Author Archives: James A. Bacon

Virginia as Nation’s 10th Most Populous State?

Source: StatChat blog

Virginia’s population growth has slowed in recent years, but the Old Dominion still is expected to grow faster than the nation as a whole. At current growth rates, Virginia could become the 10th most populous state in the country by 2040, according to Shonel Sen with the Demographic Research Group at the University of Virginia.

During the 2000-2010 decade, Virginia experienced an average annual growth rate of 13%. That has slowed to a 9% growth rate in the current decade, writes Sen in the StatChat blog. But the growth rate of other states has slowed as well.

In 2010, Virginia was the 12th most populous state. Assuming current trends continue, the Old Dominion should surpass New Jersey by 2030, ranking 11th. And by 2040, Virginia will surpass Michigan to become No. 10.

The thing about most trends is that eventually they end. But insofar as the governance philosophies of states remain relatively constant, and insofar as population trends reflect state-level political and economic conditions conducive to economic growth, there is a lot of inertia in population trends in states with large, diverse economies. This scenario actually could happen.

In related commentary, Sen has published a map showing how the geographic center of Virginia’s population has moved since 1940. Just before World War II, the population center was in Cumberland County. As Richmond, Hampton Roads and Northern Virginia urbanized, the center progressively moved east through 1970. Then, as Northern Virginia came to dominate economic and population growth, the center moved due north, and is projected to continue to move north, almost to Fredericksburg, by 2040.

Map credit: StatChat

A Fourth Force in Virginia Energy Politics

The political economy of energy in Virginia used to be simple. Three main interest groups contended to formulate energy policy in the state: environmentalists, consumers, and electric utilities. Consumers, both homeowners and businesses, pressed for lower electric rates. Environmentalists fought for cleaner air and, more recently, lower CO2 emissions. And utilities — the only parties responsible for keeping the lights on — lobbied for reliability at a reasonable cost (within a framework that preserved profits).

In the last few years, a fourth force has entered the picture, and the political dynamic is changing. The Old Dominion has seen a surge in the number of small, independent solar- and wind-power developers. They have exercised limited political clout, but now large, national corporations embracing a green energy agenda have entered the fray.

Half the Fortune 500 companies have committed to green agendas, and they signaled their desire earlier this year to see policies in Virginia that were friendlier to wind power, solar power and energy efficiency. (See “Clean Energy Options and Economic Development.”) Their message: If Virginia wants to attract outside corporate investment, the state had better get on board the solar-powered electric train.

Then, in an unprecedented flexing of political muscle last week, a green industry group injected itself into the Virginia gubernatorial race. Advanced Energy Economy (AEE), an association of green industry companies, delivered a policy memo to the campaigns of GOP nominee Ed Gillespie and Democratic nominee Lt. Gov. Ralph S. Northam.

“Evolving consumer preferences, dynamic new technologies and aging infrastructure are causing the energy system as we have known it to modernize,” states the memo. AEE outlines four priorities:

  • Allow competitive procurement to attract investment and benefit consumers. Virginia energy policy should open up third-party market alternatives. “While current Virginia law allows competition in statute, more could be done to attract investment and benefit consumers.”
  • Expand access to advanced energy options. The ability to control energy costs is a factor in where many corporations choose to locate. But they’re not just looking for cheap energy — they want green energy.
  • Maximize energy efficiency and demand-response. Under Virginia regulatory regime, electric utilities lose money when customers reduce their electricity consumption, discouraging utilities from investing in energy efficiency programs and demand response. Virginia should “decouple” electricity sales from profitability so utilities don’t lose when they invest in energy efficiency and demand-response programs that cut sales.
  • Modernize the electric grid. Evolving consumer preferences, new technologies, and the need to replace aging infrastructure have created a need to modernize the electric grid. The regulatory system, which inadvertently stifles innovation, needs to be modernized.

AEE wants more wind and solar, more electric vehicles, more energy efficiency, more innovation, and more freedom for entrepreneurs to design solutions for customers. At the same time, the association acknowledges that the way to achieve these aims is not to browbeat electric utilities into submission but to change their incentives, which would take a major re-writing of regulatory law.

Bacon’s bottom line: To advance AEE’s vision, Virginia would need an upgraded electric grid flexible enough to accommodate a less centralized, more distributed grid while still maintaining system-wide reliability. In effect, the green businesses are calling for a deregulation of electric power production. But no one wants to build a competitive and redundant electric transmission-distribution system.

