Essay by Ed Quillen
Politics – December 2008 – Colorado Central Magazine
GRANTED, I was reasonably happy with the outcome of this year’s election, at least on the state and national level. On the local level, there hasn’t been much good news lately. We can start with the local economy.
Development of the Climax Mine above Leadville is pretty much on hold, and one of Salida’s better employers, BBI International, announced it was closing its office here and laying off 25 to 30 full-time employees.
Merchants have been feeling the pinch, and some respond by scaling back on their advertising. That hurts us, of course, but even worse, some decide to close their doors, which hurts the whole community. Earlier I noted the demise of the West End Cafe in downtown Salida. More recently, Carol Cartwright decided to close her nearby gallery effective Nov. 30, and ICE Computing in Poncha Springs closed on Nov. 6.
Walt and Carolyn Hall ran ICE (with an office dog named Ruby), and whenever I got into a computer jam, Walt was always there to help. I sent all the business I could his way, and whenever we needed a part, we called him first. That’s one local business I will really miss.
Central Colorado has been through some hard times before, of course. The election of Ronald Reagan in 1980 might have led to “Morning in America” in some parts of the country, but here it was more like “Mourning in America.”
Climax Molybdenum halted production in 1981, as did the Monarch Quarry and various uranium projects. The resource-based economy of Central Colorado pretty well collapsed when it had been booming in the late 1970s.
The two periods do seem eerily similar. There were two “oil shocks” in the 1970s — a jump in 1973 on account of an Arab embargo, and another jump in 1979 on account of the Iranian revolution.
Oil prices shot up, and car sales went down. (Recall the Chrysler bail-out of that era?) Higher oil prices led to an increase in exploration and drilling. Molybdenum, which is used in alloys to harden steel, was in great demand because drillers use that kind of steel. The price goes up, more companies produce moly (copper mines, for instance, add molybdenum recovery circuits to their mills), inventories rise, and then the price collapses.
That happened in 1980-81, and it just happened in 2008. The complication this time is the collapse of the financial markets, which were apparently betting that housing prices would never go down.
And if you’ve lived around here for a while, you know that real-estate prices do go down. Some mountain counties, among them Chaffee, Lake, and Gunnison, lost population in the 1980s. Colorado has always had a “boom and bust” economy, and now some hard years may loom.
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Swings in oil prices both help and hurt. High oil prices are hard on tourism, and they raise prices for just about everything around here, since we import just about everything we use from somewhere else.
But they also encourage more local production, along with development of “alternative energy” in an area that has a lot of wind and sunshine.
And an oil boom is also good for molybdenum prices.
When oil prices drop, tourism improves, and our prices in general go down. But then there’s less interest in developing other sources of energy, which is one of the problems that hit BBI in Salida, since it was an international player in developing biofuels.
So the drop in crude oil from $160 a barrel last summer to about $60 now both helps and hurts.
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Back in 2004, Republicans George W. Bush and Dick Cheney got 56 percent of the vote in Chaffee County on their way to carrying Colorado. The Republican candidate for U.S. Senate, Pete Coors, lost the statewide race, but here he beat Democrat Ken Salazar by 57 votes, 4,286 to 4,299.
This year, the presidential vote was essentially tied: Republican John McCain got 4,832 votes here, and Democrat Barack Obama got 4,827 — a five-vote difference, and the best a Democratic presidential candidate has done here for a long time. Further, Democrat Mark Udall actually carried Chaffee County, 4,636 to 4,331, and won the statewide race for the U.S. Senate.
So it was a good year for Democrats here — to a point, that point being the county commission races. We have three commissioners, with two of them up for election this year. All were Democrats. But even though the Democrats did well at the top of the ticket, Republicans got the two commissioner seats away from the Democrats.
Part of it is that the GOP had two decent candidates, Frank Holman and Dennis Giese, who campaigned hard. And part of it might be that this is a generally Republican county where the Democratic domination of the county commission was something of a fluke.
In 2000, the Republican incumbent commissioner, Frank McMurray, sought another term. He was opposed in the primary by Joe DeLuca, who attracted some support from Democrats who changed party registration to vote for him in the primary. DeLuca beat McMurray in the primary, and coasted to win the general election. I can’t even remember whether there was a Democrat running against him.
