Joseph Krist

Publisher

UPDATES

In our January 29, 2024 issue we discussed one Colorado River water users plans to retain water allotments even though they were not likely to use them. Now, the owner has announced that it had filed a motion to dismiss its diligence application for conditional water rights that date to 1966 and are associated with the construction of a 23,983-acre-foot reservoir on Thompson Creek. The motion was granted and the claim on water rights is now legally considered to be abandoned.

The Maricopa County Superior Court on Jan. 22 upheld the Arizona Corporation Commission’s approval for SRP to add capacity using natural-gas generators at the Coolidge Generating Station. The plant lies just east of the lower-income, historically Black community of Randolph. After an initial rejection of SRP’s plans, they reapplied and agreed to a modified plan under which SRP will reduce the number of new generators from 16 to 12, won’t add any more units there, and agreed to locate the new generators farther from the community and limit annual capacity to 30% averaged across the new units.

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DRUG COSTS

The North Carolina State Health Plan state funds to pay most prescription drug costs for 740,000 public workers, teachers, retirees and their family members. That puts the Plan in the position of having to fund the costs of an ever expanding portfolio of drugs prescribed to its members. The combination of demographic trends and drug development and marketing has increased demand for drugs. This is especially true of drugs now being offered for their weight loss inducing effect.

One class of drugs prominent in this emerging trend is that of drugs developed for diabetics which help weight loss. Much of the current demand for the drugs like Wegovy. This well advertised drug is used strictly for weight loss only on an off label basis. In June 2021, the insurance plan for North Carolina state employees was paying for 2,800 people to take weight-loss drugs. Last year, it paid for nearly 25,000. The Plan attributes some 10% of its prescription drug costs to weight loss drugs. Now the Plan will no longer cover these drugs.

It may seem a bit political but a truly diverse combination of private health providers is taking steps to limit payment for weight loss drugs for their covered employees. According to press reports, Ascension Health employs about 139,000 people and operates 139 hospitals in 19 states. Its employees must now pay out-of-pocket for GLP-1s such as Wegovy and Saxenda, which are FDA-approved for weight-loss, along with Adipex, Alli, Benzphetamine, Contrave, Diethylpropion, Imcivree, Lomaira, Orlistat, Phendimetrazine, Phentermine, Plenity, Qsymia, Resveratrol, and Xenical. The coverage exclusion will also apply to new weight loss drugs that become available in the future.

Even the Mayo Clinic will now provide a lifetime benefit of only $20,000 for the drugs for its employees. The University of Texas System Office of Employee Benefits stopped coverage of the drugs in September at the start of the fiscal year. Coverage of the medications for weight loss will end on April 1 in North Carolina.

LITHIUM

It is somewhat predictable that projects to derive lithium from California’s Salton Sea would be challenged by environmentalists. Last week ground was broken on a $1.85 billion construction project. By extracting boiling, mineral-rich brine from underground, the plant will create about 40 megawatts of steam power, then separate raw lithium out of the waste stream, and produce an expected 25,000 metric tons of commercial-grade lithium hydroxide each year. That’s enough for approximately 415,000 electric vehicle batteries. 

Now a coalition of environmental and “economic justice” advocates are threatening a lawsuit to halt construction. In this case the contention is that these mining activities will generate pollution which might be harmful to residents. Keep in mind that the existing situation at the Salton Sea is an environmental nightmare. The Salton Sea has been fed by pesticide- and fertilizer-laden runoff from area farms for more than a century as well as a sewage-polluted river from northern Mexico.

Under the current set of conditions, the dry lake bed of the Salton Sea generates huge amounts of dust which pollute the air with a variety of chemicals in the soil dating back to the formation of the Salton Sea. This would continue with or without the plant. The economic base which supported local residents is long gone.

An independent fiscal analyst hired by the county noted the project would generate nearly half a billion dollars over several decades in lithium production fees and property and sales tax revenues. An estimated 250 construction jobs and about 75 full-time jobs, with an average estimated annual salary of $85,000, are also projected to be created. Imperial County’s average income per capita in 2022 was $21,216.

There are more than a dozen existing geothermal steam plants at the Salton Sea. Steam is released from a boiling hot brine pool that sits as deep as 2 miles underground there, and which contains raw lithium and other minerals.

PARTISAN UTILITY MANAGEMENT

Nebraska is the only state with a one house legislature and the only state without an investor-owned electric utility. For many years, the elections for seats on the board of the state’s electric utilities were conducted on a non-partisan basis. From the perspective of the long-term investor, this was one of many factors which made the credits of the public power entities in Nebraska attractive.

Like so many utilities with aging generation stock, the public power agencies in Nebraska face some significant decisions. They were difficult enough given the many entrenched interests which might be impacted from increases in renewable power. More emphasis on ideology is not exactly what these agencies need in the current environment.

