Archive for the ‘Energy’ Category

Peter T. Johnson

1p6nk2.AuSt.36In the years following his frequently tumultuous tenure as head of the Bonneville Power Administration (BPA), Idahoan Peter T. Johnson looked back on those years; years of crisis in the Pacific Northwest dominated by an overbuilt and astoundingly expensive nuclear power program, as a great life experience. Johnson would say he learned a lot.

In January of 1993, as was his style and long after his BPA tenure had ended, Johnson committed some of the lessons to paper in an article published in the Harvard Business Review. His think piece – “How I Turned a Critical Public Into Useful Consultants” – should be required reading for any business or government executive who needs to channel public anger, confusion and misinformation in the direction of constructive change.

Johnson noted in his HBR piece that when he ran Trus Joist, the wood products company that was founded in Boise, he had little time for the consuming and often not very pleasant task of engaging critics. “I had enough on my plate without environmentalists, politicians, special interests, or the general public second-guessing my decisions and interfering with my operations,” he wrote. But at BPA, where he became administrator in 1981, Johnson had little choice but to engage the region’s often unruly stakeholders who included public and private power interests, environmentalists, labor unions, fish advocates, river operators, and tribal governments, just to name a few,

“Outsiders had a way of exerting influence whether I liked it or not,” Johnson wrote. “I had no sooner arrived at BPA when the agency became the target of political, legal, and even physical threats from people outside the organization who had lost confidence in BPA’s ability to act without jeopardizing their interests. Those of us on the inside knew we were capable of making good decisions, and we made every effort to explain our reasoning.

“But that was the problem. By first making decisions and then explaining them, we were essentially telling people that we knew what was good for them. Meanwhile, the people affected by our decisions were telling us in any way they could—lobbying to curtail BPA’s authority, taking BPA to court, or aiming rifles at BPA surveyors—that the father-knows-best approach to decision making was completely unacceptable.”

The businessman became a listener and his “come let us reason together” approach allowed him to move ahead with the enormously controversial decision to shutdown much of the appropriately dubbed “Whoops” nuclear project – the Washington Public Power Supply System. Johnson did not fully appreciate the mess he inherited when Ronald Reagan, at the behest of Idaho Sen. Jim McClure, tapped him to run the sprawling federal power marketing agency that has been a fixture in the region since Franklin Roosevelt was in the White House.

A Johnson predecessor at BPA, a right-wing ideologue named Don Hodel, had championed the nuclear building program in the 1970’s. Convinced that the region was running short of power, Hodel lobbied utilities to “build, build, build,” while at the same time, as the Seattle Times reported in 1997, belittling environmentalists as “prophets of shortage” bent on “stopping all development in this country.” Ironically Hodel’s “vision” – a nuclear powered Northwest – eventually lead to the bankruptcy of much of the Whoops project, still one of the largest public bond defaults in American history. In classic Peter Principle fashion, Hodel “failed upward” and won a promotion to be Reagan’s Secretary of Energy and later Interior. Peter Johnson was left to clean up the mess.

Peter Johnson died a few days ago at age 82. The Dartmouth educated business guy had retired to McCall, Idaho where he kept close tabs on the often dysfunctional local politics and served as a leading advocate for protecting the water quality in Payette Lake, one of Idaho’s great natural wonders.

In reflecting on his career, I think Johnson must have been the kind of person FDR envisioned running the big, important regional agency dealing with energy; a subject of fundamental importance to the economy and the environment. Johnson was a Republican, but never a partisan. He was a man of his word and, as his HBR article suggests, a successful man of the private sector who displayed enough agility and intelligence that he could learn how to operate successfully in the public sector.

With the current management of BPA mired in scandal and beset by shifting leadership it would be easy to forget that the agency once faced even bigger problems and went on to survive as a vital resource in the Pacific Northwest. Peter Johnson was a major part of that survival.

I had the good fortune to know Peter Johnson a little. On more than one occasion he patiently schooled me on Valley County politics and I once had a cameo role in helping implement his ideas about how to focus public and government attention on water quality issues as a key factor in the future of the central Idaho region he loved.

