Fractals of Change

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.

How Projects Get Selected for Stimulus Funding

There's almost a trillion dollars of stimulus money available nationally under the American Reconstruction and Reinvestment Act (ARRA). There will be somewhere between $800 million to one billion available in Vermont. Despite these staggering numbers, only a fraction of the projects which people would like to use stimulus money for will actually get ARRA Funds.

What's eligible for funding?

Only certain categories of project are eligible for funding and only so much money is available within each category. Famously, swimming pools and casinos are NOT eligible. Less well-known is the fact that there is no money aimed specifically at school construction, although a small amount of Government Services Fund money could theoretically be allocated for this purpose (see previous post) as can some community development block grants and rural development grants. Likewise there is no money aimed at libraries, museums, and other cultural institutions. Some projects at schools and cultural institutions may, however, qualify as energy-saving. There is money for energy saving projects.

As you may already know, candidates for ARRA funding must be nearly "shovel-ready". The idea is to create jobs now so a project which still needs to get environmental permits may well not qualify no matter how desirable. What you may not know is how long it can take to go through various environmental reviews; twenty years for a major road project is not uncommon. The Vermont Legislature is considering various ways to speed up permitting under Vermont law without sacrificing our environmental values. If these bills become law, Vermont will better be able to use ARRA funding for its highest priority projects. However, no federal environmental laws have been waived nor have their processes been streamlined. For this reason alone most highway projects, for example, have to come from an existing list of projects already well-along in the permitting process.

Even given categorical restrictions and the requirement that projects be shovel-ready, there are still many more projects than dollars in almost every category.

Who decides which projects get funded?

The answer is "it depends".

In some cases various federal agencies will make the funding decisions, usually according to more-or-less objective criteria which they will publish or are in the process of publishing. The Obama Administration has been adamant that "politics as usual" will not play a role in determining how this money is allocated. However, Vermont's congressional delegation as well as the delegation from every other state will try to assure that the rules are written in ways that are most helpful to the states they represent and that their states get at least fair consideration under the rules. The agencies will almost surely try to spread the money across states – in some cases because this is what the law requires; in others because it's customary to do so. Early indications are, however, that merit and not politics will be most important when competitive grants are awarded directly from Washington.

It is already clear that in certain cases like broadband infrastructure, Smart Grid, and E-health, regional cooperative applications will be considered to have greater merit than uncoordinated, stand-alone grant requests. It's part of the job of the Office of Economic Stimulus and Recovery in Vermont to provide coordination in these areas.

In other cases money comes directly to a state and it is up to the state through its own procedures to decide how the money gets allocated. The Douglas Administration, like the Obama Administration, would like to see funds allocated on merit rather than politics. How funds actually get allocated in Vermont depends, however, on what the Governor and the Legislature are able to agree on during the budget process. For example, Governor Douglas has recommended that $10 million dollars be put into a revolving loan fund for zero interest loans to public institutions to use for energy-saving projects. If this is approved by the Legislature, then the Pubic Service Department will draw up objective rules to determine which projects actually get access to these funds (we already know that there will be more projects than funds in this category).

There are some bills in the Vermont legislature which favor specific projects. If these bills become law and the projects are eligible under federal law and regulations, these projects will get priority for scarce dollars.

What doesn't happen is the Vermont Office of Economic Stimulus and Recovery making arbitrary allocations of ARRA funds although, as mentioned above, we are coordinating some competitive grant requests to help the State as a whole. Put bluntly, even if we were convinced that you had the most worthy request or important project in the whole state, the money is not ours to give. We're glad to hear about what you want to do. It's our job to help direct you to the state or federal agency which is making the decision – if any. We may be able to help with advice on how best to make a grant request. If you don't see the answers you need at recovery.vermont.gov, you'll find various ways to reach us at http://recovery.vermont.gov/contact_us.

On Executing Flawlessly

Every speaker at Vice President Joe Biden's stimulus czar summit told us that the act required us to be "extremely transparent". One woman went a bit further. "The press'll be watching you", she reminded us. "If you make a mistake, they'll be all over you. So you have to execute flawlessly," she concluded.

