Tag Archives: James A. Bacon

Virginia Voters Back Pipeline by Nearly Two-to-One

Question: Do you support or oppose building the Atlantic Coast Pipeline?

Registered voters in Virginia favor construction of the Atlantic Coast Pipeline (ACP) by an almost two-to-one margin over those who oppose it, according to a poll released by the Consumer Energy Alliance (CEA) today. Fifty-four percent support the controversial project strongly or somewhat, while 31% oppose it.

Eighty-three percent of voters say they consider “energy issues” to be very or somewhat important in the upcoming gubernatorial election. Forty-eight percent say that are more likely to support a candidate who “favors more infrastructure projects like the Atlantic Coast Pipeline” while 27% say they would more likely prefer a candidate opposed to the pipeline.

The poll of 500 Virginia voters was commissioned by the CEA, a non-profit, non-partisan trade association for the purpose of “providing reliable, affordable energy for consumers.” The organization strongly supports the pipeline. Dominion Energy, the managing partner of the ACP, is a member. (See the questions and results of the Virginia polling here.)

Clearly, the results are favorable to the ACP, which has encountered stiff resistance from environmentalists and landowners along the pipeline route. In rolling out the poll to the media, CEA made no secret of the fact that the timing is designed to stiffen the backs of gubernatorial candidates who favor the project. Tom Perriello has made opposition to the pipeline a major issue in a tightly contested race for the Democratic Party nomination against Lieutenant Governor Ralph Northam.

In past posts I have noted biases, both pro and con, in polls that framed questions to elicit answers from respondents that their sponsors were looking for. This poll shows no obvious sign of such of bias. Here are the two key questions:

I’d like to talk now about energy issues. Have you heard or read anything about a proposed natural gas pipeline from West Virginia to public utilities in Virginia and North Carolina, or is that not something you have heard or read about?

And:

As you may know, there is a proposal to build a 600-mile Atlantic Coast Pipeline to bring natural gas from West Virginia to public utilities in Virginia and North Carolina. Do you strongly support, somewhat support, somewhat oppose or strongly oppose building the Atlantic Coast Pipeline?

The polling sample seems reasonably representative of the Virginia population: 74% white, 16% black, 36% Democrat, 27% Republican, 23% conservative, 16% liberal. The margin of error due to sample size is +/-4.4%. The polls results do not provide a geographic breakdown.

While supporting the ACP, voters gave even stronger endorsement of “renewable energy projects, such as solar and wind power” — with 69% strongly in favor, and 20% somewhat in factor. Weaker majorities favored expanding offshore oil and gas drilling in U.S. waters, and generating electricity using coal-fired plants.

Dominion has been criticized for its influence in state politics during this campaign season. Another questions asked: “As you may know, Dominion is one of the companies that has proposed the Atlantic Coast Pipeline.” Seventy-eight percent said that Dominion’s involvement would have no influence on their support, either way. Ten percent responded they would be more likely to back the pipeline; 8% said they would be more likely to oppose it.

Remarkably, despite intensive media coverage of the pipeline controversy, 47% of respondents replied that they had not heard of the ACP.

Retrofitting Alexandria: Another Office-to-Residential Conversion

This Stovall Street property within Alexandria’s Hoffman Town Center is due for a makeover, says the Washington Business Journal.

Washington, D.C.-based Perseus Realty has contracted to acquire a six-acre site in Alexandria’s Hoffman Town Center with plans to convert an obsolete, 610,000-square-foot building into a residential-dominated mixed-use project. Reports the Washington Business Journal:

The effort, if approved, will entail the addition of 25,000 square feet of ground-floor retail, conversion of two lower floors into parking and the construction of upper floor additions that raise the building’s height from 150 to 200 feet. Perseus representatives were not immediately available for comment. It is unclear how many units the building might include when complete. …

The Perseus project comes as Alexandria considers whether, and how, to encourage additional office-to-residential conversions. In Eisenhower East, for example, a 2003 small area plan sought a 50-50 split between commercial and residential. But now, city staff and the Alexandria Economic Development Partnership are of the belief that for the community to thrive, it will need 2 to 3 times more residential than office.

