Forgotten Battles, Missing Landmarks

by Cliff Page

On an abnormally warm early Spring day, I took a 150-mile motorcycle ride from Portsmouth to Stony Creek, Va. That’s where my Great Great Grandpa was captured by federal forces in 1864. He rode with the South Carolina 6th Insurgent Calvary (Aka: the Dixie Raiders), which fought in nearly every major engagement in Virginia from 1862 until the surrender.

Before visiting Stony Creek I had no idea of the importance of the place. I presumed that it was just an outlier to the defense of Petersburg. But from talking to some old timers who live there today, I learned that Stony Creek was a critical logistical hub for the Army of Northern Virginia and a focal point of the lengthy siege of Petersburg, the loss of which precipitated General Lee’s calamitous retreat towards Appomattox and the end of the Civil War.

Stony Creek lies to the west of Interstate 95 between Emporia and Petersburg. During the siege of Petersburg between June 1864 and March 1865 nearly all the supplies to the Confederate defenders — including those from Wilmington, N.C., the only Confederate port not blockaded on the East Coast at the time — came up the Petersburg and Weldon (now CSX Railway) into the Stony Creek depot. Goods were offloaded from the trains and put onto wagons and hauled on plank roads through the back woods and swamps to Petersburg, 25 miles to the north.

During the siege of Petersburg, a largely static affair, a series of engagements were fought over Stony Creek. In June, the Confederates turned back a Yankee cavalry foray, but not until the raiders had torn up 60 miles of railroad track. General Grant ordered another raid in December, which the defenders likewise repulsed. But the attack disrupted the vital supply line, doubling the distance supply wagons had to travel and exacerbating the Army of Northern Virginia’s shortages of ammunition, food, and medical supplies.

By March it was clear that Lee could no longer hold on. After a series of reversals, he evacuated Petersburg. In full retreat, the Army of Northern Virginia would fight only a couple more engagements before being forced to capitulate at Appomattox Court House on April 3rd.

I don’t know exactly where my Great Great Grandpa Randolph Page was captured at Stoney Creek, or where he was imprisoned. Many Confederate Calvary POWs were incarcerated on the Eastern Shore. But one thing is recorded – he was given ten dollars in gold, at discharge and walked on foot back to Landrum, S.C. Upon arriving at his log cabin and farm, he stripped off his lice-infested uniform, burned it, shaved off his hair and scrubbed his body down with lye soap in the creek. Thereafter he returned to the plow and put the war behind him.

Today Stony Creek is a little rural community in sad shape, and hanging by a thread. Cars and trucks whiz by on I-95 and and pay no mind. The BBQ pit and little antique shop, once easily accessible on old I-301, are off the beaten track. The billboard next to the BBQ displays the rust of over 50 years, as worn sign paper and gauze wisp gently in the breeze like curtains to the past.

The town’s history is being forgotten as those who remember get older. But the rail that brought in supplies and ammunition is still there, as are the winding roads where muleskinners ported supplies from the depot to Petersburg. A cannon abandoned in the swamp rests on the main street. The one-room Sappony Baptist church — where Confederate infantrymen fought off a company of Yankees before friendly cavalry ran them off — still stands. The church bears the scars from where a Yankee cannon ball punched through the front wall and a bullet hit the church Bible. Today, the wall’s hole is patched with tin and the church is sided with vinyl.

A wealth of knowledge about the Civil War resides in small communities like Stony Creek, but it is dying. I talked to the locals and encouraged them to print a flyer with a brief history of Stony Creek and a map showing the battlefields and the plank road routes that channeled supplies to Lee’s defenses. Virginians in communities across the state should do likewise, and put up materials on a common statewide History and Tourism website. Tourists could download and print these maps and history as guides or view them on their smart phones.

This would be a great project for the Sons of Confederate Veterans, indeed a project in which all Southern states could participate. Creating a platform for small communities to tell their story of Virginia’s defense and the Confederate cause would lift local spirits and stimulate tourism. History could be brought to life for a new generation, as folks discover the little places, now forgotten, that played significant roles in history.

Stony Creek is a great day trip on a motorcycle or an open convertible on a warm sunny day. I encourage Virginians to visit the place and learn about the history of which we all are apart.

Cliff Page, a sculptor, lives and maintains his studio in Portsmouth. 

The Northam Administration’s Top Budget Priorities: Medicaid, Rainy Day Fund

Secretary of Finance Aubrey Layne

The biggest obstacle to enacting a state budget is the disagreement between the Senate and the House of Delegates over Medicaid expansion. But even if legislators could resolve their Medicaid differences tomorrow, Finance Secretary Aubrey Layne said earlier today, they still would have to resolve a $400 million gap over other programs.

