Fractals of Change

What The $69 Million Smart Grid Grant Will Mean to Vermont

The nearly $69 million dollar stimulus award Vermont utilities received from the federal Department of Energy (DoE) this week will have a much greater and long lasting effect on the Green Mountain State than hundreds of millions of dollars in stimulus band aids that we are also receiving. When the supplemental Medicaid and educations dollars are gone, we will have bought some much-needed time but still have a huge budget hole to fill. When the utilities finish building a smart grid statewide in the next few years, Vermont will have a stronger economy, a better job market, a cleaner environment, better broadband, a lower cost of living, and a stronger tax base to support the cost of government services with lower tax rates than would otherwise be possible. Almost sounds to be too good to be true but it isn't – assuming we do a good job with this money and the additional $69 million of investor and ratepayer money with which the utilities will match the grant.

By the end of 2012 Vermont will be the first state in the nation with a smart grid stretching border to border and from almost every consumer, through the transmission network, and back to generating sources. It's likely that DoE awarded us more than 2% of the total amount of money in the nationwide pool precisely because our size allows us to complete the project quickly and because we submitted the only application in the country which included every electric utility in the state in a massive and ambitious collaboration. We did promise to make detailed reports available on what worked and what didn't to the rest of the country.

We would have eventually done all this work and paid the whole cost ourselves. The way we distribute electricity is antiquated and wasteful. We consumers have neither the information nor mechanism for adjusting our usage to avoid high cost peaks. Now we will sometimes actually be paid for avoiding peak use because that's cheaper for the utility than buying peak power on the spot market. Only businesses the size of IBM have been able to afford sophisticated ways to keep peak usage and bills low; now the smallest businesses in the state will be able to have pretty much the same control. We pay for and build transmission and generation capacity for anticipated peaks. The more we can avoid the peaks, the less we have to build. Mass adoption of plug-in cars is unthinkable with a dumb grid; it would just collapse when they are all plugged in at 6PM.

If we had done the job ourselves with the amount of money the utilities can prudently raised, it would take us eight years instead of the three years we plan with the addition of the federal grant. We'll be leaders and we'll make mistakes; that's part of what the federal money is paying us for. But we'll also get the benefits five years earlier and we'll lead rather than lag the nation in this crucial technology.

Our utilities took a chance in banding together for one big ask instead of applying for smaller amounts separately as most other utilities (which bothered to apply) did. Only 100 out of more than 400 applications got funded. The answer could have just been "no". But they did envision a fast lane to the future; they did work together; the Department of Public Service, The Office of Economic Stimulus and Recovery, and the state's Congressional Delegation and the Governor all strongly supported the application, which is an excellent and persuasive document. The Governor took me along on a visit to Vice President Biden, who advised us that a unified application was the best way to assure that a whole coordinated program got funded – but pointedly and properly couldn't assure us that it would be accepted.

And we got the grant, phew. Now we have to deliver.

Vermont’s Broadband Recommendations

Which broadband grant applicants does Vermont like or not like? That's the question the National Telecommunications and Information Administration (NTIA), which is the part of the US Commerce Department and is charged with distributing some of the stimulus funding for broadband, asked the Economic Stimulus and Recovery (ESR) office, which has the responsibility for answering such questions in Vermont.

   

The American Recovery and Reinvestment Act (ARRA or "the stimulus bill") requires NTIA to consult with the states. Originally NTIA said it would do a preliminary screen of applications, then give the screened list to the states. When they saw how many applications there were, however, they decided to give the whole unscreened list to the states – which is what we'd asked them to do in the first place. Trouble is we're not sure how much attention they'll pay to our recommendations. They made clear that they would neither accept nor reject an application purely on our say so.

   

Just to make things a little more confusing, we are only asked to look at those applications submitted to NTIA. The stimulus bill also gave money to Rural Utilities Service (RUS, part of the US Agriculture Department) to finance broadband. RUS is coordinating with NTIA and many, but not all, applications were made jointly to RUS and NTIA. However, RUS is not required by the law to consult with the states so it isn't going to do so.

   

Vermont ESR was well positioned to look at the applications since we had coordinated the preparation of a set of applications statewide which could, at best, result in broadband coverage in Vermont expanding to at least 95% of the residences in the state. We recommended those applications when they were initially submitted. However, only four of these coordinated applications were applications to NTIA (two other were RUS only); so we only got to opine on the four (but we snuck in a good word for the RUS applications just in case).  These four applications span the three separate categories in which NTIA plans to fund projects:  Infrastructure (including both last mile and middle mile applications), Sustainable Broadband Adoption, and Public Computing Centers.

   

The four applications which got our highest recommendation because of their importance and synergy were:

1.  A last mile application from local carrier VTel to offer Wireless Broadband to serve unserved areas of southern and central Vermont and to upgrade its existing service in the Springfield area to very modern fiber. (Note: VTel proposes to use newly-available 700 MHz spectrum, which is old UHF TV spectrum now available due to the transition from analog to digital broadcasting.)
2. A last mile application by FairPoint to serve unserved portions of the very rural Northeast Kingdom. Even though FairPoint is having financial and other difficulties, the assets they propose to build are badly needed by the residents and businesses of this area.
3. A sustainable broadband adoption application by The Vermont Council on Rural Development. Their proposal is to help overcome obstacles to broadband adoption in newly-served communities such as lack of training, lack of equipment, lack of money, and lack of relevant local content. Greater adoption obviously means more benefit from any deployment; a higher adoption rate also improves the difficult economic of rural broadband deployment.
4. A public computing center proposal by the Vermont Department of Libraries aimed at assuring that libraries are well-equipped in areas where broadband is not widely available. This both helps mitigate (but doesn't solve) the availability problem and builds a user base for broadband when it does arrive.

   

We recommended two other applications as well: 

1. A middle mile application by TelJet Longhaul, LLC which, if funded, will improve backbone connections to and from Boston and within Vermont and significantly increase bandwidth, redundancy, and wholesale and commercial broadband competition in parts of the state.
2. A sustainable broadband adoption application by Health Care and Rehabilitation Services of Southeastern Vermont, Inc that proposes to use broadband resources to mitigate the chronic shortage of mental health professionals in the area.

Although we like to be positive, we recommended AGAINST many applications including all proposals to use satellite service to provide broadband. Although satellite is better than dialup, it's not good enough to meet the broadband needs of Vermonters and other rural Americans. We don't think Hughes Network Systems and EchoStar should be grabbing off the available grant money to build substandard solutions. Most of the rest of the applications we recommended against were national proposals that claimed to bring benefits to Vermont but didn't substantiate that claim.

   

You can read our full recommendation to NTIA at http://recovery.vermont.gov/broadband#staterecommendation.

How Many Jobs Were Stimulated?

There's going to be a lot of controversy and confusion nationwide on October 30 when stimulus reports from states are made public on recovery.gov. The reported numbers for "jobs created or retained" will be particularly contentious since they will be much lower than the job forecasts by state which used to be posted on recovery.gov (I can't find them in the new and excellent redo of the site) and the total reported by the states won't come close to the total jobs forecast to be created by the stimulus bill (aka American Recovery and Reinvestment Act or ARRA).