Any viable energy system of the future must allow electric utilities to continue investing in, and earning a profit on, their transmission-distribution systems. Also, deregulation of electricity generation would require grappling with the issue of “stranded” investments — investments in generating capacity that utilities made in good faith under the existing regulatory environment that might not be economical and must be scrapped in deregulated environment.

Like the environmental movement, this Fourth Force in energy politics wants to see a fundamental transformation of Virginia’s electric power system. Unlike the environmentalists, many of whom see Dominion and Appalachian Power as the enemy, the Fourth Force acknowledges the need for a healthy utility sector. This new interest group has plenty of money, which means it can afford to hire lobbyists and spread cash to political campaigns. Plus, these new voices will be more credible to Virginia’s pro-business legislators than the more strident environmentalists had been. 

The politics of electric power in Virginia has reached an inflection point. We are entering a new era.

Failing to Fix the Unfixable

Cranky (aka John Butcher) is on a tear these days, most recently exposing the Virginia Board of Education’s ineffectual effort to fix the City of Richmond’s broken school systems.

The Richmond’s schools are in turmoil. According to the state board, 27 of the city’s 44 schools are not fully accredited. The school board has booted out the district’s superintendent, who only two or three years ago had been highly touted, for reasons that remain opaque. City and state bureaucracies are moving ponderously to address the deep-rooted dysfunction. But so far, the only product of the teeth gnashing and foot dragging is a “Memorandum of Understanding,” which, in Cranky’s jaundiced eyes, “does nothing but create busy work and a ‘rough draft’ plan that is not a plan.”

Cranky proceeds to dismember the MOU like Jeffrey Dahmer rended his victims. The MOU, he suggests, is vague, redundant, intrusive, and unenforceable. Worst of all, he writes, “VBOE does not know how to fix Richmond’s broken school system. They don’t know what to tell a judge that Richmond should be made to do, so they don’t even contemplate exercising their authority to sue.”

If you want to find yourself laughing and crying at the same time, check out his post.

Coping Gracefully with Depopulation

Map credit: Virginia Department of Mines, Minerals and Energy

A Roanoke Times editorial asks a provocative question: “Should we just let Appalachia go?” Instead of trying to rebuild a new economy in far Southwest Virginia, should the commonwealth just allow the region to depopulate?

As the editorial points out, the Appalachian mountains and hollers were sparsely populated through the 18th and 19th centuries. Then, in the late 1800s there arose an industrial economy that ran on coal. “Coal happened. Railroads happened. People — many of them immigrants — poured into Appalachia. Roanoke was not the only boom town to spring up then. So did lots of other communities deeper in coal country.”

After an efflorescence during the last 70s/early 80s, coal went into decline. Mechanization eliminated jobs. Thicker, efficient-to-mine coal seams played out. Environmental regulations drove up the cost of mining and combusting coal. And natural gas began displacing coal in the utility market. As long as high-quality metallurgical coal used in steel making can be mined in Appalachia, mining will never totally disappear. But coal will be a shadow of the industry it once was.

Virginia’s coalfields have tried to diversity their economies, but they suffer enormous competitive disadvantages. They are geographically remote, far from large urban centers and interstate highways. They have a paucity of flat land suitable for industrial development. The workforce is poorly educated, substance abuse is widespread, and most ambitious young people who earn college degrees leave for better employment prospects elsewhere. And the quality of amenities and public services is low so that everyone who made significant wealth in coal mining moved out of the region. There is no moneyed business class to spark an entrepreneurial revitalization.

Some coal counties refuse to die. Wise County has been especially creative in trying to reinvent its economy around broadband, data centers and solar energy. Recent state legislation that would favor pumped storage as a complement to solar farms has Dominion Energy giving a serious look at the region. The economic impact of such a facility, if ever built, would exceed that of Dominion’s $1.8-billion Virginia City Hybrid Energy Center, which burns coal and biomass. But the economics of these dreams remain unproven.

“It’s hard to see what industries exist in which Appalachia has a comparative advantage as vast as it had in coal,” the Roanoke Times quotes economist Lyman Stone as writing. “I’m not saying none do or could ever exist; I’m just saying that if they can or do, they don’t seem extremely clear right now.”