We can thank the late Jim McClure and his brilliant chief of staff Jim Goller for identifying Peter Johnson as their candidate to run BPA in the early 1980’s. It was truly a case of the right guy in the right job at the right moment in history. He’ll be missed.

[Photo credit – BPA]

Power to the People

politifact_photos_rooseIn the second wave of New Deal legislation in the spring of 1935 – historians often refer to the period as the “Second New Deal” – Congress passed a massive omnibus bill – The Emergency Relief Appropriations Act. In a move that would be political poison today, Congress granted vast discretionary power under the Emergency Act to the president and Franklin Roosevelt got busy. With the stroke of a pen Roosevelt allocated millions to construct dams, build airports, bridges and tunnels.

Among the raft of Executive Orders signed by Roosevelt, and permitted under the Emergency Act, was the creation of the Rural Electrification Administration (REA). As Stanford University historian David Kennedy has written, “when REA began its work, fewer than two farms in ten had electricity; a little more than a decade later, thanks to lost-cost REA loans that built generating plants and strung power lines down country lanes and across field and pasture, nine out of ten did.”

Before the REA’s low-interest loans changed the landscape, as Morris Cooke the first REA Administrator said, the typical American farmer was in an impossible situation. “In addition to paying for the energy he used,” Morris wrote, “the farmer was expected to advance to the power company most or all of the costs of construction. Since utility company ideas as to what constituted sound rural lines have been rather fancy, such costs were prohibitive for most farmers.”

One of the great and enduring myths of the American West, as the great writer Wallace Stegner liked to remind us, is the myth that the West was built by rugged individuals. Nonsense, Stegner said. The West was built by the federal government and there are few better examples of how an enlightened government changed the landscape and life of millions of Americans than the REA. This fascinating and still immensely important story, fundamentally a political story about the good government can do, is told with engaging flair and real insight in Ted Case’s fine recent book Power Plays.

Case, the executive director of the Oregon Rural Electric Cooperative Association, argues that preserving the public institutions and the public good that the REA ushered in during Roosevelt’s day has required nearly 80 years of constant hand-to-hand combat with a variety of political forces, often including hostile presidents. The battle has been worth it, since it is not an overstatement to say that the region’s cooperative utilities, and the Bonneville Power Administration (BPA) that serves them with power and transmission, really have built the Northwest.

As debates rage in Washington over the scope and role of government, it’s worth remembering that during some of the nation’s darkest days of Great Depression, presidential candidate Roosevelt came to Portland, Oregon in 1932 and made an eloquent argument for a government devoted to the “larger interests of the many.” The occasion was a campaign speech – billed in the day as a major policy address on public utilities and hydropower development – that turned out to be one of FDR’s most important policy pronouncements during his history making campaign against Herbert Hoover.

“As I see it, the object of Government is the welfare of the people,” FDR said during his Portland speech. “The liberty of people to carry on their business should not be abridged unless the larger interests of the many are concerned. When the interests of the many are concerned, the interests of the few must yield. It is the purpose of the Government to see not only that the legitimate interests of the few are protected but that the welfare and rights of the many are conserved…This, I take it, is sound Government — not politics. Those are the essential basic conditions under which Government can be of service.”

During his Portland speech Roosevelt pledged to develop the hydro resources of the Columbia River, proposed vast new regulation of private utilities and foreshadowed the creation of what became the REA, the agency that, as David Kennedy says, “brought cheap power to the countryside, mostly by midwifing the emergence of hundreds of nonprofit, publicly owned electrical cooperatives.”

The reason many Americans in 1932 lacked access to adequate or any electricity, Roosevelt said, is “that many selfish interests in control of light and power industries have not been sufficiently far-sighted to establish rates low enough to encourage widespread public use.” He might also have said that many private utilities in the 1920’s and early 1930’s were content to operate highly profitable businesses in relatively easy to serve urban areas and were simply unwilling to make the effort and expend the resources to deliver power to smaller communities and farmers.

It’s difficult to imagine today, when without thinking we enter a dark room and flip the switch, how long it would have taken to get affordable electricity to rural Northwest and its farms had Roosevelt not followed through on his powerful Portland speech on power. Imagine the Pacific Northwest without the power of the federal dams that FDR promised in1932 in Portland – and I know they have become controversial – or the legacy of public power. The region’s great public utilities have played their part in the region’s development for sure, but they often have a fundamentally different mission from public power, including the need to generate a rate of return on investments, while answering to shareholders and investors.

