Wednesday, December 27, 2006

Open Forum

What's happening this week that we haven't talked about?

10 comments:

Anonymous said...

How about the Governor's new Health Care Proposal called the Charter Oak Health Plan, would be open to adults of all incomes and cost each participant about $250 a month in premiums.

She is the first out of the box on a proposal and the good news is it will not be a billion dollar plan like the Democrats will propose.

Go Jodie!!

cgg said...

Edwards's campaign web site is up a day before hihttp://www.cnn.com/2006/POLITICS/12/27/edwards.running.ap/s announcement. CNN has the details. The best part of the story is that his slogan is Tomorrow Begins Today.

Nice looking site though.

GMR said...

In Trumbull, a proposed electrical substation has generated outcry.

As far as I can tell here is what's happened. There is no substation in Trumbull, and in peak periods in the summer, the substations in Bridgeport and Stratford (I think) were loaded to 107% of capacity. So a new substation needs to get built. These are where the voltage is stepped down so it can be distributed to the local users.

UI owns some land in a residential area, and proposed to build a substation on this property, which is a few acres. There would be some woods buffer between some houses, but not on all sides. The local residents were understandably upset that a substation was going to get built there, and a neighborhood committee formed to protest the new substation.

Another property in a more industrial area was proposed instead. UI doesn't own this property, but the owner said he'd sell it for $7.5 million. The town offered open space it owned, but after residents near that space complained, that parcel became a nature preserve.

The additional cost to locate in the industrial area is about $11.6 million: $7.5 million to buy the property, with the remainder for additional wiring (since I guess the industrial area site is further from the feeder cables or whatever).

It appears to me that UI owned the land where it wants to build the substation long before most of the surrounding houses were built.

UI made an operating profit of $31.6 million last quarter, and $19.7 million in net income (i.e., after interest payments on its debt). So while it certainly can afford an extra $13 million expense, it isn't trivial. UI is going to, somehow, pass these costs on to its users.

I don't necessarily think that anyone is in the wrong here, although I imagine that the industrial area property owner sees an opportunity to make a killer profit. But I think this episode is useful to show one reason why electricity costs a lot here. Real estate is very expensive in this state, and as a result, costs for goods and services that require real estate will be higher here than in states with lower real estate prices.

There are of course a bunch of other reasons why electricity is expensive in this state: generation capacity, demand for the electricity, reliance on natural gas over coal, taxes, a regulatory structure (often called "deregulation") that prevents distributors from owning their own generation plants, etc. But real estate, and the general high cost of doing business here, is going to help make electricity more expensive.

One thing I am curious about is if UI and CL&P were owned by the state of Connecticut, do you think that local neighborhood groups could stop infrastructure projects like they can now? Or would the siting council and zoning boards have less sympathy for local groups fighting not a for-profit corporation but the state government? Could a utility owned by the state use eminent domain more frequently to put substations and high voltage lines where it saw fit?

Anonymous said...

Wow, this blog is really great! Dumping your other contributors really improved the site! The visits and page views really show that. That CGG really pulls them in!

cgg said...

Yeah it's not like the holidays and lack of an election would affect CTLP's hits at all.

Anonymous said...

I wouldn't worry too much about somebody who disses this site in the middle of the night as the anon just did at 1:50AM!!!!!

Anonymous said...

The Trumbull NIMBY example is exactly why the cost of electricity, and doing business, is so high in CT. Why should ratepayers throughout the state, or investors for that matter, have to pay because a half a dozen homeowners object to the use of nearby land?

Anonymous said...

The last-in developers in Trumbull should have been required to set aside land for this infrastructure need. Everybody touts the south as the place to do businees but in the south that's exactly how it goes unless there is some graft or something.

way2moderate said...

GMR -- without wanting to say too much about what I do professionally, I will tell you that your outline/description of the Trumbull Substation matter was extremely well done. You stated it very fairly and accurately and I compliment you on that.

Your question about how the process might be different if the utlity companies were owned by the state is an interesting one. I hadn't thought about that before, but I would think things would have to be dramatically reshuffled relative to the whole siting process.

Bear in mind one thing, however. The federal government recently acted to make available something called "federal backstop siting authority" pursuant to the Energy Policy Act (EPACT 05). The effect of those changes serve to make an appeal mechanism available to utility companies in certain constrained areas of the country if the state processes serve to frustrate the development of critical electric transmission infrastructure.

So, bottom line, the processes that are in place right now, where the Siting Council has preemptive jurisdiction over the municipalities but can only approve such projects when they discern need to outweigh the adverse environmental effects, is -- on the whole -- a good one.

And "need" is carefully dilineated to mean where reliability of the service, at the lowest reasonable cost to the consumers, is demonstrated in a convincing fashion.

CC said...

How about the fact that, according to the Journal Inquirer, NY's attorney general and governor elect Eliot Spitzer gave Lieberman over $10,000 while Lieberman's own attorney general and successor in office Richard Blumenthal backed his opponent! Also, Lieberman pulled over $10,000 in from Mayor Bloomberg, too. Pretty safe to say that Joe was in a New York state of mind....