Conversions have had a net positive fiscal impact for the city, generated significant private investment, and changed obsolete office buildings to a “higher and better use,” according to a report produced by AEDP, city staff and consultant TischlerBise. These projects take excess office space off the market and shield aging office buildings “from potential years of high vacancy, special servicing, or foreclosure.” …

There is a downside to conversions, in that residential requires far more city services than office. According to the study, for every dollar of tax revenue generated by an Alexandria multifamily project, 38 cents are needed to support that project with government services while 62 cents are available for general budget use. With office, only 12 cents on the dollar are needed for services and 88 cents are available to the general fund.

Bacon’s bottom line: It looks like office-to-residential conversions are the next big thing in real estate development. I’ve blogged about the trend in downtown Richmond and Norfolk, and it should be no surprise that it’s happening in Alexandria, too.

As the WBJ article pointed out, the conversions address two problems. First, they find a new use for aging and obsolete commercial structures with prime locations. Second, they create new housing stock for growing populations. While apartment buildings are not as “profitable” for localities as office buildings — they generate a smaller surplus of revenue over costs — they are hugely beneficial from a Northern Virginia regional perspective. The alternative would be to build more green-field housing on the metropolitan fringe, requiring investment in new roads, water, sewer, sidewalks, etc, as well as the transportation infrastructure to move workers from exurban bedroom communities to urban job centers.

Judging by the article, the City of Alexandria has made the calculation that office-to-apartment conversions pencil out profitably. The infrastructure is already in place. And tax revenues even cover the cost of education.

Every urban locality in Virginia has large tracts of land zoned decades ago for commercial and retail uses. The rise of Internet commerce is demolishing the retail sector, especially big boxes and department stores, and the demand for office space is shrinking as corporations rationalize the excessive use of office space. (Although I must note a possible counter-current in IBM’s recent announcement that it was calling thousands of work-at-home employees back into the office.)

Localities that figure out how to retrofit aging and obsolete retail strips and office parks into vibrant, mixed-use communities will prosper in the years ahead. Those who dither will be left behind.

Why Panda Power Loves Natural Gas

Bechtel, which helped build the Stonewall station, used a 500-tire trailer the length of a football field — to deliver manufactured components to the construction site.

Yesterday I wrote about the 778-megawatt gas-fired Panda Stonewall power station starting up near Leesburg. Against the backdrop of ongoing debate over gas versus solar here in Virginia, I wondered why the Dallas, Tex., investors behind the plant were willing to risk more than half a billion dollars in equity and debt on a merchant generating facility that would sell into the wholesale electricity market.

How did these newcomers to the Virginia energy scene see the future of electricity? Aren’t they worried that solar energy will displace gas in a few years as the price of solar continues to drop and the cost of natural gas is expected to rise? Aren’t they worried their big investment will be rendered valueless? Remember, Panda has zero political influence in Richmond, and the company can’t go running to the State Corporation Commission to bail it out if the bet on natural gas goes sour.

Bill Pentak, vice president of public affairs, says Panda Power Funds owns both gas and solar facilities. “We understand solar,” he says. “We built the largest solar project in the northeastern United States, covering 100 acres in southern New Jersey.”

Panda Power Funds will invest in projects that make economic sense, Pentak says, and right now the economics tend to favor natural gas. Take that New Jersey solar facility — it produces 20 megawatts of electricity. “That’s gross. But you’ve got to convert [the electricity] from DC power to AC. You lose 10 percent in the conversion. In the real world, it produces 18 megawatts.”

Then there’s the land use to consider, he says. Solar requires lots of acreage, and it takes up land that has alternative economic uses such as farming. The Stonewall plant takes up a fraction of the space and produces far more energy — 62 times as much on one fifth the land.

Then factor in solar’s intermittent production. Solar does not generate electricity at night, and it fluctuates during the day. The more solar installed, the more gas is needed as a backup. Says Pentak:

If you have ton of solar or wind on your grid, you make it less stable. If the wind dies down or the sun stops shining, the grid operator will have to call upon power that can be quickly dispatched. It won’t be coal fired, which takes three days to ramp up. It won’ t be nuclear, which takes three weeks. All that’s left is natural gas. A combined-cycle plant can cycle up in an hour and a half. A combustion turbine can in 30 to 40 minutes.

Thus, gas will be needed both as a base-load energy source and a back-up energy source. “We think Stonewall will operate as a base-load plant,” he says. But technology has blurred the distinction between peak load, intermediate load and base-load. Combined cycle plants — which generate electricity with gas-burning turbines and recycle the waste heat to run steam turbines — can operate as a base-load power source if need be, and also can dial output up and down as required.