It is a re-occurring feature of American democracy that we debate and debate again the reach and responsibility of government. We are stuck in a particularly dysfunctional period of that debate right now. Almost always in our history these periodic debates have been resolved, to the extent they are ever fully resolved, in favor of what Roosevelt long ago called “the welfare of the people.”

In the last years of his life, as Ted Case points out in his political history of how cooperative utilities remade rural America, Lyndon Johnson remarked that “of all the things I have ever done, nothing has given me as much satisfaction as bringing power to the Hill Country of Texas. Today in my home county,” LBJ said, “we have full grown men who have never seen a kerosene lamp except possibly in a movie – and that is all to the good.”

Rugged individuals make for good movies, but aggressive action by a federal government devoted to the greatest good for the greatest number helped turned on the lights in much of the Pacific Northwest. The story Ted Case tells in his book Power Plays is a reminder of what truly enlightened public policy once looked like.

 

Boomer Sioux-ners

The Saudi Arabia of the Great Plains

For most of the 20th Century North Dakota claimed the unenviable distinction of being the one state in the nation that regularly experienced declining population. In 1930, as drought and depression ravaged the Upper Great Plains, the population in North Dakota was just a shade north of 680,000 souls. By 1970, that number was about 618,000. By 2000, North Dakota’s population was back to the level it had been in 1920.

Now oil and gas exploration and development in the northwestern corner of North Dakota seem sure to drive population growth, state revenues and change in ways not experienced since the 1930’s. The state legislature last week both projected an oil and gas fueled $1.5 billion  – with a “B” – budget surplus and passed what a critical spokesman for the oil and gas industry called the most stringent rules regarding hydraulic fracking anywhere in the country.

“They are the most onerous regulatory changes we’ve ever seen,” Ron Ness of the North Dakota Petroleum Council told the Associated Press. Ness’s group represents more than 200 companies working in the North Dakota oil patch. “I’m a bit concerned about the cost of doing business in the state and that it could begin to discourage activity.”

The new rules require higher levels of bonding by industry, faster clean-up of fluids left from the fracking and disclosure of the chemicals used in the process.

The rules were put in place by a Republican legislature in a deep red state with a Republican governor. North Dakota is clearly embracing its new role as the Saudi Arabia of the Great Plains, but one also gets the sense that the state is wary about the gusher of social and economic change the energy boom brings. In January, North Dakota reported more than 6,000 active wells that produced nearly 17 million barrels of oil. The state once best known for wheat and spring flooding is now a bigger oil producer than any state save for Texas and Alaska. All this is happening, of course, while the national campaign trail is full of hot talk about soaring high gas prices and the alleged anti-energy development policies of the Obama Administration. Newt Gingrich – Mr. $2.50 a gallon gas – clearly hasn’t found his way to Williams County, North Dakota.

In Williston, once a sleepy cow town just east of Montana and south of the Canadian border, you had better know someone with an inside track or you’ll never find a motel room. The oil companies have reserved everything for miles around for months, while five new hotels are under construction. Wages and the cost of living have skyrocketed in western North Dakota, as have other measures that the Chamber of Commerce isn’t bragging about.

One recent account of life in the oil patch – in Indian Country Today - noted: “The Williams County Sheriff’s Office in Williston reports that there are as many DWIs issued at 10 a.m. as are issued at midnight. Jail bookings have increased 150 percent, and bonds as large as $10,000 are routinely paid in cash. (One person paid a $65,000 bond by pulling the cash out of a Walmart shopping bag.) Law enforcement can no longer do anything but answer calls, make arrests and investigate crimes. The proliferation of strip clubs and “babe buses”—which are basically strip clubs (or worse) operating out of an RV—has also added to the frontier-town atmosphere, according to the Williams County Sheriff’s Office.”

