Fractals of Change

What’s a Smart Grid and Why Does It Matter?

We Vermonters have a huge opportunity to use federal stimulus funds to shape our near term energy future. The Vermont of three years from now will have both reduced its use of expensive and relatively dirty peak electricity AND begun to substantially reduce the use of oil in cars and homes. Energy policy is a key part of the SmartVermont plan announced Thursday by Governor Douglas and the Smart Grid is a key part of energy policy.

Whether you believe that the most important goal of an energy policy is reducing CO2 emissions, preventing the outflow of dollars from the State and nation for imported oil, or stopping the flow of petro dollars to unfriendly places, you are probably part of the huge consensus which believes that we need to reduce our use of fossil fuels both locally and nationally. It's even better, of course, if we reduce our use of fossil fuels by making alternatives cheaper rather than just by making fossil fuels more expensive; that's kinder to our pocketbooks and has a better chance of being a model for the rest of the world.

What's a Smart Grid?

 

The Smart Grid lets us do all these good things. But what's the Smart Grid?

Smart Grid infrastructure consists of electronic meters at each residence and business, an information network to carry data from the meters to the utilities in near real-time AND to bring information on the instantaneous price of electricity back to consumers; gadgets which help us automatically adjust our electrical use to prices in whatever way we want to do that; and lots of electronics and other devices in the electrical grid itself, which let the grid use the information on usage to adjust transmission and supply and accommodate the varying output from alternative energy sources.

Smart Grid benefits to consumers are lower overall rates and the chance to use very cheap way off-peak electricity for charging electric vehicles and appliances, generating and storing heat for later use, and adjustable activities like clothes washing and drying. Businesses have even greater opportunity to reduce energy costs. The benefits for the economy are less money spent on fossil fuel and a better return on alternative energy investments. The benefit for the environment is less use of fossil fuel to generate electricity. Lots of winners.

Smart Grid Economics

 

Of course electricity is not really an energy source the way a windmill or coal-fired generating plant or a hydro-electric dam is; electricity is a way of getting energy from where it's generated to where it's used. The cost of electricity depends on both what fuel was used to generate it and how much it cost to transmit it from source to point of use. Similarly the environmental impact of using electricity depends on how the electricity was initially generated. Here in Vermont two-thirds of our electricity is carbon-free from Hydro Quebec and Vermont Yankee; that's why we have the lowest carbon footprint per capita for electrical consumption of any state in the country. Off-peak almost all of our power comes from these sources; on-peak we buy expensive electricity largely generated by spooling up gas-fired facilities, which use expensive fuel and are an expensive resource because they are only needed for a few hours each day.

The following charts are from Vermont's 2005 power plan.  The chart immediately below shows how wholesale prices vary during two normal days:

   

Peak costs for power during the afternoon on both days was 60% higher than the daily lows.  On a bad day, the difference is much greater:

 

Obviously if we can shift some usage from peak to off-peak, the electricity we do use will cost us much less because less expensive fuels and more environmentally friendly generating fuels are used off-peak. Also, the total cost for building electrical facilities is reduced if we don't have to build extra generating plants and transmission lines solely to meet peak demand.

Smart Grid and SmartVermont

Part of the SmartVermont plan is to use federal stimulus money to accelerate activities already underway and get the Smart Grid in place much faster than we would have otherwise. We must compete for and win grants for:

• the speedy completion of our broadband network (a good thing in its own right and essential to carrying the information on which the SmartGrid depends),
• rolling out smart meters statewide
• making the improvements in the grid and in our electrical substations needed to make this all come together, and
• funding experiments to determine what rate structures are most useful to consumers.

To take further advantage of the Smart Grid, we are looking at possibilities of using stimulus money to accelerate the adoption of plug in hybrid or pure electrical vehicles– perhaps first by transit districts and others who may be eligible for stimulus funding for fleet expansion – and to help grow the use of geothermal heat (which uses an electrical compressor) and storage heat.

SmartVermont means using the different flows of federal money – broadband, energy, transit, economic development, diesel fuel avoidance etc. – synergistically to build an even better Vermont for the future. It won't be easy; there's lots of coordination required; we have to succeed in our competitive grant requests; and there will be slipups. But the results'll be worth the effort.

