The blog Gin and Tacos makes a fantastic catch on Wisconsin Republican Governor Scott Walker’s effort to take away the right to organize from most of the state’s public unions and cut their pay.
Buried in the bill is language that would allow Walker’s administration to privatize state-owned power plants on terms only a Russian oligarch could love:
with or without solicitation of bids, for any amount that the department determines to be in the best interest of the state… no approval or certification of the public service commission is necessary for a public utility to purchase, or contract for the operation of, such a plant, and any such purchase is considered to be in the public interest and to comply with the criteria for certification of a project…
Gin and Tacos:
If this isn’t the best summary of the goals of modern conservatism, I don’t know what is. It’s like a highlight reel of all of the high-flying slam dunks of neo-Gilded Age corporatism: privatization, no-bid contracts, deregulation, and naked cronyism. Extra bonus points for the explicit effort to legally redefine the term “public interest” as “whatever the energy industry lobbyists we appoint to these unelected bureaucratic positions say it is.”
Excellent watchdog blogging.
— Matt Stoller makes an interesting observation today about the Wisconsin union protest.
He notes on Twitter that it’s “probably the first real strike/labor action most Americans under 35 have seen” and links to Bureau of Labor Statistics numbers on major strikes since 1947.
From 1970 to 1979 there were an average of 288 work stoppages a year involving more than a thousand workers. From 2000 to 2009 the average plunged to twenty a year.
Stoller also links to the numbers in chart form, saying it’s “one of the most consequential yet little noted parts of modern life in America.”
— Once upon a time, universities were for students—or so I hear.
Here in Seattle, the University of Washington’s $250 million renovation of its decrepit 90-year-old stadium shows how that’s changed.
Once the stadium reopens in 2013, there will be all the usual accoutrements: skyboxes, suites, etc. The important and/or rich people staying dry in the suites will have wet bars while the proles getting rained on in the cheap seats remain dry in that sense.
Students, meantime, who had been sitting on the 50-yard line, will be sloughed off to the end zone, where they will pay three times ($375) what they paid for 50-yard line seats (They can still buy 50-yard line seats if they can somehow afford to fork out $150 per game for tickets to see a bad football team play). That’s so the athletic department can jack up prices on those seats to pay for the renovation.
The best you can say about this is at least taxpayers aren’t on the hook for this one, though the athletic department tried its best, of course, to get public money.
Buried in the bill is language that would allow Walker’s administration to privatize state-owned power plants on terms only a Russian oligarch could love:
Ryan, I caught Felix peddling the same BS on another post, and will copy/past my response.
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Felix, like you I would normally defer to Ed at “Gin and Tacos”, a political science professor, when making an argument like this. After all, its easier to defer to someone else who shares a similar worldview, quote them, and call the matter settled rather than take an in depth look at the issue. Isnt that what good journalism is all about: quote farming and superficiality?
But I decided to do a bit of digging on this one and asked myself a couple of questions: what exactly are these assets the state of Wisconsin wants to sell and why would they want to sell them? Now, the reason I asked myself the first questions is because I didn’t think that Wisconsin owns or operates any commercial generating units. Sure there are a few municipal power companies left in Wisconsin, like Manitowoc Public Utilities, but those don’t fall under the authority of the state and wouldn’t be affected by this. Well, turns out that all the facilities are institutional cogeneration units. These plants primarily supply heat in the form of steam to large institutions (universities, hospitals, prisons) and generate a small amount of electricity for use by these institutions.
Now, the authoritative “Gin and Tacos” insinuated that this was some kind of shady deal to allow Koch industries to come in and buy up power plants in Wisconsin for less than their market value because, as the authoritative “Gin and Tacos” argues, Koch is really into “buying up power plants”. But I scratched my noodle at this and asked ‘really’? To the best of my knowledge Koch is into fertilizers, petrochemicals, pipelines, forestry products and ranching, but commercial electric power generation, didn’t think they had any interest in that. And even if Koch did want to get into the commercial electric power generation business, why would they want to buy small units like UW Madison’s Charter Street Heating Plant which only puts out around 10MW? Independent power producers, which is what a company like Koch would fall into if they decided to get into the commercial utility game, sell to energy brokers and brokers typically don’t deal in lots of power less than 50MW.
Doesn’t make a lot of sense if you ask me. But I suppose since it falls into the kind of superficial argument that reinforces prior prejudices it makes for good journalism.
So knowing what kind of assets we are dealing with, we can now ask: why would the state want to sell them? Having a fair amount of experience with institutional cogen plants the answer immediately popped into my head: Boiler MACT. The EPA’s 2011 boiler MACT (maximum available control technology) rules will require all solid fuel boilers to comply with a very stringent set of emission standards by 2013. This means anyone operating a boiler that burns any kind of solid fuel (coal, municipal waste, medical waste, biomass, petcoke, etcetera) will either have to install a lot of pollution control equipment or convert to natural gas. Neither of these two options is inexpensive by the way, with estimates to upgrade and convert UW Madison’s plant from coal to biomass/natural gas running at around $250 million.