Not going to happen. The goal of executing flawlessly for something that hasn't been practiced over and over is not only silly but counter-productive.

You can't both act quickly and flawlessly. You can't try new things without making mistakes. Three bad things happen when "execute flawlessly" is the mantra: you move extremely slowly because you're over-studying every move; you don't innovate because you can't predict the results if you do; and you hide mistakes when you make them (perhaps even from yourself) because it's career-limiting to have been wrong. I saw all three of these bad results up close when I was at the old AT&T; posted about that experience here.

In an innovative environment you KNOW you're going to make mistakes; the important thing is to recognize them quickly and learn from them. It's not making mistakes that's wrong; it's not recognizing them or, worse, covering them up.

The transparency requirements of the American Recovery and Reinvestment Act (ARRA aka the Stimulus Bill) are a good idea. People ought to be able to see how their government works, mistakes and all. By the way, if you spot a mistake or worse, you can report it to us on the form at http://recovery.vermont.gov/contact_us/report_concerns. That's one way you can help us do our job better.

My colleagues and I in the Office of Economic Stimulus and Recovery DON'T promise to execute flawlessly; we know we're not going to. We have to move quickly and we have to innovate so we'll make mistakes. I'm sure we've made some already. We do promise to be transparent and to recognize and fix our mistakes as quickly as we can. And we do expect to take our lumps in the press when we make mistakes – the press won't be doing their job if they don't watch how we do ours.

In the interest of transparency, just want to set expectations realistically.

The Right Way to Stop Piracy

The crews of both the container ship Alabama and the USS Bainbridge just gave a good practical antipiracy course. The crew of the merchant ship fought back and avoided leaving the pirates in possession of a big ship full of hostages; Captain Phillips was apparently especially brave but did end up hostage. Navy snipers ended the danger to the Captain by killing the pirates – the opposite of paying ransom which would have encouraged further piracy.

Ironically an op-ed in today's New York Times, written before the rescue, says:

"So we end up with the spectacle of an American destroyer, the Bainbridge, with enough Tomahawk missiles and other weaponry to destroy a small city, facing off against a handful of Somali pirates in a tiny lifeboat. This is not an efficient use of American resources. It indicates how pirates, like terrorists, can attack us asymmetrically. The challenge ahead for the United States is not only dealing with the rise of Chinese naval power, but also in handling more unconventional risks that will require a more scrappy, street-fighting Navy."

Apparently we do have a "scrappy, street fighting navy". All three pirates were shot in the head while bouncing on a choppy sea. The one with the AK-47 pointed at the back of the American captain never got to shoot.

Not every attempt to fight back will end as well; we have to be prepared for that. But fighting back discourages piracy and saves lives; paying ransom to pirates finances extortion and murder. Thank you to both American crews for the sailors whose lives they've just made safer.

It’s The Netbook, Stupid

Personal computers are an obstacle to broadband use. They're complicated, expensive, heavy, take forever to boot up – and unnecessary. Ironically I'm writing this post on a computer because I'm on a plane, one of the few places (besides rural America and developing nations) where broadband isn't available.

Mary was thinking about how to achieve Vermont's new goal of making broadband available to everyone including those who can't afford or don't know how to use computers. Suddenly we realized that computers are a problem, not a solution. If you know you're going to have good broadband, you don't need a computer to browse the web or communicate; you don't even need a computer to create documents, use spreadsheets, store and analyze data. We need to compute but we don't need a computer. The personal computer is an expensive, inconvenient, and inefficient way to all these things. Of course people like me are also hooked on computers.

So we bought a netbook. It took a while to find one with Linux instead of Windows; but that's what we wanted to experiment with. Vista has conclusively proven how much of a barrier an operating system can be. Linux is not only free but also non-obtrusive. Finally bought an ASUS Eee PC 900 with a builtin video camera, mic, and speakers (Skype ready), an 8.9" screen, and a 16 Gig harddrive (which I would have as soon done without). Didn't buy any applications, of course. $247.56 at Amazon with free shipping. (I know, I know, this is really a computer; even has Intel inside. But we're only using the browser and the explorer so it doesn't count as a computer).