Battery technology is not at the point where batteries can store enough energy to meet large-scale power needs, Pentak says. Moreover, batteries are not environmentally friendly. “Where do you put spent batteries? Solar technology is promising, but it’s not there yet.”

Running in Neutral: a K-12 and Higher Ed Scandal

If a student hasn’t graduated from college within six years, the odds of completing a degree are extremely low.

In this month’s issue of Atlantic, Nick Ehrmann writes a perceptive article, “Solving the Mystery of Underachievement: Why work hard enough to earn an A when a D will suffice for college admission?” He tells the story of an intelligent African-American lad who was groomed to attend college — and ended up dropping out after the first semester. The article goes to the heart of one of the most pressing issues in American higher education today: the high rate of college drop-outs.

Literally millions of young Americans, disproportionately minorities, borrow money, attend a few semesters, and then drop out, never acquiring the college credential that will allow them to pay off their debt. A primary goal of Virginia higher education policy today is to reduce the number of these college drop-outs, who are all-too-prevalent in the state, as elsewhere in the country. The “retention” rate is a key metric used to measure the performance of Virginia’s public colleges and universities. (See the chart above.)

In my commentaries on the subject, I have assumed that dropping out of college could be explained by one of two factors: (1) poverty, or (2) lack of academic preparedness. True enough, poor kids can qualify for tens of thousands of dollars Pell grants, federal loans and institutional financial aid. But that assistance rarely covers all costs, and students from lower-income families typically have to work part-time jobs, or even drop out for a semester or two to find the extra money. Once a student drops out, he or she is at higher risk of never re-enrolling. The other problem is that lower-income kids tend to come from lower-income neighborhoods, which tend to have poorer schools. The inadequate academic preparation makes it difficult to keep up with college-level work. Discouraged and demoralized, students question what they’re doing in college at all.

Ehrmann’s article suggests a third reason why kids drop out of college — the phenomenon of “running in neutral.” The article, I believe, is so important that I will summarize its contents in detail, highlighting what I deem to be key insights. But don’t settle for the Bacon’s Digest version — read the full essay yourself.

Enrollment in higher education is reaching record-high levels, just a hair below 70% of all high school graduates. But being “eligible” for higher education does not mean that students are academically prepared, writes Ehrmann. He knows from first-hand experience teaching kids in Washington, D.C. He mentored one young man, Travis Hill, who showed flashes of brilliance, and kept tabs on him through the years.

In the fifth grade, Travis was admitted into a scholarship program through the “I Have a Dream” Foundation, which guaranteed that any participating student who graduated from high school would receive a college scholarship. The idea was that removing financial obstacles to college enrollment would encourage students to achieve. “Travis, like many of his classmates,” writes Ehrmann, believed there was ‘no doubt’ he would graduate from high school and enroll in college. He did graduate, and he did enroll in Lincoln University, a historically black university in Pennsylvania. But he dropped out after a semester. Why?

In Ehrmann’s view, there are two schools of thought. One is the “culture of poverty” theory in which “low-effort syndrome” or cultural adaptations like a prejudice against “acting white” prevent young people from living up to their potential. The other is the “structural barriers” theory that emphasizes how poverty, institutional racism, segregation and lack of adequate health care stack the deck against poor, minority students.

Writes Ehrmann:

The problem is that neither story is completely right. Over the course of a decade … I witnessed a significant number of students develop a sophisticated logic of underachievement that challenged the popular accounts for how inequality in higher education is created and sustained. For many students, their pursuit of long-term educational success was grounded and strategic. Educated in environments that measured academic success primarily by enrolling in college — not necessarily graduating with a degree — they developed strategies to achieve that goal with minimal effort in school.

Travis made no effort to make As and Bs. To the contrary, he skated by with the minimum passing grades. “Doesn’t matter,” he said. “I work hard when I want to work hard, and that’s what a lot of people can’t do. Some people might not look at it as a skill, but to me it’s a skill.”

That message was inadvertently reinforced from other directions. During his freshman and sophomore years on overnight campus trips sponsored by his high school’s college-placement office, Travis learned that “a couple hundred” colleges and universities across the United States would offer him admission. “Everyone was telling me I could get into college with my grades,” he confided. “I don’t remember exactly how or when I heard it, but that message was seeping into my brain. If I got straight Cs, admissions would be a breeze.”

