David Boussios '09

David Boussios ‘09, Chaffin Fellow in Policy Analysis

A majority of my work recently has been focused on making a parody video called “Karma Neutral.” The video parodies carbon offset programs. Although the video is intended to be fun and a joke, the reason behind the video is to create awareness about carbon offsets. By tying the Karma Neutral parody to carbon offsets perhaps people can see the relationship between the absurdity of both. We also hope that the video shows that with both companies the people selling the offsets have huge financial incentives to lack transparency and even deceive. Even if individuals do not believe the parody or have their own personal opinions on the topic at least the video can create discussion. There is no link as of yet, but search Karma Neutral in the next day or two on YouTube and you will find the video, or visit cascadepolicy.org for a link.

Continuing work on testimony for the legislative session, I have been researching House Bill 2720. This bill calls for $20.5 million to go to the Oregon Innovation Council. The Oregon Innovation Council distributes the money to different initiatives intended to boost different Oregon industries and significant research centers. Although the thought process might have good intentions in boosting portions of our economy you must question the reason for needing this funding. The money goes to help companies develop and research new technologies that would help their business or industry. However if this technology is cost effective and it will benefit the companies, why would they need state money to fund private companies becoming more competitive? Wouldn’t it be advantageous for the private company to spend their own money on research and development if they feel it will make them more competitive?

The other issue is that the funding supports significant private research centers. These research centers use universities and industry experts to develop new technology to be sold later. If these privately owned research centers develop a new invention or technology, they would sell the product and benefit 100%. If they do not develop any product or invention they do not lose anything besides time because they are funded by the state. There are no direct benefits for the state and only direct costs.

David Boussios ‘09, Chaffin Fellow in Policy Analysis

To continue with the ongoing Oregon Legislature session I have researched a couple of proposed bills, House Bill 2121 and Senate Bill 168. Both of these bills are concerned with energy policy.

House Bill 2121 is designed to setup a pilot program to integrate 17 MW of electricity from solar energy into the energy grid. The basis for the bill comes from “successful” feed-in tariff programs seen in European countries. With feed-in tariffs utilities are required to buy renewable electricity from individuals and organizations at fixed above market rates set by the government for periods often lasting 20 years. In other words the government pays individuals who produce solar energy the difference of the added expenses solar energy incurs. This subsidy is seen as an effort to decrease the costs of supplying renewable energy. Legislation in European nations have been credited with large increases in energy from renewable sources. The pilot program Oregon is trying to implement is expected to evaluate if the same kind of “successes” can be seen in here.

Although this bill is just a simple pilot program, the effects that come from this pilot program are large. Germany has instituted this type of program into their country and seen large results. Large enough in fact that some experts predict the total subsidies it will create by 2015 will reach $184 billion. Important issues to look at in these types of bills are: Does it help one industry while neglecting others? Is this subsidy necessary? What will the effects be? The research I looked at shows: it is only helping solar and neglecting more efficient energy sources like wind, the subsidy is unnecessary because large subsidies are already in place, and we do not really know the effects and a pilot program will not be able to accurately determine them.

Senate Bill 168 would allow state lands to be used for renewable energy projects and allow the state to purchase renewable energy credits (RECs). Within the past couple of years the Oregon Department of Transportation (ODOT) installed solar panels along the side of a highway. They came across problems with this project because in their bylaws their money can only be spent on highway and road projects. This bill would remove those obstacles. However, this bill more importantly addresses the City of Portland and Governor Ted Kulongoski’s renewable energy goals. The City of Portland set a goal that 100% of their energy needs must come from renewable energy by 2010. Currently they are at about 9%. Originally Kulongoski set a goal that all Oregon government agencies should use 25% renewable energy by 2010 and 100% by 2025. However last year he changed that goal to be 100% by 2010. The amount of renewable energy the state uses is much less then the City of Portland.

In order to “achieve” the goals they would have to buy RECs. The emphasis on achieve is because this would not actually increase their renewable energy use to 100%. The purchasing of the RECs simply just buys the benefits of producing renewable electricity somewhere else. By purchasing the RECs they would just have the ability to say they met their goal, artificial met but met. This ability to say that would cost anywhere from $8-$14 million extra a year. A high cost for such policy. However if they actually wanted to reach the goals it would cost much more. Using the same energy costs as the solar project by ODOT, $0.58 per kilowatt hour, it would cost the state $232 million. Their energy costs now are $24 million or $0.06 per kilowatt hour.

David Boussios ‘09, Chaffin Fellow in Policy Analysis

I have continued the ongoing process of researching Energy Trust of Oregon (ETO). My research recently has focused specifically on a couple of areas. One is ETO contracted out almost $1.5 million for a company to become their call center for four years. When looking at how many calls they received throughout the contract each phone call would cost just over $15. The next area of focus is who received funding for renewable energy projects and what were the costs. Private and commercial industries received $777.49 per kilowatt of renewable energy capacity, while public organizations only received $463.24. This is an important statistic to look at. The funding for these projects comes from a public purpose charge to all rate payers of electrical providers Portland General Electric and PacifiCorp. Private companies and individuals already have incentives to invest in renewable technologies because in the long run there are potential savings. It is already questionable to fund private organizations to save money but to then spend 1.5 times more than on public organizations brings about a whole other issue.

