White House Chronicle

News Analysis With a Sense of Humor

Wind of Change Challenging Utilities

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On Feb. 3, 1960 in Cape Town, British Prime Minister Harold Macmillan shook up what was still the British Empire in Africa by telling the Parliament of South Africa that “the wind of change is blowing through this continent.”

His remarks weren’t well received by those who that thought it was premature, and that Britain would rule much of Africa for generations. The British ruling class in Africa – the established order — was shaken.

But Macmillan’s speech was, in fact, a tacit recognition of the inevitable. It was the signaling of a brave new world in which Britain would grant independence to countries from Nigeria to Botswana and Kenya to Malawi. Britain would not attempt to hold the Empire together. His speech was seminal, in that Britain had signaled that things would never ever be the same.

To me, the appearance of investor and entrepreneur Elon Musk at the Edison Electric Institute’s annual convention in New Orleans was a “wind of change” moment for the august electric utility. It was a signal that the industry was coming to terms, or trying to come to terms, with new forces that are challenging it as a business proposition in a way that it hasn’t been challenged in a history of more than 100 years.

But whereas Britain could swallow its pride and start a withdrawal from its former possessions, the electric industry faces quite a different challenge: How can it serve its customers and honor its compact with them when people like Musk, who is the non-executive chairman of the aggressive company SolarCity, and a passionate advocate of solar electricity, and Google are moving into the electric space?

At EEI’s annual convention, Musk didn’t tell his audience what he thought would happen to the utilities as their best customers opted to leave the grid, or to rely on it only in emergencies, while insisting that they should be allowed to sell their own excess generation back to the grid. Musk also didn’t venture an opinion on the future of the grid — and his interlocutor, Ted Craver, chairman and CEO of Rosemead, Calif.-based Edison International, didn’t press him.

Instead Musk talked glowingly about the electrification of transportation, implying — but not saying outright — that the electric pie would grow with new technologies like his Tesla Motors’ electric car.

The CEOs of EEI’s board were ready for the press by the time they held a briefing a day after Musk’s opening appearance. They spoke of “meeting the challenges as we have always met the challenges” and of “evolving” with the new realities. Gone from recent EEI annual meetings was CEO talk of their business model being “broken.”

The great dark cloud hanging over the industry is that of social justice. As the move to renewables becomes a flood, enthusiastically endorsed by such disparate groups as the Tea Party and environmentalists, the Christian right and morally superior homeowners, and companies like SolarCity and First Solar, the poor may have difficulty keeping their heads above water.

The grid, the lifeline of U.S. social cohesion, remains at threat. Utilities are jumping into the solar business, but they have yet to reveal how selling or leasing rooftop units — as the Southern Company is about to do in Georgia — is going to save the grid, or how the poor and city dwellers are going to be saved from having to pay more and more for the grid while suburban fat cats enjoy their sense that they’re saving the planet.

My sense is that in 10 years, things will look worse than they do today; that an ill wind of change will have reduced some utilities to the pitiful state of Amtrak — a transportation necessity that has gobbled up public money but hasn’t restored the glory days of rail travel.

People like myself — I live in an apartment building — have reason to fear the coming solar electric world, for we will be left out in the cold. The sun will not be shining on those of us who still need the grid. It needs to be defended. — This column was previously published in Public Utilities Fortnightly.

Things That You Won’t Like in 2015

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The new year demands predictions. As those demands must be satisfied, here are mine:

1. President Barack Obama will be blamed for everything, from pet obesity to sunspots.

2. Jim DeMint, president of The Heritage Foundation, will continue to solicit me for money and will write me ingratiating letters as one conservative to supposedly another. Things are terrible because of Obama, he will say. But if I send him five bucks, the day can be saved for America.

3. Sen. Al Franken (D-Minn.) will ask me for money, five bucks, to save America from the likes of DeMint.

4. Amtrak – whose high-speed train between Washington, D.C. and Boston, Acela Express, is so expensive only rich business people can afford to ride it — will seek a larger federal subsidy. At present, it stands at $1.3 billion. Ordinary people, who Congress had in mind as riders, can’t afford the Acela's astronomical and predatory fares. So it has become a service for business executives and corporate lawyers — you can tell from the overheard cell phone conversations. A billable hour is a terrible thing to waste.

5. The airlines will find new ways to discomfort you; watch out for toilets that big and tall people can't sit on, seats that recline a 16th of an inch, and bad food that you'll buy only if you're off your medicine. Don't change your ticket, bring a suitcase or seek a seat with legroom. There are fees for that kind of convenience and comfort. Don't ask for logic in routing: How about Providence to Washington, D.C. with two stops and travel time of 10 hours and 20 minutes? An air travel Web site tried to tempt me with that “super-saver” fare. I reckon you could hitchhike it in about the same time.