Every marking period, Travis let his grades slip, When midterm grades were sent home, his grades were typically Cs, Ds and Fs. His mother and stepfather got on his case, and he promised to get his act together. In the final weeks of the term, he approached his teachers one by one and exhibited greater effort in class. His strategem: “Just go to the teacher and act like you care.” Continue reading

Dominion Urges Citizens to Report Suspicious Activity

PG&E’s Metcalf substation, where a sniper attack knocked out 17 transformers. Photo credit: Wall Street Journal

Dominion Energy issued an unusual press release a couple of days ago, urging customers to “report suspicious activity.”

“Suspicious activity includes anything from someone recording or monitoring Dominion Energy facilities to someone who doesn’t seem like they belong in a certain area or is behaving strangely,” said Marc Gaudette, Director of Corporate Security, Safety and Health. “What may seem like a small piece of information could be the missing piece of the puzzle that law enforcement needs to prevent an unexpected event.”

Bacon’s bottom line: Dominion, like other electric utilities, finds itself in a difficult situation. On the one hand, it is rightfully concerned about the threats to the integrity of the electric grid at the hands of terrorists or other saboteurs. The electric power industry has been on hyper alert ever since a 2014 sniper attack on Pacific Gas & Electric’s Metcalf Transmission Substation, which severely damaged 17 transformers and forced the utility to reroute electric power in order to avoid blackouts. The situation is all the more urgent for Dominion, which has shut down two of three of its Yorktown Power Stations, leaving the Virginia Peninsula more vulnerable than usual to blackouts should an accident knock out a transmission line on a hot-weather day with elevated electricity demand.

Dominion cannot survey every substation or every mile of transmission line 24/7, and it makes sense to call upon the public if someone sees something suspicious. As the press release states: “”Think security and safety… If you spot something suspicious, speak up. … Act as our eyes and ears and report any suspicious activity near a Dominion Energy facility by calling 1-800-684-8486. Of course, in an emergency you should always call 911.”

Dominion’s problem is that it can’t get too specific about what to look out for. For one, the utility doesn’t want to generate unnecessary public alarm by exaggerating the threat. Even more important, the company doesn’t want to tip the hand of any potential bad guys by getting too specific about what to look for, thus revealing potential vulnerabilities.

The result of these conflicting imperatives leaves people unclear about what exactly they should be looking for. But a half-informed citizenry is preferable to a totally uninformed citizenry. And, given the stakes involved, false alarms are preferable to no alarms. I live near an electric transmission line and substation, which I routinely ignore. Now, I’ll be keeping an eye out for… whatever…. I’m not quite sure. But better safe than sorry.

Panda Stonewall Gas Plant Starts Cranking out 778 Megwatts

Aerial view of the Panda Stonewall facility in Loudoun County.

Aerial view of the Panda Stonewall facility in Loudoun County.

Panda Power Funds has commenced commercial operations at its 778-megawatt “Stonewall” combined-cycle, natural gas-fired power plant near Leesburg. The plant is capable of providing the electric power needs of up to 778,000 homes in the Washington metropolitan area, the company announced in a press release yesterday.

“Panda Stonewall is one of the newest, cleanest and most efficient natural gas-fueled power plants in the United States,” said Todd W. Carter, CEO and senior partner of Dallas, Tex.-based Panda Power Funds.

Panda estimated that the project will inject $7.1 billion into Virginia’s economy during the construction phase and first 10 years of operation. The Bechtel Corp./Siemens Energy Inc. consortium employed 700 people at peak construction. The plant employs 27 full-time employees to oversee operations and maintenance of the facility.

The Stonewall project is Panda’s sixth built in a three-year period. The Stonewall facility raised debt capital of approximately $570 million. Panda Power Funds supplied equity capital along with large institutional co-investors, including Siemens Financial Services. Said Kirk Edelman, Global Head of Energy Finance at Siemens Financial Services: “Our investment underscores Siemens’ strong commitment to supporting projects that deliver cleaner, more environmentally-friendly and sustainable energy.”

The plant, located four miles southeast of Leesburg, will use reclaimed water from the town to cool the facility.

The press release did not say who Panda Stonewall will sell electricity to, noting only that the plant is located in “one of the fastest growing metropolitan areas of the United States.” The company quoted the George Mason Center for Regional Analysis as saying that the metro region is projected to add more than 410,000 new households by 2023 as a result of job growth. In addition, “Loudoun County, dubbed ‘Data Center Alley,’ hosts the largest concentration of data centers in the world. More than 70 percent of the world’s Internet traffic flows through the County on a daily basis.”