 

The Stimulus Czar Summit – Part 2

Most of the summit the Vice President sponsored in Washington last week consisted of half hour presentations from the agencies which will be awarding the money to us state "stimulus czars". These ranged from a boring reading of a list of numbers we could already find on a website to dynamic presentations with new information. There was never a case when the recovery czars didn't have a lot of questions over how a program would work; sometimes the agency people had answers and often they didn't.

Clearly a lot of thought has gone into how to get money out quickly. Often agencies are waiving complex requirements for the first tranche of money in a particular program and then requiring a lot more information for the second tranche when the recipients have had more time. This makes sense.

In many cases money is being distributed through existing programs using existing formulas. This is a fast process and it explains why we already know how much Vermont will receive for programs like home weatherization grants to low-income (200% of the poverty level) people. However, we in the states still have to be creative in these cases. Some programs are receiving ten times more money than they ever did before. Can we spend it as quickly as we were supposed to under the old rules? Should we broaden eligibility since there's more money? If we do, what happens when the money stops flowing from DC in a few years? Do we have enough people trained to do the work that the particular category of stimulus money supports? Not much guidance from Washington on these questions but we can work them out at the state level.

The most serious problem we saw was that there has been very little coordination between most of the federal agencies who are giving out money. Their definitions are not aligned. There is no clear way for us to make a request that spans multiple agencies even when that may make sense to do. Here in Vermont we want to assure that we build something lasting with this money by focusing many of the different stimulus streams on relatively few goals. We would expect preference to be given to applications which use the stimulus money well. But what if each of the agencies involved when we ask for a competitive grant for something like smart grid or broadband says "how can you be shovel-ready when you need approval from multiple agencies? What if the other agencies turn you down? Sorry, no money for you." We can't let lack of coordination in Washington (which the agencies say, with some justification, they haven't had time for) prevent us from coordination and smart use of the money.

Many states objected to the fact that, although the act is generous in allocating money for inspectors general at the federal level to audit how the money is spent, in most cases it allocates no administrative money to the states. This came to a head when Earl Delvaney, Chairman of the Recovery Act Transparency and Accountability, told us that they really expected the states to do the primary auditing for monies granted to or though them and Washington would just audit the auditors. "How come you have the money and we have the work?" the stimulus czar from somewhere asked. Delvaney was frank is saying that, if he had known he was going to have the job he has, he would have lobbied for some different provisions – presumably money for state administration or at least audits. Here in Vermont we're absorbing the extra administrative expense at the state level by "borrowing" skilled people from various agencies.

The word "transparency" was used more than the word "jobs". Problem is that there isn't yet any guidance on some basic transparency questions. For example, we're supposed to report on a per program basis the number of jobs created or retained and these numbers need to hold up in an audit. But what counts as a job? It's not as simple a question as it seems. Suppose you're building a building and you hire some people to build trusses onsite; probably those are jobs. But what if you buy pre-built trusses? Do you count the jobs in the factory that went into making the trusses? The question has some urgency because we'll need to require contractors and sub-contractors to comply with reporting requirements so we can report accurately but we're signing contracts today before we know what it is we're reporting.

Feel free to ignore the whining above; we'll figure a way to make all this work. It's our job.

The first post on the stimulus czar summit is at http://blog.tomevslin.com/2009/03/the-stimulus-czar-summit-part-1.html.

 

The Stimulus Czar Summit – Part 1

Vice President Joe Biden invited the state "stimulus czars" to a Washington conference on the American Recovery and Reinvestment Act (The stimulus bill); according to the organizers, representatives from 49 states showed up (they didn't say which state didn't show). We really do want to find out as much as we can about this huge, unwieldy program including both what we can and can't do. We did learn some but not as much as we would've liked; we also made contacts with some of the federal agency people we'll be dealing with in the months to come.

"Transparency" was the mantra of the conference; every speaker used the word at least once; many coupled it with "accountability". In that spirit I'll post both the good and bad things about the conference on this blog. I also twittered some of my notes from the conference (it was open to press so not confidential); if you're interested, you can read them (in reverse order) at twitter.com/tevslin. In Vermont we will figure out how to use modern technology, including social media tools like twitter, to get information out.