6. If you thought it was difficult to reach any large company in 2014, it will be much worse in 2015. There are consultants out and about America, teaching corporations how to avoid their customers. Gone are the days when you could expect customer service of some sort, albeit from Rajiv in Bangladesh. Amazon, always a pioneer, has produced the consumer go-have-sex-with-yourself masterpiece. If you have a question about your Kindle, you have to give them your credit card if you want it answered. It's the no-pay-no-help line.

7. Talking of the perils of being a customer, Bank of America refused to give me the phone number of the local branch where I have an account. When I finally got through to the manager, she said they didn't give out the number because “the phone would be ringing off the hook.” I didn’t know people called the bank just to chat. No thought that those callers might be customers. Just remember new the mantra of big business: “The customer is always wrong, a nuisance, and fitted for nothing better than hanging an hour on the phone with a simple inquiry.”

8. Next year the save-a-buck Congress will decimate the Post Office. Sad because it's the one place that still works, and where you can get a question answered promptly. That will not do. The Social Security Administration is efficient and polite, too. So Congress has its hatchet out.

9. Now that the Republicans have control of government, they'll be out to prove that government doesn’t work. I’m sure they will pull it off. The Democrats will be complaining – having snatched defeat from the jaws of victory in the midterms.

How can you lose an election when the economy is turning around? Ask Sen. Franken when you send him your five bucks. Bet he won’t tell you. So I will. You turn your back on your president. That makes you look really bad, and looking really bad is a bad election strategy.
 

Happy New Year! — For the Hearst-New York Times Syndicate

 

The Invisible Hand Is in Your Pocket Now

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Adam Smith’s “invisible hand,” describing the efficient operation of markets, has morphed into a something else: an invisible hand in my pocket  and yours.

This woe comes now at every turn. Corporations — possibly egged on by the battalions of MBAs they employ — have discovered that they can con you by price legerdemain. They do this by imposing fees.

Airlines, banks and utilities play the fee game. Luxury resorts have joined in: You'll pay so much for the room, so much in taxes, and pay special fees if you want to do anything other than sit in it. Bottom line: You'll have pay more than you'd expect. The advertisements that lure you are disingenuous.

Take airline fees. You find an airfare and brace for the taxes. But — Oh, surprise, surprise! — you'll have to pay a hefty fee if you want more than one change of clothes at the other end. Want to board comfortably? Pay up. Want a seat where parts of your body don’t meet other parts of your body in unnatural ways? Pay up. Have to change your flight? There’s a change fee. Just pay up or stay put.

You could take the train, but you might not know that the only corridor of the national rail network that approaches international standards is the Northeast, running between Washington, New York and Boston. The trains aren’t bad at all, but the ticket pricing is predatory and opaque. It puts the airlines to shame.

Amtrak train fares are priced according to minute-to-minute demand. On the no-frills train, a ticket from Boston to Washington can cost around $100 to $400, depending on when you buy your ticket and who else wants to travel at that moment. The result: Amtrak – with a $1.3 billion annual subsidy from you and me –operates a railroad for the well-heeled. Between Washington and New York for corporate lawyers; ditto to Boston with the addition of academics plying the consulting trade.

If you just need to get around the Northeast, take a bus. Or play airline roulette, where the fare fluctuations are held down by JetBlue and Southwest.

Then there is the new trend of companies partially shifting the burden of paying workers from themselves to you. Hotels are urging their luckless guests to tip the chambermaids. (I've always tipped them. But I fear this corporate move is designed to reduce their responsibility for paying their workers a living wage.) Fast-food outlets now have tip jars (begging bowls, really), so the poor servers behind the counter can be paid less because it is becoming a tip-calculated wage.

Now, take a look at the unmitigated scandal of interns: free labor. The government and Congress, the media, think tanks, accounting and consulting firms, and many others, have found the best-and-brightest will work for free, primarily in the summer, to learn the trade.

Fair enough? Not so. Unpaid interns get a leg up in their careers on their peers who can't afford to take those great jobs. If you worked hard all summer, serving ice cream to pay your tuition, your resume will be deficient and you won't make the important contacts. Interns ought to be paid the minimum wage, so all can start resume-building at the same starting line.

We are witnessing a vast change in the way we pay for things with tipping subsidizing companies, fees fattening airlines, banks and hotels against the interest – and often the foreknowledge — of the customer.