Four years later, local Democrats figured DeLuca would be the nominee again, and weren’t going to work hard against him. The party’s nominee was Jerry Mallett, the county party chairman, and he wasn’t planning to campaign hard against DeLuca.
But in 2004, McMurray challenged DeLuca in the GOP primary, and beat him. Mallett put together a campaign almost overnight. McMurray had alienated quite a few Republicans in the primary process, and Mallett picked up their support to win handily.
As for the other seat, the Democratic incumbent, Jim Thompson, was term-limited. The Republican candidate was an accountant who, it turned out, had been convicted of embezzlement some years earlier. And just as the campaign got going, he was nailed for drunken driving. Democrat Jim Osborne won easily.
But Osborne chose not to run again. With an open seat and a good Republican campaign, Dennis Giese beat Democrat Susan Bristol handily in 2008.
If there’s a moral to the story, it might be that national and state-wide races don’t connect that much to county commissioner contests — at least in this county. In 2004, a good year for Republicans in general, Democrats took over our county commission, but in 2008, a good year for Democrats, the Republicans regained control.
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As I have for 19 years, I headed to Gunnison for a weekend at the Headwaters Conference in Gunnison. This year’s theme was Power — not the political or financial variety, but instead the prosaic electricity at your wall socket.
Electrical power is connected to other kinds of power, of course, and those connections were examined, mostly in historic context.
We didn’t go all the way back to Alessandro Volta, André-Marie Ampère, Benjamin Franklin, Michael Faraday, and Thomas Edison. But we did hear an excellent presentation by Duane Vandenbusche, professor of history at Western State College, about the Ames power plant near Telluride.
It’s important in the history of the electrical industry, and for that matter, the mining industry, too. Mines need power to run drills, haul rock, hoist ore, and pump water. Back in the day, circa 1890, they got much of that power from steam, which meant hauling in wood or coal to fire a boiler to run the hoist. Underground transport was often provided by mules, which required bulky hay and left manure that needed to be cleaned out.
Electricity looked like a good solution — bring in the power with wires, much easier than transporting coal and hay (both of which required considerable labor to handle, too).
Most electric power back then was direct current (DC), the kind you get from a battery or one of Edison’s early generators. The other form is alternating current (AC), whose dynamics had been grasped by smart men like Nikola Tesla and Charles Steinmetz.
Without going into Ohm’s Law and how electrical transformers work and other things I barely remember from high-school physics, the basic issue then was that in theory, AC could traverse long distances much more efficiently than DC.
Now to the Gold King Mine above Telluride. It suffered high costs for transporting the wood and coal to fuel its boilers. L.L. Nunn, a lawyer with an interest in the mine, saw electricity as a solution. But the nearest source of hydro-power was several miles away. He persuaded George Westinghouse to help design and build the world’s first AC generating plant, as well as the first successful transport of generated electricity for a significant distance.
It was a success, and the basis for the electrical industry we know today.
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But that success — the long-distance transport of electricity — might be leading to problems today when people worry about carbon dioxide concentrations that could be contributing to global warming.
I’ll indulge in some gross oversimplification.
Go back to the Rural Electrification Administration, a New Deal program to bring electricity to rural areas which were not served by private power companies because the private utilities said there just weren’t enough customers per mile of line to operate at a profit. The REA provided some financial and technical assistance, but locals had to do some things themselves, such as form a co-operative and sign up customers.
And initially, they often generated their own power in their home territory. But over time, the co-operatives got out of generation and just handled distribution. Initially, they often bought hydro-power from the U.S. Bureau of Reclamation. When there wasn’t enough Bureau power, they formed their own “mega-co-operatives,” companies like Tri-State Generation & Transmission (called a “G&T” ), to generate their power, generally at big coal-fired plants.
Big coal-fired plants aren’t exactly popular these days — Kansas just turned two down — but the Tri-State rep at the conference pointed out that their duty is to produce reliable, affordable power for their customers — the local co-ops.
But as we heard from the Delta-Montrose Electric Association, a local co-op that buys power from Tri-State, its customers can be dubious about coal, and would like their co-op to get more power from local non-polluting sources like wind, solar, and micro-hydro.
One complication with this is the contracts between the co-ops and their suppliers, the G&Ts. Often the contract requires the co-op to buy at least 95% of its power from the G&T. Thus it may not be able to buy more power from local producers, including itself, if it’s already getting 5% from local producers.