The Fargo Forum, one of the better newspapers in the upper Great Plains, has started a new website to cover “the patch” and assigned a reporter to live and work in the area. One of reporter Amy Dalrymple’s first stories from Williston featured a former Spokane, Washington couple who are spending nearly $2,400 a month to live in their RV parked in a local lot. Jayson Jarvis says he came to the patch to find better work and is still waiting. “The work here has been way too inconsistent to make enough,” he said. That said unemployment in North Dakota is about 3% and virtually non-existent in the western part of the state.

The other big story in North Dakota – if you don’t count the University of North Dakota’s march through the NCAA hockey tournament – is a raging debate over whether the university in Grand Forks can continue to use its nickname – The Fighting Sioux. Some time back the NCAA said UND could not compete in certain collegiate athletic events as long as the school used the Native American nickname. Ironically to many in North Dakota, the NCAA wants to nix the use of a nickname that local Sioux tribal leaders contend is just fine with them. The issue made it to the North Dakota Supreme Court last week and, depending on how the Court rules, the logo war may be decided by voters later this year.

In the farm depression days after The Great War and before The Great Depression, North Dakota’s rich soil gave rise to a remarkable populist/progressive political movement known as the Nonpartisan League. Farm prices were awful, farm foreclosures were epidemic and a certain prairie radicalism seemed to meet the needs of many farmers. The opportunistic NPL, with many former Socialists under its big tent, came to dominate the Republican Party in North Dakota, a dominance that continued until the 1950’s when the League, more or less, came to identify with Democrats. North Dakota’s Democratic Party today is official the Democratic NPL Party. If that sounds like North Dakota’s politics are a bit unorthodox that is because they are. The state tends to elect Republican governors, while often sending Democrats to Washington. Bill Clinton wouldn’t waste his time in most red states, but he keynoted the Democratic NPL convention last weekend in Grand Forks were his response to devastating floods is remembered fondly.

North Dakota will almost certainly put its three electoral votes in the Republican column come November. The state – like Idaho – hasn’t voted for a Democrat since Lyndon Johnson in 1964. Rick Santorum did well in the recent North Dakota caucuses, in part, by making the effort to visit the booming oil patch. But, North Dakota is also unpredictable. There is a certain creative and political tension at play in the state that finds citizens and politicians both embracing the oil boom and yearning for the old-style symbolism contained in that UND logo. One senses the small town simplicity that really does have its appeal is rapidly changing – even disappearing – in “rural” North Dakota.

So while you can buy an oil and gas motif necktie in the gift shop at the North Dakota Heritage Center just across the parking lot from the high rise state capitol building you may soon only find Fighting Sioux tees and sweatshirts in a second hand store. North Dakota is drilling its way into the 21st Century, but its quirky political and social history means that while they gingerly embrace an oil soaked future these salt of the earth flatlanders still steal a glance over their shoulders at a simpler, slower time.

North Dakota is the center of the energy boom in the United States and how this 21st Century story plays out here will say a good deal about the country’s march to something closer to energy independence. North Dakota is still a very rural state where radio stations supply farm market news in and around the commercials for a new harvester or a better herbicide. Energy will change North Dakota. It remains to be seen if the fans of the Fighting Sioux will like all the change that is just beginning.

 

Oil and Water

Very Strange Bedfellows

I don’t normally pay a great deal of attention to the political opinions of Hollywood personalities. So I confess I missed the initial news reports that the actress Daryl Hannah, perhaps best known for playing the mermaid in Ron Howard’s movie Splash, was arrested a few days back for protesting the proposed Keystone XL Pipeline from Canada to the Gulf of Mexico.

The lovely Ms. Hannah, talented too, for all I know, isn’t the real story here, however. The politics of jobs is at work. in this international pipeline.

The pipeline project is designed to carry oil recovered from the Alberta tar sands to refineries in Oklahoma and Texas and the pipeline, its purpose and route, has been increasingly in the news lately. The U.S. State Department recently released an environmental impact statement that said, in essence, the project could be completed without major environmental problems. Needless to say, not everyone, including Ms. Hannah, agrees.

Most major environmental groups have expressed disappointment that the Obama Administration seems on the verge of approving the pipeline. The President’s mostly natural allies in the environmental movement are also torqued that the administration recently and abruptly dropped new Environmental Protection Agency (EPA) rules related to smog. These two events, separate and linked at the same time, really constitute Exhibit A that the political imperative to grow the economy and create jobs, particularly during a period of prolonged economic turmoil, eventually trump most every other consideration.

