Monthly Archives: September 2010

Fixing the game for Mercury Marine

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Wisconsin Power & Light wants to give a $4.8 million discount on electric rates to Mercury Marine, which slashed wages and raised health care costs for workers a year ago.

If the Public Service Commission approves the request, it’s highly likely that some of the folks who payer higher electric rates so Mercury Marine does not have to will be the very folks who saw wages cut and health care costs increased by Mercury last year.

Is this country great or what?

Here’s the kicker. WP&L knew it wanted to give a discount to Mercury even before it finished designing the program that would allow it to do so. The Public Service Commission, in a remarkably bad decision, approved the program, excluding the public from full participation along the way.

Yes, a major utility made promises in private to a specific corporation, then designed a program to benefit that corporation and then went to compliant regulators to get the program approved.  which the regulators did, benefiting the corporation but stiff-arming other ratepayers. (I have no idea whether the PSC knew the program would benefit Mercury.)

Like I said, is this a great country or what?

WP&L didn’t mention Mercury Marine in its original, November 2009 application seeking approval for the program. The utility simply said that it wanted to offer lower rates to companies that, among other things, would leave the WP&L service territory if they didn’t get them.

In documents filed with the Public Service Commission this month, however, WP&L made it clear that it had Mercury Marine in mind before the program was even out of the planning womb.

06/03/09 – Alliant Energy (WP&L’s parent company) “proposal for assistance to Mercury Marine” sent to the Fond duLac County Economic Development Corporation

• 06/09/09 – State of Wisconsin initial economic incentives offer received, verbal reference by Governor Doyle of “Alliant Energy incentive for Growing Wisconsin”

• 06/11/09 – City / County of Fond du Lac, Wis., initial economic incentives offer received, written reference to Alliant Energy “proposal for assistance to Mercury Marine” targeted at $6.0 million over five years (The value now is estimated at $4.8 million over five years.)

• 06/15/09 – Phone call between Steve Cramer (CFO of Mercury Marine) and Bruce Kepner of Alliant Energy to better understand the “Growing Wisconsin” program

And then there is this:

When Mercury announced on Sept. 4, 2009, its decision to close its Stillwater, Okla., facility, it had written indications of commitment from the City of Fond du Lac, the County of Fond du Lac, the State of Wisconsin and Alliant Energy. In all cases, these written indications of commitment were subject to successfully negotiating contracts and receiving the necessary approvals (whether City Council, County Board, State Legislature or in the case of Alliant Energy – the PSC).

…In all cases, representations were made subject to final negotiations, and are subject to obtaining necessary approvals. In all cases, the actual program and incentives are very different today than what was envisioned in Q3, 2009. However, the total value committed to Mercury Marine in Q3, 2009, by the City, County and State of $123 million will be achieved at $122.7 million = 99.8%.

…Mercury relied on representations by the City, County and State. That reliance included a rate reduction in Mercury’s electric bill under the “Growing Wisconsin” program. Mercury was aware that the program was not yet fully developed, and that the program would require the approval of the Public Service Commission, just as the City incentives required approval of the City Council, the County incentives required the approval of the County Board, etc.

Mercury Marine was hit hard in the recession, as many companies and individuals were. Its fortunes likely will improve when the economy improves, with or without a utility rate break. Pushing Mercury Marine’s business costs on to other ratepayers, including other financially struggling companies, is almost beyond comprehension. Why not have Mercury Marine’s insurance premiums paid by employees of Briggs & Stratton? Why not make Kohl’s Corp. pay for Mercury’s equipment costs? By making the WP&L service area friendlier to Mercury, WP&L and the PSC is making the same area less friendly to every other business.

This isn’t simply a bad program; it’s a bad precedent that may well have companies all over the state racing for approvals to dump utility costs on to others before others dump utility costs on to them.

The Wisconsin Citizens Utility Board, which fights for reliable and affordable electricity and telephone service on behalf of Wisconsin customers, is suing to block the ill-considered WP&L program, and I am on the CUB Board. This post, though, was not vetted or approved by CUB and I’m not representing the organization here.