Carefully I kept my nerdish self away when it came. Mary was up and on the Net using our home wifi in about ten minutes after opening the box. Mary's not a novice but she's also not a nerd. Looks good so far. I came back in when I heard the music and found her happily listening to Internet radio from India on the not-too-shabby speakers.

Here's our plan. Mary transitions off her HP to the netbook. She uses only online apps through the browser; she stores her data in the cloud (actually better for collaboration). Pictures live at Picasa or the like; videos in YouTube; white papers and spreadsheets in Google Docs (lots of Google here). Side benefits are her environment is available at whatever Internet café she uses to go online and backup is no longer an issue. In fact she was delighted to find after a small snafu with the word processor in Google apps, which made all the words disappear ,that every edit she'd made had resulted in an automatically archived version of the document.

If this works than maybe we don't worry about computers and software for the newly connected. A netbook'll actually be better – cheaper, easier install, easier to use, no software to buy, and probably replaces the landline phone with Skype video calls.

The Most Sought After Money in the Stimulus Bill

Most of the money coming to states under the American Recovery and Reinvestment Act (aka ARRA aka the stimulus bill) is for very specific purposes and must go to very specific programs. Usually, but not always, there is also a maintenance of effort (MOE to us bureaucrats) requirement which assures that states don't just use the federal money in place of state money. However, there is a sliver of money ($17.17 million in Vermont out of a total of more than $800 million) which can be used for almost any government program and which can supplant the use of state funds. This is the most sought after money in the whole stimulus program. Because there is so much flexibility in using it, everyone has an argument as to why it should go to whatever project he or she is passionate about (or an advocate or lobbyist for).

Just so you can keep things straight, until last week this super-flexible money was called the discretionary 18.2% of SFSF (State Fiscal Stabilization Fund). It is now called the General Services Fund (GSF) so I'll use that name in this post.

When I started the job as Vermont's Chief Recovery Officer there had already been over $100 million of proposals received for the $17 million we have available here. The pile of proposals has continued to grow. This money is especially attractive to those who have not found any other program in the stimulus bill for which their project would be qualified but it also sought after by those who would otherwise have to compete for scarce funds in specific programs. Needless to say, more people are going to be more disappointed than happy over the eventual allocation of GSF.

So who decides how the GSF money is given out in Vermont?

The language of the federal law says "The Governor shall use 18.2 percent of the State's allocation [of SFSF] for public safety and other government services." (later regulations make clear that "and" should have been "or"). Some people have reasonably concluded from this language that the Governor of Vermont can unilaterally decide where the money goes which is probably why so many proposals have come directly to the Office of Economic Stimulus and Recovery. However, in Vermont federal grants whose amounts are known during the legislative session are appropriated by the Legislature through the budget process in the same way that money raised from taxes is appropriated to specific programs (some other states DO allow their governors to spend federal money unilaterally). The Governor can and does propose a budget; the Legislature generally has its own ideas about what the budget should be and can pass any budget the House and Senate agree on subject to veto by the Governor.

The short answer is that the budget process now underway will determine how the GSF money is spent in Vermont. The answer will be known in about a month when the budget bill is agreed on and the legislature can adjourn.

What is under discussion for use of the GSF money in Vermont?

Governor Jim Douglas proposed that all of the $17.17 million, which will be available over two years, be spent on economic development, most of it through the Vermont Economic Development Authority (VEDA) which will be able to use the stimulus money to attract additional private capital. The administration's estimate is that this allocation will result in up to $160 million of loans and equity being available to Vermont businesses including farms - literally "seed capital". The purpose is to grow the Vermont economy now and have a better tax base and jobs that last after the stimulus money has dried up. Full disclosure: I am a gubernatorial appointee and was involved in drawing up this plan.

The House Appropriations Committee proposed that half of the GSF money or $8.58 million be used for public safety. Since they didn't propose new public safety programs, the effect is to relieve pressure on the FY2010 budget – and there certainly is plenty of budget pressure given declining revenues and increased demand for social services. They didn't say how they propose spending the other half; that decision would be made in next year's budget.