My old boss former Idaho Gov. and Interior Secretary Cecil Andrus, no slouch when it comes to possessing an environmental ethic, used to say: “First, you must making a living and then you must have a living that is worthwhile.” That is just another way of saying that without a job you don’t have much time or ability to enjoy the great outdoors, clean air and water. Needless to say not everyone in public life agrees about the political priority of jobs first. For some being “pure” on the environment is simply a higher calling that transcends all else, including finding some way to jump start a stumbling economy.

Put former Vice President Al Gore in this category. Gore recently, and perhaps entirely predictably,  came out in opposition to the Canada to the Gulf pipeline. The motivations of the Republican Governor of Nebraska Dave Heineman, who says he also opposes the pipeline because of its route through Nebraksa, appear more interesting. Republicans don’t normally oppose pipelines.

Daryl Hannah may look better getting arrested, but Republican Heineman and Democrat Gore as an anti-pipeline dance team may have a lot more impact on this increasingly complex and contentious environmental issue.

Development of Canada’s oil sands resource has long be contentious. Gore, never bashful about hyperpole, calls it the dirtest energy on the planet. Heineman says his opposition is based on the pipeline’s threat to the huge Ogallala aquifer that lies deep below Nebraska and several other states. The route through Nebraska’s special Sand Hills country, where my grandfather homesteaded more than a hundred years ago, is also problematic according to Gov. Heineman.

In Idaho and Montana recently the long public debate and substantial opposition to huge shipments of oilfield gear from the Port of Lewiston to the Canadian fields has been much less about the articulated reasons of shipment opponents – safety, disruption of traffic, etc – than about the mostly unspoken reasons, a strategic desire by environmental groups to prevent, or at least delay, further tar sands development.

As is most often the case, the debate over the pipeline from the Great North is waged with soundbites from all sides that simplify the discussion to the point of distortion.  There is plenty of substance here on all sides, but we never hear much that isn’t the rhetorical equivilent to Daryl Hannah getting arrested in front of the White House.

For example, how many Americans know that we already import more oil from Canada than any other country, in fact, nearly twice as much as we import from Saudi Arabia and four times as much as we ship in from Iraq. What happens without the pipeline? What happens with it? Good luck getting those answers.

The pipeline debate, the fight over the smog rules and the future of nuclear power, just to name three energy issues of the moment, are all symptoms of a failure of national political leadership to confront the fundamentals of how we use energy and where it comes from.

Many on the left of our politics can hardly fathom a serious debate about how we actually might alter the nation’s energy consumption and mix of resources because they know – heck everyone knows – that it can’t be done overnight or without real pain and dislocation. These folks are increasingly locked into a short-term, tactical mindset that creates a environmental emergency about this pipeline or that power plant. Vast expansion of wind energy production in the American West is now seeing the predictable pushback from many of these folks. Real debate and establishment of priorities goes begging with such short-term thinking.

At the same time, the hard right of our political flank pays a premium to someone like Texas Gov. Rick Perry who rejects the notion, now the overwhelming consensus of the world’s scientic community, that climate charge is a real and urgent fact. Or, closer to home, the short-sighted bemoan the public subsidies “lavished” on public transportation, while completely ignoring that the American system of air service is built on truly vast public subsides for airports, facilities, personnel and equipment.

It’s increasingly hard to have a sensible discussion about public priorities in the United States because we can’t often agree on a common set of facts and assumptions. Is a pipeline from Canada to the Gulf an environmental disaster in the making or a critical piece of infrastructure that keeps the oil following from a nearby neighbor that we haven’t recently had a war with?

Is the delay of $90 billion in smog rules a cave in to the dirty air crowd or a prudent, temporary move that my help the economy get back on its feet?  Jobs versus the environment is a long-term reality of American political life – just not a very constructive debate.

I have this naive notion that the American public is really capable of grappling with the complexity and nuance of these kinds of issues. It’s just been so long since anyone talked to us about complexity and trade-offs that we are out of practice.

Maybe Daryl Hannah can explain.