The second largest funding disagreement revolves around higher education, Layne told members of the State Council of Higher Education for Virginia at a monthly meeting at Christopher Newport University.

According to data SCHEV distributed at the council meeting, the House Appropriations Committee has budgeted $218.8 million in additional dollars for education over the biennial budget between 2018 and 2020, while the Senate Finance Committee has allocated only $94.7 million in new dollars. Most of the gap can be traced to differences in three areas: funding for the Cyber X cyber-security education initiative, faculty pay raises, and financial aid.

Layne voiced no preference for either the House or Senate higher-ed budgets, but did say that Governor Ralph Northam’s two top priorities are funding the Medicaid expansion and setting aside reserves to bolster Virginia’s precarious AAA bond rating.

While the budget outlook for the current fiscal year, 2017-18, is improving, Layne said he is not willing to bridge the funding gap by assuming stronger revenues for 2018-19. Year-to-date personal income tax revenues are up about 6% this year, considerably ahead of the forecast 3.5%. The federal tax cuts appear to be having a stimulative effect on income. December saw a $200 million revenue jump, but he doesn’t know if that reflects a surge in income or a burst of early payments to take advantage of the state-and-local tax deduction before the new tax law eliminates it.

Other signs are favorable — revenue from the sales tax is up, as is the recordation tax on home sales — but Northam wants to dedicate any surplus funds to building up the state’s rainy-day fund.

The Standard & Poor’s rating agency has given Virginia a negative outlook on its AAA bond rating. “They don’t like to see one-time revenues pay for ongoing expenses,” said Layne. Also, he said, “they like to see bigger financial reserves” — 3% to 8% of revenues. The budget introduced by former Governor Terry McAuliffe put an additional $270 million into the reserve for a more than $100 billion two-year budget. The House budget would do less; the Senate budget would do more than the House’s.

Bottom line: However the economy performs for the rest of the fiscal year, there won’t be any loose purse strings to paper over the differences between the House and Senate versions of the budget.

In other remarks, Layne opined on his philosophical approach to the budget. A big concept in the private sector is “fiduciary responsibility,” said Layne, who had been president of Virginia Beach-based Great Atlantic Management before joining the McAuliffe administration four years ago as secretary of transportation. If he violated the highest standards of care for a client, he could get sued or fired. He applies the concept of fiduciary to his job working for state government. His duty is to the citizens of Virginia.

Virginia citizens are paying federal taxes to pay for the Medicaid expansion enabled by the Affordable Care Act. To live up to his fiduciary responsibility and get that money back, Layne supports expanding Medicaid as allowed by the law. One argument he’s heard against expansion is that the federal government can’t afford the program, it’s going bankrupt. To the contrary, said Layne, the federal share of Medicaid expansion is paid by taxes enacted by the Affordable Care Act. It’s not deficit spending. A second argument he’s heard is that the feds can’t be trusted not to renege on its payments. But that possibility is covered by a codicil in the budget that says if the feds back out, the state can back out of the Medicaid expansion, too.

Layne suggested that there is a serious mismatch between Virginia’s tax base and its spending priorities.

Drawing upon his experience as transportation secretary, he noted that the Commonwealth collects roughly $2.5 billion a year in revenue for transportation. Of that sum, only 20% or so pays for new construction; the rest goes to maintenance and operations. The reliance upon the gasoline tax has eroded the transportation revenue stream. As cars get better gas mileage — and as electric vehicles phase out the internal combustion engines — gasoline consumption and revenues decline. In theory, Virginia could switch to a Vehicle Miles Traveled tax, a true user fee. But that creates privacy concerns. To raise revenue, the state has resorted instead to increasing tolls. Nobody likes tolls, but they are a user fee, and they do expose the true costs of transportation.

Once upon a time, transportation funding did not compete with General Fund priorities. said Layne. Now transportation gets a share of the state sales tax, which puts pressure on priorities like education and health care, both of which are funded through General Fund revenues like the sales and income taxes.

What’s the answer? Update the tax structure, which is based upon an 20th-century industrial economy, to one that is based upon a 21st-century knowledge economy. Internet sales are not taxed — although that may change, depending upon an upcoming U.S. Supreme Court ruling. Services are not taxed. Perhaps they should be.

At a broader level, Layne said that Virginia needs to adopt a rigorous approach to formulating the state budget. What kind of services do we need?  What money do we need to fund those services? And where does that money come from? “That’s the kind of analysis that not just us, but the country, will have to go through.”

After 400 Years, the Pamunkeys Shall Rise Again

Pamunkey Chief Robert Gray. Photo credit: WTJU

Wow, ever since winning federal recognition as an Indian tribe, the Pamunkey Indians are on a tear. Last week I  highlighted PamunkeyNet, a proposal to bring broadband Internet service to rural counties in the Chesapeake Bay region. Now, we find out that the Pamunkeys are thinking bigger… way bigger.