Adam Smith — so beloved by the people who are changing the nature of commerce with fees, concealed charges, predatory pricing, tips and free labor — was a canny Scot who liked to know what he was getting for the money he was paying. He must be restless in his grave.  — For the Hearst-New York Times Syndicate

 

For a Man of My Age, I’m OK

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I know the exact day and time I grew old. It didn't happen slowly, I didn't ever so gently slide into the age of slippers and healthful toddies.
 
My arrival was sudden; brutal, you might say. One second I was going about my business, just like anyone else; the next I was an old man going about my business, just like any old man.
 
It happened on July 25, 2006 at the Amtrak station on the complex of Baltimore/Washington International Thurgood Marshall Airport. The young woman selling tickets looked at me and said, “You get the senior discount, right?” I looked over my shoulder to see whom she might be addressing, but I was alone in the ticket counter. In a small voice, I confessed that I was entitled to Amtrak's pity.
 
I had almost forgotten that encounter when my health insurer wrote to tell me that it wasn't their policy to insure people my age and it was time to accept Medicare's fatal embrace – fatal because no one leaves Medicare without the aid of a box and mourners.
 
A helpful woman at the Social Security Administration recommended that I start drawing immediately because, as she said so sweetly, “You never know what's going to happen.” Any thoughts of getting a bit more down the road evaporated. Persian poet Omar Khayyam's stricture “take the cash and wave the rest” was clearly written for me.
 
I had just gotten to feel that time was not of the essence when my doctors piled on a veritable regiment of fatalistic hand-wringers and the heartless phrase “a man of your age.”
 
It started with the orthopedic surgeon: “Your knees are not too bad for a man of your age.”
 
The cardiologist said, “I recommend a light exercise regimen and some medication for a man of your age.”
 
The internist said, “Do you want us to screen your prostate for cancer? For a man of your age, we don't usually do anything even if it is positive.”
 
To cheer me, he added: “If you get cancer there, it progresses very slowly and you'll probably be gone before it's a problem. That's my advice to a man of your age.”
 
The final medical insulter is my dentist. During a recent appointment, I wanted to discuss implants. But clearly, he's a man of fiscal rectitude. “We shouldn't really undertake too much on a man of your age,” he said.
 
I think, in his heart of hearts, he's leaning toward dentures. How in God's name does a dentist know how long someone is going to live? Maybe he's had several patients keel over on getting their bill — that sort of thing can be detrimental to a man of my age.
 
Social events are not where you can look for the milk of human kindness. A hostess introduced me this way, “He has known everyone who is anyone over the past — How long is it? — 60 years.”
 
For that kind of thing, I start shaking my quite firm hand and douse her white tablecloth in red wine. What can you expect from a man of my age?
 
People expect older men to be in the bathroom every five minutes, and I don't like to let them down. Trouble is the mirror. There's a man with white hair – what hair there is — starring out of it whom I don't know.
 
Like Henry V addressing Falstaff, I tell the apparition, “I know thee not, old man.” Actually I don't look too bad, for a man of my age. — For the Hearst-New York Times Syndicate

Amtrak at 42: Making the Grade

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Two cheers for Amtrak, which celebrated its 42nd anniversary on May 1. The nation's only intercity passenger rail service, derided by its critics and begrudged funding by Congress, is providing improved service and reliability.

But this service is lopsided, favoring the Northeast Corridor — the electrified route from Washington to Boston. Here, you have a choice of two levels of service. The premier level is the Acela Express, a Swedish import. Reaching speeds of 150 mph, the Acela trains compensate for tight curves with sophisticated tilting technology. The second level is the Northeast Regional with traditional trains running up to 125 mph, but mostly traveling much slower and with frequent stops. In both levels of service, the trains seem to be clean and well-maintained.

The two principal Northeast stations, Penn Station in New York and Union Station in Washington, are a different story. They are both horrific in their own way, and both are maintained by Amtrak.

Penn Station has a lot of low-grade retailing that seems to attract people who have no plan to ride the train and add to the sense of urban threat.

Union Station is less threatening, but it seems to have given itself over to chain retailing. The grandeur of this architectural masterpiece has been undermined by a proliferation of chain stores. Passenger accommodation is an afterthought: The restrooms are inadequate and too few, seating is scarce and often shabby, and passengers stand in long lines waiting to board their trains. This gives the feeling that the trains are as bad as the stations; they are not.