The philosophical difference between these two proposals is whether the money should be used to reduce short-term pain (which is real) or aimed at creating economic growth now and in the longer term rather than relieving pressure on the budget. IMHO, the first alternative is dangerously close to eating the seed corn – always a temptation when it's winter and you're hungry. Civilizations which don't have the discipline to avoid eating the seed corn don't last.

What if I have an opinion on how GSF money should be spent?

If you have an opinion, now's the time to make it known; there is only about another month before a final decision is made in the form of the state budget. Usually final results are somewhere in the range between what the governor and the legislature propose; but we haven't even heard from the Senate yet so it is certainly possible that other ideas will be introduced.

A form for contacting the Governor is at http://governor.vermont.gov/contact.html and his hotline is at 800.649.6825. Contact information for legislators is at http://www.leg.state.vt.us/legdir/legdir2.htm. In the end this is your money and you certainly have a right to tell us how it should be spent.

Coming Up: Other ARRA sources if your project doesn't get GSF funding.

What’s a Smart Grid and Why Does It Matter?

We Vermonters have a huge opportunity to use federal stimulus funds to shape our near term energy future. The Vermont of three years from now will have both reduced its use of expensive and relatively dirty peak electricity AND begun to substantially reduce the use of oil in cars and homes. Energy policy is a key part of the SmartVermont plan announced Thursday by Governor Douglas and the Smart Grid is a key part of energy policy.

Whether you believe that the most important goal of an energy policy is reducing CO2 emissions, preventing the outflow of dollars from the State and nation for imported oil, or stopping the flow of petro dollars to unfriendly places, you are probably part of the huge consensus which believes that we need to reduce our use of fossil fuels both locally and nationally. It's even better, of course, if we reduce our use of fossil fuels by making alternatives cheaper rather than just by making fossil fuels more expensive; that's kinder to our pocketbooks and has a better chance of being a model for the rest of the world.

What's a Smart Grid?

 

The Smart Grid lets us do all these good things. But what's the Smart Grid?

Smart Grid infrastructure consists of electronic meters at each residence and business, an information network to carry data from the meters to the utilities in near real-time AND to bring information on the instantaneous price of electricity back to consumers; gadgets which help us automatically adjust our electrical use to prices in whatever way we want to do that; and lots of electronics and other devices in the electrical grid itself, which let the grid use the information on usage to adjust transmission and supply and accommodate the varying output from alternative energy sources.

Smart Grid benefits to consumers are lower overall rates and the chance to use very cheap way off-peak electricity for charging electric vehicles and appliances, generating and storing heat for later use, and adjustable activities like clothes washing and drying. Businesses have even greater opportunity to reduce energy costs. The benefits for the economy are less money spent on fossil fuel and a better return on alternative energy investments. The benefit for the environment is less use of fossil fuel to generate electricity. Lots of winners.

Smart Grid Economics

 

Of course electricity is not really an energy source the way a windmill or coal-fired generating plant or a hydro-electric dam is; electricity is a way of getting energy from where it's generated to where it's used. The cost of electricity depends on both what fuel was used to generate it and how much it cost to transmit it from source to point of use. Similarly the environmental impact of using electricity depends on how the electricity was initially generated. Here in Vermont two-thirds of our electricity is carbon-free from Hydro Quebec and Vermont Yankee; that's why we have the lowest carbon footprint per capita for electrical consumption of any state in the country. Off-peak almost all of our power comes from these sources; on-peak we buy expensive electricity largely generated by spooling up gas-fired facilities, which use expensive fuel and are an expensive resource because they are only needed for a few hours each day.

The following charts are from Vermont's 2005 power plan.  The chart immediately below shows how wholesale prices vary during two normal days:

   

Peak costs for power during the afternoon on both days was 60% higher than the daily lows.  On a bad day, the difference is much greater:

 

Obviously if we can shift some usage from peak to off-peak, the electricity we do use will cost us much less because less expensive fuels and more environmentally friendly generating fuels are used off-peak. Also, the total cost for building electrical facilities is reduced if we don't have to build extra generating plants and transmission lines solely to meet peak demand.