Energy Secretary and Nobel laureate Steven Chu opened the conference. Chu said that the stimulus money which the Department of Energy awards will "create jobs which can't be outsourced, promote alternative energy, reduce our dependence on foreign oil and… oh, yes save the planet." He pledged that he agency would move quickly to get money out the door and they did, in fact, announce the almost immediate availability of the first $780 million installment of a total program of nearly $8 billion dollars for weatherization and state energy programs. Vermont's total receipts from these programs will be $38.8 million assuming that we demonstrate suitable progress in using the funds as intended (which we will). The weatherization program, which is administered through the states, provides assistance to low income families earning up to 200% of the poverty level for weatherizing their homes; the state energy program can be used for a variety of different energy efficiency projects. The current (pre-stimulus) Vermont weatherization program is described at http://www.helpforvt.org/weatherization. Information on the expanded program will be available soon.

Chu then introduced Vice President Biden. Biden has been positioned as the enforcer for transparency and accountability in the administration of the stimulus bill – "don't mess with Joe". He was suitably stern. Not only will no swimming pools be funded (it says that in the law), but he and the President will soon announce a whole bunch more things along the same line that cannot be paid for with stimulus funds. "Just because it's legal [not forbidden by the law itself], doesn't mean you can do it," he said. He continued that Congress has given the states a huge opportunity to administer large parts of this very ambitious program; if you [stimulus czars] don't do a good job, it'll be a long time before Congress entrusts the states with much responsibility again.

My personal guess is that if we don't all do a very good job on this – feds and state people alike – it'll be a long time before the taxpayers trust any of us with so much of their money again and, when they do, there'll be a new set of people who earn that trust.

We should have known something was up when the television cameras started to cluster around the edges of the small stage; there were more of them appearing every minute. Somebody came and whispered in the ear of Matt Rogers, Senior Adviser to the Secretary of Energy, who was then presenting. "I have a surprise guest to introduce: the President of the United States Barack Obama." We all stood, of course. The President came in quickly from the back of the room and took the podium. He only spoke for about five minutes but we got the message: he thinks this is important; there will be transparency; people will know where there money has gone and what results have been achieved.

"Use these precious dollars [which] taxpayers gave up to deliver short and long term results," the President said. "You've got a wonderful mission; seize this opportunity to put your shoulders to the wheel of history."

More about what we learned (and didn't learn) from the agencies is at http://blog.tomevslin.com/2009/03/the-stimulus-czar-summit-part-2.html.

Live Twitter of VP Biden’s Conference for State Recovery Czars

Since "transparency" is the watchword of this conference, am twittering live while my battery holds out. Am @tevslin on twitter.

Was the Economic Stimulus Bill a Good Idea?

Last Friday Governor Jim Douglas (R-VT) and Senator Pat Leahy (D-VT) cosponsored and appeared at a workshop for Vermonters on the American Recovery and Reinvestment Act (aka ARRA aka "the stimulus bill"); 700 people came and more would have if there had been more room available at Champlain College. There were lots of questions, of course; some of which there were answers for and others which'll have to wait for answers.

The question which sticks in my mind is one a woman asked me in the hall: "was the economic stimulus bill a good idea?"

The answer is that it's up to us to make it a good idea so we really don't know yet. Spending this much money this quickly is an opportunity. If we do a good job with most of it, the bill will have been a good idea. If the money is spent unwisely or ineffectually, it will have been a very bad idea. This is money that is adding to the national debt. Debt's OK if you use it to build assets; debt's not OK as a regular way to pay current expenses (that's why states like Vermont have to balance their budgets every year but can borrow for capital items). The misuse of debt clearly helped get the world economy where it is today. So it's crucial that we use this money borrowed from future taxpayers well.