Outside of the prized Northeast Corridor, Amtrak shows decades of underinvestment. It tries to deliver rail service across 46 states. Correspondents tell me that this is often inadequate and is a last resort. I've been told horror stories about delays in Florida and the Midwest and breakdowns in California. One has to think seriously about whether one wants to take a long-haul train, even a sleeper, outside of the Northeast Corridor.

Amtrak came into being 42 years ago because passenger rail service from commercial railroads had collapsed and Congress felt that the United States couldn't be without passenger rail service. In those days, it was thought that Amtrak would serve those who couldn't afford to fly and those who simply didn't like flying. Amtrak wasn't set up as a government department but rather as a business, although it was understood that government funding would be necessary.

So began a long struggle; ostensibly over money, but more so over ideology. Conservatives in Congress have never liked Amtrak, and have believed that it should either perish or survive without government funding. Amtrak initiated relentless mallification of its station properties and predatory pricing in the Northeast Corridor, euphemistically called revenue management. Here Amtrak, like the airlines, charges what the traffic will bear. The Acela between Washington and New York and between New York and Boston is fast, elegant transportation for those who can afford it. The Northeast Regional uses the same revenue-management pricing, but charges somewhat less for slower rail service.

By means of its commercial struggling, Amtrak says it is able to cover 88 percent of its costs from revenue. The government subsidy amounts to $1.3 billion — $443 million for operations and $705 million for capital improvement. The total Amtrak budget is around $4 billion. By comparison, the much-admired European rail systems, with their sleek trains that run at 220 mph, have huge subsidies amounting to about 50 percent of the ticket price. In that sense, Amtrak may be a model performer.

As a passenger, someone who is infused with a sublime sense of well-being when a train pulls out of a station, I'm glad to report that despite its limitations, its chaotic terminals, its gotcha pricing, Amtrak has rolled into middle age, proving that rail transportation is still the most civilized way to travel and should have a bright future. Will Congress get smart and take the train? — For the Hearst-New York Times Syndicate

Mass-Transit Enthusiasts: Get on the Bus

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Even railroad fanatics like me have to admit that the future of passenger transportation by rail, particularly urban commuter rail, is pretty well frozen where it is. New rail – even light rail, an idealistic indulgence – is doomed by high costs, lack of appropriate track, and political squabbling.

New subways, the elegant way to get around a city, by going under it, are an almost impossible dream. The costs are too great in times of austerity, and the costs of maintenance can be prohibitive as a system ages.

Increasingly, the future appears to be the humble bus. Buses have low capital costs, are flexible, and can be adjusted to demand and population changes in ways trains cannot.

Spare the groaning: The buses are coming. And today's bus need not be yesterday's – noisy, smelly, and unreliable.

London, which has possibly the best transportation infrastructure in the world, with a huge rail network, is nonetheless betting on buses. It's deploying a new bus that is designed for the times and preserves some of the features that have made its buses emblematic of the city, like the two decks. And, yes, they are red.

The new London buses are a meeting of nostalgia with high-tech and environmental sensibility. London was busy phasing out its traditional buses in favor of articulated buses, which bend in the middle, when a controversial and eccentric Conservative journalist turned politician, Boris Johnson, declared that if he were elected mayor, he would save the old buses, or at least the concept of double-deck buses. He won the election and ideas were sought from the public.

The result is what the tabloids call the "Boris Bus." It's a high-tech beauty that meets many demands. It has two doors and two staircases, but it's so low that wheelchairs are easily accommodated.

They are designed to have conductors during rush hours and to be operated by drivers only at other times.

They use modern composite materials from the airline industry and are hybrids, with diesel engines and regenerative breaking. That has made way for the lowering of the bottom deck, increasing stability while reducing weight.

The initial reception of this high-tech scion of the old and loved London bus has been so enthusiastic that Johnson is talked about as a future Conservative prime minister – riding the bus to the highest office in the land.

Back to our buses. They, too, are getting better, but less dramatically so. Between Washington and New York, there's now thriving bus service with half a dozen competing firms offering WiFi, toilets, and many points of departure. The ticket price, about $20 each way, is a fraction of those for Amtrak and airlines.

These intercity buses are diesel-powered, but many cities are using natural-gas-powered buses. That might yet seal the deal for buses as the future of urban transportation, reducing the use of cars. America is awash in natural gas. It also has less environmental impact.

Buses are at their best when, as my wife pointed out in London once, they run like conveyors. Frequently, that means enough dedicated bus lanes.

The Obama administration would be well advised to launch a bus initiative with emphasis on better vehicles, à la London, and dedicated bus lanes. The solution to urban congestion may be in a high-speed, WiFi-equipped, natural-gas-powered bus. — For the Hearst-New York Times Syndicate