fewer apartments that Single Household Detached dwellings and no “high-rises” but that does not keep the Autonomobile crowd from throwing up red herrings and strawpersons to scare the uninformed and ride the tiger a little longer. See “Tiger Riders” 2 June 2008.

    For those who continue to obfuscate an understanding of human settlement patterns by railing against S/P’s campaign for the use of precise language, take a look at the graphic sidebar on page A14. You will note Radial Analysis (truncated by the lack of data below the County scale) and the use of terms like “Core.” We suspect the editors never looked at the side bar. It makes too much sense and if you read it with care you understand how much of WaPo coverage is misleading at best and often intentional obfuscation.

    An aside: Check out The Shape of the Future page at Amazon.Com. Look at the “Inside the Book” feature and at “Statistically Improbable Phrases.” This is a feature that Amazon added not long after our book was published in 2000. The same sort of software now produces those “word balloons” that are popular on “style” pages. A lot of what were “statistically improbable phrases” in the early years of the decade are not any longer.

    Back to gasoline, CNN Money.Com reprinted a Fortune story yesterday “Falling oil prices: The Downside” that is a MUST READ. The reason oil prices (and gas prices) are down is lower demand – here, not in China or India. That is bad news for the economy and the need to establish a rational strategy to reduce consumption and energy waste without causing a long, hard depression. See our column of yesterday – “Beyond the Headlines” – for further discussion of the missed opportunities.

    Apparently the mavens of Gambling Venue New York (aka, the New York Stock Market) did not get to their MUST READ pile. They will in a day or two and the market will drop 200 points. That is what gambling venues do to keep the game interesting.

    And on the politics-as-usual front: candidates are falling all over themselves to find ways to lower the price of gasoline and energy. They should be suggesting ways to lower the consumption of gasoline, energy and non-renewable resources, not just lowering the price.

    Let the market work, stop bailing out the greedy and punishing the thrifty.

    At least WaPo gets that right in the Oil Shock series.

    EMR

  • Building Virginia’s Nuclear Cluster

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    James A. Bacon

    One of the Virginia Tobacco Commission initiatives that intrigues me is a $7.6 million grant for the construction of a 25,000-square-foot Center for Advanced Engineering and Research CAER) just west of Lynchburg. I have seen little explanation about what this Center is supposed to accomplish. Only a few details emerge from an editorial in the Lynchburg News & Advance.

    Bob Bailey, executive director of the center, said the new facility would create the opportunity for college-level faculty to locate in the region. Among other things, that would provide more educational opportunities for them and for students interested in pursuing engineering research.

    With the presence of such nuclear giants as Areva and Babcock & Wilcox Co. in the area, nuclear energy research is no stranger here. Areva executives have announced plans to hire up to 500 engineers so the company can do detailed design work for its next generation nuclear power reactor.

    Is CAER a research facility, or is it an educational facility? Is the funding of this facility part of a larger, well conceived plan to build a nuclear power services cluster in Lynchburg/Southside Virginia, or is it a case of the Tobacco Commission throwing money at a project in the hopes that it will do some good. I’m hoping it’s the former, but press accounts have provided so little detail that I can’t say for sure.

    What can a tiny, $7.6 million facility hope to accomplish in “research” in an industry dominated by multi-billion dollar conglomerates? Will the “research” be tied to programs at Virginia Tech and the University of Virginia… or perhaps to Areva and B&W… or perhaps to the environmentally safe extraction and processing of uranium ore from Pittsylvania County?

    Have various nuclear power constituencies in Virginia ever gathered under a single roof to discuss a strategic plan for building the nuclear power cluster in the Old Dominion and, thereby, strengthen the competitive advantage of all Virginia-based players in the international marketplace for nuclear fuels and services? Has Aneesh Chopra, Virginia’s peripatetic secretary of technology, been working behind the scenes? Inquisitive minds want to know!

  • Does “Business Climate” Matter? The Bluefield Laboratory.

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    James A. Bacon

    There has been some disagreement expressed on this blog about the extent to which Virginia’s top-rated “business climate” makes a difference in economic development. There is an interesting laboratory in the vicinity of Bluefield, a mountain town that straddles the Virginia-West Virginia state line.

    The editorial writers of the Bluefield Daily Telegraph certainly believe that business climate makes a difference — a sentiment expressed in a column prompted by the decision of Metal Manufacturing and Processing to locate a $3.2 million facility, which will employ 170, on the Virginia side of the state line, in Tazewell County. Writes the newspaper (which is located on the W.Va., side of the state line, incidentally):

    During the announcement of MMP’s new location in Bluefield, Va., S.R. “Dick” Smith, president and CEO of [parent company] Raleigh Mine & Industrial Supply Inc., said Virginia aggressively fought for the new jobs.

