Joseph Krist

Publisher

THE MUNI MARKET

It has clearly been a somewhat difficult year for the market. The pace of recovery from the pandemic was erratic and sometimes a case of one step forward, two steps back. The Puerto Rico bankruptcy drags on while potential restructuring options become more expensive by the day. High rates and a potential recession are the last things that situation needs. Other outstanding high yield credits would likely come under pressure as rising rates and some layoffs are dampening enthusiasm for discretionary spending.

At the same time, the basic structure remains very much the same as borne out by statistics just published by SIFMA. They cover the period 2017-2021 so that includes the very strong economy period, the pandemic period, and some of a reemergence period. Nevertheless, total municipals outstanding have stayed within a narrow range of between $3.9 and $4.1 trillion. The average maturity of new issues has only recently showed a measurable decline reflecting higher rates and duration risk. The SIFMA Muni Index is back where it was in FY 17 at 3.2%. The difference is that the index has increased by some 90 basis points from year end.

TEXAS CENTRAL REPRIEVE

As we went to press last week, the Texas Supreme Court had not yet published its ruling in the Texas Central Railroad eminent domain case.  It has now ruled that Texas Central’s proposed 200-mph rail line between Dallas and Houston was entitled to take property through eminent domain provisions that were established for “interurban electric railways” in 1907. The decision rejected the position that the law did not apply to high-speed rail projects under the 1907 law. The decision theoretically allows Texas Central to revive its land acquisition process to obtain needed right of way.

The pointed out that the case had nothing to do with project approval. “The case involves the interpretation of statutes relating to eminent domain; it does not ask us to opine about whether high-speed rail between Houston and Dallas is a good idea or whether the benefits of the proposed rail service outweigh its detriments. The narrow issue presented is whether the two private entities behind the project have been statutorily granted the power of eminent domain, a power otherwise reserved to the State and its political subdivisions because of the extraordinary intrusion on private-property rights that the exercise of such authority entails. 

Texas Central Railroad relied on its view that it is a “railroad company” and an “electric railway” with eminent-domain power under Texas law. The decision was made on the basis of the status of Texas Central as an interurban electric railway. The issue of whether it is also a “railroad company” was not decided as it was not necessary after the initial decision. This would allow Texas Central to continue to acquire right of way through eminent domain if necessary.

It is not clear what the immediate implications are for the railway’s proponents. Staffing at Texas Central is minimal, funding activities have crawled to a halt, and the CEO of the railway recently left. Numerous news outlets have documented the lack of any real public comments from the railway’s sponsors.

AUSTIN ELECTRIC

In 2021, the meltdown of the Texas power grid was the major concern facing electric customers as it led to damage, increased costs, and a likely need for significant rate increases to deal with the costs of that event. That blackout generated new interest in alternative power sources especially solar among residential customers. As is the case in a number of other jurisdictions, Austin Energy finds itself in a diminished financial position looking for new revenues.

That process has begun with Austin’s proposed rate schedule. Austin Energy continues to see approximately 2.5 percent annual customer growth. It has not however, produced comparable load growth. In 2012, City Council adopted an ordinance requiring Austin Energy to review its rates and update its Cost of Service Study at least once every five years.

While City Council adjusted Austin Energy’s base electric rates in January 2017, those adjustments were based on data from a 2014 historical test year. Subsequently, Austin Energy performed a revenue adequacy review, based on Fiscal Year (FY) 2019 test year, and determined a base rate update was not required at that time. However, the revenue adequacy review showed that a base rate increase may be required before the next mandated review.

In 2022, Austin Energy conducted a new Cost of Service Study. The new study uses an adjusted test year of FY 2021 to determine the revenue requirement. The lack of significant annual load growth has moved the utility to try to recover more revenue through monthly fixed charge-based rates rather than through usage-based power sales. The Cost of Service Study demonstrates that the residential customer class is well below cost of service, by $76.5 million, while certain commercial customer classes are above cost of service. The proposed rate increases are designed to shift costs from the commercial base to the residential base.

As one could imagine, the residential customers are upset. A logical move for a residential customer could be to install solar but if the distribution utility only raises its rates for its fixed charge coverage in response, the move to solar doesn’t make economic sense. It is trend emerging across the country as legacy utilities see themselves in a less competitive position without some external cost being imposed on solar users.  It is seen in thew efforts in Florida and California to limit net metering benefits and diminish the competitive advantage of solar.

The utility’s own presentation shows why residential customers are upset. “Austin Energy’s process has been developed to balance the various objectives of the utility, including equity, affordability, cost causation, and gradualism. This process recognizes moving customers towards cost of service and funding discounts for State of Texas facilities, local school districts, and military facilities. The residential rate structure has some unsustainable weaknesses that require modification to secure the long-term financial stability of Austin Energy and ensure a workable rate design. The proposed rate design includes reducing the number and steepness of the residential tiers and increasing the customer charge.

The municipal utilities in Texas like Austin and San Antonio have been moving in the direction of financing the costs of the transition to clean energy on the backs of residential customers. These utilities seem to be more concerned with the costs of large industrial and commercial customers than they are with residential rates.

ENERGY EMPLOYMENT

The U.S. Department of Energy (DOE) released the 2022 U.S. Energy and Employment Report (USEER) this week. The 2022 USEER, originally launched in 2016, covers five major energy industries: electric power generation; motor vehicles; energy efficiency; transmission, distribution, and storage; and fuels. The findings show that all industries, except for fuels, experienced net-positive job growth in 2021.  

In 2021, U.S. energy sector jobs grew 4.0% over 2020 while overall U.S. employment, which climbed 2.8% in the same time period. The energy sector added more than 300,000 jobs, increasing from 7.5 million total energy jobs in 2020 to more than 7.8 million in 2021. From 2015 to 2019, the annual growth rate for energy employment in the United States was 3%—double the 1.5% job growth in the U.S. economy. In 2020, the energy sector was deeply impacted by the COVID-19 pandemic and subsequent economic fallout. The energy sector lost nearly 840,000 jobs. Last year’s United States Energy and Employment Report (USEER) showed that, by the end of 2020, the energy sector was beginning to rebound, adding back 560,000 jobs.