In Stone’s estimation, without coal mining to prop up the economy, Appalachia’s population has a long way to fall. He writes: “We can’t let hopes blind us to realities. On some level, population must be associated with economic activity to support it. Coal mining is still declining, and when it’s completely gone, it’s not clear how much economic activity will remain, and therefore how much population can be sustained.”

Bacon’s bottom line: As much as I hate to acknowledge it, Stone’s prognosis is correct. The 21st century economy belongs primarily to populous urban areas. I wouldn’t discourage coalfield residents from trying to salvage their communities — indeed, I very much hope they succeed. But even if creative-thinking localities such as Wise succeed in diversifying their economies, data centers, solar farms and pumped-storage facilities employ very few workers beyond the construction phase. Such projects would bolster the local tax base, enabling counties to maintain basic services, so they are worth pursuing. But they won’t reverse the depopulation of the region.

The coalfield counties, like other remote, rural counties in Virginia, need to think how to decline gracefully. Hard-hit cities and towns in the Midwestern rust belt are learning how to cope with shrinking populations, and perhaps it’s possible to learn lessons from them. What rural counties do not need to do is invest scarce resources in desperate, long-shot bids to turn around their economies. The circumstances are dismal, but living in denial of economic reality will only make things worse.

About Those School-to-Prison Pipeline Numbers…

Gerard Lawson

Two years ago the Center for Public Integrity (CPI) released a study reporting that Virginia led the nation in sending students from schools — 16 out or 1,000 — to police or the courts. That finding fueled demands to overhaul k-12 disciplinary practices to reduce the so-called “school-to-prison pipeline.”

Well, it turns out that those numbers were wildly inflated.

“When we look at the official Juvenile Justice records to see who actually went to court from the schools, the number is actually 2.4 per 1,000,” says Gerard Lawson, an associate professor at Virginia Tech’s school of education.

Lawson and his colleagues conducted the research to find what factors led to student involvement in the pipeline and how those factors could be mitigated, according to a Virginia Tech news story. Here’s what they found:

The researchers launched the study in January 2016, drawing data from several state agencies, including the departments of Juvenile Justice, Education, and Criminal Justice Services.

“At the very outset we realized the numbers weren’t matching up,” said Lawson, who is also president-elect of the American Counseling Association. “We scoured the data between the Departments of Education and Juvenile Justice, matching localities, dates of birth, dates of offensives, types of offenses, and we realized that the number of students actually ending up in court was much lower than that first impression.”

There is a checkbox on a Department of Education tool gathering data about suspensions and expulsions which asked, “Was this reported to law enforcement?”

“In most cases, when the box was checked, it appears that it represented an informal report to law enforcement — an administrator running into the school resource officer in the hallway, for example, and mentioning that a student had been suspended.” Lawson said. “The ‘report’ may have gone no further than the officer responding, ‘Thanks—good to know.’ With a bit of semantic imprecision, that checkbox elevated Virginia’s numbers dramatically.”

However, Lawson’s study did confirm two trends highlighted by the CPI study: students with disabilities were more likely to be suspended, and African-Americans, representing 23% of the student population in Virginia, accounted for 49.4% of the court referrals.

“We need to rethink discipline,” says Lawson. “Should a middle-schooler get arrested for flipping the bird at a teacher? The stakes are too high. A single suspension makes it less likely for a student to graduate from high school, and involvement with the Court system makes that less likely still. The repercussions can be lifelong.”

Bacon’s bottom line: Lawson should be commended for debunking the misinformation that Virginia is an outlier in the realm of school discipline. I always wondered about that claim — I never heard a logical explanation of why Virginia school officials supposedly referred so many more kids to law enforcement than their peers in other states. But when I wrote about the CPI research, I never thought to dispute it. Now we know why the numbers were so high.

However, I have to question one of Lawson’s insinuations. Middle-schoolers have been arrested for flipping the bird to their teachers? Really? If true, such actions are absolutely outrageous, and disciplinary procedures do need reform. But my “spidey sense” makes me suspicious. It would take a judge about two nano-seconds’ reflection to throw that out of court. I find it hard to believe that such a thing has ever happened. Perhaps Lawson was just using hyperbolic rhetoric, not to be taken literally. Or perhaps I’m just naive.