    “Why did we choose Virginia?” Smith asked. “We had other options — Kentucky and West Virginia. But right here is why we chose Virginia. They are excited about new jobs.”

    Smith noted when the plant expansion was first proposed, Tazewell County Economic Development Coordinator Margie Douglas coordinated a meeting the following day — a meeting packed with local and state officials, who said “yes, yes, and yes” to all of the company needs.

    That’s just one anecdote, of course. And one could argue that what matters are broader measures of economic performance, not a single manufacturing investment. Well, let’s follow that train of thought…

    Income per household, though not without its flaws, is arguably the best single measure of economic prosperity. Tazewell, a county of 45,000 people, has a median income per household of $27,304, as reported by Wikipedia. Neighboring McDowell County, W.Va., is one of the poorest in the nation, with median household income of $16,931. Neighboring Mercer County (where Bluefield is located) draws very close to Tazewell, with median income of $26,628 per household.

    To make meaningful comparisons, however, we have to drill down a bit deeper. Incomes in metropolitan (and micropolitan) regions tend to be higher than in non-metro areas. Mercer County is somewhat more urbanized than Tazewell: The larger part of the Bluefield-Princeton micropolitan area resides on the West Virginia side of the state line. That should give Mercer County, W.Va., an edge over Tazewell, but Tazewell has the higher incomes. By this line of analysis, Virgina’s better business climate would seem to make a difference not just for businesses but working men and women.

    Poor West Virginia. Such a beautiful state — with so many self-inflicted wounds. The conventional wisdom is that West Virginia is poor because of its geographic location: Its rugged mountains isolate it from commerce all around. By that logic, Switzerland ought to be one of the poorest countries in Europe, but it’s not — it’s one of the wealthiest. Economic development in the knowledge economy depends far more upon culture and institutions than geography. The good news for Virginia and West Virginia alike: While we are captives to our geography, we can change our culture and our institutions.

    Business climate matters.

  • The Netherworld of FDA Tobacco Regulation

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    James A. Bacon

    A lot of strange people are hopping into bed together with the recent passage by the U.S. House of Representatives of a bill to let the U.S. Food and Drug Adminstration regulate tobacco.

    Richmond-based firms Philip Morris USA and parent Altria favor FDA oversight while tobacco competitors Lorillard and R.J. Reynolds do not. Ultraconservative Congressman Eric Cantor, a big-time magnet for tobacco campaign funding, favors FDA regulation while even more conservative Congressman Randy Forbes does not. Stacking weird upon weird, both The New York Times and the retrograde Richmond Times-Dispatch favor FDA regulation on their editorial pages.

    Are you having trouble figuring this all out? I am.

    From what I can make of this, the bill would not allow the FDA to ban tobacco products but would have authority over the manufacturing, marketing and sale of them. It could, for instance, ban the sale of such oddities as candy-flavored cigarettes. Big Whoop.

    The real point, however, is that Big Tobacco is once again dodging the Big Issue. Deadly, cancer-causing cigarettes, which killed something like 100 million people in the 20th Century according to The Washington Post, will emerge largely unscathed. One result of FDA regulation is that it lets Philip Morris USA maintain its No. 1 brand, Marlboro, in the U.S. while, somehow disingenuously, urging you not to buy Marlboros. Meanwhile, FDA regs will do nothing to stop its sister firm, Philip Morris International, from spreading its death sticks around the world with a growth rate of 18 percent a year.

    And as present and former members of the Altria tribe do their thing, nice boy politicians like Eric Cantor, now under consideration as John McCain’s running mate, continue to rake in scores of thousands of dollars in campaign contribution from Altria and PM USA. But that’s just fine and dandy with the Richmond establishment, including the Times-Dispatch. Cantor’s wife is on the board of the parent firm, but, hey, that’s OK, they always mention that when they run another glowing story about the brilliant Cantor.

    But does Cantor realize he could be partly responsible for one billion dead worldwide in the 21st century? That’s the death toll predicted by the Post if global tobacco sales continue to go on unchecked.

    –Peter Galuszka

  • Smart Meters, Brainy Power

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    James A. Bacon

    A key public policy goal in Virginia is to generate 12 percent of the state’s electric power from renewable energy sources by 2022. That is an exceedingly ambitious target, especially when you consider all the problems that renewable energy sources pose. Wind turbines blow intermittently, and solar units don’t generate electricity when the sun doesn’t shine.