Jobs in carbon-reducing motor vehicles and component parts technologies grew a collective 25%, led by 23,577 new jobs in hybrid electric vehicles (19.7% growth) and 21,961 jobs in electric vehicles (26.2% growth). In fact, jobs in electric vehicles, plug-in hybrid vehicles, and hybrid vehicles were among the only subcategories of any type of energy jobs that rose in numbers from 2019 to 2021 and that did not decrease from 2019 to 2020. In 2021, the fuels technology group declined by 29,271 jobs (-3.1%). Fossil fuel jobs accounted for most of the fuel jobs lost. Petroleum—both onshore and offshore—led losses, shedding 31,593 jobs (-6.4%). Coal fuel jobs declined by the greatest percentage, losing 7,125 jobs and decreasing by 11.8%. Fuel extraction jobs overall decreased by 12%. Biofuels, including renewable diesel fuels, biodiesel fuels, and waste fuels, grew by 6.7%, adding 1,180 jobs.

All transmission, distribution, and storage (TDS) technologies experienced employment growth in 2021 with an increase of 21,460 jobs. Smart grids outpaced virtually all other technologies in the TDS technology group in growth rate, increasing 4.9%. Traditional transmission and distribution added the most jobs (13,088) and grew 1.4%. Batteries, for both grid storage and electric vehicles, added 2,949 jobs (4.4%). Electric power generation jobs grew 2.9%, adding 24,006 jobs in 2021, slightly faster than U.S. jobs overall.

In total, there were an estimated 857,579 electric power generation jobs in the United States in 2021. Solar had the largest gains, both in terms of new jobs (17,212) and percent growth (5.4%). In 2020, the solar industry lost 28,718 jobs. Wind energy jobs, including land-based and offshore wind, sustained modest growth in terms of new jobs (3,347) and percent growth (2.9%), continuing a trend of steady growth over the last few years.

The geography of the energy transition is also interesting especially given the politics of energy in some states. Michigan added most new energy jobs (35,500) in 2021, followed by Texas (30,900) and California (29,400). West Virginia and Pennsylvania fared best nationally for percent growth in transmission, distribution, and storage, with the fastest growth occurring in West Virginia (29%) and Pennsylvania (14%). Electric power generation technologies grew fastest in the Midwest, with the highest percent growth in Nebraska (32%), Minnesota (18%), and Iowa (16%).

The top two states with the highest percent growth in fuels jobs were North Dakota (21%) and Montana (8%). Percent growth in motor vehicles jobs was spread across many states, led by Texas (20%), Tennessee (19%), and Indiana (18%). Oklahoma and New Mexico were among the top states for percentage growth among all five energy categories. Oklahoma had the third highest per capita growth nationally for transmission, distribution, and storage (11%) as well as energy efficiency (5.3%). New Mexico was first for energy efficiency (7.0%) and third for fuels (5.4%).

CALIFORNIA BUDGET AND INFLATION

One of the concerns that some had about the amount of money made quickly available to the states was that it might create a trough of money to be used fairly indiscriminately to send money to constituents. The sheer number of state gubernatorial and legislative elections occurring this year only enhanced those concerns. Now we see that some of those concerns may indeed by valid.

In several red states, the money effectively funded income tax cuts. In other states, particularly some of the bigger ones, the money has been used to simply transfer money to residents. In New York, homeowners are in the midst of receiving checks from the State regardless of income, tax status, or anything else. Yes, the Governor is hopeful of being elected to a full term as Governor for the first time.

In California, the Governor (also up for reelection) has proposed a number of ways to get cash in the hands of potential voters. The budget framework agreement announced by Governor Gavin Newsome for the State includes giving 23 million Californians direct payments of as much as $1,050. The payments would be issued via direct deposit refunds or debit cards. The agreement suspends the state’s diesel sales tax for 12 months, starting on Oct. 1. The diesel sales tax is currently 23 cents per gallon.

The Governor originally offered payments to offset the rising cost of gasoline. That plan called for California vehicle owners to receive $400 per vehicle registered in their names, up to two vehicles per person, and millions in grants to make public transit free for three months, pause a part of the diesel sales tax rate for a year, and pause the inflationary adjustment to gas and diesel excise tax rates.

How much will eligible residents receive? Joint filers who make less than $150,000 and have at least one child will receive the maximum amount of $1,050. Single filers who make under $75,000 would receive $350; those making between $75,000 and $125,000 would get $250; those making between $125,000 and $250,000 will see a $200 payment. Joint filers who make less than $150,000 will receive $700; while those making between $150,000 and $250,000 will see a $500 payment. Joint filers making up to $500,000 get a payment of $400.

The budget will also require some technical amendments especially in the energy sector. One of those pieces of legislation deals with a plan to establish a “Strategic Reserve” of electric generation sources. The plan allows power from fossil fueled generation to be used when we face potential shortfall during extreme climate-change driven events (e.g. heatwaves, wildfire disruptions to transmission).

The budget specifies what types of energy generation is eligible: Extension of existing generating facilities planned for retirement.  Note that Diablo Canyon cannot be extended with the current appropriations or authorities in the current budget. This requires further legislative action. Note that the Strategic Reserve in itself does not authorize extension of expiring assets, including retiring once through cooling plans.

Any extensions will be subject to authorization by regulatory entities or in the case of Diablo Canyon, subsequent legislation and review and approval by state, local and federal regulatory entities. ○ New emergency and temporary power generators of five megawatts or more.  The program is prohibited from operating diesel generators after July 31, 2023. The program does not provide for retrofit of backup diesel generators.

Here’s the controversial part. For Summer 2022, the budget bill exempts several statutes and permitting requirements, and the trailer bill allows the Department of Water Resources to enter into contracts without undertaking CEQA review. The budget specifies a loading order by requiring the Department of Water Resources (DWR) to prioritize feasible, cost-effective zero-emission resources over feasible, cost-effective fossil fuel resources; clearly states that the Strategic Reserve is a “last on, first off” resource to provide grid support only in emergency conditions.

DELIVERY FEES AND TRANSIT

Various methods of deriving revenues from changes in driving habits especially as they relate to commercial activity have been considered in the face of climate change and a shift to online shopping. Firms like Amazon have been targeted but proposals for fees to be charged to those using the home delivery services have not generally been supported by customers. Now, legislation in Colorado will test that dynamic.

Beginning July 1, Colorado customers will notice a range of extra charges on their receipts for goods delivered to their homes. They include a Retail delivery fee: 27 cents charged on orders, including those made online, for goods and most other items subject to the sales tax, including restaurant food; ride-hailing fee: 30 cents per ride on services including Uber and Lyft, or 15 cents for rides in zero-emission vehicles: Bridge and tunnel impact fee: 2 cents per gallon on diesel fuel purchases, rising to 8 cents by mid-2028; and Car rental fee: An existing $2 per day fee for car rentals up to 30 days will be indexed to inflation; it will newly apply to car-share rentals lasting at least 24 hours.