Panda Stonewall will be able to draw upon gas from either Dominion Energy or Columbia Gas, both of which pass through the plant site. The plant connects to the grid through an existing Dominion 230 kV electric transmission line that connects the Pleasant View and Brambleton sub-stations.

Bacon’s bottom line: The press release does not say who will purchase Panda Stonewall’s electricity, but it seems reasonable to infer that the plant will sell into the PJM Interconnection wholesale market. As a combined-cycle facility, Stonewall will be a base-load facility, not a peaking facility. Panda Power would not have made the investment unless it was confident that it could displace older, more expensive electricity sources serving the Washington metro market.

While a power plant theoretically can serve markets anywhere — power companies don’t control where their electrons flow — the shape of the electric transmission grid creates choke points, which get incorporated into the price charged to electricity consumers. I don’t know what the electric transmission grid looks like in the Washington metro area, but I would conjecture that Panda views the location on the metropolitan fringe as a competitive advantage for Stonewall over electricity wheeled in from greater distances. Additionally, the incorporation of state-of-the-art technology will make the plant more efficient than coal-fired plants and even older gas-fired plants.

Reading between the lines, it appears that Panda thinks the power plant will pay for itself and generate a profitable return over a relatively short time line — 10 years. Why do I say that? Because the press release calculates the plant’s economic impact over a 10-year period. Admittedly, that is pure surmise and needs to be confirmed by the company. But if I am correct, it says a lot about the competitive advantage of natural gas as an electric energy source in the near- to mid-term future. Even if electric utilities in the Washington metro area — Dominion, Potomac Electric Power Co., and the electric cooperatives — begin building solar energy on a large scale, merchant generators like Panda calculate that either (a) they can pay off their investment and generate a competitive return within 10 years, (b) they can continue continue selling electricity profitably beyond the 10-year horizon, or (c) some combination of the two.

Update: Panda spokesman Bill Pentak says there is no connection between the 10-year time frame of its economic-impact analysis and the company’s financial payback model. Additionally, he said that the $7.1 billion estimate of impact includes the multiplier effect of dollars circulating in the local economy.

Marriage, Fertility and Male Earnings

North Dakota fracking: higher male incomes did not translate into higher rates of marriage.

One of the great debates in the social science of poverty asks what accounts for the decline in marriage and the increase in out-of-wedlock births. There is a broad consensus among scholars of diverse ideological persuasions that children born into stable marriages tend to fare better in life than those raised by single mothers. The question is why the institution of marriage has declined so precipitously among lower-income Americans even while it remains strong and vibrant among affluent Americans.

In a new paper, “Male Earnings, Marriageable Men, and Nonmartial Fertility: Evidence from the Fracking Boom,” Melisa S. Kearney and Riley Wilson frame the issue this way:

In 2014, over 40 percent of all births in the U.S. were to an unmarried mother, with an even higher rate of 62 percent among non-college educated mothers. A leading conjecture as to why so many less-educated women are choosing motherhood without marriage points to the weak economic prospects of their male partners. The idea is that changing labor market structures and economic conditions have adversely affected the economic prospects of less educated men, making them less “marriageable” from the perspective of the women with whom they sexually partner.

Kearney and Wilson have flipped that conjecture around and hypothesize that improving earnings prospects by non-college educated males would be associated with an increase in marriage and marital childbirth. They tested that hypothesis by examining family formation between 1997 and 2012 in Census micro-areas experiencing a natural gas fracking boom, where non-college educated males experienced a jump in earnings compared to their peers in the rest of the country.

The result: “This analysis does not indicate shift toward marriage in response to an increase in the potential wages of less-educated men associated with localized fracking booms. But both marital and non-marital births increase significantly.”

The authors compared the fracking boom of the 2000s to the Appalachian coal boom of the 1970s and 1980s. Back then, in a different cultural era, increased earnings led to an increase in marriage rates, an increase in the marital birth rate, and a decline in the non-marital birth rate.”

In other words, the conjecture linking men’s income with their marriage prospects may have been valid 4o years ago, but it’s less valid today. Write Kearney and Wilson: “As non-martial births have become increasingly common, individuals are more likely to respond to increased income with increased fertility, whether or not they are married, and not necessarily an increased likelihood of marriage.”