    By contrast, coal- and nuclear-powered generators run predictably, around the clock if need be, while gas-fired generators are configured to power up and power down on short notice. Because Dominion, Appalachian Power and Virginia’s other electric utilities can’t control when the renewable sources produce electricity, they must maintain back-up power sources that can kick in when the renewables slack off. They also need the means to monitor fluctuating electricity production and ensure that the juice flows where it’s supposed to go.

    One of the anticipated virtues of a “smart grid” — an electric system with sensors and intelligent controllers embedded at the generators, the transmission lines, the sub-stations, the electric lines and last, but not least, the household meter — is that it will make it possible to smoothly integrate those variable energy sources into the grid. Without it, that 12 percent goal is a pipe dream.

    Dominion Virginia Power is taking the first tentative step down the path leading to a true smart grid. Right now, it is proposing to invest $600 million in “smart meters,” a key component of a smart grid. These smart meters won’t be able to do all the razzle-dazzle stuff that smart grid aficionados look for, but Dominion does expect them to offer significant benefits.

    For starters, Dominion should save lots of money reading meters and turning meters on and off, and it expects the flow of data to help it trim the voltage delivered to individuals homes, thus actually reducing electricity consumption to a small degree. Further, the smart meters will enable the holy grail of smart grid advocates: variable rate pricing. With smart meters, Dominion will be able to adjust its charges based on what it costs to generate at any point in time, and customers can dynamically respond by shifting their energy consumption. The end result will be a significant shift in consumption from peak loads to off-peak loads, staving off the need to build new base-load plants.

    Smart meters represent a paradigm shift. Explains David Green, senior vice president-customer service: “Today, the utility industry views the meter as an end point of the [electric distribution] system.” As manufacturers increasingly embed consumer appliances with chips, they’ll be able to communicate. “With a smart grid, the meter becomes a network node within the distribution system that can talk to appliances, pool pumps, water heaters, and air conditioner units” — ideally working on concert to shave electric consumption.

    Green raised one other interesting point. A tidal wave is about to hit the electric power industry and no one outside the industry seems to be paying attention yet. Dominion executives are convinced that mass production of plug-in hybrid vehicles is only two or three years away. What worries them is the prospect of thousands of Virginia commuters returning home from work after 5 p.m. and plugging in their cars to recharge their batteries — and electric demand shooting through the roof.

    A solution to the gasoline crisis could quickly turn into an electric generation crisis.

    Dominion officials regard variable, time-of-day pricing as a valuable tool to encourage customers to defer the recharging of their batteries. And smart meters are a necessary component of variable pricing. Dominion wants to be prepared for the sea-change in electric demand, says Green. “We want to be at the table with General Motors.”

    Says Green: “Most manufacturers are expecting plug-in hybrids to be available on a widespread basis in the 2010-201 time frame. … We were in Detroit just a couple of weeks ago. The mass production is coming from all of the major manufacturers in two or three years. We have to anticipate it. If we don’t, it will exacerbate our peak. … We want to be at the table with General Motors.”

    Read my full e-zine story, “Brainy Power.

  • “Flash the Lights and Blow the Sirens”

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    James A. Bacon

    As Doug Koelemay does not participate in this blog, I feel compelled to plug his e-zine contribution this week, “Flash the Lights and Blow the Sirens,” about the imminent demise of the Northern Virginia Transportation Authority, whose $500 million list of regional transportation projects no longer has a funding source.

    Regardless of whether one agrees or disagrees with the NVTA’s mission or how it is run, the slow unwinding of a key player in the Northern Virginia transportation debate is an important story. So is the frustration felt by many of its members. One particularly choice quote:

    “It is one thing to be a donor region,” Loudoun County Board Chairman Scott York commented, “but through its inaction, the state is rendering it impossible for local governments to deliver the public safety, economic support and quality of life our residents and businesses expect.”

    York suggested that rather than turn out the lights, the authority should consider reconstituting itself as a “Northern Virginia Statehood Commission.”

    (Groveton: You can be the very first to donate!)

    Doug was there, and he provides solid reporting (with just a teeny, weeny bit of an editorial slant) on a session that, to the best of his knowledge, none of Northern Virginia’s newspapers wrote about.

    (Can anyone guess the derivation of the headline? The illustration above is a clue. For the answer, read Doug’s column.)

  • Another Blunderbuss from Bacon’s Rebellion

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    James A. Bacon

    Brace yourself for the onslaught of the Aug. 4, 2008, edition of the Bacon’s Rebellion e-zine. As usual we, loot, plunder and burn the conventional wisdom. And we take no prisoners.