Electric vehicle registration fees will increase as the existing $50 registration fee for plug-in electric vehicles will be pegged to inflation, and additional annual EV fees will be phased in, starting at $3 for plug-in hybrids and $4 for full EVs. Those new fees will increase over the next decade to $27 for hybrids and $96 for full EVs.

Unsurprisingly, the fees are the subject of legal action. Given that they represent revenues to replace or increase tax sourced revenues, some see the scheme as an effort to get around Colorado’s Taxpayer’s Bill of Rights (TABOR).  That requires voter approval of many proposed tax increases. Voter approved Proposition 117 in 2020 which requires asking voters to approve fees if they’ll generate revenue above a certain threshold. Lawmakers attempted to work within its confines but litigation challenging that will be heard in the Fall. 

Disclaimer:  The opinions and statements expressed in this column are solely those of the author, who is solely responsible for the accuracy and completeness of this column.  The opinions and statements expressed on this website are for informational purposes only, and are not intended to provide investment advice or guidance in any way and do not represent a solicitation to buy, sell or hold any of the securities mentioned.  Opinions and statements expressed reflect only the view or judgment of the author(s) at the time of publication, and are subject to change without notice.  Information has been derived from sources deemed to be reliable, but the reliability of which is not guaranteed.  Readers are encouraged to obtain official statements and other disclosure documents on their own and/or to consult with their own investment professional and advisors prior to making any investment decisions.

Joseph Krist

Publisher

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COAL HANGS ON      

The Omaha Public Power District board is taking public comment on a proposal to burn coal at its North Omaha power plant for possibly another three years, until 2026. The board cites the fact new solar and natural gas plants that will replace the North Omaha units are running behind schedule and customer demand for electricity is rising. OPPD previously converted three of the five units there to natural gas. The remaining coal units are newer.

OPPD puts much of the blame on the federal government. Federally required interconnection studies are backlogged across the country. The need for these federal approvals is a constant source of delay for generation projects all over the country. In addition, solar projects all over the country are delayed due to restrictions on solar panel imports. The White House recently took steps to address the issue but the sheer number of projects seeking interconnection continues to grow.

DREAM A LITTLE DREAM FOR ME

The American Dream mall in the New Jersey Meadowlands seems to be falling victim to the impacts of a highly indebted owner, an unprecedented opening environment, and the realities of a post-pandemic world. As all of the factors have converged on the project, the financial impact has been difficult.

The Trustee for some $800,000,000 of outstanding revenue bonds issued through the Public Finance Authority (Wisconsin) informed holders that the May PILOT payment, which was due from the Developer in advance of the semi-annual June 1, 2022, Interest Payment Date, was not paid. The PFA Bonds are payable from Revenues, ultimately derived from the PILOT payments required to be made by the Developer pursuant to the Financial Agreement.

On June 15, the Developer made a payment to the PILOT Trustee in the aggregate amount of $13,870,191.21, which is equal to the amount of the missed May PILOT. The Developer has not fully cured its Default under the Financial Agreement however, as due to the late payment, pursuant to Section 4.02 of the Financial Agreement the Developer is also required to pay interest on the overdue May PILOT. That interest has not been paid.  

Another potential issue reflects the fact that the Developer is challenging the current tax assessment valuation of its interests in the Project in a proceeding under applicable New Jersey law. On March 31st 2022, it filed a Tax Appeal Complaint with the Tax Court of New Jersey to contest the tax assessment imposed on the property known as the American Dream Project for tax year 2022.

For tax years 2019, 2020 and 2021, the developer filed a tax Appeal Complaint to contest the 2019, 2020 and 2021 tax assessments on the American Dream Project. The tax appeals for 2019, 2020, 2021 and 2022 are unresolved at this time. The tax-assessed value is a key component of the revenues for the PILOTs, which are the principal source of repayment for the PFA Bonds.

The bonds bear all the markings of a prime restructuring candidate. If the assessment challenge cannot be adequately addressed, a clear risk will remain. The idea that a need to restructure this bond issue might arise is absolutely no surprise. The tortured development history, the limits of the pandemic and changed habits post-pandemic have created a credit squeeze. The mall partially opened in October 2019, was forced to close in March 2020 under pandemic restrictions and only reopened in October of that year.

Given all of that, operating losses in the first year at 60% of revenues are a problem. For 2021, the project did generate some $175 million in revenue but it resulted in a near $60 million operating loss.

CALIFORNIA HOUSING

The aid received by states from the federal government as the result of the pandemic, is providing an opportunity for the consideration of all sorts of programs seeking to spend money to achieve certain social goals. In California, it has led to a proposal to aid first time homebuyers which would incorporate the use of state funds for down payments, to be recouped later from price appreciation on homes.

The California Dream for All program would issue revenue bonds of $1 billion a year for 10 years to create the fund which would be applied to support the concept of shared appreciation mortgages. The program would create a partial ownership interest on the part of the fund and it would require repayment of the portion of a down payment covered under the program after sale of the property or a refinancing resulting from appreciation related equity.

It is being billed as a program to address “equity” issues. The program would be open to buyers making less than 150% of the median income in their area, and it would target first-generation homebuyers as well as those with high student debt loads. While the proposal may indeed lead to greater “equity”, it may ultimately exacerbate the state’s ongoing affordable housing crisis.

One clue is the support for the plan from the CA Association of Realtors. The plan clearly relies on steady appreciation in house prices. It also would help to drive that appreciation in that the plan only addresses the demand side of the housing equation. Empowering more demand in a market which cannot generate commensurate increases in supply is the definition of a price driver. No wonder the real estate industry supporting the plan.

The plan would do nothing to increase the supply of housing in a state with record breaking homeless populations. It would potentially expose the state to losses on the fund if the expected real estate price increases do not materialize. The other issue is that shared appreciation mortgages are a private sector technique. This would be the largest government sponsored and funded experiment. If for some reason the expected appreciation and repayment of down payments does not materialize, will that create an obligation for the state to fund? Will there be political pressure in future to forgive loans?

HIGH SPEED RAIL SLOWS DOWN

The proposed high speed railroad project undertaken by the State of California has been the target of much criticism. Its budget grew significantly, the timelines for project completion were delayed and extended, and anticipated federal funding was initially delayed under the Trump Administration. The scope of the project initial build out was reduced. All in all, the project was seen by many as just another public works failure.