According to Daily Press, the Pamunkey Indian Tribe is looking for land to build what it envisions as a $700 million gaming center that features shows, a spa and a hotel. The project would employ some 4,000 full-time workers and would have a $200 million payroll. Not bad when you consider that the Pamunkeys number only 380 members!

It’s hard to know what to make of all this activity. Since securing their federal recognition, the Pamunkeys have been conducting negotiations with investor groups that specialize in helping Indian tribes launch similar ventures. The value proposition of Indian tribes is their ability to access federal funds and their exemption from many state and local restrictions.

I’ll be the first to admit to an anti-Pamunkey bias, dating back to 1675 and the original Bacon’s Rebellion. Nathaniel Bacon led a movement comprised mainly of poor farmers and white and black former indentured servants against the corrupt regime of Governor Sir William Berkeley. The Pamunkeys sided with Berkeley. The frontier was notorious for tit-for-tat raids and retaliations between English settlers and Indian tribes, and it is fashionable among historians now to accuse Bacon’s forces of making indiscriminate attacks on innocent Indians, including the Pamunkey. Bah! Politically correct thinking infects everything! I reject it. Cross Nathaniel Bacon for whatever reason, and you’re on my black list.

I bear modern-day Pamunkeys no ill will for the deeds of their misguided ancestors. But I find myself astonished by the sudden good fortune about to be showered upon a handful of tribesmen by virtue of their ancient lineage. Whether they succeed in building a casino or not, it seems they have hit the proverbial jackpot.

Judging by the Daily Press article, the Pamunkey tribe has an enlightened attitude. It is using its privileged status to help the broader community by expanding senior housing, rural broadband services, and job creation.

“We don’t live in teepees; we’re just your neighbors,” said Chief Robert Gray. “We’ve got jobs in Richmond, Mechanicsville, Williamsburg. We’re retirees, kids … right now we can use HUD (U.S. Housing and Urban Development) funds, the Indian Health Service. But wouldn’t it be great if we paid for our own health care — more self-sufficiency, more self government.”

The Pamunkeys sound like good neighbors. And I respect the fact that they have managed to maintain a distinct identity for hundreds of years. But in the irony of ironies, they are adopting a strategy that’s become as American as mom and apple pie — working the leviathan state for privileges and favors. They’re joining the ranks of the rent seekers. What a shame.

21st Century Wealth Creation:

Dan Larimer. Photo credit: Roanoke Times

Nine years ago Dan Larimer was broke, living with his parents, driving a 2001 Nissan Altima, and recovering from a messy divorce. Today Forbes magazine estimates his net worth at $600 million. The source of the 35-year-old Virginia Tech graduate’s fortune? Crypto-currency.

As the Roanoke Times‘ Jacob Dimmit tells the story, when Larimer was down and out, he managed to scrape up $20 to purchase 400 bitcoins. Today, those coins are worth about $4 million.

But a fortuitous purchase of bitcoin isn’t what made him one of Virginia’s wealthiest people. Fascinated by crypto-currencies, Larimer began creating his own. He launched his first crypto-currency, BitShares, in 2014. The value of all BitShares now exceeds $400 million. Then he launched Steemit, the first social network to operate on a blockchain. That currency now has a market cap of $600 million.

Now Larimer is working on his latest and greatest project,, which he hopes will outdo bitcoin.’s coin, EOS, already ranks as the ninth largest cryptocurrency by market value, worth $4 billion. And he’s barely gotten started. is headquartered in the Cayman Islands to avoid government taxes and oversight, but the engineering office is in Blacksburg. The company is self-funding, selling a digital token that operates similarly to bitcoin. The plan is to develop software and applications on top of the blockchain technology upon which bitcoin and other crypto-currencies are based.

As the Roanoke Times describes it: “ will create software that it releases into the public for free. Developers will use those tools to create their own applications that run on their own blockchains, much like the way Bill Gates and Microsoft created the Windows operating system for all sorts of personal computers.” It’s not clear from the article how is supposed to make a profit, but, hey, there’s a lot I don’t get about the technology.

“Chronicling wealth is a big part of what we do,” Jeff Kauflin, co-author of the Forbes Richest People in Crypto-Currency list, told the Roanoke Times. “Crypto is a legitimate asset class now. There’s a lot of wealth that’s been created based on it, hundreds of billions. We at Forbes think it should be treated as a legitimate asset class.”

