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Port of Wilmington Is In Need of Some Investment
Courtesy of Wikipedia

Is the economic model being used to evaluate the impact of privatizing the Port of Wilmington, the exact same one used to determine the economic benefit from both Fisker and Bloom Energy?

Delawarean’s probably ought to know.

If yes, might it be possible that here could be some flaws inside that formula?

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Politicians Prefer Coal Smokestacks

State Democrats are behind the push for NRG’s clean coal gasification plant currently under review by the PSC. Their backbone, the deep pockets of labor organizations, is firmly behind the NRG proposal. Currently the Delaware Democratic party is the party of dominance of the moment, having most of the statewide offices firmly in their grasp, and possessing a majority of the state senate as well.

That may change if the NRG proposal goes through. Republicans, quiet now, are salivating over the real possibility they have of seizing the high ground on a issue supported by over 90% of Delaware voters. Their hope is that Democrats will remain too myopic to sense the greater picture, and in attempting to pay back Labor, their long time supporters, they will antagonize an electorate electrified by the idea of going green.

Those of you who think this cannot happen, do not understand Delaware nor its politics.

If one could imagine a dear friend or next door neighbor, always supporting you in times of need, bringing food while you were too depressed to cook, offering to watch your children so you could sneak a few hours rest, or shoveling your snow and then refusing payment, actually coming to you and asking for a favor,…….. you begin to understand Delaware politics. The favor is not a big one, really, it is just a small favor. At least it was a small favor when they initially asked it……..

This scenario describes the emotional bond between organized labor and Delawarean Democrats. These are the folks who carried Biden over Boggs……These are also those guys who drove those pickups plaquered with bumper stickers calling for the “Impeachment of Carper.” (yeah, it was sort of a joke, but it sent the message: don’t mess with labor.) These are the reasons Castle continues his sole Republican reign as the single Congressman of this great state. ( See it does cross both ways.) They are responsible for Coons, and most of New Castle County Council. Those males handing out campaign literature at the polls every election, are often piped in from Jersey and Pennsylvania, and if you ask them about their candidate, they’ll tell you, they don’t know……….Yes, the Dem’s definitely owe Labor…..

Labor sees the coal plant as the means to employ many in the building trades who are slowly being laid off as the housing building boom wanes. They have a valid point. People need jobs.

But a more important issue to those of us still working is our family’s future health. As energy requirements take larger and larger bites out of business’ and family’s incomes, one of the areas from which these dollar amounts can be recouped, is medical expenses. But Delaware leads the nation in cancer. Breathing NRG power plant fumes certainly does not increase our healthiness.

This is the dilemma facing long term Democrats. Which is the stronger force: the economic well being of their strongest supporters within the building trades, or the health and well being of every voter in the state…………………………………….?

Bluewater Wind which has support from ninety percent of the electorate, still faces strong internal political opposition to their wind proposal.

Katherine Ellison in a piece titled Gone with the Wind, writes:

Last June, six months before power-plant bids were officially due, Gov. Ruth Ann Minner and NRG Energy, based in New Jersey, released a joint statement announcing NRG would “move forward” with a “state of the art” 630-megawatt coal plant for approximately $1.5 billion. The plant would use “clean coal” technology, also known as IGCC, or integrated gasification combined cycle, which converts coal to gas before burning it. ”

In fairness, wind generation was not an available option to be considered at that time. Clean coal still had favorable buzz at the time.

Minner, a Democrat, is on record as being convinced that human-caused carbon emissions are contributing to climate change. Under her leadership, Delaware in 2005 joined a multistate effort to reduce greenhouse gas emissions. What makes her embrace of “clean coal” rather odd is that her own administration calculates that the IGCC plant would emit 475 tons an hour of carbon dioxide, a major greenhouse gas.

Two other factors make it less odd. First, NRG already owns a coal plant on southern Delaware’s Indian River — a facility, dating back to the 1950s, that is one of the state’s leading sources of pollution, belching acid-rain-causing sulfur dioxide and mercury emissions. NRG has been fighting state regulators’ recent orders to clean it up, but as part of the deal with Minner, it has promised to patch things up and close the oldest part of the plant. Nor, most likely, did it hurt that NRG’s lobbyist, Mike Houghton, has been a major fundraiser for Minner and other state Democrats — so major that he was given a special award at the party’s annual dinner last year.

Perhaps you are more politically savvy than moi but I have no idea where Mike Houghton could have possibly found that money. But the bottom line is this: the more one learns of local politics, the worse it looks for wind.

For not only does NRG seem to have an inside track with the Governor of the second smallest state, but of the four commissions that will be making the energy decision, three of the four heads are appointed by Minner.

