Tag Archives: James A. Bacon

The Politicization of Energy Regulation in Virginia

Photo credit: Richmond Times-Dispatch

Earlier this week the Richmond Times-Dispatch published an in-depth series tracing the history of the relationship between Dominion Energy, the General Assembly and the State Corporation Commission over the past twenty years. Michael Martz and Robert Zullo conducted dozens of interviews and reconstructed the complex history of electric utility oversight during a tumultuous period that saw a shift from regulation to deregulation, then back again.

The main thesis of the first article is that the relationship between the regulated and the regulators fundamentally changed around 1995. Until that time, the Virginia Electric & Power Co. (known as VEPCO) had its own board of directors and operated with considerable independence. Parent company Dominion amounted to little more than a holding company for the utility, which comprised 90% of its assets. But in a titanic boardroom struggle, which the Times-Dispatch recounts in great detail, Dominion CEO Thomas Capps ousted VEPCO President James T. Rhodes Jr. In the years that followed, Dominion acquired the Consolidated Natural Gas Co. in a $8.3 billion deal, transforming Dominion into a multi-state energy giant, dissolved the VEPCO board, and stepped up its involvement in Virginia politics and policy through its lobbying efforts and campaign contributions.

The second article chronicles the shift from regulation to deregulation and then, when experiments with deregulation around the country appeared to be failing, back to regulation — under the guidance of Dominion each step of the way. The end result of 20 years of legislative tinkering, the Times-Dispatch argues, was weaker oversight by the SCC, which Dominion cannot influence politically, and greater involvement of the General Assembly, which Dominion can influence. The culmination of this decades-long process was 2015 legislation that froze electric rates in response to uncertainty created by the unveiling of the Environmental Protection Agency’s Clean Power Plan and the locking in of what one SCC judge estimates will be $1 billion in excess profits over seven years.

In the final piece, the Times-Dispatch suggests that Dominion’s grip on Virginia politics may be loosening. The 2015 rate freeze has come under heavy fire for its proposal to build the Atlantic Coast Pipeline, its construction of unpopular transmission lines, its plans for disposing of coal ash, and the pace with which it is adopting renewable energy sources. Not since the 1970s when the old VEPCO was experiencing massive cost overruns and rate increases has the utility found itself embroiled in so much controversy.

Regarding the big picture, the Times-Dispatch makes an important point: The General Assembly has become increasingly assertive in defining Virginia energy policy, and in so doing, it has whittled down SCC power. Whether this was Dominion’s doing or the General Assembly’s, however, is less clear. The series describes how SCC Judge Hullihen Moore alienated many lawmakers by appearing before a House of Delegates committee and lectured them in a tone that many found condescending. That action adversely affected relations with key legislators and staff for a number of years.

The Times-Dispatch overlooked opportunities to describe other examples of lawmaker assertiveness. Especially noteworthy were laws initiated by Southwest Virginia legislators to spur economic development by creating favorable regulatory treatment to Dominion for building its $1.8 billion Hybrid Energy Center in Wise County and, in an encore, for building a proposed $2 billion pumped-storage facility in the region. The hybrid-energy plant, which burns coal, coal waste and wood, has a generating capacity of 600 megawatts. By way of comparison, the recently constructed Brunswick Power Station, which cost $1 billion, has a capacity of 1,358 megawatts. The two projects are not directly comparable because the hybrid energy center burns coal waste, which reduces an environmental hazard. But the fact remains that on a cost-per-megawatt capacity basis, the Hybrid Energy Center was four times as expensive — economic development for the coalfields courtesy of Dominion rate payers in eastern Virginia.

Similarly, responding to incentives created by the General Assembly, Dominion is giving serious consideration to a $2 billion pumped-storage project in Tazewell County that would have a capacity of 850 megawatts. These two cases appear to be driven by old-fashioned pork barrel politics: Southwest Virginia legislators stacked the regulatory deck to induce Dominion to invest in their economically depressed region regardless of the cost to Dominion rate payers.

The 2015 rate freeze has a very different background. That legislation arose in response to the Obama administration’s Clean Power Plan. Several years previously, the Obama EPA had pushed through tough restrictions on mercury and other toxic emissions, which forced Dominion to shutter several coal-fired units, and lawmakers were concerned that the Clean Power Plan could have a comparable impact. In an early estimate, Dominion said that write-offs on four coal-fired power plants could reach $2.1 billion, while the SCC estimated that ratepayers could be stuck with $5.5 billion to $6 billion to replace the lost capacity with new electric generating facilities. Governor Terry McAuliffe was so worried that he personally lobbied EPA chief Gina McCarthy to modify Virginia’s CO2 emission targets.

Nobody knew the cost for sure because the Clean Power Plan gave states several options for curtailing their CO2 emissions, and the final cost would depend largely upon which option the McAuliffe administration selected. Adding to the uncertainty, the plan faced legal challenges on constitutional grounds, and there was always the possibility, seemingly remote at the time, that a Republican might be elected president in 2016 and reverse the plan. The potential cost of compliance was a moving target, ranging from nothing to multiple billions of dollars.

The Times-Dispatch series did a fine job of summing up the political controversy that arose after the long-shot election of President Trump. If Trump was determined to scrap the Clean Power Plan, some legislators argued, what justification was there for a rate freeze any more? But the articles did little to illuminate the context that faced lawmakers and the McAuliffe administration when they negotiated the freeze. As should surprise no one, a lot of sausage-making went into the 2015 deal.