Clearly, Larimer is a genius. With the encouragement of his father, a defense contractor, he began writing software on a Macintosh II as a fifth-grader. When he exhausted all of the Advance Placement computer science classes during his junior year in high school, he just taught himself. When he started at Virginia Tech, he tested out of three semesters of coursework.

A turn towards libertarian thinking. In Blacksburg, Larimer got married, had children, and then got divorced. He and his ex crafted a deal under arbitration. The courts overturned parts of the deal, leaving him feel cheated. “That was my first experience with the government not respecting arbitration,” he said said. “I view violence as a shortcut to governance. So I made it my mission in life to find free market solutions to securing life, liberty, property and justice for all.”

Larimer said he believes cryptocurrencies, and the blockchain technology that power them, can provide fairer solutions to all sorts of societal woes. Currency is the beginning, but Larimer said the technology has the potential to reach much further.

No one company or government controls the software, so authority is decentralized. It’s based on computer algorithms, so the subjectivity is removed from the equation. A contract agreed to by two parties, whether it’s the transfer of a bitcoin or a separation agreement, is set in stone and cannot be relitigated.

“Right now in the current system, I have no way to know if that’s your car,” Larimer said. “I have to go ask the government. And if there’s a dispute between us, I have to go ask the government. The government will decide and they may or may not honor our contract.”

In the future, Larimer imagines, vehicle registrations will be stored in a blockchain, or a public ledger containing the information on every vehicle transaction to ever occur.

A block will be created when a vehicle rolls off the assembly line, then another when it’s sold at a dealership. When that owner decides to sell the car on Craigslist, they accept payment and in exchange add another block transferring ownership yet again.

If there’s an argument years later about who owns the vehicle, anyone can look back at the public ledger, called the blockchain, track the chain of blocks back to the manufacturer and determine the rightful owner.

This would be a vehicle registration system that would give unprecedented transparency, where deals could never be undone and the government would be completely uninvolved.

Bacon’s bottom line: We live in strange and unsettled times. I cannot begin to fathom how information-age alchemists can conjure up billions of dollars from the ether through the creation of crypto-currencies. Such digital prestidigitation seems to nullify all the axioms and maxims for slow-and-steady wealth accumulation that I grew up with. I can’t begin to imagine the creative destruction that crypto-currencies and blockchain will unleash, and I have no ability to augur who the winners and losers will be, much less how to preserve the modest wealth that I have accumulated. If you’re on the wealth-creating end, it must be an exhilarating time. If you’re on the sidelines, it’s most disconcerting.

I will say this: If crypto-currencies and blockchains are going to transform the world, I’d like to see one of the epicenters of change arising in Blacksburg. If turns out to be the next Microsoft, Apple, Google, or Amazon, I’m glad that Virginians will see some benefit from it.

Scientific Knowledge vs Social Constructionism

C.E. Larson

C.E. Larson is a professor of mathematics and applied mathematics at Virginia Commonwealth University, and he’s a big believer in the scientific method as a way of thinking and accumulating knowledge. He’s also worried that a proposed new General Education curriculum winding its way through the VCU bureaucracy is so loaded with trendy, anti-scientific thought that it will make the university “a public and national embarrassment.”

“The proposed curriculum not only appears to be unrigorous and unfocused, but the main problem is that it is implicitly anti-science, at a time when we need to produce graduates — and citizens — who are critical thinkers, and can think like scientists, no matter what discipline they study,” he writes in the Richmond Times-Dispatch today.

VCU’s current curriculum is conventional, imposing minimum requirements for quantitative literacy, research & academic writing, humanities/fine arts, social/behavioral sciences, and natural physical sciences. The proposed curriculum uses a very different framework for organizing the curriculum: foundations of learning (writing and critical analysis); diversities in the human experience; creativity, innovation, and aesthetic inquiry; global perspectives; and scientific & logical reasoning.

Given the requirement for scientific & logical reasoning, one might be forgiven for wondering what Larson is worried about. It appears that he was triggered by some of the nomenclature in the proposed curriculum.

There is only space here to mention a single offending guideline from VCU’s proposed General Education curriculum: “Recognize how knowledge is constructed differently in various communities.” Knowledge of course is knowledge. But there are fashions in academia that suggest that the most important kinds of knowledge are somehow not universal, and that there is no “truth” to scientific laws.

One of these trends, alluded to in this curriculum guideline, is “social constructivism” or the “social construction of knowledge.” The main idea here seems to be that because people discover scientific laws, the discoveries must be somehow dependent on the backgrounds (cultural, political, etc.) of the scientists who made them. …

A better guideline here would be to recognize how knowledge is universal, and acquired only slowly over time with great effort, by serious and thoughtful researchers across the planet.