Again according to Katherine Ellison, a Pulitzer Prize winning journalist and author:

Her press department and chief of staff declined or ignored repeated requests for an interview. Houghton also declined comment, other than to say he saw no conflict in his dual role.

Minner isn’t alone in paving the way for coal. Also in June, Delaware’s two U.S. Senators Joe Biden and Tom Carper — both Democrats, and Rep. Mike Castle, a Republican, wrote to the U.S. Department of Energy to support federal tax breaks for the proposed new coal plant.

Is Delaware getting sold out from underneath 90% of its citizens. Republicans certainly hope so………….

But again in fairness one needs to respect the time line. Notice all the events happened in June of last year.

Things changed.

Like Minner, all three pols are on record as concerned about climate change. But it took Willett Kempton, (an associate professor of marine policy at the University of Delaware) — who bristles with impatience over what he calls “a lack of policy response wildly out of sync with what scientists are saying” — to do something to make climate change an issue in the state’s choice of power. Last summer, he and his university colleague, Jeremy Firestone, took the unusual step of personally calling offshore wind developers to invite them to compete.

Among a half dozen entrepreneurs they called, Mandelstam of BlueWater Wind took up the challenge, rushing to prepare his bid in time for the December deadline. He’s been “educating” ever since.

Due to the excitement surrounding the proposed wind farm. the electorate has become “pro Wind”. This caught incumbent Democrats by surprise. Only one, the far sighted Jack Markell, has jumped on the bandwagon for clean energy. This has put him, at least among Progressives, far ahead in the polls over Carney for the next potential governor.

It is interesting that bloggers and forums have contributed much of the research that now supports both the economical and environmental benefits of BlueWater Wind’s turbines. This has caused serious concern within the backwaters of Legislative Hall and the Governors office, and although not one of the staffers has yet opposed their boss by recommending the obvious, that the NRG proposal is dead in the water, they are all thinking it.

There are few issues that “electrify an electorate.” like energy. Perhaps we are all jumpy because of the recent political energy decision that cost us dearly last May. But ANYONE, who continues to support a policy that is 1) dangerously more expensive to its citizens, and 2) extremely damaging to the environment, will be wearing the political equivalent of a cross hairs on their chest, with ninety percent of the electorate’s fingers slowly squeezing upon the trigger……………………….

Bud Cummings, ex U. S. attorney recently commented on Salon.com about his past experience. He hits exactly on why the Bush Administration continues to create such ire among American patriots.

It is not that Bush is bad, I’m sure in another capacity he could be a great guy. It is what he has done to the country, that is bad………………………………………

The tragedy of this Attorney General scandal, is not that it was done. As this administration quickly pointed out, other administrations have done much worse. The tragedy,……. is in HOW it was done. A political firing was falsely based on poor performance.

Excerpt from Bud Cummings:

The president had an absolute right to fire us. We served at his pleasure, and that meant we could be dismissed for any reason or for no reason. And we all accepted that fact without complaint. When challenged by Congress, the leaders of the Department of Justice could have refused to explain. Or, they could have explained the truth. But apparently the truth behind some or all of the firings was embarrassing. So, instead, they said it was because of “performance.” We didn’t accept that, because it wasn’t the truth.

He then hits upon what most of us bloggers take issue with throughout the entire government spectrum, whether it is lurking in Family Court, Representative Atkins, Senator Adams, Governor Minner, the FBI, or the inner sanctuary of the White House itself, and that is credibility. He follows with these wise words.
Put simply, the Department of Justice lives on credibility. When a federal prosecutor sends FBI agents to your brother’s house with an arrest warrant, demonstrating an intention to take away years of his liberty, separate him from his family, and take away his property, you and the public at large must have absolute confidence that the sole reason for those actions is that there was substantial evidence to suggest that your brother intentionally committed a federal crime. Everyone must have confidence that the prosecutor exercised his or her vast discretion in a neutral and nonpartisan pursuit of the facts and the law.

So where do we go from here…….

Again, Bud Cummings:

You only get one chance to hold on to your credibility. My team, which holds temporary custody of the Department of Justice, has blown it in this case. The Department of Justice will be paying for it for some time to come. Lots of sound investigations and convictions are now going to be questioned. That is a crying shame, because most of the 110,000 employees to whom the attorney general referred in a recent news conference, are neutral, nonpartisan public servants and do incredible work. A lot of President Bush’s political appointees have done a lot of great work, too. Sadly, because of the damage done by this protracted scandal, which the administration has handled poorly at every turn, none of that good work is currently being recognized. And more ominously, the credibility of the Department of Justice may no longer be, either.