Smart Grid and SmartVermont

Part of the SmartVermont plan is to use federal stimulus money to accelerate activities already underway and get the Smart Grid in place much faster than we would have otherwise. We must compete for and win grants for:

• the speedy completion of our broadband network (a good thing in its own right and essential to carrying the information on which the SmartGrid depends),
• rolling out smart meters statewide
• making the improvements in the grid and in our electrical substations needed to make this all come together, and
• funding experiments to determine what rate structures are most useful to consumers.

To take further advantage of the Smart Grid, we are looking at possibilities of using stimulus money to accelerate the adoption of plug in hybrid or pure electrical vehicles– perhaps first by transit districts and others who may be eligible for stimulus funding for fleet expansion – and to help grow the use of geothermal heat (which uses an electrical compressor) and storage heat.

SmartVermont means using the different flows of federal money – broadband, energy, transit, economic development, diesel fuel avoidance etc. – synergistically to build an even better Vermont for the future. It won't be easy; there's lots of coordination required; we have to succeed in our competitive grant requests; and there will be slipups. But the results'll be worth the effort.

 

The Stimulus Czar Summit – Part 2

Most of the summit the Vice President sponsored in Washington last week consisted of half hour presentations from the agencies which will be awarding the money to us state "stimulus czars". These ranged from a boring reading of a list of numbers we could already find on a website to dynamic presentations with new information. There was never a case when the recovery czars didn't have a lot of questions over how a program would work; sometimes the agency people had answers and often they didn't.

Clearly a lot of thought has gone into how to get money out quickly. Often agencies are waiving complex requirements for the first tranche of money in a particular program and then requiring a lot more information for the second tranche when the recipients have had more time. This makes sense.

In many cases money is being distributed through existing programs using existing formulas. This is a fast process and it explains why we already know how much Vermont will receive for programs like home weatherization grants to low-income (200% of the poverty level) people. However, we in the states still have to be creative in these cases. Some programs are receiving ten times more money than they ever did before. Can we spend it as quickly as we were supposed to under the old rules? Should we broaden eligibility since there's more money? If we do, what happens when the money stops flowing from DC in a few years? Do we have enough people trained to do the work that the particular category of stimulus money supports? Not much guidance from Washington on these questions but we can work them out at the state level.

The most serious problem we saw was that there has been very little coordination between most of the federal agencies who are giving out money. Their definitions are not aligned. There is no clear way for us to make a request that spans multiple agencies even when that may make sense to do. Here in Vermont we want to assure that we build something lasting with this money by focusing many of the different stimulus streams on relatively few goals. We would expect preference to be given to applications which use the stimulus money well. But what if each of the agencies involved when we ask for a competitive grant for something like smart grid or broadband says "how can you be shovel-ready when you need approval from multiple agencies? What if the other agencies turn you down? Sorry, no money for you." We can't let lack of coordination in Washington (which the agencies say, with some justification, they haven't had time for) prevent us from coordination and smart use of the money.

Many states objected to the fact that, although the act is generous in allocating money for inspectors general at the federal level to audit how the money is spent, in most cases it allocates no administrative money to the states. This came to a head when Earl Delvaney, Chairman of the Recovery Act Transparency and Accountability, told us that they really expected the states to do the primary auditing for monies granted to or though them and Washington would just audit the auditors. "How come you have the money and we have the work?" the stimulus czar from somewhere asked. Delvaney was frank is saying that, if he had known he was going to have the job he has, he would have lobbied for some different provisions – presumably money for state administration or at least audits. Here in Vermont we're absorbing the extra administrative expense at the state level by "borrowing" skilled people from various agencies.