A reading of the proposed curriculum reveals other indicators of leftist/progressive thinking:

  • “Understand and evaluate patterns and processes affecting social organization and distributions of power and resources” — again, it’s all about the power.
  • “Examine patterns of inclusion and exclusion, and other forms of social grouping.” The emphasis on inclusion and exclusion, of course, is a leftist preoccupation.

At the risk of getting all philosophical on you, comrade reader, I do believe there is a modicum of truth to the theory of the social construction of knowledge. Knowledge is socially constructed — what else could it be? Embedded in our genome? Further, it is fair to say that there is a powerful tendency for people to construct modes of thought that support and/or justify their own culture, religion, class, nationality, race, ethnicity, affinity group or interest group. Indeed, this is a universal characteristic of human behavior.

However, that’s not to say that all knowledge is socially constructed. Some knowledge comes closer to reflecting reality than other knowledge. Some approaches to acquiring knowledge allow us to send astronauts to the moon and develop cures for cancer that other approaches cannot. Invariably the approaches that advance technology are based upon empiricism and the scientific method. The scientific method — creating falsifiable hypotheses and testing those hypotheses — is, like everything human, less than perfect and subject to bias, blindness and corruption. But over the long haul, it has worked better than any other approach to acquiring knowledge, and the proof, visible in technological marvels, is there for all to see.

Applying the scientific method to the study of human behavior — psychology, sociology, economics, politics, etc. — is more problematic than the physical sciences because (a) human behavior is so extraordinarily complex and influenced by such a vast number of variables, and (b) people have a greater stake in the outcome, which, therefore, may bias the process of scientific inquiry. (Thus, for example, we get supposedly scientific studies finding that liberals have higher IQs than conservatives.)

While the “scientific” process of acquiring knowledge about human affairs is riddled with pitfalls, it is superior to the process that says we all believe what we want to believe, that knowledge is purely a construct of power, and he (or she, or they, or ze) with the most power imposes his language, mental constructs, and cultural/political views on others.

It’s one thing for individual professors to adopt the constructivist paradigm. It’s another thing for a university administration to embed that paradigm within the curriculum. Is that what VCU’s proposed curriculum seeks to do? It’s hard to tell. Is studying “diversities in human experience” a means to entrench leftist/progressive thought? Given the temper of higher education today, I do share Larson’s concerns. But the curriculum also gives emphasis to “scientific & logical reasoning.” I hate to pre-judge the outcome.

Reynolds Wins Customer Aggregation Petition

SCC headquarters

The State Corporation Commission has issued a decision expanding the right of large customers to bypass the monopoly franchises of Virginia’s electric utilities and purchase electricity from competitive suppliers.

While the General Assembly was embroiled in debate over grid modernization and the rollback of the electric rate freeze, the SCC approved the first ever “customer aggregation” petition. Reynolds Group Holdings Inc. now has permission to aggregate the demand of three of its subsidiaries at six locations in Virginia served by Dominion Electric Virginia for the purpose of purchasing electricity from someone other than Dominion.

Reynolds, based in Auckland, New Zealand, owns several packaging enterprises associated with the old Reynolds Metals, formerly headquartered in Richmond. According to the SCC ruling, the aggregated peak electric demand of Reynolds’ Virginia operations was 10.12 megawatts, representing approximately 0.06% of Dominion’s system peak of 17,000 megawatts. The impact on Dominion, which projects peak demand growth of 1.3% over the next 15 years, was de minimis.

It was not clear from the ruling whom Reynolds intends to buy its electricity from. However, Calpine Energy Solutions and Collegiate Clean Energy filed comments in support of the petition. California-based Calpine supplies natural gas, power and associated energy and risk management services to customers throughout the United States. Wilmington, Del.-based Collegiate supplies 100% clean energy solutions to universities and businesses.

Will Reisinger with the GreeneHurlocker law firm explains the significance of the ruling in a blog post:

[The] law allows large customers with annual demands over 5 MW to purchase generation from competitive suppliers. Importantly, the law also allows a group of customers to “aggregate” their demands in order to reach the 5 MW threshold. The statute treats large customers with multiple meter locations as different customers but allows them to aggregate to meet the 5 MW threshold. Once aggregated, the group will be treated as a “single, individual customer” under the law. Before allowing an aggregation, however, the Commission must find that the requested aggregation would be “consistent with the public interest.”

SCC Case No. PUR-2017-00109 was the first test of this statutory provision – that is, the first time a group of customers sought to combine their demands in order to reach the 5 MW threshold. In this case, Reynolds Group Holdings, Inc. (“Reynolds”), a metals and packaging manufacturer, petitioned the SCC for approval to aggregate six of its retail accounts in Dominion’s service territory.