We can do honor to those 110,000 of neutral public servants by remembering that incompetence is due to the head, and does not arise from the body. Unfortunately this is just the opposite of what we usually do when we are on the public stage. We attack the body.

Once again conversation has turned to whether we should sell our roads to the highest bidder. What are the options?

First of all one needs to look at who has done it so far. In America there are very few cases from which to gather data. Those are the Skyway in Chicago, the Pocahantas Parkway in Virginia, the Indiana Turnpike, and the Texas superhighway at the border town of Laredo. Overseas there are two major players, one from Australia and the other from Spain.

Most of these leases are made for a period of 90 some years. The oldest, the Chicago Skyway, is only less than three years old. The newest, the Indiana turnpike deal, was signed as recently as last summer. So there is no evidence of the long term effects on privatizing toll roads. Therefore any argument for or against must be based on faith and theory. This is important for all to know as they listen to arguments pro and con.

Historically, toll roads were built by private investors. It was only rather recently that American taxpayers money was used to construct and operate major highways. So the concept of private highways is not new.

The question that needs to be asked is simple. Will we be better off if our roads are privatized?

Let us look at what happens when a road that has been built publicly is transferred to the private sector. First of all, a large purchase price is received by the seller. The Chicago skyway sold for 1.8 billion, the Indiana Turnpike sold for 3.85 billion, the Pocahontas Parkway sold for .6 billion. The savings continue as all maintenance is maintained by the consortium that purchases the road.

In Chicago, after expenses were deducted, the skyway over a year netted only a profit of 8.4 million. When this is applied to the roads purchase price of 1.8 billion, it yields a rate of return of .4%, a very low rate of return on the investment. In selling off its asset, the state loses the annual income of 8.4 million, but no longer has the debt of the highway on its books. It also has a large amount of cash to spend any way it wishes. If the highway is losing money as did the Pocahontas Parkway outside of Richmond, then a negative drain of finances is removed and responsibility and cost of upkeep is handed off to someone else.

However, no consortium buys a road to lose money. Their interest is in how much return they can receive on their investment. This raises the question of how much money they will invest in protecting the infrastructure, how high they will raise tolls, and what happens if they go belly up?

There is no evidence in this country on whether these roads will be kept up as well by private firms as they are currently maintained by the states. However in Europe and Australia the roads are kept in good condition. In both of those areas the roads were privately built by the firms themselves. They knew what they were buying and built the roads to last. One can only hope the Skyway’s bridges do not start to rot……therefore the argument that they will spend only the minimum allowed to keep the roads open is one we must settle before we sign any papers.

The tolls will go up. Indiana set a limit on how high the tolls could go. It is reasonable to assume that the tolls will be at the maximum set by law, since there is no governmental pressure that can be applied because of paying customers’ outrage.

There is an example that took place in this country that may portend what will happen if tolls are pushed higher. In Texas a thirteen mile highway bypassing Laredo was opened. This was to be the first piece of the trans Texan superhighway that would facilitate traffic to and from Mexico. The charges were the same as Delaware’s for about the same mileage that I95 crosses this state. 3$ for passenger cars and 16$ for trucks. This highway saved forty five minutes by bypassing the city proper. The price was too high; no one traveled it, it failed to make its debt payments, and was bought up by the state for one tenth of its cost. It turned out well for Texas. But most drivers were willing to take the longer route for free, than pay for the privilege of traveling quickly. This natural human tendency is seen in our own state, especially where Route 13 parallels Route 1. Each year more and more cars and trucks learn that exiting right off the bridge, bypasses the minimal 1$ toll.

And so what happens if we privatize I 95 and the privateers raise the toll to 5$. Will thru traffic deviate onto our Route 4’s and Old Baltimore Pikes? Many do so already, balking at the 3$ charge. More than likely the major traffic will take the alternate route South across Interstate 80 and south down Interstate 81 to avoid the collective tolls of New Jersey, Delaware Memorial Bridge, Delaware, and Maryland’s toll roads, thereby missing Delaware altogether and spending their discretionary income in other states. And will in-state commuters still continue to have free access I-95 into Wilmington to work, or will they be expected to pay 2600$ more per year so that their taxes do not rise 15$?

These are important questions that need to be asked before we jump in with both feet. Remember the Texas incident: there was no residual loss of business because it had not developed along the new highway. But when you privatize an existing road, you put each of those businesses that depend on that very road’s traffic to survive, in jeopardy.

Furthermore, one must be careful on whose advice one listens to. Goldman Sachs made 20 million in consulting fees on the Indiana deal. Of course they paint a rosy picture.

99 years is a long time. Like buying a new car, the feeling is great while the deal is new. However, get it wrong, and this state will suffer from being puckered on a lemon of a deal.