The law froze the base rates for Virginia’s electric utilities. Base rates, which cover mainly operating expenses, account for about half the total retail cost of electricity. They do not cover adjustments for volatile fuel prices, nor do they include “riders,” which are rate adjustments to cover the cost of specific projects such as new generating plants, new transmission lines, or underground burial of distribution lines.

During negotiations over the rate freeze, Dominion agreed to several concessions of value to McAuliffe. The utility promised to spend an estimated $25 million over five years on weatherization programs for the poor. The law declared it in the public interest to build 500 megawatts of utility-scale solar power. And the utility agreed not to collect an $85 million fuel cost increases from 2014. The law also gave GOP legislators something they wanted: a requirement that Dominion could not close a coal-fired power plant without first obtaining SCC authorization.

The law froze base rates and exempted electric utilities from biennial rate reviews for seven years. While the company had a chance of accumulating substantial excess profits, it shouldered several major risks: not just the risk of some $2 billion write-downs if it was forced to close coal-fired units but eating the clean-up cost from hurricanes and other natural disasters, which strike on average every three or four years. Unrecognized at the time, the company also took on the risk of closing its coal ash ponds under an EPA ruling that would be issued a half year later. Dominion has had to eat some $400 million in coal-ash expense, only some of which it has been able to pass on to rate payers. That liability could skyrocket if state regulators make the company bury the coal-combustion residue in landfills rather than cap it in place.

In sum, when the law went into force in mid-2015, there were a wide range of potential incomes for Dominion. If everything went perfectly, the company could make out like a bandit. If it had to take big write-offs, it could lose big time. In either case, rate payers were insulated from the uncertainty and guaranteed stable base rates.

It is only in retrospect, with the election of President Trump and his decision to kill the Clean Power Plan, that some have concluded that Dominion robbed the bank. SCC staff has calculated that Dominion earned between $133 million and $176 million in excess profits in 2015 and 2016, which it would have had to return to rate payers were it not for the rate freeze. (The sum would have been far larger had Dominion not incurred $174 million in coal ash clean-up costs.) Dominion disputes the accounting behind those numbers, but concedes that the company is probably ahead thanks to the freeze… at this moment in time. But the freeze has several years to run, and the company is still exposed to significant risk. Even the prospect of coal plant write-downs has not entirely disappeared. The McAuliffe administration is working on its own CO2 regulatory plan, the impact of which at this time is unknown.

The Times-Dispatch series could have benefited from some of this context. Zullo’s article leaves a strong impression that Dominion’s campaign contributions and political clout won it a sweet deal with the rate-freeze law. The picture is more complicated than portrayed. While critics say Dominion could rake in an extra $1 billion thanks to the rate freeze, at the time the deal was struck the company was exposed to $2 billion in write-downs, potentially hundreds of millions more for weather disasters, and potentially hundreds of millions of more for coal-ash disposal, a risk it had not even identified at the time.

For purposes of argument, let’s assume that the state CO2 regulations will be toothless and that Dominion’s write-off risk evaporates. Does that justify undoing the freeze, as some legislators have proposed? In effect, Dominion’s critics want a heads-I-win, tails-you-lose proposition. If the deal had worked out badly for the utility, would anyone be clamoring to let it off the hook? Not very likely. The critics only want out now that it appears that Dominion might — not will, but might — come out ahead.

That said, Martz and Zullo highlight an important trend that has gone largely unnoticed in all the reportage and commentary about Virginia’s electric power industry. The General Assembly has asserted ever greater authority over the industry recent years. The SCC still is influential — electric utilities still must win SCC approval for major capital expenditures such as new power plants and transmission lines. But the General Assembly has hemmed in the SCC’s latitude for decision-making by declaring everything from hybrid energy centers and pump-storage facilities to solar power generation to be in the “public interest.”

As long as legislators view utility investments as economic-development plums, as long as environmentalists and their allies seek to re-engineer the electric grid around renewable energy, and as long as the federal government feels free to dictate energy policy to the states, the politicization of the energy sector in Virginia is probably inevitable. Between its lobbying team and campaign contributions, there is no denying that Dominion exercises immense clout in state politics. But it’s not the steamroller that critics say it is.

Innovation in the Business of Higher Education

Virginia universities shared business best practices today at Virginia Commonwealth University with the hope of finding ways to shave costs and improve the student experience. 

George Mason University expects to save $3 million over the life of a five-year contract by outsourcing its printing operations to an outside vendor, defaulting to black-and-white print over color, and printing on both sides of the paper.

Universities make huge investments in parking lots and parking decks like this one at the University of Virginia. Today’s students are less car-centric than previous generations, and parking permit revenue has been falling. UVa has turned to metered parking to provide more convenience and recoup revenue.

The University of Virginia expects to generate $300,000 extra in parking revenue this year by shifting from the traditional arrangement, in which students purchase year-long parking passes for a space in a particular lot, to a system of metered parking that provides more flexibility as to where and when students park.

Virginia Commonwealth University doesn’t expect to save money from its Beyond Orientation program, an online orientation program for student’s parents and family members, but the university does hope to increase parental engagement in a low-cost way. When parents feel more comfortable navigating the university bureaucracy, they can provide more support for their kids, which bolsters the goal of graduating more students on time.

These were just three among the dozens of stories about higher-ed innovation highlighted at the “Partnering for Progress” event held today at VCU’s Siegel Center. Some stories reflect nothing more glamorous than the adoption of best practices that are common elsewhere. But some innovations are truly ground-breaking and have the potential to transform how higher-ed institutions function.