As that project was unfolding, a planned Houston to Dallas high speed rail project was proposed. The cost of the project when originally proposed ten years ago was $10 billion. The funding for the project was to be entirely privately funded. Now, the expected cost is $30 billion. The funding for that cost is now proposed to include a $12 billion federal Railroad Rehabilitation and Improvement Financing program loan. Construction had been scheduled to be already underway. Instead, litigation challenging the right of the private project to use eminent domain to acquire needed right of way was argued before the Texas Supreme Court.

While the Federal Railroad Administration (FRA) issued its final rule for regulating the high-speed rail project in September 2020, Texas Central must still make an application to begin construction with the Surface Transportation Board. It has yet to do so. Management is at best in flux. It has been reported that the executive staff was let go in April. A Spanish news website reported the project has entered “a hibernation phase in search for financing.

Political opposition at the federal level is based in eminent domain concerns – a real long-standing issue in Texas and the need for federal aid. Issues regarding the use of Japanese train technology are also driving opposition and concern that use of the technology could clash with Buy America requirements in federal legislation.

NUCLEAR LITIGATION

Oglethorpe Power Corp. and the Municipal Electrical Authority of Georgia are suing lead owner Georgia Power Co. over proposed contractual changes from Georgia Power involving the expansion of Plant Votgle. Oglethorpe threatened to back out in 2018 unless it was protected from additional overruns. Georgia Power agreed that above a certain point, it would pay 55.7% of the next $800 million in construction costs, and then 65.7% of the next $500 million. Those extra contributions total $180 million. 

Oglethorpe and MEAG say the agreement activates once shared construction costs rise $2.1 billion above $17.1 billion.  Georgia Power says the base construction cost should be $18.38 billion and that the agreement doesn’t kick in until shared costs reach $20.48 billion. That creates a $695 million obligation for the municipal owners. Southern Co. has acknowledged it will have to pay at least $440 million more to cover what would have been other owners’ costs.

While the litigation process unfolds, Moody’s took the opportunity to review its ratings of debt issued by MEAG for the Votgle expansion. It assigned a Baa2 rating to the Municipal Electric Authority of Georgia’s (MEAG Power) planned issuance of approximately $52 million of Plant Vogtle Units 3&4 Project P Bonds, Series 2022A, and approximately $63 million of Plant Vogtle Units 3&4 Project P Bonds, Taxable Series 2022B. The Bonds are expected to be sold in July. The bonds are secured by payments received from the sale of a portion of MEAG’s interest in the new Votgle units.

That capacity sale is important to the MEAG credit as the purchaser is essentially the sole revenue source for the payment of these bonds for 20 years. The expectation is that sufficient demand from MEAG’s current participants at that time will absorb the capacity. The rating comes with a stable outlook reflecting a continued expectation that progress will continue to be made towards the construction of Vogtle Units 3&4 with commercial operation expected during the first quarter 2023 and fourth quarter 2023, respectively.

MASS TRANSIT SAFETY

While much attention has been focused on the issue of passenger safety in the context of criminal activity and its impact on ridership, another safety issue is plaguing two of the nation’s major subway steams. This week, the MBTA which operates Boston’s rapid transit system pulled all of its new Orange Line trains from service. This is the third time that the rolling stock on the Orange Line has had to be taken out of service over systematic issues.

The last Federal Transit Administration inspection has led to some preliminary conclusions and recommendations. They include increasing staffing at its operations control center, improving general safety operating procedures, and addressing delayed critical track maintenance and safety recertifications for employees. A full report and list of recommendations is due in August.

In Washington, D.C., WMATA has announced the return to service of subway cars which have been the subject of safety reviews over the last seven months. A Metro train derailment near Arlington National Cemetery in October 2021 found a wheel defect in some of the trains. As a result, all 7000-series railcars were removed from service on all D.C, Metro lines, removing nearly 60% of Metro’s fleet. Now, the Authority will begin releasing groups of the cars back into service.  The first release of 64 cars or eight trains in total represents less than 10% of the fleet.

The return to service allows the Authority to restore service levels. The 7000-series cars represent some 60% of the total WMATA fleet. The impact on service levels and safety perceptions were significant. The situation compounded ridership levels in addition to the impacts of pandemic limitations.  

TAXES ON THE BALLOT

The Massachusetts Supreme Judicial Court ruled that a ballot initiative calling for a 4% tax on incomes of $1 million or more. Opponents had challenged description of the initiative produced by the attorney general’s office. If the amendment is approved by voters, any household income over $1 million would be taxed at an effective rate of 9%. The first $1 million of household income would still be taxed at the current 5% tax rate, with a 4% surcharge — or so-called “millionaire’s tax” — tacked onto any additional income.

Opponents took issue with how the proposed constitutional amendment was summarized for voters in language written by the attorney general’s office.  “This proposed constitutional amendment would establish an additional 4% state income tax on that portion of annual taxable income in excess of $1 million. This income level would be adjusted annually, by the same method used for federal income-tax brackets, to reflect increases in the cost of living. Revenues from this tax would be used, subject to appropriation by the state Legislature, for public education, public colleges and universities; and for the repair and maintenance of roads, bridges, and public transportation. The proposed amendment would apply to tax years beginning on or after January 1, 2023.”

SEC CLIMATE DISCLOSURE

We have been generally unsurprised at the reactions against the SEC’s proposed climate change related disclosure regs. They have already been described as an act of terror by one state official in Utah and as is nearly always the case, issuers are expressing concerns with the potential costs of compliance with the proposed rules. Now, we are seeing initial efforts by some to legislate reality away.

The North Carolina House has a resolution which directs that Congress do all it can to legislatively block the SEC from imposing the rules. It is ostensibly in support of small farmers. The claim is that companies which are subject to the regulations will require individual farms to monitor their emissions.

NET METERING COMPROMISE

Every two years, Vermont Public Utility Commission is required to assess the incentives offered to new net-metering systems and decide whether they should be adjusted upward or downward. The latest review was released this week and it includes proposed changes in the state’s net metering scheme. As a result of the review and its resulting adjustments, most existing net-metering systems will see an increase in their compensation. Future systems that apply for permits on and after September 1, 2022, will see a small net decrease in compensation compared to existing systems.

The plan is an attempt to deal with the one aspect of net metering which has been most difficult to resolve around the country. In Vermont, the Commission notes the rapid expansion of solar installations and its potential to raise costs for customers without solar power. It cites the fact that in 2021, nearly 3,000 new solar net-metering systems and one wind net-metering system received were certified in 2021, for a total of approximately 45 megawatts (MW) of new, renewable energy capacity. That is an increase of the approximately 36 MW of net-metering permits issued in 2020 and continues to exceed the amount needed to meet Vermont’s current renewable energy requirements.