Actually, the numbers SHOULDN'T match but that's tough to explain. Nevertheless, in the interest of transparency, I'll try an explanation here.

The original forecasts were made using an econometric model. In English, that means that a bunch of economists decided how a computer should make an estimate of how many direct, indirect, and induced jobs will be created or retained by each dollar of government spending. You'll find all of the details of the methodology at http://www.recovery.gov/Documents/Jobs_Report_Final.pdf.

Direct jobs are the people working directly on a project; think of the crew that you see fixing a bridge. Indirect jobs are the jobs created or retained at suppliers to the project; think of the people who made the steel that goes into the bridge. Induced jobs are the jobs created when people spend the money they earned or received as benefits; think of the people working in the mall where the road crew spends the money they wouldn't have if they didn't have jobs.

The economists go on to estimate that one job can be created for one year by $92,136 of federal government spending, $145,351 of tax cuts, or $116,603 of state fiscal relief (which presumably saves us from either having to cut services or raise taxes at the state level). There is no mention in this paper on current or future job loss caused by the increase in federal debt or the need to pay it back (I'm not opining, just reporting).

OK, now you understand where the projections came from. There's roughly $787 billion allocated by ARRA so the economists just have to divide this into spending, tax cuts, and state tax relief to figure out how many years of jobs will be created or retained. Their answer is 6.8 million job-years through the end of 2012. They estimated 8,000 jobs for Vermont with this methodology. That's a big number since we lost about 10,000 jobs total in the recession.

Let's look at what the states are going to report:

1. We report only the jobs created by the money that flowed to or through the state government – not the tax cuts, not the direct grants to companies, cities, and counties and other recipients. That's "only" $246 billion out of $787 billion total.
2. We report (this time) only on money spent through September 30, 2009. "If you look at the Recovery Act as a two-year marathon, we're at the nine-mile mark," says Vice President Joe Biden.
3. We report only the direct jobs created by that money – the people building the bridge but not the ones who made the steel or sold goods to the crew. In most cases we report prime contractors but not subs. 80% of the money that came into Vermont through mid September was for Medicaid ($105 million). None of this created or retained DIRECT jobs so no jobs are reported for this although we would certainly have been in a pickle without this money and have a huge hole to fill when it's gone.
4. We're not really reporting job-years but rather an estimate of the number of full time equivalents that were hired for the period (usually one quarter this time).

The truth is that we'll never know how many jobs were saved by ARRA; the economy is simply too complex to give us a simple answer. A woman from the Federal Reserve Bank of Boston called our office the other day and asked "If you didn't have the ARRA Medicaid money, would you have raised taxes, cut benefits, or cut somewhere else?" We answered "probably all of the above" but we'll never know in what proportions those three things might have happened or what the effects of them might have been.

We'll report a job number as required by law. When we report it, we'll give even more detail on how we calculated it. You now know why the state numbers won't match the federal estimates.

Even though you should look at both the federal job estimates and the state reports with several grains of salt, the right questions to ask are, I think, "was our money spent well?" and "what are we going to do in a year when most stimulus dollars will have been spent?"

 

Electricity Isn’t an Energy Source

Unless you're tapping lightning bolts, electricity isn't a source of energy – it's a way of transporting energy from where it's generated to where it's used. So, when we have to decide whether it makes sense to use electricity for an application like lighting, transportation, home heating, or something else, we have to know where that electricity is coming from, what fuel is used to make the electricity, and what it's going to cost to use electrically-transported energy versus an on-site energy source like oil.

For lighting we've decided not to use kerosene and candles (other than for camping and romance). For transportation we did have lots of electric trolleys but they got replaced by diesel busses and gasoline cars. Oil was cheap and sticking to wired routes was limiting. Now importing oil is an economic and strategic risk; battery technology is better than ever before; electronic controls are cheap; CO₂ emissions are a concern; and electricity is close to making a comeback in transportation.

What fuel your electric car is actually running on depends on where the electricity comes from that you use to charge your batteries. Maybe your electric vehicle is running on coal –very likely in the US where coal is the biggest source of electrically-transported energy. Here in Vermont, if you charge up off-peak, your car is some combination of hydro-powered from Hydro Quebec and nuclear from Vermont Yankee. If you charged up on-peak , your car is probably running on electricity generated at least partly from natural gas.

It makes economic and environmental sense to use electricity to charge your electric car even if the electricity is generated by burning oil. It is so much more efficient to burn oil in a power plant than in a car that, despite losses in transmission and storage, less oil gets burned overall to move you a mile on your way. Moreover, pollutants can better be captured at a power plant than from your tailpipe.

By the same logic, it makes sense to consider electrically transported energy for home heating here in Vermont where 70% of our homes are heated with oil or propane. North of us, as you drive to Montreal in the winter, you don't see smoke coming from houses. Our neighbors are warming themselves with very cheap (for them) hydro power. This hydro power from Canada is also available to us (albeit at a somewhat higher price). We can use it cleanly and efficiently to warm our homes – so long as we don't use it during peak times because, at peak times, there isn't enough transmission capacity to bring us any more than we already buy.

Residential electric rates in Vermont are around $.16/kwh. This is roughly equivalent to $5/gallon oil for home heating. So right now it is cheaper to heat with oil than with electricity. However, if there were an OFF PEAK electric rate of $.07/kwh and if electricity were only used for heating off peak, than it would be just as cheap to heat with electrically-delivered energy as with oil. In fact, at that rate and current propane prices, the average Vermont household could save $750/year by displacing 75% of its propane consumption with electricity. It's probably a good assumption that it will soon be much cheaper to heat with off peak electricity than heating oil as the world's economy and thirst for oil recover together.

Strategically, we are much better off buying Canadian hydropower than oil from the Middle East and other volatile and often hostile places. Environmentally, we'd generate both less traditional pollutants and vastly reduce our carbon footprint. The good news is that there is about to be a lot more Canadian hydro power available since Hydro Quebec has begun a vast expansion program. The bad news, for the moment, is that we can only take more electricity from there off peak because of transmission constraints. Energy from Vermont Yankee is also strategically sound and is currently cheaper than hydro; it certainly doesn't generate sulfur dioxide and CO₂. But it's also unlikely that we can get more power from Yankee than we already are.

So what are the obstacles to greener, cheaper, electrically delivered hydro power for our cars and homes?

1. We need off peak rates with large discounts (but not larger than the underlying economics justify. This isn't a subsidy).
2. We need to add electric STORAGE heating capability to our current fossil-fueled heating systems (retaining the fossil-fuel furnace for power outages and periods of prolonged peak demand).
3. We need cheap electric cars.
4. We need to rethink our mindset that electric heat is bad (formed when oil was cheap and we couldn't assure that we wouldn't draw electricity for heating during peaks).

The smart grid that Vermont utilities are building (with or without stimulus money) can deliver dynamic rates that assure electricity is only used off peak for heat – essentially that we use nuclear or hydro power for heating. That's going to happen.