Commercial entities, power plants, cement kilns, blast furnaces and the like will finance these and call it the cost of doing business (or in many cases relocate out of the country), but what’s a prison or university to do? Float a bond or ask for more money would be the usual route, but as we all know, the State of Wisconsin is facing a rather large budget hole and even in the best of times, it would be difficult for the state to pony up that kind of money.
So a state with a long term
#1 Posted by Mike H, CJR on Wed 23 Feb 2011 at 11:25 AM
Good comment, Mike H. And I say this as a big Ryan fan. Ryan? Is Mike maybe onto something here?
#2 Posted by edward ericson jr., CJR on Wed 23 Feb 2011 at 04:53 PM
Ed, not to toot my own horn, but I know I am onto something. Dealing with these kinds of regs in this industry is how I put food on the table.
#3 Posted by Mike H, CJR on Wed 23 Feb 2011 at 05:03 PM
The only issue I have with Mike H's "Gin and Tonic" post is that he's criticizing both Felix and Ryan about their focus on the Koch's, but the word Koch doesn't appear in either piece. "Gin and Tonic" found the offending language in the bill and whatever the Koch's connection is to the power production industry, the issue isn't who the governor has the power to pass government assets onto in an undemocratic way, the issue is he'll have that power once the bill goes through.
This goes to the process which has failed time and time again when republicans take majorities. They exclude oppositional voices from deliberation, produce vast bills with borrowed amendments, rush debate without properly informing oppositional voices AGAIN, and then foist the vote causing extraordinary measures from the opposition to oppose the process.
And the process needs to be opposed because the guy in question is producing very bad bills:
http://news.firedoglake.com/2011/02/22/wisconsins-walker-signs-bill-requiring-23-majority-for-tax-increases/
http://news.firedoglake.com/2011/02/23/again-scott-walkers-budget-repair-bill-is-not-about-the-budget/
PS the spam filter caught me trying to post three links. You can delete the post in the spam box.
#4 Posted by Thimbles, CJR on Wed 23 Feb 2011 at 06:36 PM
Mike H,
Thanks for the good comment.
The MACT regs may indeed have something to do with this proposal (my wife is in the cogen biz, too), but my point, as Thimbles points out, wasn't about the Koch Brothers or whatever. It's about a no-bid, no-oversight process to privatize public assets. That's a red flag for potential corruption and it needs to be examined closely.
The state may indeed be better off selling its power plants, but what's the rationale for this no-bid process that specifically allows "no approval or certification of the public service commission"? I don't see a good one.
And anyway, the state and its taxpayers are going to have to pay for these facilities one way or another. If a private company owns them, the state will pay for the private company's profits as well as any revamps through higher rates--hoping that the private company is efficient enough to result in cost savings. Or the state could issue bonds to revamp the plants to meet MACT standards and have taxpayers pay them off over thirty years. That's basically an accounting thing. Debt on public books that has to be paid by the state or debt on private books that has to be paid by the state (that's how these privatization deals typically work).
But the no-bid process is a fundamentals thing.
#5 Posted by Ryan Chittum, CJR on Wed 23 Feb 2011 at 07:07 PM
Ryan, thanks for the reply.
Boiler MACT has everything to do with this. The state of Wisconsin is looking at 37 units worth about $230 million needing between $50 and $150 million over the next three years to make them legal. If Wisconsin were to sell these using they would be making a pitch for units that wont be legal in three years unless its new owners plow up to $150 million into them. Oh and did we tell you that you wont be able to make any money off them for 10 out of th enext 36 months? Oh, and did we also tell you that if backlogs on remediation services and equipment gets to be too long, not only will you not make any money, but you will be fined for every day they are on?
The government routinely places assets like this under no bid contracts because the intersection of individuals willing to buy them, individuals with the capability to make them run, and individuals who have either the cash or credit to make this happen will be very few in number. (hint: its not Koch).
So far from being a deal that "only a Russian oligarch could love", I doubt the state is going to find many takers ... this aint exactly a 20 billion barrel oil field on Sakhalin island.
Had the State of Wisconsin tired to unload these a few years back, perhaps they could have done it on more agreeable terms .... oh wait they did, but since it meant the outsourcing of a couple hundred "union jobs", the former democrat governor said no. Nothing like proactivity.
So I guess my point is you shouldn't believe everything you read on webzones like " Gin and Tacos" (especially when it all to conveniently dovetails with malicious conspiracy theories about the lefts Emanuel Goldstien dejour) and sometimes no-bid deals are necessary.
#6 Posted by Mike H, CJR on Tue 1 Mar 2011 at 08:43 PM