Letterbox - Peak Oil, PSE Sale, Beachwatcher's and Reconveyance

Dear Watchers:

One of the first things to do is to eliminate the subsidy to oil companies that are making huge profits. However, bona fide exploration should be deductible from income taxes.

Years ago there were allegations that integrated oil companies (those that produced oil and sold gasoline) would operate oil exploration and oil production as a company separate from a sales company. The producing company would manipulate the price of oil it sold to the sales company to reduce overall income tax. I don’t know what is going on now but I suggest that the task force hire a qualified accounting firm to investigate.

Indeed, oil reserves have declined and as a result of prices have increased.

There will be some ups and downs in the price of gasoline as refineries are shut down to be serviced and as demand for gasoline increases by summer driving, but in the long term prices will go up and up. Not only are oil reserves declining, China has become more prosperous, has more cars and uses much more oil.

Another reason the price of oil is up is because the value of the dollar has gone down, and foreign oil contracts are all about the value of the dollar.

Oil fields in the U.S. are depleted except for those in Alaska. I do not support drilling in the Arctic National Wildlife Refuge. I think it is morally wrong to exterminate so many creatures there.

When President Bush went to Saudi Arabia recently and asked the Saudis to increase their rate of oil production, he was turned down. Their main oil field began producing water with oil, an indicator that the life of the oil fields is limited. They said they would invest their profits at home and not in foreign countries as they so often had.

What we are seeing is the death of the oil age. Oil congregants are extending the death of the oil age by drilling in deep water where technology was not previously available, or by the production of heavy oil that was passed up because it was difficult to refine, but in both cases at a large increase in the price of oil and gasoline. It is akin to the death of a son or daughter. First is denial like President Bush’s request of Saudi Arabia. Next is acceptance, which is doing what he can under the circumstances. That is what I hope the Oil Task Force will do.

We can promote solar panels on the roof of every house in Bellingham and Whatcom County. The time is ripe for that. Recently when Mark Turner put solar panels on his house, there was an article in The Bellingham Herald about it. Moreover, we can promote electric cars. Again, the time is ripe!

The following was published in the May 20, 2008, Wall Street Journal: “Nissan Motor Car and NEC Corp. announced they will begin producing lithium-ion batteries, a key technology needed for electric cars.” A number of other firms have announced that they will start producing similar batteries for electric cars so electric cars will not be rebuilt by Nissan.

Promotion of solar panels and all-electric cars are status symbols. I suggest that the task force consult or hire a qualified professional to get that promotion on the right track.

Wouldn’t it be fun to plug in all electric cars to electricity from your solar panel instead of buying gasoline at four dollars and eventually much more?

Dear Watchers:

In our recent Puget Sound Energy (PSE) bill was a notice of a proposed rate increase and a pending takeover of PSE by a foreign consortium. To date there have been 10,000 comments regarding the rate increase and only 4,000 regarding the merger.

While the rate increase will significantly impact households already struggling with higher costs in every realm of daily life, the larger issue is the takeover of our utilities by a foreign firm, Macquarie Group of Australia. The state Attorney General has spoken out against the deal and said that it could result in an immediate rate increase of 6 to 10 percent on top of the rate increase PSE is asking for immediately.

Many financial news sources and forecasters have concerns about Macquarie using seriously heavy debt ($4.2 billion) to finance the deal. Simon ffitch, who represents consumers as the Public Counsel Chief in the state Attorney General’s Office, is concerned that this could saddle Puget Energy with debt, sapping its financial standing and putting the company at risk.

Our current PSE holds ownership of the infrastructure including Baker dams and the water rights to Baker Lake. It operates under the oversight of both the Washington Utilities and Transportation Commission (WUTC) and the U.S. Securities and Exchange Commission (SEC). With the sale to Macquarie, ownership and profits transfer to foreign investors.

When utilities in this state are owned and operated by publicly held U.S. companies, there is oversight from both the WUTC and the U.S. Securities and Exchange Commission. Without public ownership, that oversight goes away.

A concern expressed at the Bellingham hearing was Macquarie Consortium’s poor disclosure policy and corporate management track record. A Macquarie subsidiary in 2002 was accused of minimizing power output for the sole purpose of maximizing profits. According to Bloomberg.com, Macquarie gobbles up utilities and infrastructure and milks them for quick profits.

We need to know what other options are available and need to be explored. The WUTC owes it to the PSE customers. Their mission statement includes “we visualize creative solutions, promote environmentally responsible energy production and services and vow to protect consumers.”

If you feel that such a transfer of ownership would do harm to the public you may address your concerns to the following:

Washington Utilities and Transportation Commission: comments@utc.wa.gov or WUTC, P.O. Box 47250, Olympia, WA 98504-7250.

(Please include docket number U-072375.)

Dear Watchers:

Having recently completed an environmental training called Beachwatchers through the WSU Extension service, I feel compelled to comment on your front page article (June 2008) by April Markiewicz on the water quality of Lake Whatcom. I’m most concerned about preserving and improving our water quality. As I understand it, legislation was passed long ago regarding storm water runoff, which is now known as an “unfunded mandate.”