Electric storage heat added to a conventional oil or propane furnace system costs between $3000 and $4000 installed for the average home. The payback when switching from propane (assuming off peak rates) is already less than five years – a good investment. My prediction is that the economics will soon be favorable for replacing oil as well.

Cheap electric cars may take longer than cheap electric storage heat. Batteries are still big, heavy, and expensive. My prediction is that we'll displace oil in heating faster than in transportation.

The biggest obstacle may be an anti-electricity bias which equates electrical use with waste regardless of the source of the electricity and whatever else it is displacing. In fact, more use of electrically-transported energy may be just what the economist, the strategist, and the environmentalist ordered.

 

Broadband Stimulus in Vermont

Grants.gov kept crashing on August 14, the deadline for submitting applications for broadband stimulus funding; not to worry, the feds extended the deadline by six days – and even then had to allow submission of attachments to the application on CD by mail since their systems weren't yet stable by the new deadline.

Nevertheless Vermont organizations managed to file a set of applications which, if funded in the entirety, will leave less than 10,000 homes out of 242,000 without access to broadband AND will give us a very good start on attacking other obstacles to broadband use like lack of computers, training or money. The goal of SmartVermont, our overall plan for discretionary stimulus money, is not just universal broadband availability; it's universal adoption so that applications like e-health, e-education, and e-energy (smart grid) can depend on broadband connections in every Vermont building on the electrical grid.

Five Vermont organizations applied for over $130 million of stimulus grants and loans for last mile broadband projects. Technologies proposed by the applicants include fiber to the home, DSL, and wireless. There is no guarantee that all of these (or even any of these) will be funded. We think (and hope) that these applications will have an advantage nationally because Vermont began a broadband mapping effort several years ago and the Vermont Office of Economic Stimulus and Recovery (ESR, my department) was able to provide authoritative maps to be submitted with applications which demonstrate to the anonymous grant application reviewers that these proposals do, indeed, meet the stimulus requirement of bring service to the unserved. ESR also worked with the Department of Information and Innovation (DII) to coordinate broadband support plans for community anchor institutions like schools, hospitals, and government offices and get letters of support from those organizations for the applicants who promised to provide the organizations with high-capacity low-cost connections to the fiber backbone being built statewide by VELCO, the state's transmission utility. Applicants get extra points for supporting these institutions; the institutions, needless to say, need to get connected.

The Vermont Council for Rural Development requested $2.5 million for a sustainable broadband adoption program to help assure that Vermonters in 24 pilot communities have the equipment, training, and motivation to use broadband. This effort will focus on towns where broadband has recently become available or is just becoming available to speed up adoption so that broadband capabilities can quickly become part of community life. Also, the higher the adoption rate in a local community, the better the business case for the provider. We don't have as many homes per mile as more urbanized areas; but we can mitigate that economic disadvantage by having a higher percentage of homes which sign up. The Department of Public Service (DPS) and the State Colleges both helped with preparation of the sustainable adoption grant request.

The Vermont Center for Geographic Information applied for a $1.96 million grant to continue and extend Vermont's broadband mapping effort. Extended mapping will go beyond advertised claims to verify speed and quality of service down to the individual structure level. It will also be useful in making sure that successful last mile grant recipients deliver what they've promised. We are reasonably certain this application will be funded since the feds have said they plan to grant one such application in each state.

Recognizing that there are communities and families who don't currently have broadband or the equipment to use it, The Vermont Department of Libraries applied for 80% federal funding of a $754,000 public computing center project – basically computers in libraries. The Edgar May Health and Recreation Center in Springfield filed its own $4 million request for public computing center funds.

There is certainly no assurance that all of these Vermont applications will be funded. The funding agencies – the US Department of Agriculture and the Commerce Department – announced that almost 22,000 applications totaling nearly $28 billion were filed nationally; this is seven times the amount actually available for this round. The agencies plan to accept another round of applications by the end of this year and one more in spring, 2010.

ESR has begun work on a plan to make sure that the remaining Vermont households which were not covered by applications in this round will have applicants willing to provide service in the next round. As soon as preliminary results from this round are known, which could be as early as mid-September, any areas where applications were unsuccessful will be added to the to-do list. The goal remains 100% broadband availability AND adoption.

 

 

Where Are the Signs?

"How come there are no stimulus road projects in Vermont?" As Vermont's stimulus czar, I hear this question all the time.

"There are lots of stimulus-funded road projects in Vermont," I reply. But I know what's coming next.

"I just drove home through New Hampshire [or New York or Massachusetts] and there were lots and lots of signs for ARRA projects. There are no signs in Vermont."

Right. Those signs cost $1500 each. You need at least two for each project. The exact form for the sign and the ARRA (American Recovery and Reinvestment Act) logo are spelled out in federal guidelines along with a "recommendation" that the signs be displayed.

Here in Vermont we decided that we'd rather spend the stimulus highway dollars on roads than signs. We have lots of projects but we don't have signs. Once I explain almost everyone agrees with this decision.

However, if you are worried about the number of projects here, ProPublica, a citizen reporting network, just reported that Vermont is #2 nationally (New Mexico is #1) in the percentage of approved road and bridge projects which have been given a final construction green light. We got going early; we already had a project list; and, as VTRANS spokesman John Zicconi says, "unlike Texas, we can't work through the winter."

So, don't worry; we're working on the roads and bridges. You can find a list of all the stimulus projects in Vermont that we know about (some go straight from the feds to recipients and we report them as best we can but not perfectly) at http://recovery.vermont.gov/sites/stimulus/files/1VT_ARRA_Programs_by_Location.xls and lots of information about stimulus transportation projects in particular at http://apps.vtrans.vermont.gov/stimulus/. The web is cheaper than signs.

Vermont Utilities Unite to Seek $66 Million in Smart Grid Funding

All 20 Vermont electric distribution utilities (the people you buy electricity from); the transmission utility, VELCO, which brings electricity to them; and the efficiency utility, Efficiency Vermont, whose role is to reduce demand, have united to design a single $133 million plan for implementation of a "smart grid" in Vermont and have submitted a joint application to the US Department of Energy for stimulus funding to cover 50% of the cost. The Vermont Department of Public Service and Office of Economic Stimulus and Recovery helped with coordination; the project had great support from Governor Douglas, Senators Leahy and Sanders, and Congressman Welch; but the heavy lifting was done by the utilities.

This is an extraordinary collaboration for a very good cause; if this project is funded, Vermonters will have the benefits of a smart grid five years sooner than we would otherwise. I'm not aware of this sort of coordinated state-wide application from anywhere else, which is one of the reasons why I'm optimistic that it'll get funded. However, it is in competition with other grant requests nationwide for a pool of $3.4 billion dollars, which almost certainly is NOT going to be enough to give all applicants everything that they ask for; so this is no sure thing.