Dominion and Appalachian Power Company (“APCo”) intervened in the case and opposed the petition. Dominion argued that allowing customers to aggregate their demand “would unreasonably expand the scope of retail access [and would] have the potential effect of eroding a significant portion of the utility’s jurisdictional customer base.” Dominion also suggested that the General Assembly – despite authorizing customer shopping and aggregation – intended to allow retail choice “only in limited circumstances.”

But the SCC, relying on the plain language of Va. Code § 56-577 A 4, rejected Dominion’s and APCo’s arguments and approved the petition. Dominion and APCo have until March 23, 2018, to appeal the decision to the Virginia Supreme Court.

No word yet from Reynolds, Calpine or Collegiate about what exactly they have planned.

Yet Another Path to Rural Broadband: Other Peoples’ Money

The Pamunkey Indian Tribe… soon delivering broadband Internet from a wireless tower near you.

Speaking of bringing broadband Internet to rural Virginia (see previous post)… PamunkeyNet, a business entity of the Pamunkey Indian Tribe, has received approval from the GO Virginia State Board to develop a plan to bring broadband to Gloucester, Mathews, Middlesex and other rural counties along the Chesapeake Bay.

The newly awarded federal designation of the Pumunkeys as an officially recognized Indian tribe is key to the venture. According to a GO-Virginia document, the project would unfold over three years. GO-Virginia, a state-funded economic development initiative, would provide backing for two years. The Pamunkey-owned project would:

  • Create a network of existing and new wireless towers throughout the Middle Peninsula and George Washington region that will have a high-performance backbone between towers and local access radios on each tower to provide affordable business, residential, and institutional broadband Internet service, and will provide Gigbit fiber services on the Pamunkey reservation.
  • Create a fiber-based Technology Corridor on Route 33 between Rappahannock Community College, the planned Telework Center, and the Middle Peninsula Regional Airport.
  • Design for linkage with Hampton Roads, specifically for VIMS and Rappahannock Community College, and anticipate the benefits of linkages to the south with transoceanic destinations from the MAREA landing point, as well as to the north at Ashburn.

Key to making this happen is Pamunkey access to federal funds — “the sole federally designated tribe in Virginia and a conduit to currently untapped federal resources.”

The project also would involve the Middle Peninsula Planning District Commission, the Rappahannock and Germanna community colleges, ten localities, and two electric co-ops.

Bacon’s bottom line: I’ve just finished reading Nassim Nicholas Taleb’s brilliant and confounding new book, “Skin in the Game: Hidden Asymmetries in Daily Life.” Taleb doesn’t have much use for movers, shakers, and pundits (which would include people like me) who don’t have “skin in the game,” that is, people who, if their analysis proves unfounded, walk away unscathed. One commonly encountered group of skinless gamers is people who play with taxpayers’ money.

If you had to make a prediction, which would you pick to have a greater chance of economic success (that is, recovering the funds invested): Gary Wood’s plan (described in the previous post) for the Central Virginia Electric Cooperative to deliver broadband to its 36,000 customers, or the Pamunkey plan to deliver broadband to a geographic area of comparable size?

I would lay my money on Wood. In a word, Wood has put his ass on the line, and he reports directly to a board of directors, whose members represent the interests of the customer-members of the co-op. If the venture fails, co-op members will take a bath, board members will catch endless flack from their friends and neighbors, and Wood’s career likely will be ruined. I would feel even better if he had some of his own money at stake, but there is a clear line of accountability, and the people involved have a lot to gain or lose. Without knowing Wood personally, I feel reasonably assured that he will do everything within his power to make the project a success.

Conversely, it doesn’t appear that anybody has skin in the game in the Pamunkey deal. There is no indication that the Pamunkeys are putting up any of their own money or that they’ll suffer any loss if the project bombs. Basically, a bunch of bureaucrats are playing with other peoples’ money, and if the project fizzles, there is no discernible impact on any of the participating organizations. Furthermore, participation is so broad and so diffused, there won’t be anyone to hold accountable. The Pamunkeys might tap enough state, federal, and local money to get the broadband service built. But would the project be economical, in the sense of earning back its cost of capital? Who cares? It’s other peoples’ money.

Another Path to Rural Broadband: Electric Co-ops

Service territories of Virginia electric utilities. The CVEC territory is shown in bright blue in the center of the state. (Click for larger image.)

The Central Virginia Electric Cooperative has been delivering electricity to the inhabitants of 14 Central Virginia localities for 80 years. Now it’s planning to provide high-bandwidth Internet connections. The company has announced a plan to invest $11o million to connect all 36,000 co-op members.

Co-op members will be able to purchase 100 megabits per second (mbps) access for $49.99 a month or 1 gigabit per second (gbps) for $79.99 a month, reports the Fluvanna Review.