To better moderate the pace of new net-metering development, the Commission determined to reduce the compensation offered to new net-metering systems – resulting in a net decrease of $0.00272 per kWh, or less than three-tenths of one cent. However, because of other adjustments made in this order, most existing net-metering systems will benefit from an increase of $0.00728 per kWh, or approximately three-quarters of one cent, in their current incentives.

ALABAMA PRISON REDUX

Last year the State of Alabama attempted to finance a plan to replace two existing prisons with new facilities. The State has been under federal court orders to upgrade its dilapidated existing prisons. The plan had been to employ a public/private partnership with the private entity building and owning the prisons but with the State operating and staffing the facilities.

That plan succumbed to political pressure from the decarceration movement. The complaint was that there should be no way for a private entity to profit from the provision of prison facilities. (MCN 10.11.21) After a campaign of pressure against potential underwriters, that deal was scuttled. While seen as a victory for decarceration advocates, the fact was that the State still faced federal sanctions and that a jail replacement had to be built.

That left prison replacement to be dealt with the old-fashioned way. The State would design, build, staff, and operate the prisons. It would own the prisons. The Legislature would then have to appropriate each year for lease payments to pay debt service on the debt which will now be issued. The passage of time and the impact of inflation also make cost comparisons less favorable. Seems like a bit of an own goal for activists.

Disclaimer:  The opinions and statements expressed in this column are solely those of the author, who is solely responsible for the accuracy and completeness of this column.  The opinions and statements expressed on this website are for informational purposes only, and are not intended to provide investment advice or guidance in any way and do not represent a solicitation to buy, sell or hold any of the securities mentioned.  Opinions and statements expressed reflect only the view or judgment of the author(s) at the time of publication, and are subject to change without notice.  Information has been derived from sources deemed to be reliable, but the reliability of which is not guaranteed.  Readers are encouraged to obtain official statements and other disclosure documents on their own and/or to consult with their own investment professional and advisors prior to making any investment decisions.

Joseph Krist

Publisher

________________________________________________________________

NYC CULTURAL SIGNALS

The return to pre-pandemic levels of activity central to the NYC economy at venues for the arts have been mixed. On one hand, three established Broadway shows could point to weekly box office revenues at levels only 50% of pre-pandemic levels. That is not enough to sustain those shows and consequently they will soon go dark. Broadway has become such a tourism dependent industry now. Lingering hurdles to travel based on the economy, status of the pandemic, and a more difficult economic environment than hoped appear to be holding back tourism.

On the other side of the coin, the New York Philharmonic announced that it has taken in better-than-expected revenues since its reopening. In 2020, the season was canceled and the musicians received 25% pay reductions. Now, revenues are such that the orchestra announced it would lift the musicians’ salaries back to pre-pandemic levels in September. The pandemic cost the orchestra more than $27 million in anticipated ticket revenue. Cuts like those to the musicians saved some $20 million.

The Philharmonic is a major component of the Lincoln Center For The Performing Arts along with entities like the Metropolitan Opera and State Ballet among others. The LCPA credit has been under pressure from the pandemic. The positive attendance news should bode well for the overall credit in terms of the pandemic as an issue. LCPA debt went on negative outlook as the impacts of the pandemic became clear.

The negative outlook reflected the possibility of credit deterioration if the impact of the coronavirus and the deteriorating global economic outlook place prolonged downward pressure on key revenue sources including event income, investment income, and philanthropy. As we see venues return to pre-pandemic levels of attendance, the outlook and perhaps the rating could improve as well.

GIG WORK

The issue of how transportation network companies (TNC) classify their employees has been the subject of ballot initiatives and court battles but once the pandemic took hold, the issue dropped off everyone’s radar. In those days, the industry pledged to put significant resources behind a ballot initiative in Massachusetts which would have granted the wishes of Uber, Lyft, and the other TNC.

The constitutional provisions allowing ballot initiatives in Massachusetts have been very specific. An initiative can only deal with one question. Here, the Massachusetts Supreme Judicial Court found that while one question was “buried in obscure language” that it was indeed a separate question. “Petitions that bury separate policy decisions in obscure language heighten concerns that voters will be confused, misled and deprived of a meaningful choice,” the court wrote.  

In 2020, the state’s attorney general (and current gubernatorial candidate), Maura Healey, sued Uber and Lyft, arguing that they were misclassifying their workers by treating them as independent contractors rather than employees. That lawsuit is pending in court. In the meantime, the TNC spent over $17 million on the initiative.

The Court took was clearly troubled by a provision of the measure that said drivers were “not an employee or agent” of a gig company. Opponents of the initiative were successful in highlighting that as an attempt to limit Uber and Lyft from liability in the case of an accident or a crime. That provision was deemed by the court to be unrelated to the rest of the proposal, which was about the benefits drivers would or would not receive as independent contractors. 

SEC ENFORCEMENT

The City of Rochester, New York, its former finance director, and former Rochester City School District CFO with misleading investors in a $119 million bond offering. They had help as the Commission also charged Rochester’s municipal advisor. The SEC alleges that in 2019 the defendants misled investors with bond offering documents that included outdated financial statements for the Rochester City School District and did not indicate that the district was experiencing financial distress due to overspending on teacher salaries. In September 2019, 42 days after the offering, the district’s auditors revealed that the district had overspent its budget by nearly $30 million, resulting in a downgrade of the city’s debt rating and requiring the intervention of the state of New York.

The School District CFO was also charged with lying to the rating agencies. The SEC’s complaint filed in the U.S. District Court for the Western District of New York, charges violations of the antifraud provisions of the securities laws. The complaint also charges the advisors with violating the municipal advisor fiduciary duty, deceptive practices, and fair dealing provisions of the federal securities laws. The Commission is seeking injunctive relief and financial remedies against all parties.

The School District CFO has settled with the SEC. He agreed to settle the SEC’s charges by consenting, without admitting or denying any findings, to a court order prohibiting him from future violations of the antifraud provisions and from participating in future municipal securities offerings, and to pay a $25,000 penalty. 

INDIAN GAMING COURT DECISION

The US Supreme Court ruled that the State of Texas does not have the right to regulate the operation of bingo games at two tribal gaming sites. (MCN 2.28.22) The Texas Attorney General’s Office has been arguing for many years that the 1987 Restoration Act gave Texas the authority to regulate Tribal gaming on these reservations. Texas only permits activities like bingo to be conducted by non-profit entities for charitable purposes (Wednesday night bingo at the local church remains safe).

