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October 26, 2006

Free Is a Very Good Price: Let's Talk Wi-Fi

There was a time not so long ago when youth supposedly had an edge in technological advances, when our elders were assumed to be "out of it" when it came to computers and other quickly developing gadgetry. Well, it looks as if whatever water that theory held might be dripping away. You might have heard the sound of the drips had you followed CUB Executive Director Bob Jenks to his speaking engagement yesterday at a national committee meeting of the AARP. These retired persons did not want to talk golf, or canning, or even the (somewhat deplorable) state of current medical costs. They wanted to talk Wi-Fi, the broadband access to the Internet that is available by means of an antenna receiving radiowaves.

The AARP wanted to talk Wi-Fi because that technology can dramatically reduce the cost of high speed Internet access and help bridge the digital divide. That makes it possible for low-income Americans to participate in the online information age. They wanted to have that discussion here in Portland, Oregon because Portland (so they say) has it all going on. So, what is going on with Wi-Fi in Oregon and in Portland?

Well, as you may know, quite a bit. Here are four examples of current and upcoming broadband projects in Oregon.

1. Hermiston, Oregon has for almost 2 years been the site of the nation's largest Wi-Fi network, an area that encompasses 600 square miles. Originally created to support the needs of the Port of Umatilla and the nearby Army Depot, it has been offered free of charge to local residents as well.

2. Portland-based Personal Telco Project is a non-profit created to promote the availability of broadband access through Wi-Fi "nodes" or broadcast hotspots set up in various neighborhoods, of which Portland currently has over 100. Bob Jenks lives near one of these nodes and will soon hit his second anniversary of free Internet service at his house.

3. Personal sharing of a broadband signal is also used more informally, often between neighbors who might split the cost of a broadband service and share the encryption code (note: this is forbidden in contracts with some of the larger broadband providers but not by all telecommunications carriers).

4. Portland will soon become one of only two major U.S. cities (the other being Philadelphia) to offer Wi-Fi access throughout the city. Downtown Portland is due to have free broadband in December of this year, with the rest of the city covered within 2 more years. This is a public/private partnership, with the city providing the poles and right-of-way and private sources covering start-up costs. Rather than subscribing to the broadband service, residents will be able to access it for free, with advertisers footing the bill (this is a pilot project for doing advertiser-supported Wi-Fi on this scale).

CUB notes that current prices for the faster Internet connection services such as DSL (offered by Qwest or Verizon), cable (offered by Comcast), or broadband offered by cell phone companies (such as Sprint or Cingular) tend to be on the expensive side, running anywhere from $50 to $75 per month. This prices a lot of people out of the market, particularly those living on a fixed income. In comparison, a card or antenna to receive broadband Internet access can be purchased for $10-$25. After that initial purchase, the consumer, in a place such as Portland, Hermiston, or Philadelphia, could be truly "home free."

This may be one reason that, even though the expansion of Wi-Fi coverage may be the most exciting telecomm topic for everyone from the AARP to the folks at Personal Telco, it does not have a place at the table on the current Task Force on Telecommunications created by Oregon's Senate Bill 17. Bob Jenks sits on the Task Force, as well as 4 legislators, and members of the Incumbent Local Exchange Carriers (the old Baby Bells), and the Independent Oregon Telecommunications Assoc. (smaller local carriers), Wireless Cell Phone Providers, and the Cable Industry. There is pretty broad representation from throughout this industry but the group has not spent 5 minutes on Wi-Fi. The fact that each of these industry segments offers their own broadband at a cost of more than $50 per month could explain why Wi-Fi is not being discussed or promoted within the telecomm industry.

A New York Times article about the Hermiston Wi-Fi phenomenon stated that "Indeed, we need to envision broadband Internet access as just another utility... Other American towns need to follow Hermiston... in ensuring broadband Internet access as reliably as they do water or electricity." Affordability added to reliability makes the prospect really shine.

Posted by Oregon CUB at 02:04 PM | Comments (1)

October 18, 2006

Over the river and to the voters/ Of Washington State we'll go...

A few weeks ago CUB Staff Attorney Jason Eisdorfer was quoted in a Northwest energy news publication, Clearing Up, saying, "If we're going to rely on utilities to save the world, we're in trouble." He was speaking of global warming and the need to switch to cleaner energy sources. Then last week we wrote about our first Energy Symposium, at which PGE executive Pamela Lesh said in response, "If we're going to exclude utilities from being part of the solution, we're in even bigger trouble." Of course, they're both right.