Do people do this stuff on purpose?

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Sometimes it seems that government officials get up in the morning and say, “Hey, what can we do today to make the average citizen mistrust us even more?”

Chipping children so they can be tracked electronically seems like a pretty good answer.

The George Miller III Head Start program in Richmond, California, is putting radio frequency identification chips in kids’ jerseys so that accurate Head Start statistics can be reported to the feds. (Head Start is a federal early childhood program.)

Wow, that seems like a pretty weak reason for taking such an invasive action. The Electronic Frontier Foundation and the American Civil Liberties Union, in a letter to federal and local officials, raised some major concerns.

We have seen time and time again that RFID systems can be insecure, such as when the RFID chips in U.S. Passport cards were cracked and copied last year from a distance of 30 feet using just $250 worth of parts.4 The Real Time Location Service (RTLS) Active RFID chips embedded in these preschoolers’ jerseys can be read from up to 300 feet away.3 Children wearing these powerful tracking devices in school, on the playground, and off campus during field trips may be more vulnerable to stalking and kidnapping. If this system is insecure, someone could sit in a car the length of a football field away and track the children without anyone ever knowing that any information had been read. Once read, that information could then be copied to a duplicate chip — allowing someone to take a child off campus while RFID readers potentially show the child is still safely in school.

Nor does a child have to face stalking or abduction to be endangered by RFID tracking data. These RFID chips provide constant monitoring, potentially creating a detailed portrait of a child’s movements that could loom large over a youngster’s life, particularly if the chips replace direct adult monitoring and judgment. If RFID records show a child moving around a lot, might she be tagged as hyperactive? How long could this data — and the conclusions rightly or wrongly drawn from it — be stored in school records? Might the records be subpoenaed for use in family court or a custody battle?

The folks in Richmond and in the federal government need to rethink this one. Tracking children to enhance record-keeping is the very top of a very steep and slipper slope that we won’t want to go sliding down.

Be afraid. Be very afraid.

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Power is always abused, eventually.

So be afraid, be very afraid, about what our national security apparatus is up to these days. When you have too many law enforcement types chasing too few bad guys, as the US government does now, you are going to end up with bored or corrupt federal agents going after the wrong people through ineptitude, spite or ideology.

Scarier yet: first the Bush administration, then the Obama administration, knocked down rules and the rule of law to give this overpopulated policing world more power and the policed world far less protection from its protectors.

Fareed Zakaria, writing in Newsweek, laid out some details:

Since September 11, 2001, the U.S. government has created or reconfigured at least 263 organizations to tackle some aspect of the war on terror. The amount of money spent on intelligence has risen by 250 percent, to $75 billion (and that’s the public number, which is a gross underestimate). That’s more than the rest of the world spends put together. Thirty-three new building complexes have been built for intelligence bureaucracies alone, occupying 17 million square feet—the equivalent of 22 U.S. Capitols or three Pentagons. Five miles southeast of the White House, the largest government site in 50 years is being built—at a cost of $3.4 billion—to house the largest bureaucracy after the Pentagon and the Department of Veterans Affairs: the Department of Homeland Security, which has a workforce of 230,000 people.

This new system produces 50,000 reports a year—136 a day!—which of course means few ever get read. Those senior officials who have read them describe most as banal; one tells me, “Many could be produced in an hour using Google.” Fifty-one separate bureaucracies operating in 15 states track the flow of money to and from terrorist organizations, with little information-sharing.

Some 30,000 people are now employed exclusively to listen in on phone conversations and other communications in the United States. And yet no one in Army intelligence noticed that Maj. Nidal Malik Hasan had been making a series of strange threats at the Walter Reed Army Medical Center, where he trained. The father of the Nigerian “Christmas bomber” reported his son’s radicalism to the U.S. Embassy. But that message never made its way to the right people in this vast security apparatus. The plot was foiled only by the bomber’s own incompetence and some alert passengers.

