Tuesday, January 04, 2022

New Construction Subsidizes Old

I was reading city council minutes and my head was going to explode with all the coded things that some council members were saying. In one discussion, Council Member NN wanted to impose Quimby Fees on the theory that newcomers have not been paying taxes into the community and should have to buy their way into the parks and other amenities of this city. That is, they didn't pay for the park purchases so they shouldn't get enjoyment until they pay their debt to existing homeowners. 

This is so nonsensical, because, he then talked about using the Quimby Fees to buy new parks or to maintain existing parks. That sure sounds like he wants new construction to subsidize old homes, not the other way around. Hmm. Coincidentally, he wants nearly all the new housing (and Quimby Fee payers) next to the freeway in the extreme NE corner of the city while using their Quimby money to purchase parks in the coastal southern area of the city that he represents. 

BTW, the southern end of our city has been identified as a Racially Concentrated Area of Affluence. In a county that is 26% non-Hispanic white, he represents census tracts that are currently over 80% non-Hispanic white (and formerly whites-only on HOLC "red line" maps.)

Back to this idea that new construction doesn't pay their fair share for infrastructure, let's take a look at this screenshot from the California Property Tax Viewer

Take a look at the mixed use building with 48 homes, 8 affordable (hence, lower green property tax flags). There is also a garage and several businesses, generating more property and sales taxes since 2011.  200' by 120' = 24,000 sf. One condo unit is paying $7,200/yr in property taxes. 

Look at the single family home (SFH) behind it on a 50' by 150' = 7,500 sf lot.  It pays only $1,300 in property taxes each year or about 18% as much as one of the 48 condos. It was built in 1953 so it's been paying property taxes for 67 years.

Let's do a back of the envelope calculation and just use ratios.  One ten year old condo has already paid as much in property taxes as the older house has in 55 years.  Plus, our city charges Quimby Fees of $25,000 per net new home and a bunch of other fees totaling about $29,000.  That adds up to another 22 years of taxes from the old house. 

And that thing about sewer lines?  Complete nonsense.  Our water and sewer mains run down the street and maintenance costs go by the frontage.  That old house sits between a 6-plex on one side and a duplex on the other, each on the same 50' wide lot.  

Our sewers are run by the LA County Department of Sanitation and we're charged per hookup.  The infill townhomes are paying 2-6 times as much to maintain the sewers as the old SFH. The mixed use development has about 50 hookups on 200' so they are paying 12.5x as much for our shared infrastructure.  

The water and infrastructure myth is even more pernicious in light of water conservation (which is a good thing!) Read Adapting to Change: Utility Systems and Declining Flows. As we conserve water, the residence times in the water pipes increase, sometimes too long to be safe.  Infill housing, if it adds more people, can help keep the water residence times safe.  

If you don't add enough infill housing, you end up in San Diego's fix.  In just a few years, the cost of expensive potable water (imported from the Colorado River) they had to flush to keep their domestic water safe has increased from $200,000 to $2,000,000/year. 

Speaking of flushing, water-saving appliances and toilets mean that sewage outflow is lower volume and thicker than in the past.  That requires more energy to pump it back to the sewage treatment plant.  If managed well, infill housing can offset declining flows, save energy and reduce clogging.

Infill housing helps in two ways.  It gives you more customers to share the cost of maintaining infrastructure. And it also offsets declining flows for both inbound potable water and sewage.

That SFH is the deadbeat in the picture.  Long live infill!

Monday, January 03, 2022

Dark Money Greenwash Wokewash

If you consider yourself an environmentalist and live in California, odds are high that your inbox has been bombarded with misinformation from a certain group that purports to speak for small solar rooftop owners combatting climate change. 

They call themselves The Something Rights Alliance.  Notice their rhetoric focuses on Individual Rights vs Collective Responsibilities.  This Libertarian framing is then wokewashed with faux concern for the poor to argue for policies that actively harm the poor. 

This Dark Money group is so effective at Flooding the Zone with Misinformation that I'm not going to name them for fear of their web sniffers and the mobs they unleash. But pay attention to the loaded, emotional language that they use in order to short-circuit critical thinking. 

I've been taking a lot of heat from this group and was going to lie low. But, this morning, I read Skeptics Say, ‘Do Your Own Research.’ It’s Not That Simple. written by Nathan Ballantyne and David Dunning (yes, that Dunning) and decided that I have to speak out against armchair environmentalists and the Dark Money manipulators weaponizing them.

It's bad enough that we are dealing with Covid & Climate Change deniers, but now we have to worry about Regulatory Capture by Big Solar as well? 

Let's start with Dark Money.

