The U.K. miracle

Posted on September 26, 2007 by Other News Sources

Lawrence Solomon
National Post
September 26, 2007

In Canada, our electricity systems operate like little islands, isolated from the world around them, oblivious to innovation and insulated from the real economy by regulators that administer prices. Our horizons extend as far as our power monopolies, and their government masters, permit. 

The United Kingdom, in contrast, is no island. It is plugged into the real world, for better or worse. As it turns out, the real world has generally been, and remains, the better place to be.

Electricity prices are dropping in the United Kingdom, and have been all year. British Gas – last year one of the country’s priciest providers – cut its gas prices 17% and its electricity prices 11% in March and saw 900,000 customers switch to it by May. Not satisfied, it cut electricity prices another 6% in June, making it now one of the United Kingdom’s least-expensive power providers.

Among the other major power companies, Powergen and Scottish and Southern Electric dropped power prices by 5%, while Npower dropped them by 3%. The cuts are not about to end, despite foot-dragging from private companies reluctant to part with their profits. With new gas supplies from the North Sea, Belgium and elsewhere beginning to flood into the U.K. market, the downward pressure on prices is expected to last until 2012.

The United Kingdom’s independent regulator, Ofgem, has been helping prices drop, not by imposing regulatory power but by urging consumers to switch to energy suppliers providing better prices.

“Our research shows that a big price gap has opened up, leaving EDF Energy and Scottish Power customers paying over £100 [$203] a year more for their energy for remaining loyal,” Ofgem’s chief executive announced in June. “Competition is all about customer power – any supplier that tries to buck the market by not lowering their prices or failing on service risks an exodus of customers.”

Until recently, with energy prices worldwide spiking and the United Kingdom subject to market forces, power prices in the United Kingdom saw several years of dramatic price spikes. But for the most part, the trend has been down, starting with the breakup of the United Kingdom’s state electricity monopoly in 1990.

Prices fell almost immediately, first for the residential consumers and small businesses that had been especially gouged by the government-owned system, then for large industries as well. Thanks to competition, a decade after the monopoly breakup and privatization, residential customers were not only paying far less for their power than they had under government ownership, the power was safer, cleaner and more reliable, too.

Numerous nuclear power and coal-fired generating plants had been shut down and replaced by cheaper, cleaner alternatives, and – under the enlightened rule-setting of the country’s independent regulator – blackouts and other service disruptions became rare events.

A study 15 years after the power system became clean, efficient and competitive found that cumulative cost savings amounted to some £18-billion. Prices for residential, commercial and industrial customers in the United Kingdom – after accounting for inflation – dropped by 25% to 35% since privatization, with residential customers being particular winners.

Those savings continue, thanks to the world’s most competitive power market. Unlike Canada, where customers are captive to their local provider – typically government monopolies with names like Toronto Hydro or New Brunswick Power – customers in the United Kingdom can choose from more than 70 licensed retailers, each with numerous different offerings. All told, each homeowner has several thousand different options in purchasing power, each option seeking an advantage by servicing one niche or another, each having the effect of finding efficiencies in the system that deliver some better combination of service and price.

U.K. customers can have their power metered or not, in different shades of green or not, bundled with gas or other services or not, at guaranteed prices or not, financed through different payment plans or not. They can also shop for better prices, or not, either online, or not, or they can take the advice of environmental organizations such as Friends of the Earth, who do a brisk business directing their supporters to energy decisions that please them both.

The retailers to these numerous niche markets, in turn, seek out suppliers who can best meet their customers’ particular needs. Far from being passive middlemen, they seek out generators with which to trade, often smaller ones or on-site generators that large monopolies would never consider approaching. These retailers also encourage new entrants into generation – companies not normally in the energy business that can provide power when and where they need it, for example, or farmers or other individuals that have well-situated, untapped resources. The relentless pressure to find and serve niche markets has made the United Kingdom the world’s most competitive and decentralized electricity system, providing power customers with previously unheard-of choice.

In one area, however, power customers in the United Kingdom do not have choice: climate change. By government decree, U.K. consumers pay four separate taxes – transparent to all – in order to meet the government’s policy for combating global warming. The “renewables obligation” now adds £7 per year (rising to £20 by 2015) to electricity bills in order to encourage wind and other sources of renewable energy. A further £5.50 is spent on beefing up power networks to make them reliable for renewable energy. The “energy-efficient commitment” costs another £9 per year. And emissions trading adds an amount that varies with the European Emissions markets that have been created.