The G&Ts rightly point out that they have to borrow money to build power plants, generally in the form of bonds, and the bondholders rely on the guaranteed power sales to co-ops. If the contracts were changed so that the co-ops were buying less power from the G&T, then the G&T’s revenue stream, which guarantees those bonds, would diminish. Bondholders could sue, which is nasty business.
So, the long-distance transmission of power has encouraged big generating plants while discouraging local generation, and certain financial instruments are tied to this.
In my presentation, I was part of a panel that addressed “What keeps us from doing what we should do?” In my view, dispersed power generation is good economically while improving our security.
And it was federal policy after the 1978 passage of the Public Utility Regulatory Policies Act (PURPA). I ran across it in the 1980s while doing some writing work for my brother, Kurt, who was plant engineer at a laundry in Longmont.
To make a long story shorter, Kurt designed and installed a cogeneration system for the laundry in Longmont. Cogeneration is a process of generating electricity and using the waste heat for some other purpose.
Kurt took a 292 six-banger Chevy pickup engine and converted it to run on natural gas. He mounted it in the back of the laundry, where it was hooked to a generator. The power from the generator reduced the laundry’s electric bill (it didn’t come close to generating all the power the laundry needed, and it was wired so that it ran only when there was outside power, so that it could not serve as an emergency electric supply). The engine’s waste heat went into a water heater to supply hot water to the washroom.
This saved the laundry a lot of money, and that attracted the interest of the local utility — Longmont has a municipal power company. But it was all legal and we had it licensed with the Federal Energy Regulatory Commission (FERC).
Kurt built similar units for other laundries. I helped with some of the paperwork. It was easiest to deal with the state’s largest private utility, Public Service Co. (now part of Xcel). If a plant was under 10 kilowatts, all PSCo wanted was a chance for its engineers to inspect its safety interconnections, and the company was easy to work with.
But dealing with co-ops and municipal utilities was generally more work. And then came the time when Kurt was expanding his house in Longmont, and wanted to put in a little cogeneration plant there so he’d have hot-water heat and a little income from selling the surplus power to the utility. The laundry used all the electricity it generated and then some, but Kurt’s home plant, as designed, would generate more power than his house consumed when it was running to provide hot-water heat as well as electricity.
Under PURPA, after all, the local utility (Longmont’s municipal power company) was required to buy Kurt’s power at “full-avoided cost.”
Longmont was buying its power from Platte River Power Authority (a consortium of Front Range municipal utilities) for 2.2 cents a kilowatt hour. So we figured that’s what they’d have to pay Kurt.
But Longmont said its contract with Platte River required it to purchase all its power from Platte River, and so Kurt would have to sell his power to Platte River, not the Longmont utility. Platte River said its “full avoided cost” was 8 mills (that is, 8/10 of a cent) per kilowatt hour. Plus, Kurt would have to pay for a special meter, and pay a Platte River inspector to come by once a month, etc. There were so many conditions that it would have cost him a lot of money to sell a little power to Platte River.
Since the federal law said it superseded those “exclusive purchase contracts,” we figured we just had to bring this to the attention of the federal government, such as Kurt’s congressman, and Longmont and Platte River would see the light and obey the law.
But because the bonds for Platte River’s Rawhide Power Plant near Fort Collins were secured by these exclusive purchase contracts with municipal utilities, Platte River and Longmont fought, and fought, and wore us down, spending hundreds of thousands of dollars on attorneys to keep from paying my brother a few dollars a month for his surplus electricity.
The moral of this story, I suppose, is that it doesn’t matter what laws are on the books unless the government is willing to enforce them, and as I heard from the U.S. attorney’s office then, the feds just don’t have the resources to fight a minor civil case against rich defendants who are going to appeal and appeal.
So it’s a hard row for distributed local power generation, thanks to those power-supply contracts with local utilities, which are connected to the national and international bond markets. We get more and more disconnected from the source of our electricity, just as over the years we know less and less about our food supply (melamine from China, for instance).
The “local foods” movement is generally a good thing, and maybe we’re seeing the start of a “local electricity” movement. Once citizens rallied behind the saying “Power to the people,” now maybe we should support “Power from the people.”