    If you’re not a regular visitor to the Bacon’s Rebellion blog, you can subscribe to the e-zine for free and make sure you never miss an issue. Just click here.

    Brainy Power
    Dominion’s proposed $600 million investment in a “smart grid” is the first step toward an electric power system in which conservation and renewables have equal standing with with coal and nukes.
    by James A. Bacon

    Flash the Lights and Blow the Sirens
    The NVTA is near death as legislators fail once again.
    by Doug Koelemay

    Beyond the Headlines
    A thread runs between many newspaper stories: Higher energy prices are reordering everything from international trade flows to housing affordability. Too bad our Institutions are responding so sluggishly.
    by EM Risse

    Reviving the Great Melting Pot
    A century ago, Americans expected immigrants to learn English and adapt to a new culture. Would it be politically incorrect to encourage today’s immigrants to “Americanize”?
    by Chris Braunlich

    Bogus Tax Break
    The back-to-school tax break feels good — for two days out of the year. Woopido. How about a tax break that provides relief 365 days a year?
    by Norman Leahy

    The Netherworld of FDA Regulation
    Getting the agency to oversee tobacco is creating strange bedfellows and will end up keeping the status quo – letting thousands more die.
    by Peter Galuszka

    When All Else Fails, Try the Head Smackingly Obvious
    Want to relieve traffic congestion? Stop funding pork barrel and prioritize transportation projects that… (drum roll)… relieve traffic congestion.
    by Ron Utt

    Nice & Curious Questions
    Riffles and Cascades: Waterfalls in Virginia
    by Edwin S. Clay III and Patricia Bangs

  • Housekeeping

    Posted on

    by

    James A. Bacon

    I’ve done some long-overdue house cleaning on my blog roll, deleting some 20 or so blogs that have gone stale or shut down completely. My rule of thumb, if someone hasn’t posted in the past six months, the blog has nothing new — and isn’t likely to any time soon.

    A number of bloggers have moved, and I’ve updated the new URLs where I could find them.

    Blogging is spreading so fast that it’s all but impossible to keep up with the new ones. I add them as I come across them. As always, I list only blogs that deal with state/level politics and public policy to a significant degree. I have made a handful of exceptions for blogs that address transportation/land use issues nationally, as that is a core interest of Bacon’s Rebellion.

    I’m happy to add anyone that meets my criteria, please contact me and I’ll be happy to add you.

  • Mary Peters’ Swan Song: A Plan for Overhauling Federal Transporation Policy

    Posted on

    by

    James A. Bacon

    Transportation Secretary Mary Peters has unveiled the Bush administration’s plan, “Refocus. Reform. Renew,” for reforming transportation funding and construction. It’s clearly a step in the right direction — designed to reduce Congressional pork peddling, focus federal involvement on the Interstate highway system, and level the playing field between highways and transit.

    Whether a plan from the widely-loathed Bush administration can withstand the scrutiny of a Democratic-controlled Congress is another matter, especially considering that a member of the Donkey Clan will most likely occupy the U.S. presidency next January. Still, it’s worth reviewing. Here are the key elements:

    • Federal focus on Interstates. The proper focus of the federal government should be on interstate transport and the Interstate highway system. Peters proposes setting federal priorities of making sure that system is “safe, maintained and un-congested.” By implication, there would be less money available for “bridges to nowhere” and other pork barrel projects far from the Interstate highways.

    • Accountability. Create measures for rating Interstate performance: travel time reliability, hours of delay, and condition of bridges and pavement.
    • Create a Metropolitan Innovation Fund. Reward cities willing to invest in transit, dynamic pricing for highways and new traffic technologies.
    • Streamline review process. It currently takes an average of 13 years to design and build new highway and transit projects in the U.S. Streamline the federal environmental and planning process, without compromising standards, to allow projects to move forward more quickly.

    In an ideal world, the federal government would get out of the transportation business entirely (with the possible exception of maintaining the Interstates) and turn the fiscal resources over to states and regions, which are better positioned to set priorities and coordinate transportation investments with land use. Of course, that will never happen. Congress, whether run by Democrats or Republicans, will never relinquish its influence over tens of billions of dollars worth of boodle. So, Peters’ program may be the best that can be accomplished in the real world.

    As a side note, the Department of Transportation contends that its Metropolitan Innovation Fund would level the playing field between highways and transit. The plan would expand the number of transit projects eligible for consideration and provide a bigger pool of federal money for them through the Metropolitan Innovation Fund. The plan also would expand financing options available to local governments through state infrastructure banks, private activity bonds and expanded federal credit flexibility.

