Michael Giberson
We’ve raved about Pandora here a number of times (KP search for “Pandora”). The New York Times recently reported on the surprising fact of Pandora: unlike a lot of other internet music startups, it survived. In fact, lately the company has prospered and is talking about going public.
It turns out that the Pandora iPhone app (which I raved about here) was part of what has sealed Pandora’s success.
Michael Giberson
On March 18, the Federal Energy Regulatory Commission acted on the Tres Amigas project’s two regulatory requests submitted last October. Tres Amigas has proposed to link the large scale power interconnections covering the eastern and western halves of the United States with the ERCOT interconnection in Texas. The New Mexico-based project would facilitate trading power among the interconnections and aid development of electric power generation resources in all three areas.
In docket ER10-396-000, FERC granted the project’s request for negotiated rate authority subject to conditions intended “to ensure that the goals of open access are protected and that rates for transmission service on the Project remain just and reasonable by limiting Applicant’s ability to withhold the Project’s capacity from the market.” Haven’t read the order yet, but when I have the chance I’ll let you know if I see something interesting.
In docket EL10-22-000, Tres Amigas requested the Commission agree not to assume federal jurisdiction over the parts of the ERCOT interconnection currently regulated by Texas just because the Tres Amigas project would allow ERCOT market participants to join in interstate commerce. FERC concluded that the information submitted by Tres Amigas did not warrant a blanket disclaimer of jurisdiction and so denied the request. However, the Commission offered suggestions on how Tres Amigas may go about securing the jurisdictional assurance it wants without the Commission implicitly endorsing the various justifications the project offered in the company’s filing.
MORE: The FERC press release contains more information, and see Chairman Jon Wellinghoff’s statement, Commission Marc Spitzer’s statement, and Commissioner John Norris’s statement. Mostly these statements say: we like innovative transmission infrastructure projects like this one, we support them as we can, we couldn’t quite swallow the jurisdictional request as presented, but that doesn’t mean we don’t like these kinds of projects.
The Wall Street Journal summarized the ruling, “Power Grid Connection Wins First Approval.” Bloomberg reports, “FERC Slows Tres Amigas Plan to Link U.S. Power Grids.”
Michael Giberson
At his Oddhead Blog, Yahoo! researcher David Pennock reports several links of interest for folks working at the intersection of the fields of economics and computer science and then asks what this subfield should be called. He finds several terms in use for projects or at conferences: Algorithmic Economics, Market Algorithms, Electronic Commerce, Economics and Computation, Algorithmic Game Theory, and adds “A fun suggestion is Economatics (or Autonomics), meant to invoke a mashup of economics and automation.”
I suggest “computational economic systems design” as an accurate description, even if a bit awkward even by geek science standards, putting the intersection of computer science and economics Pennock is concerned with within the slightly broader subfield of computational economics.
Pennock notes, “the phrase Computational Economics makes sense but is already in use by a different field.” (Link in source) In a long comment posted in response to Pennock’s related Facebook note, Duke University computer scientist Vincent Conitzer argues for using a wide definition for Computational Economics and finding room within that definition for this intersection. Conitzer said in part:
As [Pennock] pointed out, the main downside of “computational economics” is that other people have already started using this phrase. But note that they (comp-econ.org) seem to (correctly, IMO) have a very wide interpretation of this phrase, including topics in finance, macroeconomics, and econometrics — but also things like “computational tools for the design of automated Internet markets.” I think it doesn’t make any sense at all to say that the computer scientists working on economics are not part of computational economics! I think we should politely claim our rightful place under the phrase “computational economics,” and the other community may not mind at all — but perhaps we should engage this other community more, and also think more about whether we can in fact make ourselves useful in topics in macro, econometrics, etc. Actually, this may be more important than our struggles with finding a name.
For me at a personal level, when I came to Duke, there was already a strong sense that I would be working in “computational economics,” doubtlessly encouraged by the fact that we have a strong computational biology presence and the parallel is natural (and now we also have a computational economics minor). I went along with that vision (which I think is a good one), though I have tried to make it clear that I work on computational MICROeconomics — I don’t do any macro or econometrics — and I think this mitigates the issue of a conflict with the existing comp econ people.
Lynne Kiesling
If you are currently working as a state regulator or a member of regulatory staff, then I cannot encourage you strongly enough to apply to attend this May’s Institute for Regulatory Law & Economics:
The IRLE is sponsored by the University of Colorado’s Silicon Flatirons Center to sharpen the tools required for principled and thoughtful regulatory decision making.
The May Seminar is geared toward state regulators and staff, and distills the critical law and economics issues that arise in closely-regulated network industries and presents them in a coherent fashion.