CUB doesn't want to exclude anyone from being part of the solution, least of all the utilities which have so much direct and significant control over power production and its environmental side effects. But it becomes sometimes apparent that when utilities move too slowly they need to be hurried along a bit. That is the case with the movement transitioning to clean, renewable energy sources. It IS happening; we are developing alternative energy sources. But in order to adequately address a reduction in greenhouse gases such as carbon dioxide, things need to be sped up. And though utilities can and must participate, it seems clear that utilities will not lead the charge on this particular issue. So who will? As an old axiom states, "When the people lead, the leaders will have to follow."

The people of Washington State have a chance to lead on the issue of renewable energy, and CUB members have a chance to help Washington voters see what is at stake.

Washington will be voting on November 7th to decide whether to pass Measure I-937, the Renewable Portfolio Standard (RPS) requiring that 15% of the state's energy be produced from clean, renewable sources by the year 2020. That is an admirable goal, and when Washington voters hear the specific goals of the measure, they are overwhelmingly supportive.

Unfortunately, the ballot title does not always come across so clearly. Voters need to understand this measure to fully support it, and this makes voter contact extraordinarily important. That is why CUB is organizing groups to cross the river to Vancouver this Saturday, October 21st, and on November 4th, the Saturday before the election, to talk to voters, urging them to vote yes on I-937. We want you to come with us.

This measure is supported by a broad-based coalition that includes some of CUB's strongest allies, such as Renewable Northwest Project, Northwest Energy Coalition, Northwest Energy Efficiency Coalition, and WashPIRG. Individual supporters include both U.S. Senators from Washington State, four of the State's Congressional Representatives, Mayor Don Nickels of Seattle, King County Executive Ron Sims, and Denis Hayes, the founder of Earth Day.

CUB staff are making the passage of I-937 a priority because Oregon will also benefit from fewer emissions produced to serve the 6 million people that live upriver from us; after all, the air doesn't recognize a state boundary. Furthermore, if Measure I-937 passes in Washington, chances are very good that Oregon will also pass an RPS in the near future, hurrying us along toward cleaner energy production and away from climate disruption.

So put it on your calendar and call or email our Organizing Director, Jeff Bissonnette: jeff@oregoncub.org or 503-516-1636. It will take about a four-hour commitment with the main activity being door-to-door walking as part of a team, talking to voters about the measure. There are also opportunities to make phone calls to likely voters, reminding them to vote and urging them to vote yes on I-937. Let us know that you would like to join us as we take a short trip across the river to help make possible a much more important journey: the road to cleaner energy, cleaner air, and a more stable planet.

Oh, and by the way, we all get a chance to vote on November 7th. CUB is a non-partisan organization which doesn't endorse any candidates. However, we do encourage voters to pay attention to what candidates say about global warming, utility taxes, and other issues that are important to utility consumers.

Posted by Oregon CUB at 04:13 PM | Comments (0)

October 17, 2006

Energy Symposium Offers Much Food for Thought

What do you get when you put 8 energy lawyers and experts in a room for 3 plus hours? It may sound like the beginning of a very bad joke but actually it was the catalyst for a very interesting exchange of information and ideas.

For those of us who were there, the 1st ever Symposium on Energy, the Environment and the Law at Lewis & Clark Law School in Portland was a very good time. Speakers (in the order of their appearance) included Jason Eisdorfer, Staff Attorney here at CUB; Peter Cogswell, Deputy Chief of Staff and Energy Liaison for Governor Ted Kulongoski; Pamela Lesh, Vice President of Regulatory Affairs & Strategic Planning for Portland General Electric; Eric Redman, Attorney with Seattle firm Heller Ehrman; John Volkmann, General Counsel for the Energy Trust of Oregon; Katharine McDowell, Attorney who often represents PacifiCorp in regulatory cases at the PUC; Jim Deason, Attorney specializing in energy transactions; and Ann Gravatt, Policy Director of Renewable Northwest Project. It was, as Jason noted, an "illustrious panel," and the conversation, over two days of lunching and listening, ranged from the undeniable fact of global warming to the future of the electricity industry, from customer concerns to career advice for the environmentally-minded law students who formed the majority of the audience (several dozen members of the Energy & Utility Section of the Oregon State Bar also attended).