The project is called eEnergy Vermont because smart grid means using digital technology to make better use of energy resources than was ever possible before. For consumers the smart grid means better information about our energy use and much better control over it including substantial opportunities to save money by using electricity when it is cheap and shunning it when it is expensive as well as better reliability. For utilities the smart grid means an opportunity to cooperate with their customers to reduce expensive buys of peak electricity, avoid the need to build as much generation and transmission capability as would otherwise be necessary to deal with escalating peaks (the grid must be sized for peaks), and lower operational costs which include but go way beyond the obvious cost of sending someone out to read your meter. The distributed small sources of renewable power popping up around the state are better used and therefore more valuable if plugged into a smart grid. For the country a smarter grid means reduced reliance on foreign oil and lower CO₂ emissions as well as a stronger economy because of lower energy costs.

The communication backbone for eEnergy Vermont is a 72 strand optical fiber network that VELCO is building to every one of the 270 electrical substations in the state. Engineering for the backbone is already underway, funding has been obtained, and it will be built regardless of whether or not the stimulus grant is obtained (but we think that having this fiber available for eEnergy will help us obtain the grant). This same network is also the backbone for much of the state's broadband plan (stimulus grant applications due 8/14), eEducation, and eHealth (applications due later). In other words, the same communication infrastructure which carriers meter readings from substations to utilities, delivers electrical use and price information to consumers, and supports substation automation also will be the way many of us access Internet services, the path for transmitting electronic health records and connecting monitoring devices from home to hospital, and will provide gobs (technical term) of reasonably-priced bandwidth to schools and libraries.

A smart grid is necessary for Vermont and the nation's future. Suppose that next year plug in electric vehicles are available from a number of manufacturers, some at a reasonable price. If our Prius population is any indication, Vermonters will start to snap them up for environmental reasons even before they are strictly justified by economics. If we do that and plug them all into a dumb grid when we get home at 6PM, the grid would simply go psst! (another technical term) and not be able to handle the load. But, if these are smart cars or plugged into smart outlets and there is a smart grid behind this all, we'll fill up with electrons when they're very cheap in the middle of the night AND when the transmission bandwidth is available to deliver them to us. An added benefit here in Vermont is that we can buy more very clean, very green electricity from Hydro Quebec so long as we do that when transmission capacity is available; so we will have displaced oil with hydro power as a transportation fuel.

55.5% of Vermont homes are heated with oil and another 14% with propane. Electric storage heat, which was once in fashion and then not, is much more practical with a smart grid when you can assure that you don't burn fossil fuel at a power plant to create heat to create electricity which is then converted to heat again in the home with lots of loss along the way. With a smart grid utilities can offer way off-peak interruptible rates, which would, even at today's relatively low fuel costs, save $750/year for the typical family using propane heat (after they buy the electric storage heat setup which is probably less than $4000 installed). The trick for many will be to keep the propane furnace as backup in case there's either a power outage or a few days of high electricity prices in a row (all switching automatic, of course). The $750 savings was calculated assuming that electricity only provides 75% of the heat required and the rest still comes from propane. The economics are not as good for conversion of oil heat today – just above break even on fuel costs; but are likely to get much better as oil prices climb faster than the price of off-peak electricity. If our homes are heated by hydro power, that's a lot of oil we don't buy and a lot of CO₂ we don't produce.

It's not an exaggeration to say that smart grid enables the energy future Vermont wants to have. We'll get there sooner rather than later – and be a great example to the rest of the country – if this grant is granted.

 

Readers’ Guide to the Education Funding Announcement

"$52 MILLION IN RECOVERY FUNDS NOW AVAILABLE FOR VERMONT TO SAVE JOBS AND DRIVE REFORM," says the headline of today's press release from the Federal Department of Education (www.ed.gov/news/pressreleases/2009/07/07272009.html). "Application for Part 1 of Vermont's State Stabilization Funds Approved Today," the subhead explains.

This is formula money, money we knew we were going to get as long as we filled the form out correctly; still, it's nice to know that we DID fill the form out correctly (you can read it at www.ed.gov/programs/statestabilization/stateapps/vt.pdf). Vermont's method for funding local schools is unique and we had a lingering nervousness that someone somewhere in Washington wouldn't understand and that might cause complications in getting our money.

The $52 million is the first installment of $77 million that Vermont will receive to help with funding of K-12 and public institutions of higher learning over the two year life of the stimulus bill (aka American Reinvestment and Recovery Act or ARRA). Actually, though, we prudently budgeted half of this for each year so won't draw down all that we can from the feds until later. BTW, the rules only allow you to draw down this money immediately prior to sending it to the schools so we can't just get it all and put it in the bank to earn interest.

This money is NOT a windfall to the schools who will receive it (but there is a windfall coming, see below); it is aid to the State so that it doesn't have to either cut its level of support for schools or take money away from somewhere else – that's why it's called "state fiscal stabilization fund". The money will probably make up part of the September money the State sends to school districts, but, other than the new reporting requirements that come with this federal money, that really won't make any difference to the districts. They'll get what they would've gotten anyway.

There are strings besides the reporting requirements. For one thing the State has promised to do no less than level fund the schools at the higher of the 2008 or 2009 levels for 2010, 2011, and 2012. That was part of our application. But note that the stimulus money only lasts two years. Unless the economy has come roaring back by then, we're going to have a hole to fill and cutting aid to the schools, for 2012 at least, won't be an option. It's not clear constitutionally how this binds the future legislature which makes the budget for 2012, but let's not go there now.

Other strings include all kinds of reports and commitments to improving education in ways we've already committed to improving it.

The press release goes on to say "To date, Vermont has received [sic] nearly $46 million in education stimulus funds—representing a combination of funding for Title I, IDEA, Vocational Rehabilitation Grants, Independent Living Grants and Government Services funds. On April 1st, Vermont received [sic] nearly $13 million in Title I funding and more than $14 million in IDEA funding.  This represents 50 percent of the Title I and IDEA funding Vermont is eligible for in total." It is NOT accurate to say Vermont has RECEIVED this money; in fact, we haven't although most has been approved and we can draw it down. Applications are available to schools at http://education.vermont.gov/new/html/dept/recovery_act.html and that page also has links to district-by-district allocations.

The Title I and IDEA funds go to school districts by formula and DO represent a substantial increase over the funding schools usually receive under these programs – but only for two years. So schools are going to have to be very careful not to ratchet up expenses on these programs to a level that will not be sustainable when the ARRA tap is shut.

Leveraged Stimulus

Q. When does $72,000 equal $1 million?

A. When leveraged, of course.

The US Department of Agriculture (USDA) is taking advantage of this financial magic trick. The stimulus bill (aka American Recovery and Reinvestment Act or ARRA) allocated $2.5 billion to USDA to encourage broadband buildout in unserved and underserved rural areas. If USDA gave out all this money as grants, there would be $2.5 billion to be divided among applicants from various states. But USDA has announced that it will give them money out as a combination of grants and low interest loans and will actually be able to give out between $7 and $9 billion. The catch, of course, is that most of this money will have to be paid back. Still, for both stimulation and broadband penetration purposes, this isn't a bad idea because more actual money will go into projects than would have been possible with grants alone. If things go well, more and bigger projects'll get done and more people'll be put to work.