The IRLE draws on the expertise of leading academics, practitioners, and scholars. In particular, it highlights the important tools provided by neoclassical economics, new institutional economics, “code as law,” Schumpeter, and public choice theory. The curriculum also includes a discussion of corporate finance principles and risk valuation as applied to regulation. This four day intensive seminar will foster discussion and cohesion, so attendance is limited to approximately fifteen to twenty attendees.
This year’s IRLE will take place 15-19 May, at Aspen Meadows Resort, Aspen, Colorado. As one of the founding faculty members of the IRLE, I find the interaction with core ideas of regulatory law and economics among the attending academics and applied regulatory professionals to be incredibly intellectually engaging and stimulating. If you attend I can promise that you will be richly intellectually rewarded.
The application deadline is this Friday, 19 March, so don’t procrastinate!
Lynne Kiesling
Hey students! If you are a KP reader and you are looking for an experience this summer with good brain candy that’s a lot of fun, then check out the week-long summer seminars offered by the Institute for Humane Studies. There are a range of topics and focus areas, but most seminars involve economics, philosophy, law, and history, and getting to read and think about and argue about fundamental social science ideas relating to our living together in civil society.
IHS seminars are seriously some of the most intellectually valuable and fun experiences I have ever had, and I can’t recommend them highly enough. If you do one you will be richly rewarded intellectually and personally.
The application deadline is March 31, so don’t procrastinate!
Lynne Kiesling
If you are in Washington, DC and interested in electricity policy, then I hope I will see you at this upcoming event at the American Enterprise Institute on Thursday afternoon.
Why is the process of restructuring and institutional change so different in electricity than in other infrastructure industries? What is the current status of state and federal electricity policy? How can electricity policy objectives at the federal and state level evolve to match innovation and technological change? Discussing these and other questions will be economist Lynne Kiesling, whose work at Northwestern University focuses on electricity regulation and restructuring; John A. Anderson, president of the Electricity Consumers of America; and Peter Fox-Penner, a principal at the Brattle Group who is an expert on energy and electric power industry issues. AEI resident scholar Kenneth P. Green, acting director of the AEI Center for Regulatory Studies, will moderate the discussion.
If you’re there, please make sure to stop me and say hi!
Lynne Kiesling
Hi folks! I am getting ready to crawl out from under my winter quarter rock; I have been teaching three classes this quarter, and it’s been frenetically busy. I’m also working on some stuff that I’m not quite ready to talk about in public, so I’ve been indulging in some self censoring.
Plus, honestly, all of my spare mental bandwidth outside of the classroom has been going to my training, and in particular my indoor winter bike training using a CompuTrainer to get data on my power output and to work on increasing it and my cycling efficiency. Doing as much training as I have been has been good for increasing my focus and decreasing my distractability, but it has not left me much time for writing here. Hopefully my lighter spring quarter course load will change that!
I’m also a bit mystified as to why our header banner has disappeared … I’ve tried it in Firefox and Safari on the Mac, and Mike’s tried it in Chrome, Firefox, and IE on Windows, and only in Chrome does the banner appear. If you have any other data to contribute, please do so; in the interim I am going to inquire with WordPress.
Michael Giberson
David Pennock hears another another tick of the clock in the countdown to web sentience.
[In 2003] we trained a computer to answer questions from the then-hit game show by querying Google. We combined words from the questions with words from each answer in mildly clever ways, picking the question-answer pair with the most search results. For the most part (see below), it worked.
It was a classic example of “big data, shallow reasoning” and a sign of the times. Call it Google’s Law. With enough data nothing fancy can be done, but more importantly nothing fancy need be done: even simple algorithms can look brilliant. When in comes to, say, identifying synonyms, simple pattern matching across an enormous corpus of sentences beats the most sophisticated language models developed meticulously over decades of research.
Our Millionaire player was great at answering obscure and specific questions … It failed mostly on the warm-up questions that people find easy — the truly trivial trivia. The reason is simple. Factual answers like the year that Mozart was born appear all over web. Statements capturing common sense for the most part do not. Big data can only go so far.
In 2003 their best example of a question that they could not answer via websearch was “How many legs does a fish have?“
Now, on the other hand, Pennock said:
I was recently explaining all this to a colleague. To make my point, we Googled that question. Low and behold, there it was: asked and answered — verbatim — on Yahoo! Answers. How many legs does a fish have? Zero. Apparently Yahoo! Answers also knows the number of legs of a crayfish, rabbit, dog, starfish, mosquito, caterpillar, crab, mealworm, and “about 133,000″ more.