These explicit and transparent environmental policies, which Canadian environmentalists can only dream of in our moribund monopolized systems, are also a fruit of competition and decentralization. Under the old government-run monopoly in the United Kingdom, as with the continuing government-run monopolies in Canada, government and business were in bed with each other, and the power systems were run chiefly for the benefit of big industry. Subsidies abounded, but they were neither transparent nor provided for causes that had public support – they were hidden subsidies to the country’s biggest polluters provided via uneconomic coal and nuclear plants, the country’s most polluting.

The miracle is that, even loaded with all these environmental charges, the U.K. system today delivers power at lower prices than those that came of the old-style monopoly. It is the miracle of competition.

Lawrence Solomon is executive director of Energy Probe and Urban Renaissance Institute.

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Sweden proves congestion tolls work

Posted on August 4, 2007 by urbanrenaissanceinst

Lawrence Solomon
National Post
August 4, 2007

Long-suffering car commuters in Stockholm finally got their wish this week: value for money in the use of their roads. Users of rapid transit services got their wish, too: transit that is truly rapid and provides better service. Pedestrians are breathing freer. All are saying “skol” to the resumption of tolling on Stockholm roads.

Just over one year ago, in July, 2006, the Stockholm Trials ended. For the previous seven months, anyone entering or leaving the city on weekdays faced a charge that varied with congestion – as little as $1.50 at low-volume periods, such as 6:30 a.m. to 6:59 a.m., as much as $3 at a peak period such as 7:30 a.m. to 8:29 a.m., and no more than $9 over the course of any day.

Before the trials began, public opinion ran strongly against the tolls. By the end of the trials, most in both city and suburbs had been won over. The stats explain why.

The number of vehicles crossing the charge cordon decreased 22% – far more than the 10% to 15% predicted. But traffic dropped pretty well across the board. Inner city roads saw a 16% reduction in kilo-metres travelled; less central roads saw smaller reductions. Only the bypass roads, taken by those who didn’t need to enter the city, saw an increase, and that was modest at 4% to 5%. Ironically, the toll increased car usage by city residents who didn’t need to leave the city, and so didn’t face tolls: With the city less congested and more pleasant to drive in, they took to their vehicles more often. Outside the city, where many roads also experienced less congestion, some drivers likewise rediscovered their auto.

With less traffic, health, safety and the environment improved. The Stockholm Trial saw a decline in the number of personal-injury accidents of 5% to10% within the congestion-tax area. Emissions from motor vehicles in the city dropped substantially, preventing an estimated 25 to 30 premature deaths per year – a health benefit about three times higher than would have been gained through increased fuel prices. Noise levels are down, too.

The biggest drawback that people feared – the financial cost of complying with the congestion prices – played out without profound upset. A mere 4% of the private vehicles tolled accounted for one third of the toll revenue. This disproportionately affluent group – representing 1.2% of the population of the greater Stockholm County area – bore the lion’s share of the financial burden of unclogging the road system. In contrast, most drivers paid tolls only occasionally, doing little damage to their bank balances.

People did adapt to the charges, but not in the ways that many had expected. Carpooling did not increase appreciably. Neither did telecommuting. People who did not need to travel into or out of the city during working hours tended not to. People who continued to drive to work tended to do so without dramatically changing the hours at which they travelled – they were not fussed by the round-trip charge of $3 to $6 per day. Those who needed to commute for work, and did not want to pay the rush-hour congestion fees, overwhelmingly switched to a greatly expanded public transit system, rather than changing their hours of travel. Public transit trips across the cordon increased by 45,000 per day.

The Stockholm Trial, in fact, provided an object lesson for public transit planners around the world: Although the Stockholm Trial was preceded by a major buildup of transit facilities, that, on its own, accomplished little. It “is not possible to show that the investments in public transport (park-and-ride facilities, expanded bus and rail services) had any visible effect on the total number of trips taken on public transport during autumn 2005, before the charges began to apply,” a government study states. “Of the 22% decrease in car travel across the charge zone, only 0.1% at the most could have been caused by the expanded bus services.”

Public transit users are better off now than before – spanking new buses travel on uncongested roads, getting them to their destinations faster. Little wonder that city residents voted in a referendum to make the congestion charge permanent. Little wonder, too, that public opinion outside the city – once vehemently opposed to the tolls – also changed dramatically. By the end of the trial, 54% of county inhabitants felt the congestion scheme was a “fairly/very good decision,” while 42% deemed it a “fairly/ very bad decision.”