Here's how the leverage magic works: USDA takes some portion of the money and uses it to set up a loan loss reserve. For this calculation they assume that there will be $72,000 in losses for every million dollars they lend; this $72,000 is the COST to the USA of lending $1 million. Of course the USA also has to pay interest but the borrower is expected to pay interest approximately equal to the federal borrowing cost so there is no net interest cost to the treasury. So let's do some math:

First divide one million by 72,000. That answer is approximately 14 meaning that one dollar in loss reserves will "pay for" $14 in loans. Another way of saying this is that RUS believes that it will get back $13 in principal repayments for every $14 it lends. So, if USDA takes $500,000,000 million of the $2.5 billion which it has been allocated and uses this as a loan loss reserve, it can make $7 billion in loans and expect to "lose" no more than $500,000,000. That's apparently what USDA intends to do and, assuming they are discerning enough in making their loans so that their losses aren't higher than anticipated, this is a pretty good way to get lots of programs going.

But now suppose you're a telco which formerly didn't find the reward of building in a rural area worth the cost; will this program convince you to build affordable broadband in areas you previously bypassed? Obviously if you get grants – free money – that can be pretty persuasive. You invest less but get back the same return. But loans have to be paid back. Couldn't you have just borrowed before and built? Why would you want to do that now?

My guess is that the loans will help to incent the development of projects which wouldn't have happened otherwise. I know that there are companies prepared to apply for them in Vermont. One reason these loans are so attractive is simply the fact that they're available. This recession began as a credit contraction and, to a large degree, still is. Credit is very, very hard to get; patient money even harder to find. The rewards from building in a rural area take time. People who didn't have broadband before don't have a perceived need to get it immediately; their neighbors aren't posting to YouTube or living in Facebook; the schools aren't giving online homework. People who couldn't get broadband may not have the equipment to use it. The market develops but it takes time. The availability of any money at all is an incentive; the availability of money which can be paid back slowly as the market develops is further incentive.

Also the interest rate on the USDA loans is approximately the borrowing cost of the US government – just over 3% for five years and under 5% for ten years. On their own, if they could get loans at all, many of the companies who might build in rural areas would have to pay interest rates which are at least twice that. The difference between what loan applicants pay USDA and what they would pay in the open market is just as good as a grant – it's cash that stays with them instead of leaving.

The rules for broadband funding were published last week. The forms and instructions are available online at http://broadbandusa.sc.egov.usda.gov/. The deadline is August 14^th. The scramble is on. USDA making some of its (our) money available as loans means that there are more funds nationwide and more potential for bringing Vermont closer to its goal of universal broadband penetration – a key component of SmartVermont.

How Much Stimulus Money Has Reached Vermont?

As of June 24, Vermont state government had posted actual cash receipts to its coffers of $74,846,608 from the federal government of funds authorized under the American Recovery and Reinvestment Act (ARRA aka the stimulus bill). This does not count stimulus money which does NOT pass through state government such as Pell grants to individuals attending college, grants made by the Small Business Administration to businesses, and tax cuts and credits to individuals and businesses (does not collecting money count as an expenditure?).

To put this in context, over the life of ARRA, generally two years, the state should receive about $720 million in grants which are allocated to us under various formulae in the stimulus bill (and which we get as long as we jump through the right hoops in the right order and account for it properly). We also hope to get $200 million or more in competitive grants under various stimulus programs. Nationwide ARRA is supposed to spend $787 billion.

The bulk of the money state government has actually received has gone to human services - almost $71 million largely for help paying Medicaid benefits. Just under $5 million was received for transportation projects (these are posted monthly so this number is as of the end of May).

More stimulus money has been spent in Vermont than has been received. This doesn't indicate a problem, however; in most cases you have to spend money in federal programs before you are reimbursed for the expenditure. Washington doesn't want us earning interest on "their money".

Which brings up the interesting point of whose money is this anyway. A commenter on Vermont Tiger, where some posts from this blog are reposted, wrote: "Same old tripe repackaged to hide the smell. "We must compete for and win grants" [this quote is from me] translates into OPM [other people's money], for grants are nothing but tax dollars. If it such a good idea, invest your money for a healthy return."

ARRA money is anything but OPM; it's our tax dollars or money that was borrowed in our names or our kid's names. It would be negligent not to bring as much of it as we can use responsibly back to Vermont ; it's even worse if we don't spend this money well. We have to spend it like it's ours because it is.

There is a reasonable argument that this money (and lots of other money) would be better spent if it hadn't made a round trip to Washington, where a fair amount is lost in the handling and from where it comes back in categories we might not have chosen ourselves and with restrictions we would not have placed on ourselves. Our job in the office of Economic Stimulus and Recovery, however, is to deal with ARRA as passed by Congress and assure that it is as constructive for Vermont as it can be. We have a lot more cash yet to come. You can use recovery.vermont.gov to judge whether your money is being used well.

The Smart Grid Opportunity in Pictures

Save money, protect the environment, achieve greater energy independence, create economic opportunity – these are the promises of a smart electrical grid.

Is this too good to be true? Look at the pictures below from ISO New England, the grid system which Vermont belongs to.

The top graph is called a load curve. It shows that we New Englanders, like people everywhere else, sometimes consume a lot more electricity than we do at other times. 10% of the time we have meters spinning at over an 18 gigawatt rate at the high end; During the low 10% of the time we consume at less than a 12 gigawatt rate. This by itself would be no big deal until you look at the difference in price per megawatt hour between the heavy use and the low use times – above $100 megawatt hour (except this year) during the high and less than $40 megawatt hour in the lull. The highest prices are over $200 and the lowest near zero.

[cheat sheet: if you light a 100 watt bulb for 10 hours you consume 1000 watt hours or one kilowatt hour (kwh). At retail we pay about $.16/per kwh here in Vermont. 1,000 kilowatt hours are a megawatt hour (mwh). Utilities buying electricity wholesale buy it by the megawatt hour. $100 per mwh is $.10 per kwh; not surprisingly, wholesale rates are lower than retail. 1,000 megawatt hours is a gigawatt hour. Now you know.]

Notice now that the price graph is pretty flat except at the ends while the demand curve is much more slanted. At the ends, price varies much more dramatically than demand. What's going on is that both the fuel and the capacity used to produce "extra" electricity during periods of peak demand are expensive. Here in New England we usually use natural gas for peak power in plants which run only a fraction of the time. BTW, the low price of natural gas this year explains why peak costs in 2009 (red) are so much lower than in 2008 (yellow).

At the low end you can't really turn off a nuclear plant for the night or completely shut down a hydro plant. Sometimes it's literally necessary to give away surplus electricity.

So one smart grid opportunity is to incent and enable consumer to move their use from the left end of these charts over to the right. The more we level out our use, the cheaper the total bill. Sometimes a peak price lasts for only a few minutes; a refrigerator, for example, can safely be turned off for a little while (the process has to be automated to be practical). Cheaper power late at night than during the day is predictable; electric storage heat can and is created off peak. Some day that's when we'll charge our plugin hybrid electric vehicles and electric lawn mowers.