The case revolved around the fact that the reservations were restored to federal trust status in 1987 under the “Ysleta del Sur Pueblo and Alabama and Coushatta Indian Tribes of Texas Restoration Act.” However, the Restoration Act contained a provision that barred these two tribal nations from conducting gambling activities that are prohibited by the state of Texas. The tribes argued since Texas does not outright ban bingo, they can operate gaming facilities that offer bingo on their reservations. 

It’s not like the two tribes would be the first to operate a casino in the state. The Kickapoo reservation near Eagle Pass operates the Lucky Eagle casino near El Paso. That made Texas’ case a bit harder to argue. The court’s view was quite clear – “we find no evidence Congress endowed state law with anything like the power Texas claims,”.

AUTONOMOUS VEHICLE REALITIES

Over the last ten years, the notion that transportation would be provided through increasing numbers of autonomous vehicles in a relatively short time frame seemed to predominate. Whether it was commercial trucking, buses, or autonomous transport as a service NHTSA also collected data on crashes or incidents involving fully automated vehicles that are still in development for the most part but are being tested on public roads.

For the TNC providers, the answer to many of their personnel related issues seemed to rely on automation. That would require significant investment in “smart” transit infrastructure. How and when to undertake that change is a significant forward policy issue that the municipal bond market is in good position to finance.

New data released by the National Highway Traffic Administration (NHTSA) will help to stir that debate. The data covered the period from July 1, 2021 to May 15 of this year.  NHTSA documented 392 incidents in that period. There were six fatalities and five were seriously injured. Teslas operating with Autopilot, the more “advanced” mode of driver assistance were in 273 crashes. Five of those Tesla crashes resulted in fatalities.

The rest of the crashes were split among Honda (90) and Subarus in 10. Ford Motor, General Motors, BMW, Volkswagen, Toyota, Hyundai and Porsche each reported five or fewer. Tesla is by far the most prevalent electric car consequently the data is not surprising.

As for the TaaS sector, this is where completely autonomous vehicles are making some headway. NHTSA also collected data on crashes or incidents involving fully automated vehicles that are still in development for the most part but are being tested on public roads. These were involved in 130 incidents with only one serious injury, 15 in minor or moderate injuries. Those events were primarily fender benders or bumper taps reflecting the fact that autonomous public transit is a low-speed affair.

SCHOOL AID REALITIES

The enactment of a NYC budget for FY 2023 is shining a light on one of the impacts of the pandemic on school district finances. Most of the big city school districts around the country have seen declines in average daily attendance since the onset of the pandemic. This year, reductions in revenues tied to attendance-based state aid are putting pressure on districts to reduce spending. That need to control spending is generating some political heat.

In New York, the enacted budget includes $221 million less than in the prior FY. That money was generated from city revenues rather than state aid under a formula tied to attendance. The Mayor argues that the “cut” is formula driven and that it actually should be larger. The use of federal pandemic funds to reduce the school budget gap held the reduction to $221 million.

It is a scenario facing districts like the LAUSD in California and the City of Chicago. Education advocates are looking for ways to reduce the dependence of aid levels on attendance.

MEDICAID DEMOCRACY

Voters in South Dakota will have the opportunity later this year to vote on an initiative which would expand Medicaid eligibility in the state. In those states where the voters have a direct say on the issue, proposals to expand Medicaid are successful. It is estimated that some 42,000 South Dakotans would be eligible under the changes proposed in the initiative.

In states where initiatives pass, it often requires enabling legislation in order for the goals of the vote to occur. Opponents of Medicaid expansion use their legislative advantages to obstruct expansion. In South Dakota, opponents turned to “Constitutional Amendment C” which was up for a vote this week. The proposal would have applied only to measures that “raise taxes or require $10 million or more from the state over the next five years. It would have required a supermajority of 60% in order for it to take effect.

In addition to the 90% federal matching funds available under the Affordable Care Act for the expansion population, states also can receive a 5-percentage point increase in their regular federal matching rate for 2 years after expansion takes effect. The new incentive is available to the 12 states that have not yet adopted the expansion as well as Missouri and Oklahoma.

ELECTRIC CAR OBSTRUCTION

Electric car owners across the country are seen as receiving an unwarranted benefit from the fact that electric car owners do not have to pay gas taxes. Vehicle mileage fees which would be the same for internal combustion vehicles and electric vehicles are one current alternative. Many states already levy higher annual registration fees against electric vehicles. It is clear that there are ways to generate revenues from electric car owners which would address the “equity” concerns of legislators. Nevertheless, those seeking to slow the shift away from internal combustion are attempting new ways of obstruction.

Four legislators in North Carolina have introduced legislation designed to hinder the development of charging infrastructure in the state. The Equitable Free Vehicle Fuel Stations Act would require that an equal number of free gas pumps be installed anywhere there are no-cost chargers on municipal, county and state property. That would include public parking lots, parks and government-owned facilities. The bill also would force businesses with free electric vehicle chargers to disclose on customers’ receipts what percentage of their purchase goes toward paying for them.

The bill is ostensibly designed to eliminate a perceived “subsidy”. A 2019 study by the N.C. Clean Energy Technology Center at N.C. State University found electric vehicle owners would have paid an average of about $100 a year in gas taxes if they instead were driving a traditional vehicle of similar size and model year. The higher registration fee collected from EV owners is $130.

On another favored front in the battle over electric vehicles is West Virginia. The state is trying to “punish” financial institutions who will not bank the fossil fuel industry. The West Virginia State Treasury is slated to blacklist six of the nation’s largest financial firms from accessing state contracts, in view of perceived lending discrimination against the fossil-fuel industry. The six – BlackRock, Wells Fargo, JPMorgan Chase, Morgan Stanley, Goldman Sachs and U.S. Bank – will be given 30 days to provide the treasury with proof they have not stopped banking the coal, oil and natural gas industries. 

They would be placed on West Virginia’s restricted financial institution list within 45 days if they cannot satisfy the Treasurer’s issues. The action highlights one aspect of the irrationality of much of the debate over climate change. Whether it is laws like this or acts attempting to override local regulation, the opponents of efforts to move from fossil fuels are coming to rely more and more on legislative obstructions. Those efforts only serve to highlight the effort to substitute emotion for logic as the country moves towards electrification.