“Dark money” refers to spending meant to influence political outcomes where the source of the money is not disclosed. Here’s how dark money makes its way into elections: 
Politically active nonprofits such as 501(c)(4)s are generally under no legal obligation to disclose their donors even if they spend to influence elections. When they choose not to reveal their sources of funding, they are considered dark money groups.

I looked up this group in Charity Navigator to find out more about them. They are unscored because they won't disclose information. Hmmm. Then I looked up their 990s on the IRS website. They reported ZERO income in 2017, the last year 501(c)(4)s were required to disclose their donors in a supplement. New grassroots organizations may start with no money and a bunch of volunteers, then grow slowly (both members and $), but this organization's funds grew overnight and then stayed flat. 
IRS 990 for 2018, showed they went from $0 income to $215,017 income, but did not file a (now purely optional) supplement to show who gave them the money. Meanwhile, the board shuffled a bit, but kept the same executive director. He earns his keep by being very active on the bird app and always in your inbox stoking outrage for Straw Man claims that no one is seriously proposing or considering.
In 2019, they report $215,027 in income and their board changes slightly again with the addition of more minorities to bolster their wokewash credentials.

Enough about the Dark Money, let's talk about the lies. I wrote an entire fact sheet debunking the wild things they say in their mass emails. It all sounds so physically plausible, until you pick up a physics textbook and calculator. 

The kerfuffle is over Net Metering, the methodology where we credit rooftop solar owners at retail rates for excess electricity that they export onto the shared grid. It made sense when the goal is to nurture a nascent industry, but it becomes a problem when the industry is mature, per panel costs have come down over 90%, and a lot of homeowners are trying to do the same thing. 

When CA passed the first Net Metering law back in the 1990s, lawmakers were worried about the day when residential rooftop solar would be ubiquitous enough that Net Metering would cause a cost-shift from solar owners to non solar owners.  They wrote in the legislation that they would periodically examine the cost-shift and readjust incentives as necessary. This Dark Money group wants to subvert the law. 

This is further exacerbated by the fact that (with few exceptions) you have to own your home and have enough home equity to swing a loan to install solar panels on the home. Guess who has the money?  It's generally older, wealthier and whiter people than the general population.  Over half of Californians are renters. Add in the people who live in condos/townhomes, whose smaller roof area per resident constrain their ability to generate excess electricity to export. 

According to the vast majority of energy experts in academia, national labs and industry; that cost-shift is happening, costs CA electricity customers without solar over $3 Billion per year (and rapidly climbing), and is a very inefficient way ($ and materials) to decarbonize California's grid.  I'm not going to belabor the points, it's already covered in my Fact Sheet. The main point is that people who have  larger systems, and fewer residents/users, export the most electricity to the grid and benefit the most under the status quo NEM 2.0. 

This Dark Money organization tried to stop the regulatory reform process by claiming it was rigged.  When that failed, they turned to organizing a mob to lobby Governor Newsom to either veto the proposed decision or to appoint new California Public Utilities Commissioners that are friendlier to them. This might work because the CPUC was led by an environmental justice rock star, Martha Guzman Aceves, who has been tapped by the Biden administration to head up the EPA for Region 9, which includes California. 

There will be two openings on the CPUC, so this is where they might actually succeed. The vote is scheduled for January 27, 2022 and there might be new commissioners, or the vote can take place without two stalwart defenders of poorer Californians. This is why I'm writing about it here. I'm hoping you will learn more, and then help vaccinate the population against the lunacy.  They are going to flood the governor and the CPUC with their talking points. So I want to get mine out as well. 

I want to talk about the Straw Man claims vs the actual California Public Utilities Proposed Decision. The Dark Money group is using wildly inflated numbers for the Grid Participation Charge. The math doesn't even work out right on their claims.  If you don't want to read the 204 pages of the Proposed Decision (PD), then at least read the CPUC NEM Fact Sheet: Modernizing California’s Net Energy Metering Program to Meet Our Clean Energy Goals Proposed Decision for Proceeding R.20-08-020. 

Simply put, the Grid is a support system that binds all of us together.  We depend on our neighbors and they depend on us. That is the rationale for the Grid Participation Charge, GPC. 

The Grid is a complex and expensive system to build and maintain.  It's also extremely creaky, with many system components from the Rural Electrification Act era, over 80 years ago. If we are not going to burn coal or fossil gas, for which we already have plants close to the users, then we need to build out a twenty-first century national grid to move renewable energy around from source regions to use regions. 

Transmission losses are inversely proportional to voltage; high-voltage interstate transmission lines that bring New Mexico evening wind energy to Los Angeles can lose as little electricity to transmission loss as from a neighborhood substation to a home in the suburbs (a few % each).  That's all taken into account in the Avoided Costs Calculator that NEM 3.0 uses. 

