By the way you look fantastic in your car of Audi plastic

February 9, 2010

Michael Giberson

Audi said its “Green Police” commercial, shown during the Super Bowl, was meant to be funny.  Turns out that neither the Plastics Division of the American Chemistry Council, nor at least some environmentalists, were amused.  I found the ad annoying – I’m not sure why – but anything that can unite the American Chemistry Council with at least some environmentalists has something going for it, right?  (More on the ad controversy at USA Today.)

The folks at the chemistry council set up a response website, Green Police Confused, pointing out how the extensive use of plastic in the Audi A3 TDI helped the car win the “2010 Green Car of the Year” award at the LA Auto Show.  Now that’s funny.

For your viewing pleasure, first the Audi ad and then a celebration of the plastics in Audi’s “Green Car of the Year”:

HT to Tom Fowler, indispensable at NewsWatch: Energy.


Google Energy LLC files at FERC

February 9, 2010

Michael Giberson

First Google PowerMeter, then Google.org invests in renewable power R&D and now a Google entity – Google Energy LLC – files at FERC to become a wholesale power marketer. What’s going on?

At the EU Energy Policy Blog, Fereidoon Sioshansi examines “Power Marketer Google“:

Google has a habit of surprising its competitors. The fast moving company is known for launching into new forays not always knowing where it may end up. In this sense, it is not only the competitors who are trying to read what the company’s latest move may entail.

In early January, Google submitted an application to the Federal Energy Regulatory Commission (FERC) seeking approval to become a power marketer. There are approximately 1,500 entities in the US who have FERC’s blessing to operate as power marketers. Most are utility companies, power generators or pure traders, companies who buy and sell power at wholesale prices and serve as intermediaries between generators and large consumers. Some are large energy-intensive electricity users such as Alcoa and Safeway with hundreds of supermarkets across the country. But why Google?

Google is closed mouthed about its full intentions, only acknowledging that as a power marketer it could “better manage (electricity) supplies for its own operations” and have “greater access to renewable energy resources.” Both are reasonable reasons to seek official power marketing status….

The Google Energy LLC application does go on a bit about selling ancillary services, and the rate schedule submitted identifies a complete list of ancillary service products it wishes to be able to trade in the organized regional markets and with third parties in areas outside of the regional markets.  The seeming focus on ancillary services suggests some interesting possibilities: most of the regional markets provide some ability for large consumers to supply reserve services, for example, and increasing the availability of ancillary services would ease integration of renewable power to the power grid, something Google favors.

But actually the filing is just trying to be exhaustive in its listing of products that it may trade, either because Google doesn’t want to inadvertently reveal strategic plans or because they haven’t yet decided on a specific set of plans and so simply seek flexibility to pursue opportunities as they emerge.  And, in fact, it is fairly common for power marketers to submit relatively general requests for market-based rate authority. (I.e. compare the Google Energy LLC filing linked below to the quite similar filing of Monarch Global Energy, Inc., a generalized electricity services consultant, in ER10-583-001.)

So few clues yet as to Google’s plans and maybe Google hasn’t yet fixed on a plan. But it is an interesting move coming on top of the other energy actions the company has taken.  Competitors, potential trading partners, and electric power market geeks will be watching.

Links to Google Energy LLC’s filings at FERC:


Georgia electric consumers want competition to help protect against higher prices, just like they have for natural gas

February 8, 2010

Michael Giberson

From WTVM-9:

Latrese Brown, a Cusseta [Georgia] resident, gathered a group of people who believe Sumter EMC is ripping them off. “Not only mine but my entire community light bills are outrageous high, they’re more than our mortgages, more than our rent, more than our car note,” complains Brown.

… The citizens of Cusseta went to their county commissioners Tuesday night and asked them to consider bringing in another company.

“You should be able to choose who you’re with, we choose our gas company, we should be able to choose who provides our lights to us because we want to choose our customer service.”

Notice what she said? “We choose our gas company, we should be able to choose who provides our lights …” Georgia is, I think, unique in allowing competitive retail natural gas suppliers to operate. Consumer Latrese Brown has experienced a competitive retail gas market and a regulated monopoly electric utility service, and she concluded she’d like to give competitive retail electricity a try, too.

Greg Crowder, vice president of marketing and administration at Sumter EMC says it’s not Sumter Electric calling the shots. He argues they have not increased rates and that the electric service act decided territories for electric companies.

“It was done to keep from duplicating efforts, two utilities running down the same road to serve the same customer then that’s inefficient,” says Crowder.