Back in the Great Depression there was a very serious suggestion that Vermont apply for federal money to build the Green Mountain Parkway. This scenic skyway would link the mountain PEAKS of Vermont including Killington, Camel's Hump, and Mt. Mansfield. Obviously lots of jobs would be created as this road was built. Tourists would flock to Vermont so that they could drive skyway as they do the Blue Ridge Parkway in North Carolina. One of the two main proponents of the parkway was James Paddock Taylor, who was not only head of the Vermont Chamber of Commerce but also the man who had the idea for the Long Trail which had already been built but wasn't a big money maker. The Burlington Free Press was for the parkway; the Rutland Herald was against it. In the end, the parkway was defeated fairly narrowly in the legislature. Good thing even though it would have created lots of jobs.

On the other hand many of the fine trails visitors and Vermonters hike on today were built by The Civilian Conservation Corp (CCC) during the depression. This is infrastructure which has lasted and still serves us well. There are many other projects from the depression era Works Progress Administration (WPA) which served well for many years, some of which are still around. And there was lots of money that was wasted.

The great economist John Maynard Keynes said that government could help cope with depressions by hiring people to dig holes and hiring other people to fill them up again. Doesn't really seem like a good idea, though. Once the money runs out all you have is debt and some recently disturbed dirt.

We do want to put people back to work; but we can do better than Keynes suggested. We have to hire people to build infrastructure that'll be a long term benefit and the basis for permanent jobs. We not only have to reduce the backlog of deferred maintenance on our existing systems at a time when workers and equipment are available and asphalt and steel are cheap; we also have to build the communication and smart energy infrastructure of the future. We need to do these things for economic, environmental, and strategic reasons. The stimulus money CAN be used to get us where we want to go. It can also be squandered.

The choice is ours. Was the stimulus bill a good idea? We'll see. The results depend on all of us.

Tom Evslin

The Challenge of Stimulus

Have spent the last week immersed in ARRA – the American Recovery and Reinvestment Act, better known as the stimulus bill. You'll find the one meg PDF here if you want to help make sure I haven't missed anything. As Vermont's Chief Recovery Officer it's a part of my job to make sure we don't miss anything that we could reasonably use.

The short term part of the challenge is that we don't yet know what most of the bill means. Like most law, it leaves the fine detail to regulation writing in various federal agencies. Since there's been turnover at the top of all these agencies and some don't even have their new leaders yet let alone the second echelon, it's going to be tough to get sensible regulations out at warp speed. Until we have regulations, we don't know what the rules are for getting the money – but, once the rules are out, there'll be a mad scramble. In many cases there is no guarantee that a particular state will get anything. So we have to make some guesses and get prepared.

The more interesting part of the challenge is the long term impact. How do we use this short term flood of money (it'll stop in a couple of years) to make a long term difference for Vermont? How do we take umpteen different programs with umpteen different objectives and rules written by umpteen different agencies and combine them to produce a coherent result? It's not even that all the money comes to the State and we can disperse and send it according to our vision. Non-profits, for-profits, coops, towns, etc. etc. can also apply for many programs. We can attempt to coordinate; we can cajole; in some cases the bill says that the states will be consulted so we get some authority from that. But we are certainly not in full control.

This is the problem and the opportunity nationwide. We've got to take this money – almost a trillion dollars – and build the infrastructure for the future. Actually, not anywhere near a trillion dollars is available for infrastructure; much goes for tax relief; expanded unemployment insurance; help to the states with Medicaid and a bunch of counter-cyclical stuff, most of which is necessary to keep the patient alive while we're getting ready for rehabilitation.

With what is available for infrastructure, we've got to do smart stuff. We have to make sure that all Americans (although my job is just Vermonters) actually have broadband, not just the availability of broadband. Why? Because when we build applications like Smart Grid to save on energy bills or electronic medical records to improve health care, we need to know that everyone is going to be able to access those applications. If not, we end up building parallel systems for those who are still offline. Money for Smart Grid and electronic medical records is in the bill. So is money for broadband. We have to make sure that the communications layer is there when the applications come online and that the applications are built assuming the communications layer will be there.

Similarly we need to make sure job training money in the bill gives workers the skills they need not just for the two year stimulus program – although that is important – but also the skills they'll need for the jobs that'll be created when the new infrastructure is in place.

So back to my reading.