Another smart grid opportunity is incenting generators of renewable energy to make more supply at peak times. For wind or solar, this requires some form of storage like batteries, but the extra cost may be worth the extra revenues. With hydro power, if there's sufficient impoundment space available, water can be stored until power is needed.

It's all about flattening the curves.

There's more on the components of the smart grid we hope to build quickly in Vermont with stimulus money at http://blog.tomevslin.com/2009/03/whats-a-smart-grid-and-why-does-it-matter.html.

The Most Popular Stimulus Funds Are Gone

"We have a great library project shovel-ready," the lady from Morristown told me. It was my second day on the job as Vermont's Chief Recovery Officer; I asked her to tell me about it. "Repaving projects don't put carpenters to work; our construction project will." She was right, of course; but Morristown didn't get any money from the American Recovery and Investment Act (ARRA or the stimulus bill) for its library (but there are other ARRA-funded projects in and near Morrisville).

There is no specific program in ARRA for libraries. But Vermont did receive a two year allocation of $17.1 million which it is free to use for any government service. The Morrisville library would have been eligible for this money – known variously as the discretionary part of the State Fiscal Stabilization Fund (SFSF) or the General Services Fund (GSF). So would the lists of building and rehabilitation projects submitted by the University of Vermont, the state colleges, the hospitals, and some towns and school districts. People in my home town of Stowe hoped to use GSF for its long-sought and already-permitted hockey rink. The Preservation Trust listed over $27 million of shovel-ready projects on their website. There were at least $200 million of request for this money. It was obvious that most would be disappointed and, of course, they were.

Different states have different procedures for appropriating federal funds. Here in Vermont they are appropriated by law, not by the Governor unilaterally. Governor Douglas proposed spending all $17.1 million on economic development, mostly through the Vermont Economic Development Authority (VEDA). State money invested in VEDA attracts private funds into the same companies, and the hope was that the as much as $160 million would actually have been available for Vermont businesses as a result of this allocation.

The budget passed by the Legislature over the Governor's veto appropriates only half of the money, $8.5 million, for the State's fiscal year 2010 which begins on July 1, 2009. The rest remains to be appropriated next year.

$4.4 million was appropriated to the Public Safety Department. Since no new programs were created with this money nor any new positions created, this money is being used as a stop gap to lessen Vermont's budget deficit problem.

$2.15 million will go to VEDA to set up a venture capital fund to help early stage Vermont businesses.

$1 million will go to VEDA for a Vermont Jobs Fund to help otherwise healthy businesses weather tight credit conditions caused by the recession.

$200, 000 will go to the department of economic development for operation of the Vermont Training Program.

$500,000 will go to the department of tourism and marketing.

$100,000 will go to the Vermont Sustainable Jobs Funds for the Farm-to-Plate Investment program.

$150,000 will go the Vermont Sustainable Jobs Funds for operation of the funds.

Since the Governor will almost surely make a recommendation for the remaining $8.6 million to the next session of the Legislature and since the Legislature will certainly appropriate that money, you do have a voice in how the money is spent next year. You'll probably have a hard time making the case that it should be spent for a specific project in your town since it won't cover very many local projects but you can certainly try. You can advocate for statewide projects, for economic development, or to use the rest of the money to plug one more year of budget gap. The right people to contact with your recommendations are the Governor and your elected representatives.

An AP story on this subject is at http://www.rutlandherald.com/article/20090610/NEWS04/906100378.

An earlier post on the most popular money in the stimulus bill is here.

Stimulus and Recovery on Community Access TV

Telling you about stimulus opportunities is a big part of our job at the Office of Economic Stimulus and Recovery. Community Access TV provides in depth coverage which lets us get into the details of the very complex American Reinvestment and Recovery Act (ARRA better known as the stimulus bill) and the three hundred or so separate programs it funds.

There are 25 community access centers which operate 43 local cable channels and serve 100,000 cable households in Vermont according to the about page of CCTV in Burlington. These channels are funded by a percentage of the gross revenue of cable companies and sometimes contributions as well. Each access center produces and hosts shows and broadcasts them on local cable channels. You can't get them over the air or on satellite or out of the region in which they're produced except when the access centers share shows with each other, which they sometimes do. And, very importantly, the access centers make some of their shows available on the Internet so you can get them anytime and anywhere you have a good enough broadband connection.

Making coverage of events like select board meetings, local interviews, speeches at local events accessible to everyone is just one of the reasons all Vermonters need to have broadband access. But I digress.

Last month Congressman Peter Welch (D – VT) and I were luncheon speakers at a daylong conference in Burlington called Stimulating Green. The topic of both of our talks was the stimulus bill and what it means to Vermont. You won't get lunch but can hear what we both had to say at http://www.cctv.org/watch-tv/programs/stimulating-green-conference-keynote-addresses-rep-peter-welch-vermont-recovery-of. The conference and the talks were targeted to businesses looking for stimulus so the webcast is most interesting to small business people although it also has some general information on how your stimulus dollars are being spent.

A few weeks ago I was interviewed on another community access station, PEGTV in Rutland on their Insight show hosted by Laura Vien. Laura and fellow panelists Randal Smathers, editor of the Rutland Herald, and Royal Barnard, owner and publisher of the Mountain Times, asked me some good questions about the stimulus act and what it's likely to mean for Vermont. You can find that interview by going to http://www.pegtv.com/ipegvideo.php and typing "recovery" in the search box.

Broadband for EVERYbody

We used to think it was enough to make broadband accessible everywhere. That's no longer good enough. We now need to make sure that everyone actually has broadband in his or her residence and business. Everyone! (voluntary cave dweller excepted). Our goal in Vermont is to combine stimulus money with private investment and state bonding authority to move us quickly not only to 100% broadband availability but 100% broadband penetration.

The electrical system of tomorrow, the health care system of tomorrow, and the education system of today all depend on universal broadband penetration. Oh yeah, communication, commerce, and entertainment all need broadband too. So does e-government (coming soon) and research.

The electrical system of tomorrow will be smart. That means demand, supply, capacity, and outage data flow unimpeded and in near realtime from meters to utilities and back to consumers and generators. Much of this data flow is machines communicating with other machines. Some information flow is back to consumers both large and small so they can control their energy bills by using electricity when it's abundant and cheap and shunning or selling it back to the grid when it's rare and expensive. Taking advantage of the smart grid requires a broadband connection.

Part of e-health is electronic health records. Better information means better, cheaper, and less mistake-prone care. But we can't replace paper records with electronic ones until we can be sure that very doctor's office and place of treatment is online with enough bandwidth for bandwidth-hungry objects like x-rays. In the case of home health care, the place of treatment is the home. A home health worker needs the same access to medical records and the same ability to update them that a doctor or a hospital does. The home of the future will have health monitoring devices when needed. Homes need to be online for the delivery of health care.