Preceding the Symposium was a free showing of Inconvenient Truth, Al Gore's presentation of the evidence that global warming is real (thanks to Oregon Interfaith Power & Light and The Regeneration Project). Then, the first day of the Symposium, we explored the ways in which the energy industry contributes to global warming and can be redirected to have less of a dire impact on our environment. Jason set the stage by sharing the following quote: "The debate on the complicity of humans in observed and projected climate change is effectively over. As an indication of this, across the nearly 1,000 peer-reviewed scientific articles published between 1993 and 2003 that mention 'climate change,' not one questioned the reality of human influence in the phenomenon." He then queried, "Where do you think this came from, the Sierra Club, the National Resources Defense Council? No, this is a document written by and for members of the insurance industry, subtitled 'How Insurers Can Proactively and Profitably Manage Climate Change.' And, folks, when the insurance industry says the debate is over, the debate is over. So the question becomes, where do we go from here?"

Jason showed some slides from Climate Solutions, one of which shows the contribution of various nations to greenhouse gas emissions that lead to global warming. The United States was, of course, in the lead. He then talked about the fact that fully 40% of the carbon dioxide (CO2) emitted in the U.S. comes from the electricity industry. This figure translates to 10% of all CO2 emissions worldwide. And this means we've got to change course and find ways to cut our emissions.

Next up was Peter Cogswell, who talked about the plans and accomplishments of our sitting governor, in the realm of energy efficiency and renewables. The list included one piece we are particularly excited about, the proposal for Oregon to serve 25% of its electrical demand with new renewable sources by the year 2025.

Pamela Lesh took the stage and gave a presentation on what utilities can bring to the table in finding a solution to addressing global warming. She said that utilities bring, in addition to many hard assets found on the balance sheet, many soft assets such as customer interaction, access to capital, and control of the many aspects of energy production. She took a broad historical view of the industry, asserting that during its first 100 years, the electricity industry's purpose might have been described as "Helping individuals and businesses accomplish their purposes more conveniently." And it is true that flicking a switch is more convenient than filling the house with candles or gas lamps, turning on the stove a lot easier than building a fire. What if, Lesh posited, the electricity industry's purpose metamorphasized in the 21st century to "Helping individuals and businesses accomplish their purposes more efficiently"?

Eric Redman is a well-known energy attorney who has been around the industry for 30 years. He now represents Siemens, who is trying to build a West Coast test plant for Integrated Gasification Combined Cycle coal (whew!), better known as IGCC. This technology converts coal into gas, which emits less CO2 when burned, allows for extracting energy twice in the process, and holds the potential for carbon sequestration, actually capturing the carbon and storing it underground, so that less of it is released into the atmosphere.

Tough, intelligent questions were asked after the speakers had finished. One woman asked about the IGCC process: "Shouldn't we be moving away from fossil fuels altogether and toward renewables?" Redman answered that it was not a renewables vs. IGCC question, that both would be needed to help keep our planet livable. He discussed both the fast industrialization of China (which plans to build at least 60 traditional pulverized coal plants every year for as long as it can), and the work of Robert Socolow, a Princeton professor who claims that we should think in terms of stabilizing carbon emissions in 7 wedges, each wedge equaling 1 billion tons of carbon per year. Redman said we should think of renewables as a wedge, IGCC as a wedge, energy conservation as a wedge, etc. (CUB has not taken a position on building new coal plants using IGCC technology, but we unequivocally oppose any new pulverized coal on Oregon ratepayers' dollar.)

The second day was more clearly directed at the law students in attendance. Each speaker gave a brief overview of their own career path, the highlights and pitfalls, what to consider if wishing to make environmental change. Some of those tips included: indirect paths can often yield big results, and training in business, engineering or other seemingly unrelated fields can sometimes be just the ticket to helping site a wind farm or write concise legislation supporting renewables; also, you can be impatient for a solution, but the process of change often requires great patience; and finally, adversarial attitudes are often not as effective in getting things done as creating and maintaining good working relationships.