    There is a catch, though: The Peters plan would tie Metropolitan Innovation Funds to the use of congestion pricing. The plan proposes to eliminate all federal restrictions on congestion pricing in metropolitan areas and allow localities to reinvest revenues generated from pricing on transit. Congestion pricing, the thinking goes, would encourage motorists to avail themselves of mass transit as an alternative. The Metropolitan Innovation Funds would “award funds to cities that effectively combine peak period highway pricing, expanded transit options and technology into a single mobility strategy.”

    Bacon’s bottom line: To my way of thinking, the Peters plan represents a big step forward from the system we have in place now, which effectively treats revenues from the federal gas tax as a funding source for Congressional patronage. I am ambivalent about the idea of taking tax revenue from motorists and using it to subsidize mass transit, but it could be acceptable under tightly defined conditions, as explained elsewhere on this blog.

    Interestingly, the Metropolitan Innovation Funds would create a funding mechanism for the Rail-to-Dulles heavy rail project along the lines I’ve outlined in previous posts and columns: Use congestion tolling to allocate scarce roadway capacity in and out of Tysons Corner and apply the proceeds to a combination of spot road improvements, traffic light sequencing and other “smart road” initiatives, and construction of heavy rail.

    If there were some way to make MIF transit subsidies contingent upon appropriate zoning for Transit Oriented Development around transit stations — or, even better, tied to the evolution of “balanced” communities — the Peters plan would be better still.

  • Is Virginia Losing its Mojo?

    Posted on

    by

    James A. Bacon

    For the third year running, Virginia ranks as Forbes Magazine’s “Best State for Business,” edging out Utah for the top spot. While the Old Dominion won the top spot two years ago with a slam dunk, its lead in 2008 was “razor thin,” with Utah and other states nipping at its heels.

    Whereas the Old Dominion ranked in the Top 10 for all categories two years ago – regulatory environment, cost of business, labor, economic climate, growth prospects and quality of life – its standing has fallen markedly in “cost of business” and “growth prospects.”

    The ranking by the business magazine is arguably the most prestigious of the all best-place-to-do-business ratings, so state officials justifiably crowed over the “three-peat” feat of garnering the top spot three years running. Said Gov. Timothy M. Kaine: “This best-in-nation validation speaks volumes to our competitiveness in today’s global market. It’s a real honor to receive this recognition from Forbes.com once, but to be named the ‘Best State for Business’ three years in a row is a true accomplishment for which we should all be proud.”

    Virginia fared best – No. 1 — in the “regulatory environment” category, which incorporates measures of regulatory and tort climate, incentives, transportation and bond ratings. We fared well in economic climate (No. 6), quality of life (No. 6) and labor (No. 7), although we have slipped a notch or two in each over the past two years. (Compare the 2008 and 2006 rankings.)

    But Virginia has suffered market deterioration in two of the six categories. Wrote Forbes reporter Kurt Badenhausen:

    Driven by higher labor costs, business costs in Virginia jumped, and are now approaching the national average. The biggest factor closing the gap between Virginia and everyone else: lower growth projections for the next five years. On last year’s list, Virginia ranked eighth in our growth-prospects category. This year, lowered expectations for growth in jobs, income and gross state product knocked Virginia’s growth-prospects ranking down to 26th.

    In the “cost of business,” which incorporates labor, energy and taxes, Virginia has slipped from No. 10 to No. 20 in two years. Badenhausen attributes the decline in ranking to higher labor costs, which does cut two ways. If labor costs are going up, it may be hard on business, but higher wages and salaries are a benefit to employees and taxpayers. If this is bad news, I’ll take more of it.

    Meanwhile, the “growth prospects” category has fallen even harder over the two past years, which is a bit of a paradox: If Virginia has been such a great state — the very best in the country — in which to do business for three years running, how come its growth prospects have dropped from No. 10 to Nov. 26?

    Lamentably, Forbes provides no explanation for the lowered expectations for growth in jobs, income and gross state product. What’s going on? Is the Northern Virginia economic engine slowing down, reflecting the inevitability that federal spending, which has buoyed the regional economy, cannot sustain its post 9/11 growth rate? Or is the problem downstate, to be found in the failure of downstate metro areas to adapt to globalization and the knowledge economy?

    For Virginians, the ranking raises as many questions as it answers. But the way the trends are heading, don’t be surprised if we get knocked off our perch next year.

    (Cross-posted with R’Biz.)

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.

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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.

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