By John A. Charles, Jr.
The most serious problem facing Oregon right now is the exploding costs of the Public Employee Retirement System (PERS). The PERS crisis is so severe that the Oregon Legislature should make it the only issue addressed in the February 2018 legislative session.
But Governor Brown isn’t interested in reducing the PERS liability. That would take too much work and might offend her public employee union campaign contributors. So instead she has signed two Executive Orders purporting to address “climate change,” ahead of her jaunt to Bonn, Germany next week to attend a United Nations conference on global warming.
Her Executive Orders impose a blizzard of costly requirements on new buildings, including requirements for new homes to meet energy efficiency guidelines by 2023, and mandates for new homes to be solar-panel-ready by 2020. New buildings will also have to accommodate electric vehicles, regardless of whether the owners ever intend to own such vehicles.
The Governor is also setting a fantasy policy goal that Oregonians own 50,000 electric vehicles by 2020, more than three times the current ownership level.
Oregon desperately needs political leadership to avoid a PERS-induced death spiral. Unfortunately, all we’re getting is a Governor flying halfway around the world to escape reality.
John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization.
Statement regarding President Trump’s decision to withdraw the U.S. from the Paris accord on climate change
FOR IMMEDIATE RELEASE
PORTLAND, Ore. – Today Cascade Policy Institute’s President and CEO John A. Charles, Jr. released the following statement on President Donald Trump’s decision to withdraw the United States from the Paris accord on climate change:
“President Trump made the right call today in terminating participation by the U.S. in the Paris climate change agreement.
“The central problem with the accord was that the alleged benefits were speculative, long-term, and global; yet the costs to Americans would be real, immediate and local. It was a terrible deal for American taxpayers who would have been required to send many billions of dollars to an international green slush fund, with no accountability.
“Pulling out of the Paris agreement does not mean that the climate change apocalypse is upon us. The carbon intensity of the U.S. economy has dropped by 50% since 1980 simply through technological innovation and the dynamic market process. If reducing carbon dioxide is a worthy policy goal—which is just an assumption—the United States already has an impressive track record of reducing emissions.
“The Paris accord was always a triumph of symbolism over substance. Now that American participation has ended, we can appropriately move on to issues of real significance.”
Founded in 1991, Cascade Policy Institute is a nonprofit, nonpartisan public policy research and educational organization that focuses on state and local issues in Oregon. Cascade’s mission is to develop and promote public policy alternatives that foster individual liberty, personal responsibility, and economic opportunity.
By John A. Charles, Jr.
Recently the Oregon Legislature held a hearing on HB 3231, a bill promoted by Rep. Rich Vial (R-Scholls) that would authorize the formation of special districts for the purpose of constructing and operating limited-access highways.
Opponents made many of the same arguments they’ve been using for decades: new highways threaten farmland; increased driving will undermine Oregon’s “climate change” goals; and we can’t “build our way out of congestion.”
Perhaps the most comical opposition argument was made by Marion County, which sent all three of its Commissioners in a show of force. The Commission Chair concluded his remarks by saying, “We understand progress; we just want that progress to go somewhere else.”
Oregon stopped building new highways in 1983 after I-205 was completed. Elected officials came to believe that our needs for mobility could be met through increased urban densities, massive subsidies for public transit, and various forms of “demand management” to entice or even force people out of their cars.
The new approach didn’t work.
It turns out that manipulating urban form through land-use controls has very little influence on driving. Sure, you can regulate suburbia out of existence through density mandates, as Metro is doing. You can also reduce the parking supply and bring light rail right to someone’s front door.
But no matter how much some people fantasize about using alternatives to cars, it’s not very practical. Midday meetings, post-work errands, childcare obligations, and countless other demands lead people to rationally opt for driving for most trips.
That’s why, after a 20-year spending binge of $3.67 billion for new rail lines, TriMet’s share of daily commuting in Portland actually dropped from 12% in 1997 to 10% in 2016.
Auto-mobility is a wonderful thing, and there is no reason to feel guilty about new roads. For one thing, driving is strongly associated with economic growth. According to ODOT, for every job created in Oregon, we can expect an additional 15,500 miles of auto travel each year. If you’re in favor of new job creation, you have to accept increased driving as a logical consequence.