Of course Georgia is not overrun with multiple natural gas pipes running down the same road. A single natural gas pipeline company manages the distribution pipeline and provides delivery service.  Separately, about 15 or so competing retail natural gas suppliers offer consumers a variety of fixed-price or variable-price contract offerings and other terms.

It is not too complicated to have a single wire running down the street and yet multiple retailers delivering power over that single wire.

… And, the cause for the high bills is nothing more than the heaters reaction to the extreme temperatures, “the heating load is what caused the high bills, we’ve seen it before.”

The proximate cause of the unexpectedly high bills was the much cooler than normal weather experienced this winter.  Nothing unusual about occasionally experiences unusually cold weather. What seemed noteworthy about the news story was that consumers facing unexpectedly high bills were not demanding regulators take direct action to reduce electric rates.  Rather, they sought protection through competition, just like they already enjoy for retail natural gas prices.


Tres Amigas wants to take cheap electric power away from hard-working Texas families

February 8, 2010

Michael Giberson

I spent the middle of last week in Austin at the University of Texas-Law conference on wind, solar and geothermal energy law, and as a side bonus got to hear some informal, Austin-based commentary on the Tres Amigas proposal to interconnect the Eastern, Western, and Texas electric grids. It will give you some idea of the thinking in the state capital that I heard the term “Dos Amigas” used more than a few times.

During the pre-conference “fundamentals” discussion, in response to a question that asked whether stronger transmission links to other states would help accommodate added growth in Texas wind power, a current member of the Public Utility Commission of Texas arose from the audience, climbed onto the dais, and took the microphone to say, among other things, “ERCOT is just fine the way it is.” The other main point of his comment was to suggest that the Southwest Power Pool, which has long covered the wind resource rich Texas Panhandle (with relatively weak links elsewhere, but a plan to beef up those links), would ably serve to sell the wind resource out of state while not compromising ERCOT’s jurisdictional status with respect to the feds.

Later in the conference a speaker offered a Texas policymaker’s view: ERCOT has its well-regarded CREZ plan to spend $5 billion on transmission enhancements primarily intended to allow wind generation in far west Texas, central west Texas, and the Texas panhandle to be delivered downstate to consumers in the Dallas, Houston, Austin, and San Antonio regions. If those lines link to Tres Amigas, then the prospect arises that consumers elsewhere will – in effect – “drink our milkshake.” Texas policymakers don’t want other consumers to drink our milkshake, especially after ERCOT consumers spend $5 billion to build there own transmission “straw” into the Panhandle region.  (Yeah, I watched “There Will Be Blood” a week or so ago, hence the milkshake and straw references. The presenter did not use this language.)

Peter Behr, writing for ClimateWire, has a more journalistic report on the debate over Tres Amigas. Behr reports that Occidental Petroleum – a large power consumer within the ERCOT region – has actively opposed the Tres Amigas project in filings at FERC, as has the Texas Industrial Energy Consumers. I haven’t read their filings, but apparently they believe ERCOT power prices will be higher on average with Tres Amigas than without, and as consumers they prefer lower prices.

In my opinion, however, they are more likely to get slightly lower (and somewhat less volatile) prices with better links to the rest of the grid.  That’s the way market expansion usually works.

Tres Amigas posts its FERC filings and related documents on its website. Here are links to a couple of the opposing views filed at FERC.  The “Supplemental Protest of Occidental…” includes the expert witness testimony that Behr discusses in his story:

Not all Texas policymakers oppose Tres Amigas. Member of Congress Randy Neugebauer (R-TX) sent FERC a letter indicating the project would encourage investment in renewable power and urging the Commission to give the project a “fair and deliberate view.”  And, as the ClimateWire story suggests, developers aiming to exploit the extensive power generation potential of the region are strongly behind the project.


A disgusting display of bureaucratic force from the Chicago Department of Public Health

February 5, 2010

Lynne Kiesling

This is so vile, so disgusting that I am literally nauseated at my desk as I write. One of the ways that independent chefs, caterers and confectioners economize on their substantial fixed costs is by sharing kitchens. In Chicago, the business license treatment of such kitchens from the Chicago Department of Public Health has been uncertain: does the kitchen owner have to be the one with the license, or does each user of the kitchen have to have a separate license?

Last night, due to a paperwork miscommunication and Kafkaesque bureaucratic process of trying to sort this out, the Chicago Department of Public Health destroyed organic fruit purées that Flora Lazar of Flora’s Confections prepared over the summer and preserved to use in her much-touted and anticipated Valentine’s Day confections. These officials tore open the bags and bleached the food so that it could not be put to any use. I’m going to quote Chicago Tribune reporter Monica Eng here at length, because she was there, and her post illustrates exactly how senseless and appalling this destructive CDPH behavior is, but there is more at her post, including a depressing video of the CDPH officials destroying the food, so please do go read more there.