Returning to the main storyline… Let’s play a little parlor game, shall we? How much media attention will Lawson’s story get compared to the the Center for Public Integrity’s flawed report? Will the Center for Public Integrity ever correct its findings?

Update: The editors of the Center for Public Integrity offer an extended rebuttal of Lawson’s findings (and Bacon’s Rebellion’s reporting of those findings). You can read their comment here.

Don’t Bet the Farm on Population Projections

Source: StatChat blog

The Demographics Research Group at the University of Virginia is the entity tasked with making official population projections for the Commonwealth of Virginia and its localities. Their projections feed into all manner of planning documents across the state. If the projections are off, so are the forecasts for school attendance and transportation demand. Getting the numbers right is a big responsibility.

Hamilton Lombard, a research specialist for the group, assumes an appropriate air of humility regarding long-range projections.

Forecasting population change, like forecasting the weather, is complex, requires one to make assumptions about the future, often based on past trends, and is rarely spot on,” he writes in the StatChat blog. “Because population projections are less familiar to the public, projections are often treated as something closer to a fact, rather than a forecast that can and likely will change. Unfortunately, not understanding population projections can lead to much larger problems than a rained out barbecue.

In the chart above, Lombard traces the history of state population projections for the year 2000 beginning in 1975. The 25-year projection was off by a significant margin. But, as a rule, shorter-term projections are more accurate, and the 10-year projection hit very close to the mark.

Numbers tend to be less accurate for localities because demographic trends tend to be more volatile. As an extreme example, Lombard cites, projections made of Bath County’s population jumped around 1980 when the lightly populated county experienced an influx of construction workers to build the Bath County pump storage facility. “Because of the temporary rise in Bath County’s population,” Lombard writes, “the projections expected the county’s population to keep growing, even after the 1990 census showed that most of the power plant construction workers had left.”

Bacon’s bottom line: Forecasting increased population for Bath County by projecting a trend line based on a temporary influx of construction workers was utterly foolish. Someone should have been strung up by the thumbs. Fortunately, not much was at stake (well, not much for anyone except, perhaps, the residents of Bath County). But sound planning for billions of dollars of transportation and infrastructure investments depends upon reliable population estimates.

For the 50-year reign of suburban sprawl, forecasters could reliably predict a shrinking of Virginia city populations and growth in surrounding suburban counties. Then an inflection point occurred in the mid-2000s when population and business began reversing the trend — moving from the burbs into core urban areas. Straight-line projects based on 2000 population trends would have gotten the numbers very wrong. I would urge Lombard to reconstruct the history of population projections for the year 2020 projections going back 25 years. I suspect he would find a much wider gulf between forecast and reality than in the graph shown above.

As long as the economy is in a steady-state condition, predictions tend to be reasonably accurate. When inflection points occur, forecasts go widely astray. Today demographers must ask, how long will the urban revitalization movement last? Will cities continue to gain population? Will the growth rate of counties continue to slow? Answers to those questions are beyond the ability of demographers to predict, for they depend upon the willingness of cities and counties alike to adopt policies that promote the kind of denser, mixed-used development that can accommodate growing populations.

So, as Lombard counsels, understand the limitations of long-term demographic projections. If demographers could predict the future with 100% accuracy, they wouldn’t be demographers — they’d be making a killing on Wall Street.

Business Leaders Demand WMATA Governance Reform

An alliance of Washington-region business groups is calling for a fix for the Washington Metropolitan Area Transit Authority (WMATA) that would create dedicated funding streams for the Metro rail system and a restructuring of the authority’s board.

Twenty-one chambers of commerce and employers groups outlined the proposal in a letter to the region’s political leaders, reports the Washington Post. The proposal is expected to have influence, the Post says, noting that executives with the signatory businesses are frequent campaign contributors.

WMATA has said it needs at least $500 million a year to restore to functioning condition the commuter rail transit system, which has been plagued by maintenance issues, safety incidents, and declining ridership. The letter signatories did not specify a particular funding mechanism.

“We’re not trying to get into the weeds,” said Bob Buchanan, founder of the 2030 Group, told the Post.

One commonly floated proposal is a region-wide, penny-per-dollar sales tax, but Northern Virginians have objected on the grounds that Northern Virginia would wind up paying more than Maryland and the District of Columbia combined.