The event, itself a first-of-a-kind, featured an hour’s worth of speechifying and exhortations, plus two hours for schmoozing, visiting booths, listening to presentations, and swapping business cards. “Partnering for Progress” was backed by the Virginia Business Higher Education Council’s Growth4VA initiative, a public relations campaign driving home the message that Virginia’s colleges and universities make critical contributions to economic growth and prosperity. A recurring Growth4VA theme is that while state government needs to do more to support its public system of education, Virginia’s colleges and universities need to be more creative about controlling costs, reining in tuition increases, and helping students graduate with less debt.

There wasn’t time to visit every booth, but I had conversations with enough presenters to be persuaded that some very imaginative thinking is taking place in Virginia’s colleges and universities. It’s an open question whether these bright ideas get the funding and administrative support needed to transform the cost-encrusted higher-ed system. While some of the initiatives seem impressive, the thought occurred to me, why isn’t every institution adopting these changes? And what’s taking them so long?

Still, I came away convinced that there may be hope for Virginia’s higher education system. While higher-ed’s lobbyists and advocates may, for purposes of public consumption, be putting blaming runaway tuition on cutbacks in state support, administrators acknowledge the institutions themselves also bear some responsibility for holding down costs. Here follow some of the more promising programs I encountered in my perambulations through the Siegel Center.

Energy efficiency. Gains in energy efficiency had leveled off for several years at the College of William & Mary when Farley Hunter came on board to focus on utility management. Having worked in private-sector property management, he quickly spotted numerous opportunities to cut the university’s $7 million to $8 million in energy bills. W&M cobbled together a $140,000 revolving fund to invest in projects with at least a three-year payback, mostly in areas such as HVAC, ventilation and lighting. That’s a modest sum for a 200-building campus, concedes Hunter, but if he can demonstrate success, he expects the university to invest more.

Faculty productivity. University professors persevere through years-long Ph.D. programs to gain mastery of their subject matter. But unlike school teachers, they receive little instruction on how to teach. The University of Virginia Center for Teaching Excellence created the Course Design Institute to help professors organize and design better courses. Participants engage in a short but intensive exercise that begins with the question, “What do I want my students to know 3-5 years after the course is over?” The program uses proprietary software to build a syllabus and create “knowledge checks” that align teaching objectives with tests and assessments. About 500 UVa faculty members have gone through the program. Said program director Michael Palmer: “We created a revolution.”

Research productivity. University of Virginia researchers apply for roughly $1 billion in research grants in every year, and succeed in nailing down about $300 million worth. Only two years ago, however, the paper-based system for administering the research applications was extravagantly inefficient. It wasted space on literally hundreds of filing cabinets. Files were frequently misplaced (at an average estimated cost of $125 per file). The university even maintained a dedicated car and driver to carry papers from office to office around the grounds for needed signatures.

Ironically, UVa’s inefficiency turned out to be a blessing, said Vonda Durr, senior director of electronic research administration. Other institutions purchased multi-million-dollar software solutions to deal with the same paperwork issues, but many have them are dissatisfied and ready to scrap them. UVa learned from their mistakes and drew upon the university’s in-house IT staff to design a custom solution, starting with a portal for principal investigators, which makes contracts, account balances and other critical information accessible through one online location. The experience was so positive that the Office of Sponsored Programs added new capabilities such as electronic signatures, workflow tracking systems, and data visualization tools. Among other tangible benefits, the university has freed up space by getting rid of the filing cabinets, driven down printing costs, and saved an estimated $5 million in faculty and staff time.

Student retention. One third of the students entering Virginia Commonwealth University are considered “first generation” students — that is, they are the first members of the family to attend college. They are disproportionately poor and minority, and they have a harder time graduating from college. The graduation rate for first-time students is 78%, considerably lower than the 85% rate for all students, and GPAs tend to be lower. A high priority for VCU is improving the graduate rate for first-timers. The university’s You First program assembles a variety of orientation programs, faculty-led sessions, networking events, and support resources to ease the transition of first-timers into college life.

Virginia State University has a program with a similar purpose — helping students complete their college degree — that concentrates support services in a single location where students can access a wide variety of services. Students learn study skills and time management, get tutoring, receive counseling on which courses to take, and gain access to other support services. Every student is provided a mentor.

Radford University is adopting first-year living-learning communities organized around common interests such as the environment, the maker movement, biology, research, and the arts. Students living in the same residence halls take shared classes and engage in other activities together, building a sense of community and belonging. Participants have measurably higher retention rates and higher GPAs. Radford also uses data analytics to predict and improve student attrition. Remarkably, university ID swipes in dormitories and the fitness center is one of three factors with greatest predictive value. The data allows staff to reach out to students identified as being at risk of not returning to the university.

Virginia’s system of higher-education has the second highest six-year graduation rate in the country, second only to Utah. The payoff for students is huge — fewer drop out with big student debts they can’t repay. And the payoff is big for Virginia as well. When more students graduate, Virginia inches closer to its 20-year goal of becoming the best educated state in the country.

Dominion’s 3,000-Megawatt Battery

Bath County Pumped Storage Station: lower reservoir

The Bath County pumped-storage facility has worked out so well for Dominion that the utility wants to build a smaller version in Southwest Virginia.

Since its completion in 1985, the Bath County Pumped Storage Station has functioned like a giant battery, supplementing Dominion Energy Virginia’s base-load coal, nuclear and gas-fired plants with its variable output. When energy demand peaks in the early morning and evening, the Bath County facility drains water from an upper reservoir through tunnels to its hydroelectric turbines more than 1,000 feet below. Then in the evening, when demand is low, Dominion pumps water in the lower reservoir back up the mountain, in effect recharging its battery.