Moreover, the emissions associated with driving are now so minor that the real concern should be reducing air pollution from congestion. Vehicles sitting in gridlock have per-mile emissions of infinity; getting those vehicles into free-flowing conditions will improve local air quality.
Autos generally have the lowest emission rates when traveling at steady speeds of around 50 MPH. This is also a driving speed that makes most drivers happy, especially at rush hour. The way to accomplish both goals is through the construction of new highways when needed, coupled with the use of variable toll rates (also known as “dynamic pricing”). This could happen under HB 3231.
Across the country, dozens of impressive new highways are being built, many with private financing. Dynamic pricing is being be used to pay off bonds and eliminate congestion. This is the progress that most commuters dream about.
Unfortunately, it probably won’t happen here. Oregon politicians only support progress somewhere else.
John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization. A version of this article originally appeared in the Portland Tribune on April 25, 2017.
By John A. Charles, Jr. and Lydia White
The Sierra Club and other environmental groups are objecting to PGE’s plan for new, natural gas-powered generation to help replace the electrical output that will be lost when PGE shuts down the Boardman coal plant in 2020. What these groups should admit is that they are the ones responsible for that decision.
Last March, the Oregon legislature adopted the Oregon “Renewable Portfolio Standard” (RPS), which requires PGE to procure 50% of its retail load from designated renewable energy sources by 2040. This requirement, enacted with few public hearings in the rush of the one-month session, was demanded by environmental groups as a way to burnish the state’s mythical green power credentials.
The RPS is essentially a mandate for more utility-scale wind and solar power. These are known as “intermittent resources” because wind farms don’t generate any power about 68% of the time, while solar goes dead about 71% of the time. Being forced to rely on randomly-failing generators means that utilities must have back-up sources (known as “spinning reserve”) in order to preserve grid reliability.
Electricity cannot be stored like other commodities. As soon as electricity is fed into the grid, it travels at the speed of light through many pathways until it is consumed almost instantaneously by a household, factory, or some other end-user. Supply and demand have to be matched at all times in order to avoid grid failure, or “blackout.”
Right now, wind and solar only account for about 5.69% of Oregon’s electricity supply. As lawmakers keep ratcheting up RPS mandates towards 50%, the need for spinning reserve will go up as well. The only practical fuel is natural gas.
These new gas-fueled plants will be running even when not used, in order to be ready when the windmill blades stop turning or the sun goes down. This will result in wasted fuel and increased air pollution.
If utilities must have spinning reserve, can we predict the need for it? This question was the subject of a paper recently published by the National Bureau of Economic Research (NBER). The researchers found that a 1.0 percentage point increase in the share of fast-reacting fossil generation capacity in a country is associated, on average, with a 0.88 percentage point increase in the long-run share of renewable energy.
In other words: more wind and solar = more fossil fuel use. Oregon legislators rushed through the RPS law so quickly that they forgot about the law of unintended consequences.
PGE and PacifiCorp will both be turning to increased natural gas generation over the next 20 years because they don’t have a choice. Customers want their electricity 100% of the time, not 30% of the time. If environmental groups are offended by the use of more natural gas, they should admit that the 50% RPS requirement was a mistake and ask legislators to repeal it.
John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization. Lydia White is a Research Associate at Cascade. This article originally appeared in the Portland Business Journal on January 12, 2017.
By John A. Charles, Jr.
Oregon’s free-market research center, Cascade Policy Institute, celebrated its 25th anniversary with a gala dinner party on October 20 at the Tualatin County Club. Since its founding in 1991, Cascade has emerged as a leading voice for individual liberty and economic opportunity. Building coalitions with others, Cascade has helped develop innovative policies such as Oregon’s charter school law and the more recently enacted Right-to-Try statute.
Cascade helped Ethiopian immigrants break the Portland taxi cartel and secure a license to operate a new company. The Institute also helped a young Black woman start her hair-braiding business by persuading the legislature to repeal onerous licensing regulations.
And a paper first published by Cascade in 1996 suggesting that 84,000 acres of the Elliott State Forest be sold off helped persuade the State Land Board to do just that; a sale will be approved by the Board in December of this year.
However, such advancements will be tougher to come by in the years ahead, because the culture of Oregon has changed. The permanent political class that now rules the state has little respect for the entrepreneurial spirit.