As of Aug. 1, that fairly/very good decision rules the road.

Lawrence Solomon is executive director of Urban Renaissance Institute, a division of Energy Probe Research Foundation. He is also a director of PEMA, a non-profit with patents on toll-road technology.

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Vertical Farming

Posted on July 21, 2007 by Other News Sources

Lawrence Solomon
National Post
July 21, 2007

Rooftop gardens. This idea, as old as Nebuchadnezzar’s Hanging Gardens, one of the Seven Wonders of the Ancient World, has been pursued throughout history and continues to inspire. Countless organizations raise vegetation to new heights in big cities throughout the western world, for both food and flowers. The latest and most dazzling urban farm scheme yet comes from New York’s Columbia University.

Skyfarming, as dubbed in a feature in New York magazine and touted in the national and international media, is the brainchild of Dickson Despommier, a professor of environmental sciences and microbiology. In one manifestation, 30-story towers, topped by high-tech solar collectors that rotate with the sun, would yield a cornucopia of fruits, vegetables, grains, and animals, too, including chickens, pigs and fish. Just 150 of these futuristic greenhouse complexes, Despommier calculates, would suffice to feed all eight million New Yorkers, and with the freshest, wholesomest organic fare imaginable. Food aside, this complex would yield a surplus of fuel and of water for New Yorkers, and would even be economic (just), he notes, producing studies to prove it.

Maybe. I suspect we’ll never know skyfarming’s true financial viability because no down-to-earth businessman is likely to back a barely economic venture on business merits alone. If the business plan miscalculates by even a small amount, the business could go bankrupt. Despommier as much as admits this, openly hoping for a charitable foundation or an altruist like Ted Turner to get his urban farm off the ground.

But Despommier’s visionary scheme has great value nonetheless. Although his business plan’s risk/reward ratio may not pass muster, his basic premise – that cities have the technical wherewithal to meet their own food needs – is a matter of simple calculation and beyond dispute. Also beyond dispute is that cities can meet the food that others need: By building 300 skyfarms instead of 150, New York could feed itself and eight million others – say Montrealers, Torontonians, and those living in their environs. Paris, after all, not only fed itself exquisitely in the 19th century and into the 20th, it exported its surplus to London and elsewhere.

That cities can support themselves and others too demonstrates the bankruptcy of faddish eco-concepts such as the ecological footprints that now mesmerize governments and corporations worldwide. These footprints spread the mistaken view that we are somehow running out of space on

Earth, or that Earth is somehow running out of resources. Based on such thinking, footprint gurus insist that we must consume less of just about everything, eschew technological advances, and return to low density subsistence lifestyles.

Despommier’s high-tech environmentalism demonstrates that the footprint of urbanites is irrelevant – he calculates that city dwellers need rely on no net external inputs for their sustenance, thanks to the use of renewable energy, recycled materials, and recycled waste water. When the agriculture occurs high off the ground, other economies kick in: The absence of ground-level pests eliminates wastage and the costs associated with applying pesticides. Locating farms close to markets also minimize transportation and storage costs. Similar calculations would show that city dwellers need rely on no net external inputs for other needs, too. Despommier’s High-Tech Utopia trumps the Footprint Dystopia.

Between the extreme visions, however, lies an historical truth: Conventional urban farming is inherently profitable, and, unlike Despommier’s plan, would have no end of financial backers. Or practitioners. Thousands of agricultural startups would materialize but for one impediment. Urban farming is against the law. City governments, striving to be modern, over the course of the last century placed one restriction after another on farming and finally, when farming continued to persist, city governments banned farming altogether, typically permitting the growing of produce only for one’s own use. Toronto does have one farm – complete with pigs, sheep and goats – close to downtown within a middle-class residential district. The 7.5-acre Riverside Farm is exempt from the ban – it is run by the city’s parks department as a relic of days gone by.

If urban farmers could again operate freely, cities at low cost would be producing much of the fresh produce that urban customers relish. Tenant farmers would contract for unused backyards and roofs, and contract with specialty restaurants seeking custom crops. Farmer’s markets would shoot up in supermarket parking lots. A century ago, the roof of New York’s Ansonia, a luxurious Upper West Side apartment hotel, housed a small animal farm, daily delivering to building residents fresh eggs via the bell hop. We don’t see fresh rooftop produce today for only one reason: The farm has been overgrown by the state.

Lawrence Solomon is executive director of Urban Renaissance Institute and Consumer Policy Institute, divisions of Energy Probe Research Foundation.