In a sad struggle that unfolded in a West Town kitchen Thursday night, Department of Health inspectors seized, slashed open and poured bleach over thousands of dollars of local peaches, pears, raspberry and plum purees owned by pastry chef Flora Lazar. She’d purchased the fruit from Green City Market farmers last summer and had planned to use it to make local fruit gelees for her business, Flora Confections.

More than $1,000 of food owned by the Sunday Dinner Club caterers was also destroyed by health department inspectors.

Inspectors cited no health problems with any of the food. They even encouraged Lazar’s son to eat the confiscated granola bars from Sunday Dinner Club. They only said the food was prepared by chefs who didn’t have the proper business licenses to prepare and sell it. …

The destruction of organic artisanal granola bars and local fruit from Klug Farm and Hillside Orchards is heartbreaking to any local food advocate. But for Flora Lazar, this setback, the week before Valentine’s Day is devastating.

“This puts me out of business for six months,” a despondent Lazar said. “I have done everything by the rules. Instead of making the food at home, which I could easily do, I sought out and rented space in a licensed kitchen. When they finally said we could apply for a separate license, I did that. I paid my $600 and invited the inspectors here today.”

If Lazar had been less transparent and left her cooler in her car during the inspection, she would probably be cooking today. Inspectors were mostly destroying food that had been prepared before their arrival. But she estimates that her honesty and attempt play by the rules just cost her $6,000 in revenue. She says the fruit purees, harvested at the peak of Midwest ripeness, are “irreplaceable.” …

But until recently the city had no clear policy regarding shared use kitchens, says Kitchen Chicago owner Alexis Levering. When she secured her latest space she said she confirmed with the Department of Licensing that it was zoned for shared use. The department further assured her that as the licenseholder, she would be responsible for any food safety issues associated with her clients, she says.

Later, though, Licensing said her clients would all need to apply for their own licenses, and with each application they’d need to get a new health inspection, giving the little niche kitchen exponentially more inspections than the busiest restaurants in Chicago.

But when Kitchen Chicago users went to the department, they were told again that they couldn’t apply for the license because it was at the same address as Levering’s license. The confusion continued for months until recently, Levering said, a department representative told her that now he would make sure that renters could apply for the licenses. He further told her, however, that any violations committed by one chef would mean a ticket for every cook who rents space in the facility, meaning possibly thousands of dollars reaped by the city for a minor infraction by one cook the others might have never met.

“That’s like giving everyone in the car their own ticket when a driver is stopped by the police,” she said.

This week, it seemed as if the kitchen was finally making progress with the department and, indeed, two of the businesses, Sunday Dinner Club and Flora Confections, had their license applications accepted, paid their fees and were told the inspectors would come Thursday.

The inspectors arrived at 9:30 a.m. and didn’t leave until nearly 5 p.m., when their final act was to destroy hundreds of pounds of local, organic, often unopened cheese, cassoulets, granola bars, frozen fruit purees, baking ingredients and more with a gallon of bleach.

Officials never said that the food posed a health risk. At best it was a victim of paper work confusion among city bureaucrats who couldn’t agree on a policy. But since no one at the city will comment on the situation, part of the story remains unclear.

Francis Guichard who is the CDPH food protection director called this morning to say that her inspectors could not allow the food to move from the building because they could not ensure where it was going. Licensing has still not commented on the issue.

At one point, one of the cooks suggested that the unopened food at least go to the Greater Chicago Food Depository rather than being destroyed. That request was denied. Watching the destruction of all of this perfectly edible food, you’d never know we live in a state where one out of 10 households doesn’t have enough food to eat.

The Health Department inspectors are expected back at the kitchen today to destroy the rest of the food they deem unlicensed.

These so-called “protectors of public health” destroy the inputs into an entrepreneur’s business in her busiest season, despite acknowledging that the destroyed food poses no health risk. These so-called “protectors of public health” destroy perfectly healthy food instead of even giving to hungry, needy people. On what grounds can these so-called protectors of public health have any legitimate claim to be doing valuable work on behalf of the people of Chicago? And I pay how many thousands of dollars in taxes every year to support this kind of wasteful, counter-productive, aggressive, megalomaniacal activity?

If these City of Chicago employees are indicative (and I think they are) of the attitude of city government toward entrepreneurship and toward the value of meaningless bureaucratic gestures that keep income out of the pockets of entrepreneurs and food out of the mouths of people, then I am truly ashamed and embarrassed to call this my home. It adds insult to injury that I pay such high taxes for the privilege of living in such a despotic city. Yes, I mean despotic; we Chicagoans know that there are many dimensions in which such a word is not hyperbole.