Another issue involving ETO, was 2007 Oregon Senate Bill 838. This bill requires 25% of all of Oregon’s electricity come from renewable energy sources by 2025. This is a good enough idea and a big step towards cleaner energy. However this bill requires that 8% of all energy come from 20 aMW or smaller renewable energy sources. It also requires that ETO not fund any project that would generate greater than 20 aMW. The top four efficient energy projects funded by ETO are greater than 20 aMW. The larger projects produced seven times as much energy per dollar as the smaller projects. To set this limit is like requiring them only to fund the least efficient projects.

Another policy issue for the Oregon legislature is Senate Bill 76. This involves the removal of four hydroelectric dams on the Klamath River. PacifiCorp is the energy company who produces the power. However these dams are said to be environmentally hazardous for the fish. There was an incident a couple years ago where the dams stopped the flow of water allowing massive amounts of algae to grow downstream.  The algae suffocated thousands of fish. Since this happened many have come to protest these dams, and demand their removal. However the removal costs are expected to be at least $200 million. Additionally the dams are holding millions of tons of silt that would be released downstream if removed. There is also the potential that the silt is holding hazardous material that then would be released downstream killing the fish they are trying to protect. To protect the fish from potential harm the silt would have to be removed, costing millions more. The removal of the dams would also require new forms of energy to be used, including more energy from coal plants. This would provide even worse environmental consequences. This bill has millions of dollars of economic related decisions as well as dramatic environmental consequences. In my own personal opinion I would have to say there is much scientific research need to decide this issue. Although the tragic killing of fish a few years back is an unfortunate event, without knowing all the consequences of a decision we could be hurting the economy as well as the fish if decisions are made in haste.

David Boussios ‘09, Chaffin Fellow in Policy Analysis

Continuing my work at Cascade Policy Institute I have continued looking into some projects and started research in others.

I have continued my research into Energy Trust of Oregon (ETO). I am finding more and more questionable spending by ETO. On one account ETO gave a grant of $24,125 to an individual to install a 42 kW wind energy system for their house. Not only does it seem odd to give an individual a grant to install a wind energy system that in the end would save them money, but the individual bought the wind system from a company they owned. Another grant from ETO showed they funded a solar energy project, not because the project was efficient or effective for producing energy, but because it was highly visible to the public. They ignored the fact that the panels were inappropriate and impractical, just to make a solar homage.

One of the new topics I researched was the Common School Fund. The topic of focus in the CSF is the Common School Forest Lands (CSFL). The “CSFL’s are trust lands that were granted by the United States to the State of Oregon upon admission to the union for the use of schools.” These lands are managed by the Oregon Department of Forestry to ensure the highest revenues for the funding of Oregon schools. Revenues from these lands have varied from $8.5 million to $24.3 million. The largest area of the CSFL is the Elliot State Forest (ESF). The land value of the ESF is estimated near $1 billion. The policy being looked at is whether to continue the current management of the ESF or sell the land. Under current management the CSF is earning about 3% annual return on assets, recently revenues of about $9 to $12 million a year. However, since the land is worth about $1 billion, the potential to sell the land and reinvest the cash in more profitable areas could mean large increases in school funding. Not to mention selling the land would help a struggling timber industry and provide possibly thousands of jobs, which would in turn provide more income tax to the state. I did research looking at some of the more recent data involving the ESF.

David Boussios ‘09, Chaffin Fellow in Policy Analysis

The past week I have continued my research into Energy Trust of Oregon. The projects I have looked into are one involving 76 wind turbines in Eastern Oregon.  Another is a lumber yard that burns excess wood products to produce steam to dry the processed wood.  A third involves market transformation to encourage the use of high efficiency lighting. These projects have good intentions and can change how we create and use energy. The question to be looked at is not the projects themselves but the reason for funding such projects. This leads to the concept of additionality; would these companies and individuals proceed with the projects without the help from ETO? If the companies were to decrease their costs of doing business and become more efficient would it not be in their own best interests to continue on their own with the projects? Why should public funding go to individuals and companies who already have the market incentives to become more efficient? If the incentives are not there then perhaps the projects are unnecessary or the technology is not ready to implement in the market.

Another project I helped work on involves a change in unemployment insurance (UI) that Cascade is trying to push in the Oregon Legislature. Instead of the current system where employers pay into the system and if individuals become unemployed they seek to receive these benefits from the state. Instead the new system would allow individual accounts for unemployment insurance. A portion of the amount the employers pay into UI goes into individual accounts which could be accessed by the individuals themselves.  The other portion would go into a general account for all individuals. The general account would go to the individuals who do not have much in their own personal accounts. The reason for the change in the current system is because often employers pay into a UI account on behalf of the individuals and the individual ends up never receiving any of the benefits. Another reason for change includes different groups that are less likely to receive these benefits, such as women due to their market behavior from things like child birth and raising kids.  Another major reason is that the current systems does not create enough incentives for individuals to seek out new jobs once they have lost theirs. The current unemployment insurance payments also do not allow for retraining or seeking additional education.