Creative Ideas for Surviving Tough Economic Times

Mayor David Coss of Santa Fe and the nonprofit Creative Santa Fe are holding a forum to solicit ideas from the community on job creation and economic development. Here's the letter I just sent from Local Energy...I hope you like it!

Hi Kris and the Creative Team,

Here are my ideas for creating jobs and strengthening the local economy in Santa Fe:

In tough economic times, strengthening a local economy must focus on plugging leaks. That means looking at how to make the most of every dollar that is here, rather than looking to attract big outside capital. It’s not like there are huge capital flows out there ready to be captured anyway, other than the federal stimulus money everyone is so excited about. So sure, go after some of that “gummint” money if you want to, but remember that it is short-term and it was all borrowed from taxpayers in the first place.

Every community that has done an economic leakage study has shown the same four main leaks: Food, Interest, Insurance, and Energy. So our community economic plan MUST focus on these four items. We should begin by focusing on the ones that hold us hostage:  Imported food and imported energy.

Plugging the energy-dollar leaks is easy, mostly because my nonprofit recently spent nearly two-million dollars researching how to do it. You begin by building technology-neutral platforms that allow local companies to provide thermal and electrical energy to their community. Thermal is easier to start with because it’s unregulated, and you can start small and interconnect the systems as you move forward. Every building that is heated using water-delivery (i.e. with hot-water radiators, baseboard, or radiant floor) can be easily modified with a Thermal Access Port that allows a third-party vendor to furnish heat to it. And there’s no monopoly on heat sales, so you don’t have to worry about the PNM’s of the world trying to shut this effort down.

Building the heat network is also a prerequisite to building the electric network, because generating electricity typically involves waste heat and you will need a place to dump it. For local electricity you will need a legal strategy, because as we’ve seen, the incumbent isn’t willing to allow new players to come in. But you CAN beat the monopoly if you are creative about it. Hint to City Council:  Local electricity does NOT involve inviting a Baltimore-based company funded by a Wall-Street Bank to connect Chinese-made products to a monopoly power grid. What it does involve, as a first step, is creating a self-generation cooperative that works exclusively behind the meter, installing cooperatively owned power systems of all types and sizes. This allows you to begin right away putting in the locally owned generation that you will need as you prepare for step two, which involves (deep breath please) creating a municipal electric power system. Power for the system would come from (you guessed it) the self-generation cooperative, which would continue installing local generation strategically to reduce power imports and defer any needed line upgrades.

I’ll leave it to the Ag folks to solve the food localization strategy, but be sure that it involves a local greenhouse cooperative building climate-battery greenhouses with moveable radiant blankets for night-time protection. For this component, consider supporting local nonprofits like my own that have been researching and developing such efforts for years. We could really benefit from your support.

Many, many thanks for the opportunity to provide input, and all the best with the effort,

 - Mark Sardella, Chairman
   Local Energy, a 501(c)(3) charitable nonprofit

Hi Kris and the Creative Team,

Here are my ideas for creating jobs and strengthening the local economy in Santa Fe:

In tough economic times, strengthening a local economy must focus on plugging leaks. That means looking at how to make the most of every dollar that is here, rather than looking to attract big outside capital. It’s not like there are huge capital flows out there ready to be captured anyway, other than the federal stimulus money everyone is so excited about. So sure, go after some of that “gummint” money if you want to, but remember that it is short-term and it was all borrowed from taxpayers in the first place.

Every community that has done an economic leakage study has shown the same four main leaks: Food, Interest, Insurance, and Energy. So our community economic plan MUST focus on these four items. We should begin by focusing on the ones that hold us hostage:  Imported food and imported energy.

Plugging the energy-dollar leaks is easy, mostly because my nonprofit recently spent nearly two-million dollars researching how to do it. You begin by building technology-neutral platforms that allow local companies to provide thermal and electrical energy to their community. Thermal is easier to start with because it’s unregulated, and you can start small and interconnect the systems as you move forward. Every building that is heated using water-delivery (i.e. with hot-water radiators, baseboard, or radiant floor) can be easily modified with a Thermal Access Port that allows a third-party vendor to furnish heat to it. And there’s no monopoly on heat sales, so you don’t have to worry about the PNM’s of the world trying to shut this effort down.

Building the heat network is also a prerequisite to building the electric network, because generating electricity typically involves waste heat and you will need a place to dump it. For local electricity you will need a legal strategy, because as we’ve seen, the incumbent isn’t willing to allow new players to come in. But you CAN beat the monopoly if you are creative about it. Hint to City Council:  Local electricity does NOT involve inviting a Baltimore-based company funded by a Wall-Street Bank to connect Chinese-made products to a monopoly power grid. What it does involve, as a first step, is creating a self-generation cooperative that works exclusively behind the meter, installing cooperatively owned power systems of all types and sizes. This allows you to begin right away putting in the locally owned generation that you will need as you prepare for step two, which involves (deep breath please) creating a municipal electric power system. Power for the system would come from (you guessed it) the self-generation cooperative, which would continue installing local generation strategically to reduce power imports and defer any needed line upgrades.