Our thanks go out to the people of Lewis & Clark Law School for being such good hosts to the event, to the Environmental Law Caucus and Student Advocates for Business and Environmental Responsibility for their sponsorship of student lunches, to the Energy & Utility Section of the Bar for its sponsorship of attorney CLE accreditation and attorney lunches, to Alice Bray (CUB's summer intern) and her fellow students, Sam Gomberg, Alliyah Mirza, and Allison Reed for their many hours of on-campus organizing work. And most of all, we very much appreciate the generosity of our speakers during this symposium, each of whom brought a wealth of knowledge and experience.

We enjoyed the conversations, we learned new things and found new ways to look at some old facts, and we believe that this small group of current and future attorneys will have a greatly enhanced understanding of both the global environmental challenge we face, and the most realistic ways to approach a solution. And that's no joke.

Posted by Oregon CUB at 11:59 AM | Comments (0)

October 05, 2006

Who can best shoulder the risk of power cost changes - you or PGE?

If you read the news you may have seen yesterday's Oregonian article entitled, "Extra costs pit PGE, customers." The language is adversarial and the two cases we currently are negotiating with PGE have been, too.

The first, the Boardman case, is PGE's request for deferral of extra costs incurred because their Boardman coal plant was out of service for several months. This outage cost PGE about $43 million in extra power costs, from having to purchase replacement power, and they asked customers to pay all of that. They're now down to asking for about $39 million, or 90%, but CUB has said that this number is out of line with previous expectations of what customers should pay.

The Boardman case shows PGE's desire to shift risk onto customers in a particular way. In a general way, shifting risk has also been one of the thrusts of PGE's general rate case, now being argued before the Public Utility Commission. A little background: Utility rates are set using power cost forecasts of the coming year. The numbers for power costs are provided by the utility, debated by parties to the case (such as CUB), and the final forecast is decided upon in the annual power costs rate case by the Commission. The overall rates for customers (inluding the Company's rate of return) is then set in a general rate case.

In their current general rate case, PGE has requested a power cost adjustment (PCA), in which 90% of all costs higher than those forecast should be paid by customers. This PCA proposal is balanced in the sense that customers would also benefit from the PCA if power costs were lower than forecast, but CUB doesn't support the proposal for several reasons:

1) First and foremost, this PCA would shift the changing costs, the biggest risk of the utility business, onto customers. If we were ever to consider supporting such a change, it would be with the understanding that PGE's rate of return, the profit they earn for managing said risk, should be similarly decreased. Instead, PGE is asking in this same rate case for an increase of their rate of return.

2) Second, this PCA does not adequately reflect the reality of the time lag that exists in rate-making. "Under a PCA, when I use power today," explains CUB Executive Director Bob Jenks, "I don't know what my rate really is. I won't know for 2 years, until there is a true-up of rates with actual costs. The lag-time in ratemaking is why we need someone to bear the risk of changing power costs, and that someone should not be the customer."

3) Third, PGE's proposal has no deadband. Additional costs have almost always been shared between customers and the Company, with the Company absorbing a significant share of the extra costs due to a "deadband," which is figured based upon a percentage of the Company's earnings. The deadband could be likened to the deductible on an insurance policy. If something goes wrong the insurance policy holder pays a percentage out of pocket before the benefits kick in. PGE wants the benefits without the deductible. The Public Utility Commission has set a strong precedent of using deadbands, and PGE has even supported deadbands in the past. CUB believes that a deadband of $35 million is appropriate in the Boardman case (out of total annual revenue of about $1.5 billion for PGE).

Power costs go up and down from year to year and season to season. Hydropower was great in the '90s and has slowed in some recent years (forgive us the pun) to a trickle. Natural gas prices were low during the '90s as well and we all know what direction they seem to be headed. The major problem with trying to shift power cost variation onto customers, with the promise that lower costs will mean lower rates, is that power cost variation is asymmetrical: costs can only go down to near zero, but costs can go up indefinitely, high as the sky, as long as people are willing to pay those unknown future premium costs for power. And let's face it, most households are not as well able to bear the brunt of large changes in power cost as is a large corporate utility.

Power cost variation is the major risk involved in operating a utility. If PGE wishes to continue to earn a profit for managing the risk of the utility, they have to actually manage that risk, accepting the occasional spikes in their cost that accompany other years of windfall. Shareholders make a profit; they also provide a financial buffer when things don't go according to plan. We will never support a ratemaking deal which doesn't understand this trade-off as the baseline.

Posted by Oregon CUB at 02:27 PM | Comments (1)