Such mistakes might be excusable. But the rise of this national-security state has entailed a vast expansion in the government’s powers that now touches every aspect of American life, even when seemingly unrelated to terrorism. The most chilling aspect of Dave Eggers’s heartbreaking book, Zeitoun, is that the federal government’s fastest and most efficient response to Hurricane Katrina was the creation of a Guantánamo-like prison facility (in days!) in which 1,200 American citizens were summarily detained and denied any of their constitutional rights for months, a suspension of habeas corpus that reads like something out of a Kafka novel.

Everyone feel safer now?

Obama’s $50 billion

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President Obama used a Labor Day appearance here to announce that he wants to spend $50 billion on infrastructure over six years.

Hold the applause, please, at least until we get the details.

First, Republicans don’t like the plan, announcing that it is dead on arrival. Republicans don’t like anything Obama does, so the opposition isn’t new. It still could be significant, though.

Second, it’s not really very much money. $50 billion nationwide over six years. The fine folks at the Southeastern Wisconsin Regional Planning Commission told us seven years ago that spending $6 billion in a small area of a smallish state to rebuild and unnecessarily expand freeways is such a minor consideration that it need not be mentioned in surveys measuring support for the $6 billion effort.

Just kidding. The SEWRPC freeway study planning process, as we all know, was a joke driven by road builders and HNTB (sponsors of the broken Marquette Interchange ramp) to justify a conclusion already reached by road builders and HNTB.  (See how it works? HNTB helps SEWRPC conclude that freeway expansion is needed and then grabs the design contracts for the resulting projects. Sweeeeet.)

What is serious is that $50 billion over six years over 50 states is less than it might first appear. Economist Dean Baker says it is 1.4% of the federal budget and adds:

It is also equal to about 4 percent of the $1.2 drop in annual demand (@ $600 billion in lost consumption and $600 billion in reduced construction) due to the collapse of the housing bubble.

Obama says the $50 billion, targeted at transportation, would be the first phase of an infrastructure bank. But adding $50 billion in spending is just wasting a lot of it if it isn’t spent well. And highway spending, in this country, isn’t done well.

According to the Government Accountability Office report, Highway Trust Fund: Nearly All States Received More Funding Than They Contributed in Highway Taxes Since 2005:

As we have reported, for many surface transportation programs, goals are numerous and conflicting, and the federal role in achieving the goals is not clear. Many of these programs have no relationship to the performance of either the transportation system or of the grantees receiving federal funds and do not use the best tools and approaches to ensure effective investment decisions.15 Our previous work has outlined the need to create well defined goals based on identified areas of federal interest and a clearly defined federal role in relation to other levels of government.16 We have suggested that where the federal interest is less evident, state and local governments could assume more responsibility, and some functions could potentially be assumed by the states or other levels of government.17 Furthermore, incorporating performance and accountability for results into transportation funding decisions is critical to improving results.

So major jobs program? Absolutely, yes. But spending large, but insufficient sums in the usual ways that don’t produce the desired results? Absolutely, no. Please. Let’s get it right.

Now that we know the Marquette Interchange was screwed up…

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A ramp built as part of the gee-golly-whiz Marquette Interchange project was closed down Thursday because it’s cracked.

According to the JS:

State Transportation Secretary Frank Busalacchi said the cracks were discovered during a scheduled inspection on Monday and further investigation revealed that the 40-foot concrete support was designed improperly and is inadequate to support the weight that rests on it, including steel girders and the roadway.

Busalacchi says contractor HNTB is accepting responsibility for the mega-mistake, according to the JS.

Now that we know that the $800 million project is screwed up, we need answers to a few questions:

  • Who at the Wisconsin Department of Transportation is accepting responsibility? Anyone?
  • Why did it take until now to discover that the concrete support was “designed improperly?”
  • What, exactly, is improper about the design?
  • How did WisDOT review project designs before construction?
  • Why did WisDOT wait three days after the crack was discovered to alert the public of a potential problem?
  • Would WisDOT and HNTB have been better off hiring more project and design inspectors instead of spending almost $700,000 on a web site?
  • Would WisDOT have been better off hiring more project and design inspectors instead of spending $1.5 million on an office renovation for Milwaukee Transportation Partners, the design team led by HNTB and CH2M Hill?