I also sympathize with the first commenter on Monica’s post:

And the Government still doesn’t think the Revolution is coming?


Matt Welch on monopoly: Joseph Schumpeter, call your office!

February 5, 2010

Lynne Kiesling

Matt Welch channels his inner Joseph Schumpeter (and his inner Lynne, while we’re at it …) in his post this morning about the evanescence of monopoly. The grit in Matt’s oyster is yesterday’s NYT oped from former Microsoft vice president Dick Brass bemoaning Microsoft’s lack of an innovation-facilitating corporate culture. As someone who studies an allegedly monopoly industry in which the government-protected monopoly status has outlived the actual underlying economic justification for that status, this statement of Matt’s particularly resonated with me:

I’m more interested in a macro fact about monopolies: Namely, unless they’re either run or locked into place by government, they do not last. And even government-run monopolies produce mass consumer defections. … Companies that grow bloated on profits squeezed from a seemingly captive audience end up panicking when those consumers wriggle free to buy and even create competing products. Meanwhile, corporate cultures in (temporarily) uncompetitive industries are the very definition of non-innovative, even in technology companies.

This “macro fact” is one substantial reason why regulated electric utilities are fighting so hard to retain their retail market monopolies, because reducing the entry barriers to those captive customers would enable us to wriggle free. Removing that regulatory shield from Schumpeter’s “gale of creative destruction” would mean they would actually have to, you know, like, … come up with and market customer-focused value propositions so they could actually compete.


A little innovation with great effect: the new Heinz ketchup packet!

February 5, 2010

Lynne Kiesling

Here’s an example of how a small innovation can have a substantial beneficial impact: Heinz redesigns its ketchup packets to hold three times as much ketchup, and to be squeezed or dipped. No more ketchup splurts on clothes, no more having to get three packets to get as much as you’d like, no more having to open the ketchup for your kids. And, of course, as a Pittsburgher I am doubly proud of this redesign.

Seriously. It’s little innovations like this, and like my other favorite example, the non-drip top on laundry detergent bottles, that bubble up from the market and, in aggregate, are great evidence for the plenitude of free enterprise.

The new packet is also cute, which doesn’t hurt …


Amazon ebook controvery persists: update

February 4, 2010

Lynne Kiesling

A quick update on the Amazon ebook controversy that continues to roil since my earlier posts on resale price maintenance and on price discrimination. This Technology Review article covers much of the same territory that I did in those posts, with some links to additional author sources, and Simon Owens at Bloggasm has some interviews with Tor Publishing authors on the impact this situation will have on their incomes and their abilities to continue writing. Tor author John Scalzi has an extremely funny satirical screenplay post on the situation (see if you catch the joke in the name of one character!). Kenneth Anderson at Volokh Conspiracy asks several of the same questions I did, and the discussion in the comments is particularly insightful. One of the commenters raised the question of whether Amazon’s market power is sufficient to constitute a monopoly, and that they could therefore be prosecuted under antitrust law for removing Macmillan’s books from their offerings (the consensus seems to be no, correctly). If you are following this story, I encourage you to check them out.

Speaking of Amazon’s market power … from the Technology Review article:

On Sunday, Amazon agreed to accept Macmillan’s new pricing model and said it would once again make the publisher’s titles available through its site.

However, I just checked Amazon’s listing for Hilary Mantel’s Wolf Hall (which is my test book for this story), and it still only lists availability for third-party sellers; there is still no listing for a direct purchase from Amazon, or for a Kindle ebook version of the book. It seems that John Scalzi is engaging in the same research as I am, finding that his Tor titles are listed similarly to Wolf Hall. He’s also landed in the same place as I have in terms of how I will spend my money from here on out:

Q: Do you hate Amazon?

A: My Amazon Prime account suggests that I really don’t. But, you know, look. What this is about to me, and what it’s always been about for me, is the fact that Amazon is punishing authors — a lot of them — for something that fundamentally doesn’t have anything to do with them, that being top-level trade negotiations between two corporate entities. Amazon can choose to do whatever it likes under the law, but admitting “Amazon has a right to do this” doesn’t mean I can’t say “and it’s being dicks to a lot of innocent writers” as well. Both statements are true. As for me, it’s pretty simple: When Amazon reinstates the “buy” buttons to all the Macmillan titles it’s stripped them from, I’ll consider buying something from it again. Until then, I’m taking my personal business elsewhere. I’m not suggesting others have to follow my example. But this is where I’m at.