Keeping the pricing reasonable was important to CVEC President Gary Wood. “I didn’t want this to become a premium service or a luxury service,” he says. Continues the Rivanna Review:

Wood said the project is anticipated to lose money for the first seven years and reach the break-even point in about 11. He admits that “give me $100 million and in seven years, I’ll start bringing you your profits,” hasn’t been the easiest argument to sell, but he believes it can be done with a combination of  loans, grants, state and federal funding and tax rebates.

CVEC is also asking for financial support from each of the counties in its service area.

For a for-profit business, eleven years would be a slow payback. But for an electric co-op, owned by its customers, that might seem like a reasonable proposition.

One objection, I would expect, would revolve around opportunity cost. By taking on a financial obligation of this size, the co-op might be limiting its ability to pursue other projects such as, say, grid modernization or solar energy. Another objection would be risk. What if rural residents aren’t willing to pay $50 to $80 per month for broadband access? Could disappointing revenues put the co-op in financial jeopardy?

But let’s face it, no one else is likely to want to deliver broadband to the rural residents of Central Virginia. This seems like a project that is custom-made for CVEC, and it could provide a model for other co-ops, who cover roughly a third of the geographic expanse of the state.

Why Offshore Drilling Is Good for Virginia

By Mark Greene

According to a recent study, safely tapping Virginia’s offshore natural gas and oil reserves could provide nearly $1.8 billion of private investment annually in the Commonwealth. While many are quick to judge this initiative, all of the facts should first be considered.

For example, federal revenue sharing could help transform the state economy by sending billions in royalties, rentals and fees to our state coffers. By putting revenue-sharing programs in place -– like those already working for the states of Alabama, Louisiana, Mississippi and Texas -–Virginia could benefit from offshore energy development to the tune of $235 million per year, according to the study. And that’s in addition to industry spending and high-paying jobs created that would help boost our economy.

“So, what’s trying to stop a reasonable exploration of what job creating resources might be available off our coast?,” asks former delegate Chris Saxman in a Roanoke Times editorial. “Fear. Fear accelerates order to disorder and hinders economic growth that will pay for the promises we have made.” He goes on: “Done properly, offshore exploration can create thousands of jobs that pay an average over $100,000 a year while providing tax revenue to also pay our hard working public employees like teachers, police, fire, and rescue personnel or we can dedicate that revenue to fixing interstates like I-81.”

To elaborate on Saxman’s point about the kinds of economic benefits offshore access could bring – here’s the picture of the Virginia projections if we were to develop oil and natural gas off of our coast, recently released by API:


  • $2.1 billion in federal revenue sharing over the forecast, reaching $236 million per year at the end of the forecast.
  • $19 billion in industry spending over the forecast, reaching $1.8 billion by the end of the forecast.
  • $22.3 billion added to state GDP over the forecast.
  • 24,664 jobs gained by the end of the forecast.

Numbers likes these illustrate big economic opportunity for the whole state if we are included in a new federal offshore leasing plan now under development. Despite any kneejerk reactions that may have taken place initially, economic benefits of this size should compel policymakers to consider the needs of entire states when discussing offshore development.

At a House hearing last fall, former U.S. Sen. Mary Landrieu of Louisiana said natural gas and oil industry employment long has benefited her state. “We have men and women graduating from high school that are going to work in the oilfield and they don’t make minimum wage,” Landrieu said. ”They can make $80, $90, $100,000 a year. And that means a lot to their families, and it sends a lot of kids to college from south Louisiana.”

Offshore energy would be privately financed – reflected in the industry spending numbers above. That’s spending throughout state economies by natural gas and oil companies and their employees. It’s a boost to economic growth for portions of our state, like Southwest Virginia, that haven’t seen much growth for years.

Offshore energy is compatible with other ocean uses, including the military. It is safer than it has ever been and is always improving, thanks to technology, industry standards, safety management systems and employee training. No human enterprise is without risk, but industry’s premium on technology and safety – to protect its workers and the environment – properly manages this risk while producing energy and national security benefits for today and decades into the future.

“Interior’s offshore proposal is a critical first step to advancing a strong energy future for Virginia,” said Miles Morin of the Virginia Petroleum Council. “Not only can offshore energy exploration and development help provide reliable and affordable energy for Virginia’s consumers, but it can also be the cornerstone for economic growth and investments in our state.”

This is American energy that should be safely harnessed to benefit all Virginians – both on the coast and all across the Commonwealth.

Mark Green is editor of Energy Tomorrow, a publication of the American Petroleum Institute.