The 2016 legislative session served as Exhibit A for this change. In the short space of 30 days, the majority party rammed through two major pieces of legislation: (1) a dramatic increase in the minimum wage; and (2) a mandate forcing electric utilities to provide 50% of their retail load from designated “renewable energy” sources.
Each bill only received a few hearings. Vast areas of complexity were brushed aside as unimportant. When hundreds of witnesses showed up pleading for a more incremental approach, they were dismissed. In 35 years of lobbying, I had never seen anything like it.
This was in contrast to Cascade’s early years, when the organization sponsored “Better Government Competitions” in 1994, 1996, 1998, and 2000. These events solicited good ideas from citizens about how to make government work better. Top officials including Governor John Kitzhaber and Portland Mayor Vera Katz enthusiastically endorsed Cascade’s “citizens’ suggestion box.”
Today, many elected officials openly disdain the public they serve. They don’t want your ideas, just your obedience and your tax dollars. Moreover, if you compromise and give them half of what they want today, they’ll be back for the rest tomorrow.
Nowhere was that more evident than with the so-called “coal to clean” bill in 2016. Why was this topic even being discussed when only nine years ago the legislature passed SB 838, which mandated that large electric utilities procure 25% of their power needs from specified “renewable energy” sources by 2025?
SB 838, passed in 2007, was seen as a visionary achievement. The leading legislative advocates, Senator Brad Avakian and Representative Jackie Dingfelder, were exultant. Oregon was now on a path to renewable energy Nirvana!
Yet by 2016, the “25 by 25” banner was seen as wimpy and out of date. Oregon’s perceived reputation as an international environmental leader had been undercut by legislation elsewhere. So the new (arbitrary) standard became “50% by 2040.”
We can do better than this. Perhaps if Measure 97 fails, legislators will stop looking for quick fixes and work together on tax reform. There are officials in both parties willing to tackle PERS reform and transportation finance, if the Majority party allows it.
Replacing hubris with humility would be a good first step.
John A. Charles, Jr. is President and CEO of Cascade Policy Institute, Oregon’s free market public policy research organization. This article originally appeared in the October 2016 edition of the newsletter, “Oregon Transformation: Ideas for Growth and Change.”
By Lydia White
In accordance with House Bill 2941, the Public Utilities Commission (PUC) is making recommendations to the Oregon State Legislature to ensure Oregon’s solar energy incentives are equitable, efficient, and effective.
One recommendation is to modify the compensation method for solar energy, net metering. Under net metering, solar owners consume energy their panels produce. When energy produced is insufficient, solar owners purchase additional energy from traditional sources. When excess energy is produced, solar owners sell energy. Solar owners are compensated at above-market rates and are exempt from paying their portion of incurred costs. Such costs include operation and maintenance of the grid and “spinning reserves,” the alternative power source utility companies run continuously in case solar produces less energy than projected. The state’s incentive structure shifts costs from solar owners to non-solar ratepayers. As the number of solar owners increases, ratepayers bear higher costs. The PUC is recommending these costs instead be shifted to taxpayers. While the PUC proposal’s efforts to alleviate inequity are commendable, their proposed recommendations still constrain Oregonians.
Although solar owners are double-dipping into the taxpayer pot—once when receiving heavily subsidized (and therefore low-cost) solar systems and again when receiving above-market compensation—the solar community is vehemently protesting. Despite the outcries, the PUC should pursue its recommendation to transition from net metering while also rejecting subsidies from ratepayers and taxpayers alike. By doing so, the PUC’s recommendations could relieve Oregon’s ratepayers from substantial burden.
Lydia White is a Research Associate at Cascade Policy Institute, Oregon’s free market public policy research organization.
Portland is one of seven cities still in the running for a $50 million grant as part of the “Beyond Traffic” challenge sponsored by the federal Department of Transportation.
While the idea of solving traffic congestion sounds great, that is not an actual goal of Portland planners. In fact, local officials are trying to make traffic worse, by downsizing roads and lowering traffic speeds. As part of this campaign, a northbound travel lane on Naito Parkway was recently removed, and later this year two lanes on Foster Road will be eliminated.
Portland planners think we drive too much, so they want $50 million in federal funds to develop new data collection systems to encourage people to travel by bus, train, or bike. Since most people prefer a car, this will be a big waste of public money.