Pennock links to Lance Fortnow’s related comments on IBM’s effort to write a Jeopardy-playing computer, and Fortnow suggests something that is going to remain hard for computers for a while: making sense of natural language in context. Fortnow, part of the group that wrote the Millionaire paper, said:
Humans have little trouble interpreting the meaning of the “answers” in Jeopardy, they are being tested on their knowledge of that material. The computer has access to all that knowledge but doesn’t know how to match it up to simple English sentences.
Michael Giberson
“PACE” stands for “Property Assessed Clean Energy.” It is a financing tool through which cities sell bonds and then loan the proceeds to property owners to improve building energy efficiency. The loans are repaid via a dedicated taxing mechanism. A Milken Institute event on PACE financing described it in more detail:
In the PACE framework, cities and counties form financing districts that could issue bonds to provide financing for residential and commercial property owners to voluntarily retrofit buildings and make improvements such as installing solar, wind or geothermal energy systems.
Property owners would repay the loans over 20 years through a special property assessment, with the paper secured by a super-senior position, much like any property tax. Up-front costs for owners are dramatically reduced, which improves return on investment and the internal rate of return and doesn’t discourage them from opting in.
One bit of legal uncertainty surrounding PACE proposals is in that super-senior position. Since the loan would become attached to a property that frequently is already mortgaged, in the case of default lenders become very concerned with who gets paid first from any proceeds from liquidation. If PACE loans can achieve the super-senior position, then the bonds are safer investments, it lowers the city’s borrowing cost, and enhances the attractiveness of the program to property owners. The legal question concerns whether, for already mortgaged properties, the law will allow PACE loans to jump ahead of the mortgage lender in priority.
On the finance side of things, the main issue comes in packaging bundles of small-scale, non-standardized city loan programs into something that can be sold in the municipal bond market. But there are a lot of creative financial types that are under-employed these days, so I trust “the market” will solve this particular problem.
Mitchell Schnurman’s column in the Fort Worth Star-Telegram discusses the PACE program’s California origins and growing interest among cities in Texas, he calls it a “game changer for a green economy.”
PACE financing has a couple of key principles. Most important, the improvements have to generate enough savings to cover the costs. That helps ensure that homeowners are making high-value investments.
Most programs exclude homeowners who are underwater on their mortgage. Leaders try to make sure that contractors are qualified, that the work is done correctly and that nobody is shortchanged.
There’s one more reason Texas leaders should get moving soon. To make the numbers work on energy efficiency, residents tap a slew of federal, state and local incentives.
With deficits rising, that money won’t be around forever.
I wouldn’t oppose the PACE idea on principle, though municipal management of lending programs make me a little nervous. Lots of critics of Wall Street these days are calling for salaries and bonuses to be tied to long term performance in order to prevent short term manipulation of results. How will municipal workers be motivated to be good loan officers? Program management overhead should be recovered through the loan repayments, otherwise these costs become an indirect subsidy to participants.
On principle I worry about the after-the-fact revision of lender priorities. And it seems like a misuse of the taxing authority of government to use it to support home and commercial property improvements, even though the “taxing” is limited to the properties involved in the PACE program. Yet I’m not a specialist in these finance issues, so I am not particularly confident that my worrisome feelings properly identify substantive areas of concern.
I do object to the idea that government subsidies can “make the numbers work on energy efficiency.” Seems to me that a proposed energy efficiency project is either a net value enhancer or a net value destroyer. Subsidies can’t change energy efficiency facts, they only change who ends up paying for property owners to improve their property. If it takes a subsidy to “make the numbers work,” the numbers don’t work. But government subsidy is not inherent in the program, so this is not an “in principle” objection to PACE financing.
Much more information on PACE financing is available at PACE Now.
Michael Giberson
In advance of the screening next week at SXSW, the Austin Chronicle presents a story about Haynesville and its director Gregory Kallenberg. Here’s a bit of it:
The Rev. Reegis Richard was wandering through a field, hungrily eyeing a dilapidated former school and dreaming of the possibilities, when a Haynesville producer climbed over a fence out of curiosity. Five minutes later, a camera crew was set up, says documentary director Gregory Kallenberg.
It was the sort of serendipitous moment that has guided his documentary, which explores how a massive shale natural gas find in Louisiana is both fueling the dreams of Louisiana’s downtrodden and crushing them, while providing a potential solution to our nation’s energy thirst.
[...] Kallenberg interweaves Richard’s story along with those of Mike Smith, a good old boy who finds himself a sudden multimillionaire from the shale his 300 acres of land contains, and – perhaps the doc’s most gripping character – Kassi Fitzgerald, a single mother who turns into a driven community activist to make sure both her economically depressed neighbors and the environment are treated fairly.
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