Heads I Win, Tails You Lose

This will be one of those blog posts where many readers will ignore the substance of my arguments and go straight for the jugular — Dominion Energy Virginia sponsors this blog, I’m a shill for Dominion, and, therefore, anything and everything I say can be discounted without further thought. If you’re one of those people, I know I won’t persuade you. But please, if you object to my conclusion, don’t settle for the cheap ad hominem shot. Explain to me why I’m wrong.

This post was triggered by a Washington Post op-ed by Del. Mark Keam, D-Fairfax, titled, “Why I’m Breaking Up with Dominion.” Keam wrote:

In 2017, President Trump made it clear there would be no Clean Power Plan, which put Dominion in a bind. Dominion couldn’t justify continuing the rate freeze when the reason it cited no longer existed and it held nearly a billion dollars of potential customer refunds.

On the other hand, as Virginia’s most powerful political donor, Dominion couldn’t admit its mistake and simply return to pre-2015 status. So, Dominion launched an all-out lobbying campaign to push for a different result.

First some background: In June 2014, the Obama administration began implementing its Clean Power Plan. The State Corporation Commission (SCC) staff estimated that the plan would cost Dominion between $5.5 billion and $6 billion for Dominion to shut down coal plants and replace them with power from other fuel sources. Environmental groups suggested that the cost would be much less. But nobody knew for sure, and nobody possibly could know until the Commonwealth adopted a definitive methodology for calculating CO2 goals to be attained. When the General Assembly convened in January 2015, uncertainty reigned.

A deal was struck to freeze base electric rates through 2022 (while continuing to allow the SCC to adjust rates for fluctuations in the cost of fuel and pay for major capital projects). The purpose was to guarantee rate stability for electricity customers. Whatever the outcome for Dominion and Appalachian Power, customers wouldn’t be subjected to higher base rates. Dominion and Apco absorbed the risk. They might make higher profits if the costs were lower than feared, but they might make lower profits if worst-case cost scenarios panned out.

In November 2016 something happened that no one anticipated — Donald Trump won the presidential election, and he effectively spiked the Clean Power Plan.

But what if Hillary Clinton had won, as virtually all informed political opinion expected? It’s no stretch to think that the Environmental Protection Agency and the McAuliffe administration would have continued implementing the Clean Power Plan. We cannot know which of the regulatory options the administration would have chosen — setting CO2 emission targets based on mass-based limits (or total tons emitted) or rate-based limits (CO2 emitted per unit of electricity) — but we can safely assume that the new regulatory framework would have been more costly than doing nothing at all.

Continuing our counter-factual scenario, let’s say the Clean Power Plan framework adopted by Virginia would cost the $5.5 billion to $6 billion postulated by the SCC, and that Dominion had to eat a billion dollars or two in write-offs when it shut down its coal-fired power plants. Now let’s say Dominion came to the General Assembly, saying, sniff, sniff, poor us, these regulations are ruinous, could you please bail us out? What answer would Keam and others of like mind have given? They would have said, “Not a snowball’s chance in hell! You took yer chances and you lost. Now beat it!” And rightfully so.

Of course, that’s not the way things turned out. Dominion lucked out. Trump won the election and he canceled the Clean Power Plan. By January of 2018, Dominion was accumulating earnings way above its normally allowed rate of return (although a major weather event or a regulatory order to pay of billions of dollars to clean up coal ash ponds could have negated those profits).

Inevitably, a hew and cry was raised that Dominion was making out like a bandit by pocketing huge excess profits. Dominion was on track to make a lot of money, all right, but not like a bandit. More like a poker player. Dominion didn’t steal anything — but it did win the bet.

A lot of politicians and consumer advocates couldn’t see the difference. And, politicians being politicians, they ignored the risk that Dominion absorbed back in 2015 and clamored for a rollback of the freeze. The game they were playing can be described forthrightly as, “Heads I win, tails you lose.”

When it became clear in the November 2017 elections that voters largely agreed with the anti-Dominion politicians, nearly obliterating the Republicans’ hefty majority in the House of Delegates, Dominion saw the writing on the wall. The utility seized the initiative with its proposal to end the freeze on its own terms — by reinvesting over-earnings into a massive grid-modernization plan. Politically, the ploy was brilliant. Dominion cut a deal with the new Northam administration, environmental groups, independent solar producers, and other constituencies, leaving Keam and his buddies to eat dust. I understand why the delegate is so sore.

The resulting Grid Transformation and Security Act may or may not be a good piece of legislation. I haven’t delved deeply enough into the details to conclude whether it will be harmful or beneficial to rate payers. We can be reasonably assured that it will be beneficial to Dominion, or the company would not have gone along with it. But if I were a senior Dominion executive, I’d be very wary of cutting a deal like the 2015 rate freeze ever again. Getting sucked into a heads-you-win, tails-I-lose political proposition is no way to run a business.