Yep, me too. I’ve got hundreds of dollars worth of books and other merchandise in my Amazon wish list and shopping cart, and I plan on shopping for them elsewhere for as long as Amazon refuses to have direct links to the Macmillan books. I have been planning on buying several new hardcover books (such as The Enlightened Economy and The Invention of Enterprise), and now I’m going to do so elsewhere, as you can tell from the links that I’ve chosen. In fact, I also canceled my American Airlines MasterCard last November and got an Amazon Visa card instead, which is also now going to lie fallow in my wallet unless absolutely necessary.

I’ll be shopping for books at the online and “meatspace” locations of Barnes and Noble and Powell’s, and I’ll continue buying books from Abe Books. I’ll also shop elsewhere for housewares and electronics, high-priced products that I used to buy with great alacrity through Amazon.

Oh, and by the way, if you want an ebook version of Wolf Hall, Abe Books has one from Bargain Electronic Books in pdf format for $9.49.


The networked grid: 100 movers and shakers

February 4, 2010

Lynne Kiesling

I am pleased and honored to be included among Greentech Media’s 100 movers and shakers in smart grid, thank you very much! This is a list of wonderful people, with many of whom I’ve worked over the past five years during the development of smart grid interoperability principles — including economic market design principles and the potential value creation from a transactive, interconnected network of diverse, heterogeneous producers and consumers. I think the Greentech folks nailed it for me with this observation:

If you ever wondered who is looking out for the consumer in smart grid, fighting in the trenches to ensure that we get the participatory end-user experience (and the market to go with it!) that many of us are envisioning — the answer is Lynne Keisling.

Yep, that’s part of what gets me out of bed in the morning! Thanks again to Greentech Media for the recognition, which I really appreciate (although it’s Kiesling, not Keisling, like the wine but with a K instead of an R …).


Why is Idaho Power paying its customers?

February 4, 2010

Lynne Kiesling

KP readers know the answer to that question: reducing peak demand, load shifting across time, better capacity utilization. But there’s a bit more to it, as you can see in the New York Times article on Idaho Power’s rebates to their customers for reducing their irrigation during peak hours, as well as allowing for direct load control cycling of air conditioners. First, although I am glad to see such “programs” in a largely agricultural and rural customer base, the “energy efficiency program” focus of their strategy shows very little innovative thinking, and does not go far enough; there is no concept of dynamic pricing here, or even of time-of-use pricing, so the retail choices available to customers are not novel or innovative at all. In particular, note this passage:

“It’s clearly iconic in terms of a utility that’s turned the corner,” says Tom Eckman, the manager of conservation resources with the Northwest Power and Conservation Council, a planning group created by Congress. “They have gone from pretty much ground zero to a fairly aggressive program level.”

The company’s efforts are especially striking given that the push for energy efficiency is generally associated with coastal states like California and Massachusetts, not with a state whose electric rates are among the lowest in the country.

But the concept has rung true for Idaho’s farmers, anglers and snowbirds — outdoor types who have helped keep the state nearly free of coal plants. They have been largely receptive to the utility’s arguments that it is cheaper to save energy than to build new power plants.

While these “programs” make economic sense for the reasons we’ve discussed here frequently, note how embedded the entire concept of “energy efficiency programs” is in the traditional business model and culture of the regulated utility. This “energy efficiency program” framing of the retail space is what I would call a top-down sledgehammer approach. There is no concept of dynamic pricing here; this is just an implementation of direct load control (customer gives utility right to control devices, like air conditioner), so I don’t see it as being as innovative as Eckman does in his quote.

Second, the way such programs are being implemented in this industry are still embedded in the regulatory, cost recovery model, consequently with no concept of the fact that reducing costs and increasing sustainability is a way for companies like Idaho Power to increase their profits. You can see this from the fact that the regulators and Idaho Power still view energy efficiency as a cost center, a “program” that will reduce their revenue, so as a regulated firm they have to be paid to do that. The way Idaho Power is implementing this is under a regulatory mandate from the state PUC, and they are charging a monthly “energy efficiency fee” to their customers. This fee is intended to defray some of the revenue loss that might occur when they pay customers to reduce peak demand … but isn’t that reduction supposed to help Idaho Power reduce costs, so why charge customers for it? Welcome to the incongruous world of the incentives facing the regulated utility!

So, for better and for worse, this article gives you some insights into the current, evolving state of play in the electricity industry, and particularly the perverse embedded incentives for cost recovery and risk aversion that are a direct consequence of the economic regulation of electricity distribution companies and their government-granted monopoly in the retail market.