Bacon’s bottom line: The interplay of economics and culture is incredibly complex. But the findings suggest that among a large portion of the American population, marriage is increasingly viewed as optional — regardless of the father’s economic circumstances. Further, out-of-wedlock birth is no longer stigmatized. This research calls into question the idea that blue-collar male earnings are the main stumbling block to family stability. We have passed a cultural Rubicon, and there may be no going back without a major change in values.

New Energy in Downtown Norfolk

Hilton Norfolk the Main. The Bacon family stayed here during my dad’s funeral. We had other priorities at the time than hitting the rooftop bar. But we may be back!

Hampton Roads may be stuck in the economic doldrums, lagging the state and national economic growth rate over the past decade, but considerable change — positive change — has been taking place under the surface. Spurred by booming residential development, the city of Norfolk’s downtown is looking more vibrant than any time I remember seeing it.

My impression of downtown Norfolk was shaped in the summer in 1973 when I interned with the Virginian-Pilot as a college student. I would venture across Brambleton Ave. to buy lunch at a sandwich shop whose name I can no longer recall — great Italian hoagies, though — and would stroll down Granby Street, fascinated by the gin joints and titty bars catering to sailors and merchant seamen. The words that come to mind are sleazy and dilapidated. Norfolk was still an important regional finance center, so people were willing to work downtown, but no one, other than homeless people, would dream of living there.

Over the succeeding decades, city authorities pumped millions of dollars into urban revitalization projects of varying merit. The Waterside retail development. Hotels and conference centers. Nauticus. MacArthur Mall. The cruise ship terminal. And probably a lot more that I can’t recall offhand. It was an uphill battle as downtown retail collapsed, the local banking industry was absorbed by out-of-state giants, and, other than the location of the Norfolk Southern headquarters, the private sector showed few signs of vitality.

But something happened the past few years while I wasn’t paying close attention. Downtown residential is hot. Drive down Boush Street, and you’ll see wall-to-wall townhouses and apartment buildings for blocks on end. A major bank tower is being converted from commercial to residential. And Hilton’s Norfolk the Main hotel has just opened an amazing new facility. I’m sure there’s a lot more going on that I’m not aware of. But downtown appears to be developing a great restaurant scene, and I expect it is experiencing a revival of small-scale retail and service businesses catering to the growing residential population.

Downtown Norfolk has several assets. It has inherited a grid street system, a wealth of pre-20th century architecture and a mix of office, retail and residential development. It has cultural amenities such as the MacArthur Museum and the Chrysler Museum (just outside of downtown). And it has a fantastic working waterfront.

Before my dad passed a month ago, he and my stepmom lived in a high-rise senior living facility on the waterfront just a few blocks from downtown. From the 12th floor, they enjoyed a panoramic view of the Elizabeth River with its port cranes, shipbuilding docks and all manner of vessels chugging up and down the waterway.  My dad would stand out on the balcony with his telescope and inspect every inch of the landscape. The view isn’t anything you would call beautiful, but it is mesmerizing — there is so much going on. It never gets dull.

I haven’t spent enough time in Norfolk to get a keen sense of what is happening downtown. Who is moving into all these apartments and condos — Millennials or old guys? Are there a lot of start-ups forming? Is an ecosystem of innovation taking root? Is the changing look of downtown an impressive but economically sterile trend, or does it portend a wave of entrepreneurial energy? I can’t say. What I can tell you is that Norfolk is not stagnating. It is changing. It is reinventing itself. And I can’t help but think that’s a good thing.

What Virginia Can Learn from GE’s Relocation to Boston

My apologies if I sound like a broken record, but clearly there are people who still don’t get the message. So, here I go again… Today’s Wall Street Journal interviews GE’s chief financial officer, Jeffrey Bornstein, on how the move of the conglomerate’s headquarters from suburban Connecticut to Boston is working out.

I reproduce select quotes from Bornstein below. As you read them, keep in mind the chart to the left. Richmond ranks 6th among the top ten markets in the country with the highest concentrations of millennials as a percentage of the urban population. Think about where walkable, mixed-use urban development is occurring in the metropolitan region, and where it is not occurring. (Hint, almost all of it is occurring in the city of Richmond and almost none of it in Henrico, Chesterfield or Hanover counties.)