Describing the Metro as in a state of “crisis,” the letter linked the creation of a dedicated revenue source toward a revision of the tri-state governing compact and a restructuring of the board. States the letter:

We reiterate our strong conviction that any reform effort must include reforms to WMATA’s governing, financial and operational structures. Reform of any one structure alone will not be sufficient. For instance, additional funding for Metro will only be beneficial if it is accompanied by structural changes that give WMATA’s board the flexibility to effectively allocate resources and staff the flexibility to leverage additional resources to make operational improvements.

Governance reforms include “right-sizing” the WMATA board and requiring directors to have expertise in specialized areas, including transit operations, management, finance and safety.

Bacon’s bottom line: WMATA is critical to the functioning of the Washington metropolitan region. After decades of short-changing maintenance, WMATA needs billions of dollars to remain a viable transportation mode. There is no avoiding the necessity for regional taxpayers to cough up more money to restore the rickety system to health. Washington-area residents have been enjoying the benefit of a heavy-rail transit system for years without paying its full cost — now it’s time to pony up. But given WMATA’s dismal history, the NoVa business leaders are absolutely right to demand reforms that will ensure that any new funds are not mis-spent or frittered away in concessions to WMATA labor unions.

Working out a compromise with Maryland and D.C. won’t be easy, but Virginia’s political leaders need to hang tough.

Drip… Drip… Drip… Another Richmond Company Moves from the Burbs to Downtown

Bob Hilb

The Hilb Group, a fast-growing insurance brokerage with more than $125 million in revenue, has made the decision to move its headquarters from the suburban Stony Point office to the Riverfront Plaza in downtown Richmond.

CEO Bob Hilb told Richmond BizSense that he had been looking for a new location for a year in anticipation of the lease expiring on his 5,000-square feet office in 2017. “While it’s a great building, it has turned into very much a medical office space,” he said. “There’s nothing wrong with that; it just doesn’t fit our vibe.”

And what’s that vibe? It’s all about the Millennials.

The downtown office will have a more modern, open layout — “a little less wood and more glass,” said Hilb. The company will move only 17 of its 800 employees into the new 9,000-square-foot digs, but he expects the number to grow as the company continues to roll up smaller, independent insurance agencies around the country.

“A lot of a people in our business, you walk into their office and it’s like you’ve walked into a hunting lodge,” he said. “As we grow, there’s no question that being able to attract millennials and having a really nice progressive office makes a difference.”

Bacon’s bottom line: Technically, the Hilb Group’s relocation is a Richmond-to-Richmond move. But Stony Point, located on the far western edge of the City of Richmond, was developed as a classic suburban office park surrounded by parking lots and trees. Walking to the nearby “pedestrian” mall is impractical. The office park is accessible only by automobile. The Hilb Group’s new location in the Riverfront Plaza will be in the heart of downtown near the James River.

Meanwhile, the urbanization of the City of Richmond continues apace. Union Presbyterian Seminary is moving ahead with the development of a $50 million, 301-unit apartment complex in Ginter Park, a single-family neighborhood, despite stiff opposition by neighboring property owners.

And the city planning commission has signaled its intention to rezone Scott’s Addition, a light industrial area transitioning to mixed-use residential and commercial, under a new, more urban zoning classification. Local businesses, says the T-D, would see changes to parking regulations, square footage restrictions and the allowance of small-scale manufacturing.

A Non-Partisan Election Reform: Shorter Lines

Here’s an idea for election reform that everyone should be comfortable with: reducing the time voters spend in line at the polls.

In 2014 a bi-partisan Presidential Commission on Electoral Administration called on state and local officials to ensure that voters wait no more than 30 minutes to cast a ballot. As a voter who spent an hour or more waiting in line in the 2016 election, I would greatly appreciate any effort to cut the logjam.

Writing in the Richmond Times-Dispatch, John Fortier and Donald Palmer with the Bipartisan Policy Center describe a nationwide study in 2016 of election lines. That study encompassed 17 Virginia jurisdictions representing more than 2 million registered voters, or nearly 40 percent of all registered voters in the state.

Our data shows that more than 80 percent of Election Day lines in Virginia occur before noon. Moreover, we found that steps taken by Virginia officials after the 2012 and 2014 elections to allocate resources more effectively did decrease the average wait times at the polls. In 2016, Virginia voters waited an average of less than nine minutes to vote — down dramatically from 24 minutes in 2012 and 28 minutes in 2008. This decrease is one of the largest in the country.