I’ll leave it to the Ag folks to solve the food localization strategy, but be sure that it involves a local greenhouse cooperative building climate-battery greenhouses with moveable radiant blankets for night-time protection. For this component, consider supporting local nonprofits like my own that have been researching and developing such efforts for years. We could really benefit from your support.

Many, many thanks for the opportunity to provide input, and all the best with the effort,

 - Mark Sardella, Chairman

   Local Energy, a 501(c)(3) charitable nonprofit

Will Utilities Monopolize Distributed Generation?

In a case currently before the New Mexico Public Regulation Commission, PNM and other regulated monopoly utilities are objecting to third-party developers installing generators (solar, wind, cogeneration, etc.) within their service territories and charging their customers based on the kilowatt-hours produced by the generator. They say that such arrangements amount to operating a competing public utility within their exclusive service territories.

The case is interesting because the City of Santa Fe recently entered into an agreement with Sun Edison to install solar power on its facilities using a power-purchase agreement—just the type of financing system that PNM and others object to. Apparently the City was unsatisfied with shipping its energy dollars to a New Mexico-based, Wall-Street funded corporation, and instead hopes to ship them to a Maryland-based, Wall-Street funded firm. (Sun Edison’s primary funder is Goldman Sachs – the financial behemoth whose alumni keep getting appointed to run our treasury.) If the City moves forward with the Sun Edison deal, the rate at which energy dollars leave the local community will actually increase. (The message that Local Energy has spent six years promoting has yet to catch on at the City, apparently!)

In effect, the case seeks a legal interpretation of what constitutes a public utility in New Mexico. On Tuesday (November 10, 2009), hearing officer Carolyn Glick of the NMPRC explained her understanding of the laws regarding when a third-party can own, operate, and finance distributed generation without being considered a public utility.

The short answer to the legal question, according to Glick, is that a DG developer is not a public utility if it develops a single system on a host’s property and then sells the energy to that host. The developer can even repeat this model at multiple host-sites without being considered a public utility. The line is crossed, in her eyes, when the developer builds a single system and then delivers the energy to multiple customers – then it could be considered a public utility.

Chairman Jones and Marks both questioned Glick. Jones was primarily concerned with whether PNM Resources, the parent of PNM, would begin installing DG through one of its unregulated divisions. He thinks that this would be bad because he believes that DG tends to raise rates because with DG, the utility’s fixed costs must be spread over a smaller load.

His comment illustrates just how effective utilities have been in their 35-year campaign against DG. Despite mountains of evidence to the contrary, regulators and lawmakers still think that using distant generators operating at very low efficiency and then shipping the power over hundreds of miles of expensive transmission lines is superior to using many small, highly efficient generators located near load centers.

Chairman Jones also remarked that his job as a commissioner includes making sure utilities stay in business. At one time the job of the commission was to protect ratepayers against monopoly mischief, but it was re-branded at some point to one of “balancing the interests of ratepayers and utilities”. Even that would be OK if ratepayers had an advocate in cases before the commission, but we don’t.

Commissioner Marks remarked that he would like for the case be resolved before the legislature meets in January. The smart money, it seems, is on PNM dragging the case out as long as possible so that they can get the relief they seek from the legislature before the NMPRC tells them they can’t have it.

It should make for a very interesting legislative session this coming January!

Farm Energy News: Greenhouse Technology

As part of the Regional Food and Fuels project with the Santa Fe Alliance, I've been visiting some of the greenhouses in the area to study the potential to grow food year round in commercial quantitites in Northern New Mexico. Some of the setups are downright impressive, but every one I visited needed help. Either the controls don't work properly, or they leak and need lots of supplemental heat to work in cold weather.

I'm wanting to start a Winter Farming Cooperative that enables farmers that want greenhouses to finance them by selling shares of the produce they will grow in them, just like with a CSA. Only I'd like to see dozens of farmers pool their output in solidarity, so the risk and rewards could be spread over a wider base of farms.

Send me an email if you'd like to follow this effort.

Energy From Space? That is NOT Local!

The Wall Street Journal carried a story today describing how Pacific Gas and Electric (PG&E) is now trying to convince state regulators for permission to sign a contract to get power from a space-based solar power system. Proponents of space-based solar power, which gets beamed to earth with microwaves, acknowledge that launch costs could be an issue but tout the benefits of it being 24/7 baseload power. Unless the microwave goes off track and smokes a city or something....

Honestly, I can't tell who is the dumbest one here -- the company that is designing the system, or PG&E, or the Wall Street Journal for carrying the story with a straight face. But if regulators allow this to go forward, it'll be the ratepayers that get smoked for sure.