Having had an energy efficiency business for about 30 years and three adult children, I’ve come to appreciate incentive-based motivation. While many come to value Cicero’s “virtue is its own reward,” an incentive toward “right livelihood”/sustainability is often just what’s needed to move forward.

A vital part of the Beachwatchers’ training was exposure to an interesting and effective measure to interrupt stormwater called “rain gardens.” These “rain gardens” are planted basins into which flows stormwater to interrupt and cleanse it; construction plans can be downloaded and much pleasure gained from watching one’s loved one[s] sweat while improving one’s property and doing a good thing. My instructor’s supervisor suggested I mention that “rain gardens” help protect precious resources.

I do not know if any financial incentives available, but there should be; perhaps a clever CPA can figure an angle. All residents of Bellingham want clean water and “rain gardens” are a proven method to preserve this precious resource. It is my hope that they will become common.

P.S. In addition to the obvious good of “rain gardens,” I hope diapers will be kept out of the Bloedel Donovan swimming area.

Dear Watchers:

In the June issue of Whatcom Watch, April Markiewicz gives us a sobering view of the current state of Lake Whatcom water quality. Clearly, the downward trends that have been observed for decades continue unabated. This, and the recent draft TMDL report show clearly that action is needed — the question is: what actions will be most effective at this time?

Unfortunately, in the article, Markiewicz deviates considerably from an unbiased presentation of the facts when she writes under the heading of “What We Can Do.” Here, she devotes two-thirds of her text to promotion of the Kremen/DNR proposal to reconvey 8,400 acres — 7,400 of which are in the Lake Whatcom watershed — to Whatcom County for parks purposes.

As I have already discussed the level of forest practices on DNR land in the January 2008 issue of Whatcom Watch, I will not go into details regarding that here. Suffice it to say, only 40 percent of the 7,400 watershed acres proposed for reconveyance are available for harvest under the landscape plan, and these approximately 3,000 acres (not greater than 4,000 acres as stated by Markiewicz) are not as likely to be harvested as other DNR or private watershed forestlands due to their steep slopes and relative inaccessibility.

As an example of what we should be concerned about in the area of forest practices, right now there is a private forest practice application to clearcut 22 acres of a 24-acre parcel near Strawberry Point (fpa 2810011). Whatcom County government has neither taken an interest in, nor have they offered to help the city of Bellingham in the purchase of this property from its willing landowner.

In the past five decades, the level of forest practices in the watershed has dropped drastically; much of this decrease has occurred in the past two decades. At the same time, forest practice rules have been tightened considerably. This decreased volume of forest practices results from two processes — the conversion of forestland to residential use, and the transfer of a large block of private forestland in the watershed to the DNR in 1993.

During this same time period, the water quality of Lake Whatcom has declined precipitously. The negative correlation between forest practice activity and water quality doesn’t mean that we needn’t be concerned about forest practices, but the strong positive correlation with regard to conversion to residential use means that this is where we must concentrate our efforts.

As I have said before — reconveyance will make a nice park, but it is a park we cannot currently afford.

Dear Watchers:

This ain’t no laughing matter. Pardon my grammar, but this is not a good time to be asleep at your citizenship wheel. Now is the time to speak up. You are looking at an Enron-style fiasco in the making and you will be paying the bill — literally — if you don’t educate yourselves, express your opinions and grind this scam to a halt. Check it out: http://www.savepse.org.

This isn’t really my gig — others are working much, much harder on this — but hardly anyone knows that our power company, PSE, is at risk of being taken over for foreign investors, specifically the Macquarie Group, which focuses on infrastructure investments, including toll roads, bridges, water companies and airports around the world.

Macquarie has an alarmingly horrific reputation of gutting and running, and their debt loads are so high (over 85 percent) that they will likely immediately start selling off parts of PSE if they succeed in the takeover (and in fact I’ve been told that they are already in conversation with FERC regarding selling some of PSE’s assets).

What does this likely mean to you? Well, people who know way more than I are estimating that there will be additional rate increases of 30-40 percent over the next five years if this takeover occurs.

The current request for a 12 percent rate increase is just for now, and future increases under Macquarie control are likely to be much larger than they would be if PSE were under public PUD control. (PSE ratepayers already pay some of the highest electricity rates on the West Coast.)

The takeover would almost certainly result in much less responsive service as well, as the rich guys sitting in their armchairs thousands of miles away aren’t likely to be too concerned about Washingtonians. And who knows what the takeover means to the management and maintenance of our Baker River dams, which actually could be sold again in the near future?

The best answer is for our local public utility districts (PUDs) to buy PSE, and then our power becomes a public resource, not something for investors to manage for maximized profit and minimized service. Skagit PUD is taking a poll — and I encourage you link to their Web site via the Save PSE Web site (scroll part way down the page) and take the poll, or call them directly.

I strongly encourage you to take a look at the Web site, http://www.savepse.org get educated and decide if this issue is worth a few minutes of your time. I know that everyone is busy, but so often it’s just a few who fight the battles for the benefit of all. And it’s not clear that this battle will be won unless more people become engaged.