My New Gig

JAMES H. DOUGLAS

            GOVERNOR

 

State of Vermont

OFFICE OF THE GOVERNOR

For Immediate Release:

March 2, 2009

 

Contact: 

Dennise Casey: 802.233.9436

Tom Evslin: 802.760.1226

 

 

Governor Announces New Office of Economic Stimulus & Recovery

 

Former VTrans Secretary & High-Tech Entrepreneur

Tom Evslin to Lead Intensified Effort

 

Establishes New Director of Accountability with Auditor’s Office

 

 

Montpelier, Vt. – Today Governor Jim Douglas announced the creation of the Office of Economic Stimulus and Recovery (ESR) to coordinate the State’s use of federal funds authorized by the American Recovery and Reinvestment Act.   The Governor has tapped former Vermont Transportation Secretary and high tech entrepreneur Tom Evslin to head the Office as Chief Recovery Officer. The Office will be located in the Agency of Administration and report to Administration Secretary Neale Lunderville.

 

The Vermont Federal Recovery Office, which was established in January before the recovery bill became law, has been fully incorporated into ESR.  Jim Bush will continue to serve in a leadership role as Director of Physical Infrastructure, responsible for oversight and delivery of the nearly $200 million in new state and local infrastructure projects.

 

 “The scope of the American Recovery and Reinvestment Act extends beyond the original intent of Medicaid and transportation funds,” said Governor Douglas.  “In turn, we have expanded the Federal Recovery Office into the Office of Economic Stimulus & Recovery to ensure the federal money flows into our economy quickly and with strict accountability measures in place.”

 

The Office of Economic Stimulus & Recovery will assist and coordinate efforts of State, community and private organizations to obtain funds for projects that not only alleviate the pain of the current recession but build the infrastructure necessary for Vermonters to succeed in the second decade of the 21^st century.

 

“The Office of Economic Stimulus & Recovery will work at entrepreneurial speed to make certain Vermont obtains all possible funds and gets maximum effect from tight coordination between programs,” said Evslin. “As much as possible, we need to use new technology to preserve Vermont values while building the foundation for a strong economy that can compete in a changing world.”

 

Accountability and transparency are key elements of the newly constituted Office. Working with Auditor of Accounts Tom Salmon, the Office will appoint a Director of Accountability from the Auditor’s staff to assure that federally funded projects are designed from the beginning to meet stringent requirements for audit and accountability.  The Director will serve as a direct link between the Auditor’s Office and Office of Economic Stimulus & Recovery.  “This important partnership is essential to ensure that Vermont exceeds the new federal standards for transparency, accountability and effectiveness,” said Auditor Salmon. “We want to ensure compliance and accountability right out of the gates.”

 

Evslin has agreed to lead the Office working at minimum wage – and has volunteered to return his entire salary to state coffers. “I’m thrilled and honored for the opportunity to help advance Vermont and position us for a strong economic recovery,” Evslin continued. 

 

The Office will be staffed by existing state employees on temporary assignment from agencies and departments. In addition to a Director of Physical Infrastructure and a Director of Accountability, the Office will include staff resources for Network Infrastructure, State Programs, Planning, and Community Partnerships.

Tom Evslin Bio

Tom Evslin was Secretary of the Agency of Transportation under former Vermont Governor Richard Snelling, a member of the Board of Trustees of the Vermont State Colleges, and is currently vice-chair of The Snelling Center, a non-profit dedicated to good governance in Vermont. Evslin’s civic career began as town moderator in Worcester, Vermont in the 1970s.

Evslin ran a software business in Vermont

for many years before going to work for Microsoft, where he was responsible for communication products.  Evslin went on to work at AT&T where he founded their first Internet business, WorldNet. In 1997 Tom and his wife, Mary Evslin, founded ITXC which was a pioneer in the use of the Internet for phone calls.  The company grew to be one of the world’s largest wholesale carriers of international calls. The company went public in 1999 and is now part of Indian telecommunications giant Tata Communications. Mary Evslin was the founding chair of the Vermont Telecommunications Authority. The Evslins live in Stowe, Vermont

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Dennise R. Casey

Deputy Chief of Staff

109 State Street

¨ The Pavilion ¨ Montpelier, VT 05609-0101

Telephone: 802.828.3333 ¨ Fax: 802.828.3339 ¨ TDD: 802.828.3345