The transportation challenge for Portland is the need for an expanded highway system. Experimenting with technologies such as electronic tolling as a way of paying for that expansion might have been a useful grant application. But Portland planners don’t want to grow the system; they’d rather keep it small and congested, then use fancy technology to entice a few people onto a slow bus.
This is not a plan that will move us “beyond traffic.”
Updated as of 6/22: According to The Oregonian, the U.S. Department of Transportation has selected Columbus, Ohio as the winner of the federal “Smart City-Beyond Traffic” competition.
With this distraction out of the way, perhaps city planners can turn their attention to something more useful, such as finding ways to actually reduce traffic congestion in Portland.
The Portland Public School board recently voted to prohibit textbooks or classroom materials questioning the mainstream thinking about climate change.
The decision has sparked an outpouring of commentary, with many writers supportive of the School Board.
However, the wording of the Board resolution should greatly concern parents of Portland public school students. Resolution No. 5272 is two pages long, but the most chilling part is the final sentence:
“[Portland Public Schools] will abandon the use of any adopted text material that is found to express doubt about the severity of the climate crisis or its root in human activities.”
The primary purpose of education is to teach students how to be critical thinkers. Now that the School Board has declared that expressions of doubt about complex scientific topics will be banned, what is the point of going to school?
Regardless of the subject we should encourage students to be skeptical. The more questioning, the better. They will be poorly prepared for adult living if they spend their childhood years being spoon-fed in schools where skepticism is prohibited.
Public education already faces a growing challenge from private schools, online learning, and home-based education. If Resolution 5272 is upheld, Portland Public Schools will give parents one more reason to leave.
In the recently concluded session of the Oregon legislature, the big environmental “win” was Senate Bill 1547, a bill that was hatched in secret by two large utilities and a group of environmental activists. The bill promises to rid the Oregon electricity grid of coal-fired power and to double the required levels of “renewable energy” from 25 percent to 50 percent by 2040.
When the legislature was debating SB 1547, members were calmly assured by proponents that the cost of these requirements would be minimal. They were reminded that the existing standard of 25 percent (by 2025) had always included an “off-ramp” if the cost of compliance reached 4 percent of utility revenue—and the costs had never come close to 4 percent.
Indeed, compliance costs for PGE in 2014 were only 0.24 percent of revenue (or $4.2 million in dollar terms). Obviously, ratepayers had nothing to worry about.
This storyline was especially soothing when it was repeated by Sen. Lee Beyer, former member and chair of the Oregon Public Utilities Commission. In his grandfatherly way, he told his colleagues that everything was under control.
The problem with this narrative was that it’s highly misleading. What the advocates didn’t say was that the reason the cost of compliance so far has been low is that utilities only needed to get 10 percent of their power from designated renewable energy sources through 2014. However, from 2015 to 2019, the requirement jumps to 15 percent, and rises steadily after 2020.
No one actually knows how much it will cost to get 50 percent of the power from “green energy” sources by 2040, but it’s going to be expensive.
We get a hint of this in the PGE forecast for 2017-2021. For those five years, PGE predicts that compliance costs will total $335 million, or 3.46 percent of revenue. Those costs will have to be paid for by ratepayers, and they will get nothing in return.
Under SB 1547, the highest costs are back-loaded. Advocates know that when the program blows up a decade from now, it will be someone else’s problem. Many of the legislators who voted for it will be sitting poolside collecting their PERS checks.
Senate Bill 1547 is a fraud. Virtually every claim made by proponents is false. Instead of increasing our “energy security” by making the Oregon grid “coal-free,” it will dramatically increase the risk of power failure by force-feeding huge amounts of intermittent sources like wind and solar into the grid. In engineering terms, the electrical distribution system requires stability; SB 1547 mandates volatility.
System costs have to rise because consumers will be paying twice for the same power—once for the subsidized wind farms and again for the adult power sources used to back up the wind farms that sit idle most of the time.
The advocates also claim that SB 1547 will get coal out of the system by 2030; but Oregon’s only coal-fired power plant will be shut down in 2020 anyway. The notion that this bill will affect coal used in other states is laughable.
In his floor speech, Rep. Cliff Bentz summarized his criticism of SB 1547 by saying it was “long on symbolism, short on results, and really expensive for ratepayers.” Nonetheless, a majority of legislators voted for it, and the governor signed it.
Ratepayers deserved so much better. In 2017, repealing SB 1547 should be at the top of the legislative “to-do” list.