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An Interesting Scenario

By Greg L | 17 November 2006 | Prince William County | 1 Comment

There’s been some discussion over the past few months about a proposed new half-million volt power line that would run through parts of Warren, Fauquier and Prince William Counties which has been proposed by Dominion Power and Allegheney Power. The stated reason for that proposal has been that there will be a supply and congestion problem in Northern Virginia in the future, and this project would help ensure long-term reliability.

Perhaps.

A competing rationale for a project such as this has been advanced which dispenses with potentially faulty projections of supply and demand, and makes eminent sense in the here and now: that Dominion and Allegheney stand to make a fortune selling relatively cheap power generated in the midwest and selling it to the New York Metropolitan power market, and using transmission lines run through Virginia in order to do it. It would be an entirely rational decision by these power companies to improve their profitability by doing this, after all providing supply from areas of plenty to areas of dearth is the basic model for commerce which has stood for thousands of years. So anyone looking for a solid business case to understand why Dominion and Allegheney Power want to do this really doesn’t need to look any farther.

I like simple explanations for business’ behavior, because most of the time they’re right. And I can understand why Dominion and Allegheney wouldn’t want to admit to this, as it’s pretty cold to tell Virginia residents that the reason they may be faced with fifteen story transmission towers and half-million volt power lines in their backyards is so the stockholders of these power companies can increase their wealth. It’s a far better tactical move to explain to Virginians that unless this gets built, there’s going to be rolling blackouts and skyrocketing electricity costs in ten to fifteen years. Virginians might bite the bullet for that, whereas they might even go so far as to engage in civil disorder to prevent commercial interests from blighting their corners of the rural crescent in order to improve their financial statements.

What makes this scenario even more fascinating is the possible impact of the Energy Policy Act of 2005, which makes it possible for the Department of Energy to declare an area a “National Interest Electric Transmission Corridor”. Such a designation would allow property to be seized under eminent domain, allowing utilities to forego the process of negotiating settlements with property owners. If the issue is preventing blackouts, such a designation is possible. If it’s “we want to make a boatload more money and pay greater taxes”, it smacks of the kind of eminent domain abuse which the Kelo decision makes possible.

So take your pick. Either believe that there’s a grave danger and Dominion Power and Allegheney Power are coming to the rescue because they just happen to be nice folks. Or you can believe that there’s a lucrative business opportunity that requires brushing aside the interests of a few thousand Virginians, and that the interests of those Virginians are a lot less valuable to Dominion and Allegheney than the profits they expect to reap from this project.

It shouldn’t be too hard to choose.



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1 Comment

  1. Ray Hyde said on 5 Dec 2006 at 1:27 am:
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    Conservation, vehicle sharing, and other alternatives will dealy the need for more infrastructure, but not replace it.

    Sooner or later, we will have to face the prospect of providing more infrastructure, unless we agree on a way of having fewer people.

    What is needed is a fair and equitable means of paying for it. At present, this boils down to saying “Hell no, we won’t glow.” and similar nonsense. This boils down to “Put it in someone else’s back yard.”, a system which benefits those that have the most money and power and those that scream most vehemently.

    At this point, the situation is that those with conservation easements have sucessfully argued that they have more property rights than those that don’t. Once again, those that have preserved their land the longest, with the least government help, are going to be the ones punished for their own personal conservation efforts.

    I’ve said before that one way to deal with this kind of thing is to have a reverse auction. Let everyone in the pathway put up a bid for how much they are willing to pay not to have the power line in their back yard. The route would be chosen to include most of the low bidders. EVeryone who got stuck with the power line would then share all the money that was bid by everyone else.

    The drawback to this is that it concedes that the power line will be built. Unfortunately, that is most likely the case. Our air pollution laws make it unlikely that local power generation or co-generation will be possible, even if it is more environmentally friendly.

    Handwringing and wishful thinking about what might be done differently is of little use. When those rolling blackouts hit, people will start demanding that something be done, just as they are now demanding that something be done about clogged highway capacity, as long as it is built in someone else’s back yard.

    When this power line is built, there will be millions of dollars invested, and billions of dollars worth of power will be delivered over decades of service. If it goes through, the land owners will each get paid a few thousand dollars, and they will not be compensated for the loss in value to the remainder of the property.

    The nearby landowners will get nothing, and they will also lose property value. But landowners hundreds of miles away will continue to be able to run their air conditioners and dishwshers at a time convenient to themselves.

    I’m all in favor of smart meters, but they do nothing to adress the problem of fair and adequate payment when property is taken, not for public use, but for economic gain.

    Surely part of the equation ought to be that those that provide the property should share in the economic gain.

    This is true whether the property is taken for a power line, or whether it is “taken” to provide other public benefits such as clean watersheds, or viewscapes.