Bath County is capable of producing 3,000 megawatts of electricity for up to three hours at a time, making Dominion’s 60% ownership of the facility a critical component of the company’s total 19,900-megawatt generating fleet. That same flexibility will serve the company well as it integrates between 5,280 and 5,760 megawatts of intermittent solar power its system over the next two decades. Solar generates maximum power with the mid-day sun and none at night, scrambling the traditional supply-and-demand equation. Bath County will play a critical goal in keeping power output in concert with demand.

Indeed, Dominion is so enamored with its pump-storage facility that it wants another one. The utility is giving serious study to a site in Tazewell County that would be capable of generating up to 850 megawatts of electricity. Building a pumped-storage project there would cost roughly $2 billion.

Dominion is touting the Tazewell project as an economic boon for Southwest Virginia, a region whose economy is depressed from the long-term decline of the coal industry. A Tazewell pumped-storage facility would create more than 2,000 jobs during the construction phase, plus 50 permanent jobs, and would contribute $37 million to the regional economy, including $12 million in tax revenue.

With interest in the project high in Southwest Virginia, Dominion invited regional media to Bath County to see how pumped storage works. I tagged a long as the sole member of the Richmond media.

Bath County is a marvel. Most notably, the facility is the largest pumped-storage operation in the world. It produces more electricity than the Hoover dam. The earth-rock impoundment dam creating the upper reservoir reputedly is the eighth highest dam in the world. But the facility is so tucked away so deep in the mountains — it takes more than half an hour to get there from Hot Springs, location of another Bath County icon, the Homestead — that spa visitors have no idea it’s there.

The upper reservoir at the Bath County Pumped Storage Station.

The upper reservoir serves one function: to hold the water that pours through three gravity-fed tunnels at the rate of 2.2 million gallons per minute. Those tunnels split into six, and the water drives six 505-megawatt turbines. The depth of the upper reservoir, which sits at an elevation of roughly 3,000 feet, fluctuates dramatically throughout the day as the water level rises and drops.

This photo looks down at a sharp angle. The flat expanse is the rock-and-dirt impoundment dam, reputedly the world’s 8th highest dam.

Building the two reservoirs and three tunnels entailed excavation of 36.3 million cubic yards of material, quarrying 2.8 million cubic yards of rock, and pouring 1.1 million cubic yards of concrete. Dominion maintains an elaborate system of sensors and inspections to ensure that the the integrity of the structures is never compromised. Dominion staff walk the upper and lower dams weekly to look for seepage or other signs of failure. To keep the vegetation low, the company has contracted with a service to bring in goats. (Without question, the goats were the crowd-pleaser of the tour.)

The generating station, sitting at the base of the mountain, houses the turbines. The pressure created by thousand-foot columns of water with a lake above them is phenomenal.

Top-down view of the six turbines. The main structure of the unit is below ground. The component visible at the center of the photo is where the rotating brushes create magnetic fields.

The beauty of the Bath pumped-storage facility is that it can be dispatched quickly. The turbines can start generating electricity within six minutes. Within 15 minutes, they can begin pumping water back to the upper reservoir. That’s not the same flexibility provided by a real battery, which can dispatch electricity more or less instantaneously, but it is more nimble than any other conventional power source.

The hydroelectric technology is deemed low risk and high-efficiency — for five units of power consumed to pump water back up the mountain, the plant generates four units of power, making it 80% efficient. Pumped storage also has a long lifetime and low operating costs. Recent technological advances may make the Wise County facility even more responsive to fluctuations in demand than Bath. A July 2016 Department of Energy report, “Hydropower Vision: a New Chapter for America’s Renewable Electricity Source,” found that advanced pumped-storage capabilities such as adjustable-speed and closed-loop and modular designs can “further facilitate integration of variable generation, such as wind and solar, due to its ability to provide grid flexibility, reserve capacity and system inertia.”

The drawback of the Bath facility is that it can operate at full capacity, 3,000 megawatts, only three hours out of the day. When operating for extended periods, up to 11 hours, it can generate only 362 megawatts. And it can take up to 12 hours to restore the upper reservoir to its full capacity. Still, as long as Dominion has to balance supply and demand on its grid — a job that will get trickier as more intermittent solar production comes on line — and as long as there is a wide differential in the price of electricity at different times of the day, the Bath pumped-storage station will play a pivotal role in keeping the lights on in Virginia at a reasonable cost.

Whether the economics of the proposed Tazewell facility pencils out as nicely as at Bath remains to be seen. Tazewell would produce only a third of the power and construction would cost a bit more than Bath did three to four decades ago. Moreover, Dominion officials expect it will take a full decade to walk the project through the regulatory process and build the hydro plant. But unlike some infrastructure projects Dominion has been pushing recently, Tazewell would have three things going for it. One, it will have strong political support in Southwest Virginia. Second, compared to lengthy pipelines and transmission lines, the visual impact on neighbors will be negligible. And third, hydro power is not a fossil fuel, so it should win the blessing of environmentalists.

Even Progressives Acknowledge the Failure of Indiscriminate Student Loans

I’ve been making the case for a couple of years now that if you’re looking for a real example of social injustice, take a look at the United States higher education system. For years liberals and progressives argued that everyone deserves a college education, that government should help anyone with a high school degree attend college, and that poor students could borrow huge sums to pay for ever-escalating tuition and fees without ill consequence. Now even the social justice warriors are waking up to the social disaster they have wrought.