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Facts and results from the Stockholm trials

Posted on December 1, 2006 by urbanrenaissanceinst

December 2006
Congestion Charge Secretariat, City of Stockholm

These studies cover travel patterns and effects on motor traffic and public transport, environmental consequences, effects on trade and industry, as well as macro-economic impact and effects on the regional economy.

Click here to view the pdf file

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Toronto Mayor Miller

Posted on November 17, 2006 by Other News Sources

Lawrence Solomon
National Post
November 17, 2006

David Miller, get off your knees! What a spectacle you made of yourself on election eve. No sooner did you win re-election as Toronto’s Mayor than you began begging senior levels of government for money.

“Tonight you have given me a strong mandate to tell the Premier and the Prime Minister that Toronto needs a 1 cents share of the existing sales taxes, and we will not take no for an answer,” you said in your victory speech, and then you said it again, in case the Premier and the Prime Minister weren’t listening.

Well, they were listening. The next day, the Ontario Premier calculated your so-called “strong mandate” – you managed just 23% of the eligible vote in a match against no credible opponent – and he told you to get real. So did Ontario’s Finance Minister: “It’s just not on,” he said. So did his federal government counterpart, Jim Flaherty, who called your plan a “non-starter,” and then gave you a dressing down for failing to manage your budget.

Frankly, Mr. Mayor, while Toronto may well have legitimate grievances in how the tax pie is being divvied up – what government doesn’t – most Torontonians don’t want you to turn your mandate into a non-stop plea for pogey. The federal Finance Minister has a point when he says you, above all other mayors in the country, have your hand out farther and faster, nagging for money “day after day.” Appointing yourself Special-Pleader-in-Chief for Canada’s big cities, as you are now doing, doesn’t help your case.

Let’s be honest. Toronto’s problems are of its own making – largely your making, Mr. Mayor. You’d like more tax revenue? Then why adopt an anti-business bias through discriminatory taxes that force Toronto businesses to flee the city? With fair taxes, businesses would not leave Toronto in droves, the city’s tax base would grow, and with it the taxes you’re pleading for. You’d like public transit to work better so it can attract more passengers? Then why not privatize it, as Toronto icon Jane Jacobs recommended? Once London, England, privatized and otherwise deregulated its transit system, London transit began to thrive. You’d like to end the traffic congestion that costs the economy billions in inefficiency? Then do what London and Stockholm did with such stellar success: Toll congested streets to end the congestion and raise money for city coffers.

You asked the province for more powers to raise money and it assented, including the right to toll roads. The province also gave Toronto a windfall by downloading to the city road assets. Now you refuse to take responsibility in meeting the city budget by utilizing your own powers and your own assets to meet your fiduciary responsibility as Mayor.

You lamely claim that you can’t introduce a charge for the use of congested roads, although it is proven to pull people out of their autos and into the public transit you claim to champion. You say, “We don’t have the transit infrastructure that a city like London, England, has,” and that, “People in London have a real choice: They can choose to pay the congestion charge or they can choose transit. . . . That is not true in the Greater Toronto Area.”

Yet London and Stockholm both faced the same situation Toronto does now. They solved their problems by simply adding buses prior to introducing tolls to deal with the extra transit use they knew would come. The tolls more than paid for the buses. In fact – no surprise – the tolls became a big money-maker for the city governments. What did surprise was the tolls’ popularity with voters in both cities. Politicians who backed the polls won their elections; those who didn’t were turfed out. A recent public opinion poll in Toronto shows the same result would likely occur there, even without a debate. According to a recent Decima poll, more Toronto residents want to see a toll than don’t if it would solve the congestion problem.

But you are a problem gnasher, not a problem solver. You claim that tolling major roads into Toronto would push traffic into Toronto’s neighbourhoods. Don’t you know that the naysayers said the same thing in London and Stockholm? And that the city traffic engineers proved them all wrong, by brilliantly anticipating where problems might occur, and successfully redirecting traffic to avoid any upsets? Or do you think Toronto’s traffic engineers are any less capable than those across the pond?

The problem, Mr. Mayor, is the vision thing. You were elected the first time round, three years ago, because people thought you had it. No Toronto mayor ever disappointed more people more quickly. You are now known as the do-nothing mayor. Yet Torontonians reelected you anyway, because you claimed you needed a second term to produce results. Now you tell us that your mayoralty is all about making Toronto a bigger and better beggar.

Mr. Mayor. You lead one of the continent’s largest cities. You are a big-city mayor. You need to act like one.

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