    Most of the potential value of my property has already been taken this way. Some of the actual property has been taken as well. My wife’s family has already lost their beach property and waterfront cottage to development under eminent domain. Then they lost 60 acres for highway development. Then the county took away most of the building rights, then they took away some more of what remained, then they made what building rights remained impossible to use - unless I agree to place a conservation easement on what I am already prohibited from using.

    Today, I was approached by neighbors who want me to place a conservation easement on the land, as a means to help block the power line. I think this is a futile effort to try to capitalize on what appears to be a new and unwritten law that says those with conservation easements have more property rights than those without.

    The power company has already made the decision to shift the proposed line south, and around those powerful and wealthy intersts farther north. I think it is unlikely they will unmake that decision.

    So, once again I am being pressured to do something with the land that I don’t want to do, by people who don’t own it, and who are unwilling to pay, or pay adequately, for what it is they want me to do.

    Those people include my immediate neighbors, the powerful interests farther north, the power company, and the power companies customers as far away as New England. It seems to me that among them there ought to be plenty of money on the table.

    But, as I pointed out to my neighbor today, the only people with money showing is the power company. I am already forbidden from doing anything profitable with the land. The power line will grossly reduce the value of what is left, but since it isn’t going to be sold anyway, the price is mostly irrelevant.

    Had my neighbors been fighting for my property rights thirty years ago, I might be more sympathetic. And we might have a law that guarantees adequte compensation. But as it stands now, all they want is for me to give up more, for their benefit, and little value to me.

    Granting a conservation easement does have some tax value, and I could then stop losing money farming and do something more productive, but I would still be paying taxes on land I can’t use.

    As I pointed out to my neighbor, under these circumstances, I’m inclined to let the power company come, and take what little they offer, and just give the rest to Habitat for Humanity.

    At least that way it will go to people who are willing to work for what they get.

    At 10:20 AM, Paul said…
    I’m amused that the property rights people and the conservationists are on the same side for once…

    At 12:09 AM, Ray Hyde said…
    Unfortunately, it is a little late.

    The real killer is that the power line was allegedly sited to avoid both houses and conservation easements. Had the county allowed more houses around here, they might have avoided the power line.

    The power company apparently hasn’t considered designation as a Virginia Century Farm as one of their criteria for avoidance, since two of the three proposed routes cross the farm. After a hundred and seventy years it is going to come down to this.

    Dominion recently put a peaking power plant here in the county. There was such a stink about it, and the county exacted such a toll for building it, that the power company apparently decided that local power wasn’t worth the cost.

    I am highly misunderstood around here. People think I am in favor of building this place out, more housing and all the rest. It is true that pwople will need more places to live, but that isn’t the point I have been trying to make.

    At present, I am effectively working to fulfill the desires of PEC and people like them. I lose a little money every year, with no hope of compensation, ever. I provide valuable goods and services that people claim to want, but which they are unwilling to pay for. To me, Dominion is no different from the other powers that control me: they want something that benefits others, at my expense, for which they are willing to pay little or nothing, and they will do it to me with my government’s help.

    I’m going to be FUBAR beyond all recognition either way. Either way I don’t get to do what I want to do in a free country. Either way I am out (literally) millions. Left to my own devices, I probably would forgo them anyway: I don’t need the money, at present. If you have enough, more is not necessarily better.

    But it is a big difference to decide not to go after the money than to have it taken from you. If Dominion raided my bank account for a couple of million in order to build their towers, that would clearly be against the law. To me what they are doing is no different.

    All I wanted was to retire and work the farm as a full time retirement job as long as I can. As my neighbor said to me, if we had a heart attack and needed money last week, we could probably get it, but now we are condemned.

    I like the farm a lot, but unlike many, I’m not overly sentimental. I watched what happened on Martha’s Vineyard and other desireable places. I know that desirable places become valuable, and then someone who can afford them will get them.

    I just hate to see the governmet help them (or anyone else) get it at far below what it is worth or have it maintained at no expense.

    If Dominion is going to do this, they can’t do it without the unwilling participation of thousands of people. Even Dominion employees get profit sharing, and they get paid every week. It seems to me that those of us who are going to effectively become new and unpaid, not to say dispaid, employees should deserve no less.

    ———————-

    Seven states passed anti Kelo laws last month, and where was Virginia?

    Promoting a good business climate.

    Ed Risse has come out as saying that Kelo is not a bad thing, and I suppose that is because he has an overarching desire to see more people living in town, in order to preserve open space. I have argued that those of us out here are providing valuable services to those in town. Rather than being taxed 10x, as he proposes, we should be rewarded for what we do, somehow. Making open space more profitable would go a long way to keeping more open space.

    This would seem to be a case in point. All those people living in town are going to have to get power from somewhere, and preferably NIMBY.

    I wonder if he ever considered that at one swoop an action using eminent domain in favor of urban dwellers could wipe out and devalue so much open space.

    At least the birds will have plenty of space to perch.

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