People without solar pay for the grid through volumetric rates ($ per kWh) and a very daily fee.  Rooftop owners push/export electricity to the grid during midday and then pull/import from after sunset.  They are heavy users of the grid, but their volumetric bill can be effectively zero. So they are not financially supporting the grid even though they are heavily reliant on the grid.

In order to encourage conservation, we set volumetric rates so that, the more you use, the more you pay.  That makes intuitive sense, as long as everyone is paying into it.  But, suppose all the heavy users, who also happen to be the wealthiest, install privatized systems--rooftop solar. With volumetric rates, they buy a lot less electricity, which means the (~9/10) non solar customers have to pick up the slack to support the grid.  

The fewer people paying for the Grid through volumetric rates, they higher the volumetric rate (cost per kilowatt hour) needs to be to pay for the Grid.  Under the current Net Energy Metering 2.0 program, rooftop solar owners get paid the retail rate for electricity they export, which is about 5 times as much as the avoided cost (generally wholesale cost of utility-scale solar plus transmission & reserve capacity).

This retail rates have to go up to cover this overpayment, which then generates even higher payments to the rooftop solar owners.  This is a positive feedback mechanism, also known as a runaway train.

Net Metering Reform is about countering this runaway train effect. 

It's long, it's complex, the ruling (proposed decision) is 204 pages for a reason. But I want to counter two BIG LIES. 

The first is that the Grid Participation Charge will hurt low-income solar owners (or which there are very few).  Nothing could be further from the truth. 

Remember earlier when I explained that the Grid is a social contract?  Well, we acknowledge some people have more needs and less resources than others.  We subsidize the vulnerable.  Low income and disabled people (their entire households) will be exempt from the GPC.  The GPC will phase in slowly over 5 years, with a Market Transition Credit to soften the landing. Low income households will also get the MTC so they will get a negative GPC. 

In contrast, NEM 2.0 is paying low income homeowners with solar LOWER prices than for much wealthier solar owners.  Why? Because low income people pay 18-35% lower retail electricity rates.  So, the wealthier you are, the more you are earning under NEM 2.0. 

The second lie is that the CPUC is doing the bidding of the utility companies and designing NEM reform to kill their competitor, roof top solar.  Utility companies are regulated monopolies. They can wish for the sky, but the CPUC tells makes the rules. 

The CPUC has an obligation to keep the Grid in good working order (capacity and maintenance); ensure a safe, reliable and affordable electricity supply for all users; decarbonize the Grid in a cost-effective way as fast as possible, using roof top solar as one of their many tools; and to sustainably promote roof top solar.  It's a tough balance, which is why they studied the issue for so long, listened to many arguments, examined a lot of data. 

The CPUC isn't trying to kill off an industry they are tasked to support.  They are just trying to do it within the constraints of the other things they must also ensure--like affordable rates and a robust grid for everyone.

The second lie is related to the resilience argument.  Currently, the CPUC and the public who pays for NEM 2.0 has no say in where new rooftop solar is installed and subsidized.  Adoption is much broader in wealthy communities. That leaves a lot of poor communities vulnerable to rolling blackouts and Public Safety Power Shutoffs.  Rooftop solar + batteries/storage help insulate people from power outages. If your community has a lot of solar power, and it is set up to run in island/micro-grid mode, then you may be able to access some intermittent power off the micro-grid. But it's not reliable.

Under NEM 2.0, the resiliency benefits of rooftop solar accrue to the owners, and a little bit to their neighbors.  If you are so worried about access to reliable electricity for the medically fragile in the era of frequent Public Safety Power Shutoffs, why not just give solar systems with batteries for the disabled?  Or build Community Resilience Centers in poor neighborhoods where people can come for air conditioning, electricity, wi-fi, hot showers, etc?

That's the beauty of proposed NEM 3.0.  It would raise and disburse $150 Million each year to fund solar installations with storage (batteries) for those in highest need.  We would swap a horribly inefficient subsidy system, NEM 2.0, for a new subsidy that identifies those in highest need and directs the largest subsides to help them. Disabled people who are on SSI (and their households), regardless of income, will be exempt from the GPCs. 

It's about efficiency with our dollars. It's about directing help to those in need instead of waiting for trickle-down solar to work. It's about helping renters and multi-family residents instead of single family home owners (who have a larger rooftop/person ratio).

Please, please, please, don't feed the outrage machine.  Read the Proposed Decision yourself (the conclusions of law starts on page 175 and the order starts on page 179), or at least the CPUC NEM Fact Sheet