Readers of Bacon’s Rebellion know full well that the policy of indiscriminately handing out student loans to everyone has created a new class of debt slaves. Not all high school graduates are academically prepared for college-level work. Not everyone who undertakes to earn a college degree is financially able to complete their degrees, even with financial assistance. As a result, literally millions of Americans have taken on college debt without earning the degree or other workforce credential that would allow them to obtain a job that pays enough to carry that debt.

The members of the new debtor class are disproportionately poor, and they are disproportionately African-American. This is a real social injustice, not an imagined one, and it has arisen from the blind pursuit of good intentions.

Finally, progressives are waking up. According to an analysis by the Center for American Progress, data from a U.S. Department of Education study provides a “first-ever look at long-term outcomes for student loan borrowers, including results by race and ethnicity.”

The data show that 12 years after entering college, the typical African American student who started in the 2003-04 school year and took on debt for their undergraduate education owed more on their federal student loans than they originally borrowed. This holds true even for students who finished a bachelor’s degree at a public institution. One reason they might not be paying down their loans? Nearly half of African American borrowers defaulted, including 75 percent of those who dropped out of for-profit colleges.

Among the detailed findings:

  • African-Americans borrow more on average than their peers.
  • The typical African-American made no progress over 12 years in paying down his or her loan. African American borrowers who started college in 1995-96 owed 101% of their loans a dozen years later, compared to 60% for whites and 72% for Hispanics.
  • A bachelor’s degree does not insulate African-American borrowers from bad outcomes. College drop-outs are not the only ones who default; college grads do, too.
  • Nearly half of all African-Americans defaulted on their student loans. One reason, suggests the analysis, is that African-Americans take on higher debt on average.
  • Seventy-five percent of African-American dropouts from for-profit colleges defaulted. (No word on how this compares to the percentage of African-American dropouts from public colleges or Historically Black Colleges and Universities.)

A conservative/libertarian reaction to this data is that the system hands out student loans too indiscriminately. Many Americans — of whatever race — would be better off learning a trade in a two-year college than attending a four-year college. Some would be better off not going to college at all and learning on the job. Student loans, like any other kind of loan, should be granted based upon a person’s ability to repay the loan.

The problem is that granting educational loans on the basis of a student’s ability to repay — based upon key predictors like academic preparedness and household resources — would “discriminate” against the poor and, because African-Americans are disproportionately poor, against African-Americans. In today’s political climate, that’s a non-starter.

The Center for American Progress expresses an admirable sentiment when it suggests that policymakers should strive to create a world where African American students don’t start their careers with large loan debts they struggle to repay. But the CAP’s answer is to admit more poor African-Americans into better institutions with more resources to help them succeed. How? By “fixing” admissions practices and funding systems “so that African American students do not end up disproportionately underrepresented at institutions with the greatest resources to educate them.” 

Translation: Get higher-ed institutions to admit more African-Americans in the blind hope that somehow they will do better regardless of whether they are academically prepared. Great idea. That’ll work out well.

For Irish, Italian, Jewish, Chinese, Koreans and other Americans, the typical family’s climb from poverty into affluence took place over generations. Parents sacrificed so their children could rise a step higher on the educational and socioeconomic ladder. Today’s social justice warriors are impatient. They want African-Americans to vault from Mosby Court to the University of Virginia and a job in the hedge-fund industry in a single generation. A handful of individuals are so extraordinary that they can succeed. Most aren’t. Instead of reaching for achievable goals for self improvement, millions are pursuing unrealistic dreams and winding up in debt bondage as a result.

Justice for Whom?

The Legal Aid Justice Center, which has released another report decrying differential rates of suspensions and expulsions in Virginia public schools, is described by the Richmond Times-Dispatch as an organization that “works to fight injustice.” I have no doubt that the Legal Aid Justice Center sees itself on the side of the angels, but I’m surprised that the Times-Dispatch accepts the group’s self definition so uncritically. I’ve never heard of an organization anywhere claiming to fight for “injustice.” It’s really a question of whose justice is being fought over.

In this case, the Legal Aid Justice Center (LAJC) fights for “justice” for black students who commit offenses that get them suspended or expelled. Making an issue out of the fact that blacks were suspended in Virginia about four times as often as Hispanic or white students in 2015-16, the LAJC calls for sweeping changes in school disciplinary policies and, of course, more money to implement them.

The LAJC is not fighting for “justice” for black children whose classrooms are disrupted by trouble makers. While the organization goes to great pains to measure the rates of suspensions and expulsions by race, it makes no effort whatsoever to measure the race of those whose educations are deprived by the ne’er-do-wells. Indeed, its report, “Suspended Progress 2017,” shows no interest in their plight whatsoever.

The front-page Times-Dispatch article quotes extensively and uncritically from the LAJC report. The reporter doesn’t quote anyone else who has studied school disciplinary issues, nor does he quote anyone from the Virginia Department of Education or local school districts. The reporter never informs the reader that parents — including many black parents — are often dismayed by the lack of discipline in many schools.

The report found that Virginia schools issued over 131,500 out-of-school suspensions to over 70,000 individual students in 2015-16, an increase in the overall suspension rate for the second year after several years of declines. Virginia schools use “exclusionary” discipline with very young students at an “astonishing” rate, states the report. And the majority of suspensions were issued for minor offenses — “approximately two-thirds of all suspensions given [were] for behavior offenses, such as possession of cell phones, minor insubordination, disrespect, and using inappropriate language.”