West Virginia’s treasurer has been a leader in the effort to “punish” financial institutions over climate change. He calls the move to electrification a “radical social agenda”.

Disclaimer:  The opinions and statements expressed in this column are solely those of the author, who is solely responsible for the accuracy and completeness of this column.  The opinions and statements expressed on this website are for informational purposes only, and are not intended to provide investment advice or guidance in any way and do not represent a solicitation to buy, sell or hold any of the securities mentioned.  Opinions and statements expressed reflect only the view or judgment of the author(s) at the time of publication, and are subject to change without notice.  Information has been derived from sources deemed to be reliable, but the reliability of which is not guaranteed.  Readers are encouraged to obtain official statements and other disclosure documents on their own and/or to consult with their own investment professional and advisors prior to making any investment decisions.

Joseph Krist

Publisher

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NYC HOUSING

With the State budget out of the way, the second calendar quarter is usually a time for significant policy issues to be debated in the NY Legislature. One of the key issues facing the new administration in NYC is the issue of affordable housing. The limits of the pandemic and lingering damage to the local economy have focused even more attention on the issue. Recent proposed rent increases for regulated units in the city have raised an outcry. All the while, the existing stock of public housing continued to deteriorate in the face of ever declining federal funding for maintenance and rehabilitation.

The federal debate over public housing funding leaves public housing operators at the confluence of all of the factors which bedevil public housing. So, they feel left to their own devices. The problem is biggest in the City of New York, the largest provider of public housing by far. NYCHA needs over $40 billion to fully restore and renovate all its buildings. NYCHA has a 250,000-waiting list.

A main goal of the Adams administration is increased funding for NYCHA’s capital needs. This week, the New York City Housing Authority (NYCHA) Public Housing Preservation Trust legislation, A7805D/S9409A  passed the New York State Senate on 38-25 vote, after passing the Assembly on a 132-18 vote. The Public Housing Preservation Trust would be a new, entirely public entity. It is designed to facilitate access to billions of dollars in federal funding to accelerate repairs.  

Under the legislation, leasehold interests for each development would be transferred to the Trust. This would allow for changes in the source of federal revenues able to be generated by each unit. NYCHA estimates that a typical unit would receive $1,900 under the Section 8 Tenant Protection Vouchers compared to just $1,250 per month under currently available funding sources. The median monthly rent for NYCHA apartments is about $500, and the median household income is around $18,500 per year, compared with $1,500 and $50,000 citywide. More than 43 percent of NYCHA households have at least one person employed, according to city estimates.

NYCHA would retain ownership of the land and buildings, and residents would continue to have the same protections they do under the current regulations, including a cap on rent payments set at 30 percent of a household’s income.

Within those parameters, the idea is to enable the Trust to pledge some of those dollars from a revenue stream seen as more reliable than that available under the current system. Those pledged revenues would be the source of repayments on bonds issued to fund the needed capital repairs.

While a fix for public housing was taking shape, another longstanding source of funding for “affordable“ housing was being allowed to whither on the vine. The 421-a property tax exemption—which grants up to 35 years of property tax benefits to newly built multi-unit buildings—will expire on June 15, 2022, after the state legislature did not renew the program during its session that ended last week. It has been a more and more controversial issue as the local hosing crunch became more severe.

The debate has always been whether the level of tax expenditure in the form of abatements is offset by the volume of desired housing produced. The City’s Independent Budget Office (IBO) has estimated the future cost of the program under the scenario that no new exemptions would be granted after fiscal year 2022, which ends in June.

The existing 421-a exemptions will cost the city a projected $25.7 billion from fiscal year 2023 through fiscal year 2056, when the last of the current exemptions would cease (all amounts in 2022 dollars). Existing 421-a exemptions will cost the city over $1 billion a year from fiscal year 2023 through fiscal year 2033. The annual cost falls below $1 billion in fiscal year 2034 and eventually diminishes to $6.8 million in fiscal year 2056.

RENEWABLES IN NY STATE

The NY State Legislature will not take up a bill which would have loosened financing restrictions on the New York Power Authority. The Build Public Renewables Act was intended to enable NYPA to advance the development of renewable generation in the State. The pace of renewable generation development has been slow. The bill easily passed through the state Senate last week and it is generally agreed that there were enough votes to get the bill through the Assembly and to the governor’s desk for signing.

The biggest hurdle now is the Speaker of the State Assembly. As has been the case in states like Ohio and Illinois, the private utility industry has been successful in financially supporting legislators who back those corporate interests. In 2019, the Climate Leadership and Community Protection Act, requiring New York generate 70% of its energy from renewables by 2030 was enacted. The new bill would have been one of the first pieces of legislation which would have driven public investment in renewables.

The public blowback from the decision to block the Legislation has already generated some backtracking. Public competition would likely motivate more overall investment and that lower cost competition could upend some very carefully laid plans. If NYPA is in a position to develop competing facilities with the benefit of tax-exempt financing, that would throw a serious wrench into those plans.

Case in point: the IOU which serves our location is owned by a foreign owned power company that is looking to move into the industrial scale renewables space. Their business plan is based on an IOU service area monopoly model. The plan is to develop an array of primarily wind generation facilities and sell it to their distribution utilities.

The Speaker also effectively killed a proposed ban on natural gas connections for new construction. While no improprieties are implied here, supporters of the bills noted that the Speaker gets significant financial support from the private industry. Attempts to influence legislation have already claimed speakers of the House in Illinois and Ohio. In NY, the reaction was so strong that the Speaker is trying to have hearings held in July on the legislation. It is a step in a process which could result in a special session of the Assembly to have a vote on the bill.

EMINENT DOMAIN

Missouri has enacted legislation which would require that landowners be paid 150% of fair market value for land taken through eminent domain for electrical transmission projects.  The legislation is seen as a compromise between the Grain Belt Express transmission line’s developers and landowners. The bill also requires that developers start construction within seven years of getting easements or their rights to the property would expire. It would also require that court-appointed commissions tasked with determining the fair market value of a farmer’s land during eminent domain proceedings include a farmer who has lived in the area for at least a decade. 

The Grain Belt Express is designed to transmit wind energy from Kansas to Illinois and beyond. It was not initially intended to provide power in Missouri. This was one of the main sources of opposition – the idea that the line would damage Missourians without providing any power in Missouri. Eventually, project supporters convinced local utilities to obtain power from the project. This softened opposition and led to the resulting compromise.

Significant issues around eminent domain continue to play out in neighboring states. It’s clear that this is less an environmental issue for opponents than it is one of property rights.