Now, partisan elections are being encouraged by sponsors a new bill which received a 29-16 vote in the Legislature which gave first-round approval to LB541 that would make elections for the Nebraska Public Power District and Omaha Public Power District boards partisan. The motivation is a belief that out of state “East coast money” is driving the election of people with a climate change agenda.

NPPD and OPPD have been holding public hearings dealing with proposals to increase the share of renewables in their respective generation bases. This has generated opposition. The utilities also depend on coal and nuclear for their baseload supplies. Both sides of the issue have seen increasing sums spent on power district board elections.

The bill is actually a softened version. Originally, a bill would have made all public power and irrigation district elections in the state partisan.

MENTAL HEALTH ON THE BALLOT

The ongoing dilemma as to how best to deal with homelessness and its companion issues of substance abuse and mental illness will be on the California ballot this March. In 2004, California voters approved Proposition 63, also known as the Mental Health Services Act (MHSA). The act taxes people with incomes over $1 million per year and requires that the money collected from the tax be used for mental health services. The tax typically raises between $2 billion and $3.5 billion each year. It is clearly not succeeding in its efforts to deal with homelessness.

Nearly all the money from the tax—at least 95 percent—goes directly to counties, which use it for mental health services. The rest of the money goes to the state to support mental health programs. Counties can only spend the MHSA money on certain types of services, but have flexibility in how to provide those services. The services include treatment for people with mental illness and prevention programs for people who may develop a mental illness. While counties can spend MHSA money on treatment for drugs and alcohol, the people receiving treatment must also have a mental illness.

Proposition 1 increases the share of the MHSA tax that the state gets for mental health programs from 5% to 10%. The proposition also requires the state to spend a dedicated amount of its MHSA money on increasing the number of mental health care workers and preventing mental illness and drug or alcohol addiction across communities. The increased state share will reduce the counties pool of funds to 90% of the tax.

Proposition 1 requires that counties spend more of their MHSA money on housing and personalized support services like employment assistance and education. While counties currently can use MHSA money to pay for these types of services, they are not required under MHSA to spend a particular amount on them now. Counties would continue to provide other mental health services under the proposition, but less MHSA money would be available to them for these other mental health services.

Proposition 1 would give up to $4.4 billion to the state program that builds more places for mental health care and drug or alcohol treatment. It would give $2 billion to the state program that gives money to local governments to turn hotels, motels, and other buildings into housing and construct new housing. The state government estimates that the bond would build places for 6,800 people to receive mental health care and drug or alcohol treatment at any one time. It also estimates that estimates the bond would build up to 4,350 housing units, with 2,350 set aside for veterans. The bond would provide housing to over 20 percent of veterans experiencing homelessness.

A November poll found that two-thirds of respondents support the plan.

REGULATION

In Iowa,  House Study Bill 608 would give the Legislature the power to intervene to halt eminent domain proceedings in the state. The bill would allow 21 members of the Iowa House or 11 Iowa senators to file a petition to halt an eminent domain process, stopping all associated hearings, trials or other proceedings. It would take a vote of at least 60% of the House and 60% of the Senate to resume the eminent domain proceeding. The eminent domain process could also continue if 60% of each chamber sign a letter attesting that they believe the use of eminent domain is constitutional in that case.

The target of the law, Summit has delayed its planned operation date for the pipeline, citing regulatory difficulties in several states. It now does not expect it to become operational until 2026, two years later than initially projected.

Two companion bills under consideration in the Virginia legislature would “Establishes a procedure under which an electric utility or independent power provider (applicant) is able to obtain approval for a certificate from the State Corporation Commission for the siting of an energy facility rather than from the governing body of a locality.” The legislation comes as some shore communities are attempting to regulate the siting of transmission lines related to wind generation. The primary opposition is from Virginia Beach.

P3 REVERSAL

In October, the Louisiana legislature approved a public-private partnership to build a $2.1 billion toll bridge over the Calcasieu River after officials renegotiated an initial deal rejected in October. The new structure would replace a 71 year old bridge which is well beyond its useful life. The renegotiated agreement would expand a 25-cent toll with a vehicle size limit for locals to all noncommercial vehicles in a 5-parish area. It would reduce the toll for large trucks from $12.50 with a transponder to $8.25. Large trucks without transponders would pay $12.36 instead of $18.73.

The new deal also returns 15% of any toll profits to the state, rather than no equity distributions included in the agreement presented in October. It also reduces LA DOTD retained costs from $415 million to $280 million, contingent on approval of design changes that would eliminate the need to relocate railroad and pipeline infrastructure. The state’s funding for the project remains essentially the same as proposed in October, with $800 million in public funds from federal grants, $250 million in vehicle sales taxes, $85 million in State General Obligation Bonds, and $150 million from the State General Fund.

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