There were moments in the past when we really asked ourselves whether Connecticut made sense for the company. There wasn’t a huge ecosystem around the company. We lived on a very beautiful property in Fairfield, but very isolated. Attracting talent there was a bit of a challenge. For younger folks maybe not the most dynamic place in the world. …

There are upward of 500,000 kids who go to school—undergrad and graduate school, doctorate—every day here in greater Boston. …

There definitely is an innate culture and tactical depth and talent here. It lends itself to these kind of entrepreneurial endeavors. The universities here, whether it’s MIT, Northeastern, Harvard, you name it…the proximity allows us to build even deeper relationships with these institutions. …

If you saw where we were in Fairfield County, it was a morgue. Very little activity. I hated it. Even in our temporary space, the offices are open. There’s a lot more interaction. You aren’t calling people who are four offices away. You can get up and go, and physically grab the folks. We’re translating those experiences to the new facility. It will be very modern, green and open. …

Millennials, this is the kind of environment they want to work in. They don’t want to work in the environment that was paneled walls, and, based on your level in the company, you could count the ceiling tiles and that determined the size of your office. That’s the world of the ’70s, ’80s, maybe the early ’90s. Young talent today want to be in a vibrant, open, interactive, high-tech, fun kind of space. That’s how we thought about design in the new facility. …

From the get-go we knew we wanted to be in a place that was vibrant and entrepreneurial, where you could walk out your door enriched by your environment and your ecosystem. I can walk out my door and visit four startups. In Fairfield, I couldn’t even walk out my door and get a sandwich. We knew we wanted to be in a more urban environment where we could actually participate in the ecosystem and be smarter and more aware as a result.

(Hat tip: Chris Spencer.)

McAuliffe Moves to Cap Utility Carbon Emissions

Governor Terry McAuliffe. Photo credit: Associated Press

Big news yesterday: Governor Terry McAuliffe issued an executive order to cap greenhouse gas emissions from Virginia power plants. Unfortunately, I’m out of town on personal business today, so I don’t have time for anything more than a cursory analysis.

Said McAuliffe in a press release: ““The threat of climate change is real, and we have a shared responsibility to confront it. Once approved, this regulation will reduce carbon dioxide emissions from the Commonwealth’s power plants and give rise to the next generation of energy jobs. As the federal government abdicates its role on this important issue, it is critical for states to fill the void. Beginning today, Virginia will lead the way to cut carbon and lean in on the clean energy future.”

McAuliffe’s press release cited the job-creation benefits that would come from a shift from fossil fuels to solar energy. Last year, as solar production took off in Virginia, the solar industry employed 3,236 workers — twice the number supported by coal. McAuliffe said also invoked sea level rise to justify his move:

Virginia is already experiencing the effects of climate change in its coastal regions due to rising sea levels. The threat from frequent storm surges and flooding could cost the Commonwealth close to $100 billion dollars for residential property alone. The impacts extend far beyond our coast, as half of Virginia’s counties face increased risk of water shortages by 2050 resulting from climate-related weather shifts.

The action now moves to the Department of Environmental Quality, which the governor ordered to write the regulations.

Bacon’s bottom line: McAuliffe’s move will generate headlines and plenty of political heat — Republicans have already announced their opposition to what they call the governor’s executive overreach — but it’s far from clear what practical impact the move will have. Acknowledging that the cost of solar energy has plummeted, Dominion Energy and Appalachian Power already have forecast that they will move heavily toward renewable energy sources over the next 25 years.

The press release spoke of a “cap” on greenhouse gases and new regulations that will “reduce” carbon emissions — not merely reduce carbon intensity (carbon dioxide emitted per kilowatt of energy produced). It is possible to reduce the carbon intensity of the electric generating fleet while allowing total carbon emissions to increase, albeit it at a much slower rate, as the economy grows. If Virginia caps carbon emissions, Dominion and Apco might be required to close additional coal-fired power stations, and it is unlikely that Dominion would build a planned gas-fired power plant in the early 2020s. Cancellation of that facility could undermine the economics of the proposed Atlantic Coast Pipeline, construction of which McAuliffe has said he supports.

Expect trench warfare between utilities, environmentalists and consumer advocates in the DEQ hearings discussing how to implement the carbon caps. Also expect General Assembly Republicans to challenge McAuliffe’s legal authority to implement a cap.

Update: Apco spokesman John Shepelwich submits the following correction: “Appalachian Power no longer operates any coal-fueled power generation in Virginia and has not since 2015. Two of the three units of our Clinch River Plant in Russell County were converted from coal to natural gas; that plant is scheduled to be retired in 2026.”