Perhaps most disturbing is that Virginia schools continue to disproportionately suspend African-American students and students with disabilities. The suspension rate for African-American students was 3.8 times larger than for Hispanic and white students. Students with disabilities were suspended at a rate 2.6 times larger than that of their non-disabled peers. When examining the effects of race, sex, and disability, the results are especially troubling: African-American male students with disabilities were almost 20 times more likely to be suspended than white female students without disabilities.

The authors never talk to anyone in the educational front lines — the people meting out the discipline — to get their perspective on what’s happening. The authors assume from the get-go that racial disparities in disciplinary actions are in and of themselves evidence of injustice — no other explanation needed.

The LAJC never pauses to consider that the reason why African-American male students with disabilities are disciplined at a higher rate is that they are committing offenses at a higher rate than white female students without disabilities. Given what we know of the breakdown of the family, the geographic concentration of poverty, and how many poor single mothers lose their children to “the street,” it should not surprise anyone that behavior problems are rampant in poor communities generally and poor African-American communities specifically.

This chart, which appears in the “Suspended Progress” report, shows the school districts where the highest rates of suspensions occur. Every one of these has high percentages, often majorities, of African-American students. Let’s take the City of Richmond, with which I have some familiarity. Most teachers are African-American, most principals are African-American, the superintendent is (or was, before he was canned for political reasons) African-American, and the school board is predominantly African-American. It defies reason to think that anti-African-American bias is permeating Richmond school disciplinary practices.

The real problem is that teachers and administrators in Richmond are grappling with large numbers of students who come from exceedingly challenging environments like housing projects riddled with violence, drugs, crime, and murder where the norms of bourgeois behavior have utterly collapsed. Eighteen percent of the student body was suspended because 18% of the student body committed offenses against school rules.

The LAJC engages in a classic case of defining deviancy down by declaring that cell phone possession, disrespect, and “inappropriate language” as “minor” offenses. We didn’t have cell phones when I was a kid, but I can assure you that being disrespectful to teachers and using profanity assuredly would have warranted disciplinary action at my school. The phrase “inappropriate language” sounds inoffensive, but I question whether students are suspended for using the occasional profanity. As for cell phone possession, the LAJC’s own data shows that the number of students disciplined for that offense is a minor cause of short-term suspensions and a negligible one of long-term suspensions.

The biggest causes of disciplinary action are disruption of classrooms or campus, defiance of authority, disrespecting teachers. Some offenses may seem “minor” if viewed in isolation. But we have no sense from these numbers how often similar offenses are routinely ignored, and we have no sense how often students have been lectured or given second or third chances before finally being slapped with a disciplinary action.

I find especially noteworthy the LAJC’s observation that after two years of supposedly improving statistics that suspensions and expulsions have increased for two years. How do we explain this? Have teachers and administrators become less rigorous in their adherence to the protocols imposed by the American Civil Liberties Union and the Obama administration justice department? Have they become more biased in their attitudes against African-American (but not Hispanic) students? Or has discipline gotten worse under those protocols? Have the supposedly “proven alternatives” like “restorative practices, multi-tiered systems of support, and emotional learning programs” failed to maintain discipline? Indeed, do misbehaving students, perceiving that they are less likely to suffer adverse consequences from their actions under the new regime, felt freer to act disruptively?

Locked into its mindset that views every racial disparity as evidence of a social injustice, LAJC never asks those questions. But Richmond Times-Dispatch reporters and editors should not accept social justice warrior dogma without question. In fact, if the Times-Dispatch were truly interested in social justice, it would conduct its own inquiry into how LAJC-inspired disciplinary policies are working out.

Pipelines Clear Another Regulatory Hurdle

Another regulatory barrier to the Atlantic Coast Pipeline and Mountain Valley Pipeline has fallen. The board of trustees of the Virginia Outdoors Foundation unanimously approved Monday applications for “conversion of open space” by the two natural gas pipeline developers that propose to cross 11 VOF conservation easements.

From the outset, VOF informed the pipeline companies that their incursions would be incompatible with the conservation values of the easements, therefore triggering a process in state law known as “conversion” of open space. (See the VOF announcement here.)

The two resolutions included several conditions, including restrictions on the footprint of the pipelines and access roads, the conveyance to VOF of more than 1,100 acres of substitute land in Highland, Nelson, and Roanoke counties, and the transfer of $4.075 million in stewardship funding for the properties’ long-term care and maintenance.

The VOF easements will remain in place on the properties with overlaying permanent rights-of-way for the pipeline developers.

Last week the Federal Energy Regulatory Commission (FERC) granted the ACP and MVP certifications of public convenience and necessity. The VOF vote eliminated one of the few remaining regulatory obstacles to the project. The pipelines still face one significant hurdle, however: meeting state regulatory standards for erosion and sediment control.

FERC Approves Atlantic Coast, Mountain Valley Pipelines

map credit: Marcellusdrilling.com

The Federal Energy Regulatory Commission (FERC) approved the Atlantic Coast Pipeline (ACP) and Mountain Valley Pipeline (MVP) in rulings issued Friday.

The three-person commission was divided on the issue of granting the pipelines a Certificate of Public Convenience and Necessity, with two commission members appointed by President Trump ruling in favor while an Obama administration holdover issued a dissenting opinion.

While FERC approval was required for the two natural gas pipeline projects to advance, the battle is not over. Environmentalists and landowners remain adamantly opposed to the projects, and they have vowed to continue resisting. Major sticking points are reviews by West Virginia, Virginia and North Carolina environmental agencies of pipeline impacts on water quality.