When I was in school a million years ago I was taught to do research in the Reader's Guide to Periodical Literature. That was then and this is now. Students need to know how to separate the wheat from the chaff on Google and wikipedia; their homework needs to be online just as mine was in the library. But a teacher can't responsibly give online homework to a class if even a small fraction of the students don't have the equipment and connections to get online when they go home. We can't reinvent pedagogy the way we need to until we know that all students have broadband connections – and that schools have scads of bandwidth

So everyone needs to be online. Geography can't be an obstacle but neither can poverty, lack of equipment, or lack of training.

The platform for SmartVermont – the Vermont we hope to build with stimulus money, State money and bonding authority, and private investment – is universal broadband penetration. The first application on that platform will be smart grid, e-health, and e-education. With lots of hard work, some luck, and our fair share of federal (our!) dollars, we can build that future for ourselves and our children.

How Elders Protect Themselves from Young’uns

"For the first two years," the young architecture student told us, "we're not allowed to use computers or CAD. We have to learn to do all our drawing by hand. That's the way Miis [van der Rohe] would have wanted it. That's how we learn the basics."

Sounds good but it's bullshit.

Do we do physics with a slide rule and log tables anymore? Would that make us more like Einstein? Do young programmers have to learn to keypunch because that's what I had to do a million years ago to prepare my programs for execution? Do stone cutters have to practice chipping a softer stone with a harder stone because that's what their predecessors did? Of course not!

I know why generation x doesn't want generation x+1 to use the latest technology; it's because the kids are better at the new technology than their elders. And the elders don't want to be bested. The great fear of the greybeards whose skill was tedious drafting of commonplace designs is that a young genius with a computer'll output a masterpiece that breaks the old rules without even serving a decent humble apprenticeship.

The rules favor the incumbents, no surprise. You can't get your degree without following some of the rules and it's hard to be a practicing architect (or many other things) without a degree. What a waste.

Synergy

Yesterday Governor Jim Douglas announced that Vermont has submitted its claim for $21,999,000.00 in stimulus money for renewable energy projects. You can read that announcement at http://recovery.vermont.gov/news/22mRenewable. This is formula money – money that Vermont is entitled to under the American Recovery and Reinvestment Act (ARRA) so long as we can spend it quickly enough and follow all the rules. But this money is also part of our coordinated plan – SmartVermont – which aims to use stimulus money to transform the Vermont economy and assure that we are in a good competitive position for the very competitive 21^st century.

Nothing subtle about this. We intend that our use of this $22 million plus another $7 million of state funds to develop small and medium scale renewable energy projects will help convince the federal Department of Energy that we ought to receive a healthy allocation of the $4.5 BILLION which is available nationwide for smart electrical grid projects. It takes a smart grid to make full use of electricity generated from sun and wind; the smart grid is more valuable if there are a variety of energy sources for it to coordinate. Vermont already has a number of renewable energy projects up and running and in process. We estimate that we can use $29 million of ARRA and state money to bring another $150 million worth of projects online which will generate more than 3 million megawatt hours of electricity over the next twenty years ; generating this electricity from natural gas would release 860 million pounds of CO2 .

On most nights Vermont has no carbon footprint for electrical generation; our power comes from HydroQuebec and Vermont Yankee. Moreover this offpeak power is cheap at wholesale, in comes cases – believe it or not - almost free because there's no easy way to shut down its production temporarily and it has to go somewhere. On the other hand the power for peak times is generated by burning natural gas in plants that are only used for hours a day if even that. This peak power is very expensive.

In an ideal world the sun would shine on our solar collectors and the wind would turn our turbines during times of high demand and save us from buying peak power and burning hydrocarbons to produce it. Unfortunately we don't live in that ideal world; the sun shines at random and the wind blows willfully. We need a smart electrical grid to help match supply and demand.

Among the projects that Vermont utilities will almost certainly seek ARRA smart grid funding for is electricity storage – essentially big high tech batteries. These are particularly effective when used with wind power. The wind blows when it will and charges the batteries ; the grid draws from the batteries before importing fossil-fueled power.

A smart grid is good at dispatching electricity to areas of demand from areas of surplus. Even a small state like Vermont can be half cloudy and half sunny on any given day. Methane in cow power digesters can be hoarded until extra electricity is needed. Water can accumulate behind dams while the wind blows and be released on still days.

A smart grid is used to manage demand as well as supply. When there's a surplus of power, low prices encourage consumers to dry their clothes, charge up their electric vehicles and appliances, and store up heat. When power is in short supply, higher prices and information about those higher prices encourage consumers to avoid electrical consumption.

In context yesterday's announcement of incentives for distributed generation of electricity from renewable sources means that Vermont will be ready to demonstrate all of the benefits of a smart grid for energy independence and reduction of CO2. We hope the Department of Energy will see it that way when they consider our applications for smart grid projects. If they do, we'll have a smart grid sooner than otherwise and get even more value from all of our generation and transmission capacity.

That's called synergy. We should know much more about how close we come to accomplishing this plan in the next few months.

 

Is Vermont Moving Fast Enough?

My last post complained that federal agencies are not moving quickly enough to make the rules and give out the money for competitive stimulus programs in crucial areas like broadband and energy. Getting these projects under way in the this year's construction season is going to be a problem.

So how well are we doing here in Vermont at putting ARRA (American Recovery and Reinvestment Act aka the stimulus bill) money to work?

We've done a good job of getting highway projects underway. It's taken us slightly longer to sort out the priorities for water projects but we're getting there. We can't make our own rules for alternative energy and energy efficiency and some economic development programs until both houses of the Legislature and the Governor agree on a budget (hopefully'll happen by the end of this week). With hindsight I wish that I had pushed for separate legislation to get some of these projects going faster; but it's not clear whether that could've happened or even that the Legislature should have looked at a budget for ARRA money out of context of the rest of the state budget.

The Douglas Administration has proposed that large amounts of the ARRA money which has been allocated to the state by the Department of Energy be spent for alternative energy and energy efficiency projects. The intent is to distribute this money through open processes –either competitive or first come, first served for eligible projects – depending on the anticipated demand for a particular program. The idea is to make sure that the most effective projects are the ones that get done.

We can't write the precise rules for these programs until we know what the Vermont legislature finally authorizes. But we know we have to get the rules written and the awards made quickly to take as much advantage as possible of this year's summer construction season, put people to work, and quickly start reaping the long term benefits of less dependence on imported fossil fuels. You should judge us by whether we meet these goals.

We in Vermont decided to go ahead and prepare for the competitive ARRA broadband, smart grid, education, and e-health awards even in the absence of final regulations from Washington. It'll probably turn out that we've "wasted" some of this work when we see the rules under which grants are to be awarded. We rushed to be ready to file applications for broadband and smart grid grants as early as the beginning on May; looks like we didn't have to move quite that quickly. On the other hand, since we know now how we'd like to proceed in these areas, we find ourselves well-positioned to comment on both proposed regulations and the proposed (but too slow!) schedule of awards.