BRIGHTLINE

The private high speed rail project in Florida continues to move forward. Recent management comments indicated that a goal is the operation of trains (without passengers) for testing by the end of this year on the extension of existing service to Orlando. The railroad has said the extension to Orlando from Miami would open to passengers in early 2023. Brightline estimates that a trip between Miami and Orlando will take a little over three hours. The same trip by car takes some 3 hours and one-half hours.

That reinforces the ultimate dependence of the success of this project on foreign-based tourism. Landing in Ft. Lauderdale, one could go to either South Beach or Disneyworld. The hope is that less auto dependent and more train friendly visitors will drive utilization and revenues.

There was also an update on the Brightline West project linking southern California and Las Vegas. Construction is now tentatively scheduled for Christmas. Management said Brightline West could begin carrying passengers roughly three years after construction begins, or as early as 2025.

CALIFORNIA DROUGHT DRIVES NEW LIMITS…

The California State Water Resources Control Board is making “significant, very deep cuts” for water users, primarily in the San Joaquin River watershed. The San Francisco Public Utilities Commission as well as East Bay Municipal Utility District are among the retail municipal suppliers facing supply restrictions. Others with supplies subject to limits include agricultural water districts such as Merced Irrigation District, Oakdale Irrigation District, Turlock Irrigation District and El Dorado Irrigation District.

The state sent curtailment notices to a larger group of about 4,500 water Some 10% rights holders in August.  A total of ,571 water rights and claims are being curtailed in the Sacramento-San Joaquin Delta watershed. Those rights and claims are held among an estimated 2,000 water rights holders. Some 10% of those holders are 212 public water systems that supply drinking water. The real pressure is on agricultural users to use less water. That sector is by far the biggest consumer of water in the state.

Almonds, pistachios, grapes, alfalfa for cattle and other crops all being grown in a desert. It is the long-term issue which will not go away when viewing California over the long term. The current imbalance between agricultural and non-agricultural use is not sustainable.

..BUT WATER CREDIT HOLDS UP

Moody’s Investors Service has assigned a Aa1 rating to the Metropolitan Water District of Southern California’s Water Revenue Refunding Bonds. It also affirmed the Aa1 ratings on Metropolitan Water District of Southern California’s (“MWD”) approximately $2.5 billion in outstanding parity senior lien water revenue bonds and the Aaa ratings on MWD’s $20.2 million in outstanding general obligation unlimited tax (GOULT) debt.

MWD is the largest provider of drinking water in the US, serving as a water wholesaler to a 5,200 square mile service area with nearly 19 million residents. The district serves exclusively as a wholesale supplier, with no direct retail customers. It sells its water to a base which includes 26 member agencies including 14 cities, 11 municipal water districts and one county water authority. MWD provides supplemental water to its member agencies that represent a critical portion of the members’ water supply mix, with these supplies projected to represent roughly 50% of member agencies’ water supplies over at least the next 25 years.

Moody’s notes a potential benefit of usage limitations at least for the wholesaler. While member retail agencies continue to develop their own water supplies including recycled and desalination supplies, reliance on MWD remains stable and in some cases will increase as a result of water quality regulations, underscoring the essentiality of MWD water to the region.

WASHINGTON STATE DAMS

The long-running debate in the Pacific Northwest over the role of the federal dam system along the Snake River is moving in to a new phase. Advocates for native fishing interests have long advocated removing the dams which are a major contributor to the continued decline of salmon in the river. Advocates for keeping the dams have long worried about the economic costs of removing some of the dams.

Now, a report released by the Washington Governor and one U.S. Senator introduce some hard data into the debate. The report released last week estimates that breaching the dams and mitigating the loss of energy, irrigation and transportation benefits would cost $10.3 billion to $27.2 billion. The direct costs of the process of breaching the dams and the inevitable cleanup are estimated to cost between $1.2 billion to $2 billion. The rest of the costs reflect the loss of shipping capacity on the river and the replacement of that method of shipping by road and rail.

The report estimates that significant improvements to rail lines and roadways would be needed, and compensation for increased transportation costs, infrastructure maintenance and loss of jobs would need to be considered. Those improvements could cost between $542 million and $4.8 billion.  Those costs will be cited by opponents of breaching the dams.  The timing may not be good as well in that those previous efforts to get the breach plan funded through federal dollars came up short and were not included in federal infrastructure legislation. This would shift the costs to the State of Washington.

RETAIL CHOICE UNDER SCRUTINY

Legislation is under consideration which would make Massachusetts the first state to reverse course on retail electric choice after allowing it. The bill would prevent retail suppliers from creating new contracts or renewing contracts after 2023. The bill reflects the results of studies undertaken by, among others, the Massachusetts Attorney General which found higher costs for customers who left municipal or investor-owned utility service. 

This has been an issue in the state since the first Attorney General review in 2018. Polling shows high support for retail choice as individual customers try to eliminate their individual carbon footprints. The reality is that there is still a shortfall in terms of “green” energy supplies available for Massachusetts. This legislation actually spotlights the pressures in the region over the proposed transmission line through Maine to bring hydroelectric power from Quebec to Massachusetts.

MEMPHIS POWER

Memphis, Light, Gas and Water (MLGW) customers could see the utility save between $25.7 and $55.3 million annually, according to data from private sector bids released this week. An MLGW study published in 2020 originally projected savings of more than $100 million a year.  That difference is being seized upon by advocates for the status quo. The projected savings versus initial estimates (dating back to 2018) reflect increased solar and natural gas energy costs relative to when the utility released its integrated resource plan in 2020. 

That 2020 analysis estimated annual savings of $100 to $150 million a year if MLGW left TVA and received power through local natural gas plants, solar farms and purchasing energy through the Midcontinent Independent System Operator. The debate is about more than just cost. It comes as other municipal utility customers of the TVA call on it to move away from fossil-fueled plants rather than replace coal with natural gas.

Disclaimer:  The opinions and statements expressed in this column are solely those of the author, who is solely responsible for the accuracy and completeness of this column.  The opinions and statements expressed on this website are for informational purposes only, and are not intended to provide investment advice or guidance in any way and do not represent a solicitation to buy, sell or hold any of the securities mentioned.  Opinions and statements expressed reflect only the view or judgment of the author(s) at the time of publication, and are subject to change without notice.  Information has been derived from sources deemed to be reliable, but the reliability of which is not guaranteed.  Readers are encouraged to obtain official statements and other disclosure documents on their own and/or to consult with their own investment professional and advisors prior to making any investment decisions.