When equipped with the right data, local officials can make smart and informed choices about where and when to deploy resources on Election Day, designing a structure that works best for their unique situations. Until now, however, those officials were flying blind with little to no data to guide or back up decision-making.

It’s nice to know that our election officials are doing something right. I’m looking forward to a snappy, nine-minute wait in the gubernatorial election this fall.

Workgroup Seeks Compromises to Move Solar Forward

The consensus-building workgroup that fostered 2017 legislation to promote community solar energy in Virginia reconvened Monday to grapple with more intractable issues that stand in the way of widespread adoption of solar power.

Participants in the Solar Policy Collaborative Workgroup had clashed repeatedly in the General Assembly over the years, but decided to pursue a different approach in 2016. Mediated by Mark Rubin, executive director of the Virginia Center for Consensus Building at Virginia Commonwealth University, they worked out a compromise proposal that will allow Virginians to purchase renewable electricity generated by local, independent solar developers and marketed by electric utilities.

The General Assembly enacted the law in the 2017 session, and participants hope to build on the success, tackling issues that they could not resolve last year. “A level of trust and respect has been established among members of the steering committee,” said Rubin when convening the Monday meeting.

This year the ad hoc organization is seeking input from a broader array of stakeholders and inviting the public to attend meetings. Sub-groups will discuss issues relating to land use, large developers, large customers, community development and net metering. Of the five topics net metering — in which utilities pay owners of solar facilities for surplus electricity they supply to the grid — stimulated by far the most interest, inspiring numerous comments from the audience.

“No ideas are off the table,” said Sam Brumberg, counsel for the Virginia, Maryland & Delaware Association of Electric Cooperatives, and a leader of the net metering sub-group. He cited time-of-use rates, charging for usage of the grid, feed-in tariffs (which enable long-term contracts for solar generators) and other options that might be considered to encourage distributed solar development. “No idea is off limits.”

Brumberg was joined by Scott Thomasson, southeast director of Vote Solar. His organization has engaged in some “fierce battles” in other states over solar policy, he said. By participating in the Virginia solar workshop, he added, he hopes to “get better outcomes through dialogue. We want to avoid the melt-downs in other states.”

Net metering. One thing most audience members agreed upon is that the existing net metering law, designed to protect electric utilities, is a hindrance to widespread adoption of solar energy by homeowners, small businesses, and other small users. Current law limits net metering to residential systems up to 10 kW and commercial systems up to 500 kW, with a program cap if generating capacity reaches 1% of an electric utility’s peak load for the previous year. The benefit to generators is that their surplus electricity can be used to offset electricity purchases from the utility during off-peak periods.

Dominion Energy has sought to limit the surplus that generators could use to offset their electricity sales, while both Dominion and Appalachian Power have insisted upon stand-by charges to compensate them for the cost of maintaining the electric grid that solar-generating residences would draw upon for backup. Builders, environmentalists and other advocates say the restrictions make solar less attractive to install and give small, distributed generators no credit for the load they take off the transmission and distribution grids.

The interests of the electric utilities and the others seem starkly opposed, and there is no obvious way to reconcile the two. But Katharine Bond, senior policy adviser for Dominion, sounded an optimistic note, suggesting that new technology and novel rate structures might make the utilities “more agnostic” about solar initiatives that cut into utility revenues.

Another complication is that net-metering advocates are a diverse group and do not agree amongst themselves on the best approach. Charles Guarino, a Richmond-area resident, made a plea for simplicity in the net metering law. “If people don’t understand it, they won’t participate,” he said.

But Tom Hadwin, with Waynesboro-based ACN Energy Solutions, advocated a value-of-solar tariff based on the premise that it made more sense from the perspective of balancing load on the electric grid to put solar in some locations than in others. Electric rates would be less favorable for solar located near where the grid was congested than for locations where grid congestion was not an issue.

“Simplicity is good, but there are trade-offs,” said Thomasson with Vote Solar., who suggested that a tariff that varied by time of day and load demand might suit some better.

“Not everyone can get what they want,” said Brumberg, but “if we’re successful, folks will get some of what they want.” Continue reading