States have an incentive to move very quickly once ARRA money has been granted. If the money is not spent quickly, it will be reclaimed by the feds and redistributed to speedier states. Our ambition is to have Vermont benefit from these reallocations. Our small size and the important fact that we already have projects in broadband, smart grid, and health information systems underway will help; some of our permitting and review processes could be a problem. Stay tuned.

Stimulus Delayed Is Depressing

Some programs meant to be funded under ARRA (American Recovery and Reinvestment Act aka the stimulus bill) are dangerously delayed in getting under way. It is still not possible to submit applications for broadband or smart grid or e-health projects (just to name a few) because no final rules have been promulgated describing how grants for these programs will be awarded. The obvious problems caused by this delay are that we are going to miss some of the summer construction season and the promised jobs won't be delivered when they're most needed. Not so obvious but more serious is the danger that these promised but not delivered programs are helping to prolong the recession.

For example, planned alternative energy projects are being put on hold in the hope that there will federal money for them. If there were no promise of federal money, some of these projects would be underway. You can't blame the project organizers for seeing if they can get some of their costs defrayed; after all, they may have to compete with projects which do get federal funding. You can blame us in government for not moving fast enough to make the rules clear, end the uncertainty, and let the projects get underway. We're delaying the day Americans will have the benefits they deserve from these programs and, for the moment, we're discouraging job creation with our unfulfilled promises.

There are reasons, of course, for the delay; but there are no good excuses.

At the federal level, it is difficult to write regulations for competitive grants which make sense nation-wide and satisfy at least a majority of political constituencies. Typically regulations have to first be proposed and published in the federal register, then there is a comment period, finally there are final regulations. The proposed regulations have been slowed by the fact that the stimulus bill was passed at the very beginning of a new administration; most agencies didn't even have secretaries yet, let alone all the deputies and assistants who actually make the policy decisions which become regulations. When the regulations are final, grant requests will be written and submitted; then an evaluation period; and, at the end, awards; only then can work begin.

It doesn't have to be this slow. In many cases the agencies would have been well within the letter and intent of the law if they'd made preliminary allocations to the states by formula and allowed work to get underway; in other cases Congress can amend the law. Later allocations could be competitive and could depend, partly, on how well the states were spending the initial allocations. Vermont and other states ARE already doing highway projects because that money was deliberately allocated by formula. It's not too late to release some money for broadband, smart grid, e-health and other priorities by formula and get that work going now. With the help of our congressional delegation, we're urging that approach in Washington; you'll be able to read here whether or not we're successful. More important, you'll benefit from more jobs and better infrastructure sooner rather than later if we can get these processes underway.

It's fine to criticize the feds but are we moving qucikly enough in Vermont? See here for some of the answer to that.

PCs Under Fire

Smart reader Cletus White responded to my post predicting that netbooks will replace many PCs with this comment:

"Netbook, yes maybe...but I read your blog from a facebook link and responded here on the couch via my apple iPod touch (home wifi). It's not a netbook . It's an Internet appliance about the size of a playing card."

He's right; it's not just netbooks but all sorts of devices which are replacing PCs in our lives. During the day my Blackberry is now my take-along email machine, not my much heavier Toughbook which used to be my constant companion. Blackberry's good integration with Exchange makes this practical since I can reply, delete, and folder from the Blackberry and not have to redo any of it when I go back to my desk. Sent mail ends up in my sent mail folder no matter where I read it from.

Since the Exchange Web Client which runs in a browser (officially Office Outlook Web Access) is now very good (formerly it was awful) and since I'm online so much of the time, I don't use the standalone Outlook client on my PC to do my State of Vermont email when I'm out of the office; I do it all in a browser window. That's great in an Internet café where I don't have my own machine. More important to the future, since I'm just working in a browser, I don't really need the PC; I could be on a netbook or some other connected device.

Web sites are developing mobile-friendly versions of themselves and the iPhone shows how even websites authored for PCs can be reasonably accessible on smaller screens. During our recent trip to Greece, we used Kindle's onboard dictionary for word disputes (in English) and Google Search and wikipedia on Mary's connected iPhone for settling all other bets. Even if I had a cellular data plan for my PC on this trip (too complicated and expensive in Greece), using the iPhone was faster than booting up a computer; and, like a PC, the iPhone took advantage of WiFi in hotspots (We didn't get Skype working on it, though).

Perhaps a sign of times to come (and certainly partly a result of recession), Microsoft reported a 32% revenue decline in quarterly profits and the first ever decline in quarterly revenue since it went public twenty-three years ago. People aren't buying as many computers, of course; they're not upgrading as often. But this from the Wall Street Journal story on MSFT earnings:

"In addition to slumping PC sales, Microsoft faces a challenge from netbooks, the inexpensive laptop computers that are the only segment of the PC business enjoying growth. Microsoft hasn't been able to charge as much for the versions of Windows that are generally bundled with netbooks as it can for software included with other types of PCs."

Even worse for the future of Microsoft is that netbooks almost never come with Office and some, like the one I bought, don't have Windows on them at all.

Having learned from my prediction in 1984 that mainframes were on the verge of extinction, I know that PCs will be with us for years to come. But the future is a world where all sorts of appliances are used to get online and where applications and data usually live in the cloud with access through a browser. No one will consider it necessary to have a PC to go online. No one will be offline for very long.

Ryan InterContinental

Why is the luxury InterContinental like low-cost no-frill Ryanair? Read on.

What a deal! Mary went on Priceline and got us three nights in the Athenaeum InterContinental Athens for $100 night, just a little more than we paid for the three star Acropole Hotel in Delphi.

At check-in, knowing we were paying so little, I accepted the €30/night upgrade offer to a renovated room on a high floor. The room is nice and we can see the Acropolis, which is lit up at night. I'll never know what the un-upgraded room would've been like.

Well, of course the Acropole had free WiFi; it's €19.95/day for the cheapest option at the InterContinental up to €49.95 if you want 10Mps and need it to work not only in your own room but in public areas and meeting rooms.

Breakfast was included at the Acropole. It's €30/each at the InterContinental (but you can get your eggs other than hard boiled). Mary and I like cheap, greasy breakfasts (she actually prefers sticky to greasy) but the InterContinental is in a commercial zone which seems to be free of competing restaurants. That also meant that last night, when we were tired from a day on the Acropolis, in the Agora (birthplace of democracy), and walking around the old city, we ate in the hotel restaurant. Pretty good food but ouch! A bottle of three buck chuck equivalent goes for €26. A bottle of Jack Daniels (which we didn't have) is €140.

Ryanair will famously fly you for a single euro plus tax on some routes. But then there are the booking fees, credit card fees, baggage fees (where do you think US airlines learned that trick?), priority boarding fees (no assigned seats so you want to be able to make a dash to stay out of the middle), lots of opportunity to buy things inflight, and nada for free.

Has lnterContinental learned to use Priceline as a low cost lure? Probably not but it wouldn't be a bad strategy.

See http://blog.tomevslin.com/2007/03/easyjet_is_chea.html for my experience with Ryanair clone easyJet.