Naturally, Dominion Energy, which is the managing partner of the ACP, is delighted at news. Said Leslie Hartz, Dominion vice president of engineering & construction:

We are very pleased to receive FERC approval for this vitally important project. This is the most significant milestone yet for a project that will bring jobs, economic growth and cleaner energy to our region. In the coming days we will fully review the Certificate and finalize our plans for complying with its conditions. We will also continue working with the other state and federal agencies to complete the environmental review process and make this critically important project a reality.

All three commissioners acknowledge the need for more natural gas infrastructure to serve consumers in Virginia and North Carolina. In her dissent, Commissioner LaFleur noted that more than 90 percent of the ACP’s capacity is subscribed by public utility customers in the two states. The end use of this gas is well established on the public record and is a matter of urgent public necessity.

The FERC ruling also garnered kudos from Dominion’s business allies. This joint statement comes from Barry Duval, president of the Virginia Chamber of Commerce, and Matt Yonka, president of the Virginia Building & Construction Trades Council:

This is great news for our economy, our working men and women and energy consumers all across our region. This project will serve as a catalyst for economic growth, job creation and greater energy security in our region for years to come. The hardworking men and women who built our nation are ready to get to work rebuilding our region’s infrastructure. We’re eager to see the thousands of new jobs and billions of dollars in new income this project will bring to the region.

By lowering energy costs in Virginia and North Carolina by more than $370 million a year, this pipeline will allow businesses to grow and families to save. The pipeline will also mean lower emissions and cleaner air in all of our communities as electric utilities continue making the transition from coal to cleaner-burning natural gas.

Equally predictably, pipeline foes were appalled by the ruling. This from the Allegheny-Blue Ridge Alliance, a coalition of 52 organizations in Virginia and West Virginia:

The Commission’s judgment has been made in advance of necessary and required decisions by the U.S. Forest Service, the U.S. Army Corp of Engineers and the state environmental authorities in the affected states of Virginia, West Virginia and North Carolina on critical environmental issues. We concur with the thoughtful dissent of Commissioner LeFleur’s, who has served on the Commission for 7 years, raising serious questions about the basis of need for both the ACP and the Mountain Valley Pipeline and expressing concerns about environmental impacts that both projects present. The majority decision does not reflect an understanding of the issues at hand and is clearly not in the public interest. It calls into serious question the agency’s regulatory credibility.

Greg Buppert, a senior attorney with the Southern Environmental Law Center, said this: Continue reading

Inside the Facebook Solar Deal

As part of the $1 billion Facebook data-center deal, Dominion Energy Virginia will file a request with the State Corporation Commission to create a new kind of solar tariff called Schedule RF. (The RF stands for Renewable Facility.) The tariff, if approved, could be used by other big customers seeking renewable energy.

“We came together with Dominion Energy Virginia to create a new tariff that ensures renewable energy solutions are accessible not just to Facebook, but other companies as well,” said Bobby Hollis, director of Global Energy at Facebook in a press release issued last week. The tariff “opens the door to attracting more businesses and more jobs for the communities we serve,” said Robert M. Blue, president of Dominion’s Power Delivery Group.

Virginia is well positioned to win more data-center projects and, as major players in cloud services are committed to reducing their carbon footprints, there likely will be more Facebook-like deals in the future. Given the magnitude of data-center energy consumption — the Facebook facility is expected to consume as much electricity as 32,500 homes and the solar investment will run roughly $250 million — these deals could well influence Virginia’s energy mix and cost of electricity. Curious to know more about how the project is structured, I talked to Dianne Corsello, director of Dominion’s business development group.

At full build-out, Facebook will require 130 megawatts of electricity. Power consumption at data centers is fairly constant, but the output of solar farms varies with weather and time of day. Assuming the panels are equipped with trackers, which rotate to follow the sun and generate more power, the solar farms will generate electricity only 25% of the time. Consequently, Dominion will need to build about 300 megawatts total solar capacity. (By way of comparison, the utility’s state-of-the-art gas-fired power station in Greensville is rated at 1,588 megawatts capacity and generates electricity approximately 85% of the time.)

Dominion soon will issue an RFP to solar developers with the expectation of bringing the solar capacity online in 2019 and 2020, Corsello says. The utility will draw from multiple facilities, none larger than 150 megawatts in size.

The SCC must approve the Schedule RF tariff, just as it will have to approve the rates charged by each proposed solar facilities using Schedule RF. Facebook will pay the full retail rate plus an add-on for the purchase of renewable. Under the tariff Facebook will receive Renewable Energy Certificates certifying that the company has paid for renewable energy equal to the volume of electricity it consumed. Facebook’s payments for these certificates will help offset the higher cost of solar power paid by all Dominion ratepayers.

The 300 megawatts of solar capacity arising from the Facebook project will be over and above Dominion’s commitment to derive 15% of its electricity from renewable power sources by 2025.

Chesterfield Debates Matoaca Mega-Site

Image credit: Chesterfield Observer

In August Governor Terry McAuliffe joined legislators and local government officials to announce plans to build an industrial “mega-site” in the Matoaca area of Chesterfield County. The county anticipates spending $9 million for preliminary engineering and right-of-way-acquisition and $70 million on road improvements, according to the Progress-Index, and that’s just the expenditures noted in the 2018 budget. The county likely will spend tens of millions more providing utility connections.