The word "transparency" was used more than the word "jobs". Problem is that there isn't yet any guidance on some basic transparency questions. For example, we're supposed to report on a per program basis the number of jobs created or retained and these numbers need to hold up in an audit. But what counts as a job? It's not as simple a question as it seems. Suppose you're building a building and you hire some people to build trusses onsite; probably those are jobs. But what if you buy pre-built trusses? Do you count the jobs in the factory that went into making the trusses? The question has some urgency because we'll need to require contractors and sub-contractors to comply with reporting requirements so we can report accurately but we're signing contracts today before we know what it is we're reporting.

Feel free to ignore the whining above; we'll figure a way to make all this work. It's our job.

The first post on the stimulus czar summit is at http://blog.tomevslin.com/2009/03/the-stimulus-czar-summit-part-1.html.

 

The Stimulus Czar Summit – Part 1

Vice President Joe Biden invited the state "stimulus czars" to a Washington conference on the American Recovery and Reinvestment Act (The stimulus bill); according to the organizers, representatives from 49 states showed up (they didn't say which state didn't show). We really do want to find out as much as we can about this huge, unwieldy program including both what we can and can't do. We did learn some but not as much as we would've liked; we also made contacts with some of the federal agency people we'll be dealing with in the months to come.

"Transparency" was the mantra of the conference; every speaker used the word at least once; many coupled it with "accountability". In that spirit I'll post both the good and bad things about the conference on this blog. I also twittered some of my notes from the conference (it was open to press so not confidential); if you're interested, you can read them (in reverse order) at twitter.com/tevslin. In Vermont we will figure out how to use modern technology, including social media tools like twitter, to get information out.

Energy Secretary and Nobel laureate Steven Chu opened the conference. Chu said that the stimulus money which the Department of Energy awards will "create jobs which can't be outsourced, promote alternative energy, reduce our dependence on foreign oil and… oh, yes save the planet." He pledged that he agency would move quickly to get money out the door and they did, in fact, announce the almost immediate availability of the first $780 million installment of a total program of nearly $8 billion dollars for weatherization and state energy programs. Vermont's total receipts from these programs will be $38.8 million assuming that we demonstrate suitable progress in using the funds as intended (which we will). The weatherization program, which is administered through the states, provides assistance to low income families earning up to 200% of the poverty level for weatherizing their homes; the state energy program can be used for a variety of different energy efficiency projects. The current (pre-stimulus) Vermont weatherization program is described at http://www.helpforvt.org/weatherization. Information on the expanded program will be available soon.

Chu then introduced Vice President Biden. Biden has been positioned as the enforcer for transparency and accountability in the administration of the stimulus bill – "don't mess with Joe". He was suitably stern. Not only will no swimming pools be funded (it says that in the law), but he and the President will soon announce a whole bunch more things along the same line that cannot be paid for with stimulus funds. "Just because it's legal [not forbidden by the law itself], doesn't mean you can do it," he said. He continued that Congress has given the states a huge opportunity to administer large parts of this very ambitious program; if you [stimulus czars] don't do a good job, it'll be a long time before Congress entrusts the states with much responsibility again.

My personal guess is that if we don't all do a very good job on this – feds and state people alike – it'll be a long time before the taxpayers trust any of us with so much of their money again and, when they do, there'll be a new set of people who earn that trust.

We should have known something was up when the television cameras started to cluster around the edges of the small stage; there were more of them appearing every minute. Somebody came and whispered in the ear of Matt Rogers, Senior Adviser to the Secretary of Energy, who was then presenting. "I have a surprise guest to introduce: the President of the United States Barack Obama." We all stood, of course. The President came in quickly from the back of the room and took the podium. He only spoke for about five minutes but we got the message: he thinks this is important; there will be transparency; people will know where there money has gone and what results have been achieved.

"Use these precious dollars [which] taxpayers gave up to deliver short and long term results," the President said. "You've got a wonderful mission; seize this opportunity to put your shoulders to the wheel of history."

More about what we learned (and didn't learn) from the agencies is at http://blog.tomevslin.com/2009/03/the-stimulus-czar-summit-part-2.html.

Live Twitter of VP Biden’s Conference for State Recovery Czars

Since "transparency" is the watchword of this conference, am twittering live while my battery holds out. Am @tevslin on twitter.