A mega-site, county officials says, will put Chesterfield in the running for a large-scale industrial manufacturer like an auto assembly plant or aerospace company capable of investing a $1 billion and creating 5,000 jobs. But there are no guarantees. Indeed, the track record of Chesterfield’s previous mega-site, the Meadowville Technology Park, is decidedly mixed.

Jim McConnell and Peter Galuszka raise good questions about mega-sites in a well-researched article in the Chesterfield Observer.

Twenty years ago the county rolled the dice on Meadowville in the hope of landing a semiconductor manufacturing facility. Instead, the U.S. semiconductor boom fizzled, and the 2008 recession intervened, and county officials lowered their aspirations for the park. Meadowville wound up attracting two data centers, a couple of warehouse operations (including an Amazon facility), and a bottling plant. County officials call the park a “success story,” noting that it has attracted $570 million in private investment, produced a 3,000% increase in real estate assessment and collected $24.45 million for land sold to date, with 726 acres yet to be developed.

But not everyone is impressed. “Meadowville was never intended to be a bunch of warehouses,” the Observer quotes Meadowville neighbor Freddy Boisseau as saying. “It was supposed to be computers, biotech, research and development. But the county couldn’t get what they wanted there, so they started searching for what they could get.”

What’s missing is a proper accounting that would allow Chesterfield citizens to draw an informed conclusion about whether the investment in Meadowville was worth the risk taken. What was the total investment in roads, utilities, land acquisition, engineering and improvements? How much has the county recouped in land sales, how much does the increased tax assessment generate in additional tax revenue, and do those revenues cover the debt service? Does the park represent a net gain or a net drain to county finances?

But that is only the beginning of questions that citizens should insist upon answering. Chesterfield has maintained its AAA bond rating, so it can’t be said that Meadowville did any obvious harm. But to what extent did investing in Meadowville crowd out other uses of the county’s debt capacity? What other capital projects went unfunded? And what other transportation improvements could the Virginia Department of Transportation have funded? Maybe Meadowville turned out to be a great investment, maybe it didn’t. The fact is, nobody has done the analysis, and county officials now are asking citizens to take it on faith that the new Matoaca mega-site is worthwhile.

When you roll dice in Las Vegas, you know the odds. It strikes me that Chesterfield, which is hardly unique in this regard, is gambling without knowing the odds. The logic behind mega-sites is more akin to that of someone playing the mega-lottery: You can’t win if you don’t buy a ticket. That’s fine for a $1 lottery ticket, but it’s not OK for a $100 million industrial site.

“They’re asking us to accept a major highway, rail and an industrial site in our neighborhood without anything more than the possibility of getting a company that will bring thousands of good jobs,” said Mike Uzel, leader of a citizen group, Bermuda Advocates for Responsible Development, that opposes the megasite. “This boils down to, do you believe them or not?”

As President Reagan famously said, trust but verify. Chesterfield citizens should get all the facts about Meadowville so they can make a retrospective judgment, and they should get all the facts about Matoaca.

Virginia Gears up for Amazon HQ2 Pitch

Fort Monroe — hands down, the coolest location proposed for Amazon HQ2. No one else, not even Google or Apple, has an headquarters on their own private, friggin’ island! Good luck getting 50,000 people in and out, though.

The Amazon gold rush is heating up. Northern Virginia, Richmond and Hampton Roads are pitching the online retailing giant on multiple site in their regions for Amazon HQ2, a $5 billion, 50,000-employee second headquarters complex. Michael Martz with the Richmond Times-Dispatch has the scoop, citing “multiple” unidentified sources.

Northern Virginia, writes Martz, has identified four potential sites, including the state-owned Center of Innovative Technology property near Washington Dulles International Airport, the Potomac Yard along the Potomac River in Alexandria, and Arlington County properties in Rosslyn and Crystal City.

Hampton Roads is pushing three potential sites: Town Center in Virginia Beach, Harbour View in Suffolk, and Fort Monroe in Hampton.

The Richmond region is pitching three sites as well: Tree Hill Farm, a 500-acre property south of downtown, the Diamond baseball stadium and neighboring properties, and a 160-acre property in Chesterfield County.

The odds are long. Virginia’s metros are competing with dozens of cities/regions around the country. Of the three Virginia metros, Northern Virginia comes closest to matching the criteria established by Amazon, including one of the largest (though financially troubled) mass transit systems in the country and access to three international airports. The Washington region also has a massive, technologically literate labor pool. As an added bonus, Amazon CEO Jeff Bezos already has a mansion in Washington, D.C., owns the Washington Post, and would enjoy access to U.S. government leaders.

However, one informed economic-development source that I talked to recently reminded me that Amazon has encouraged Richmond and Hampton Roads to submit proposals. A major advantage of either metro, the source said, was massively lower costs than Northern Virginia — and Amazon is highly sensitive to costs. However, any number of other cities and regions around the country could claim to offer lower costs. It doesn’t strike me as much of a differentiating factor.

Speaking with another well-informed economic-development source, I raised the objection that metros the size of Richmond or Hampton Roads would have a difficult time building the infrastructure and otherwise adapting to such a massive growth stimulus, especially if Amazon demands significant subsidies or tax exemptions. This source was confident, however, that the 15-year time frame for the project would allow plenty of time. I’m not so sure. I expect Amazon wants to see assets on the ground now, not promises that something will get done. Given Virginia’s track record with big infrastructure projects, I wouldn’t bank on any promise.

But my sources know a lot more than I do, and if they think Virginia has a genuine shot at bagging Amazon, well, I say go for it. Who knows, maybe they have something up their proverbial sleeve they’re not willing to talk about.