City Pay Wars

The city of Cedar Park just escalated the pay war for firefighters in central Texas. This is the game the cities play to increase the pay of city employees.

Every several years each city does a pay survey of similar cities in Texas to see how their pay compares with other cities. This invariably leads to a pay increase for the employees without respect to the scope of the job. In other words, a firefighters job has changed very little over the last several decades, yet the pay has increased due to the game of pay setting that cities engage in.

Cedar Park has raised the pay of firefighters by about 15% over the next three years. Currently, a firefighter with 5 years experience earns $53,294 annually. A 15% raise will boost that to $61,342 by 2019.

It looks like Georgetown is one of the leaders in the pay setting race.  They raised firefighters pay 4% in January, 2106 with another raise scheduled for July, 2017. Here is the Georgetown firefighter pay table. Click on table to enlarge.

So currently a Georgetown firefighter with 5 years experience earns $54,368/year and next July that will escalate to $56,542/year. Thus a Georgetown firefighter is ahead of a Cedar Park firefighter right now, but, without additional raises by 2019, they will be behind Cedar Park by $5,000/year.

It seems obvious that a new system of setting police and firefighter pay is needed to replace the round robin system that results in one-ups-man-ship for the pay tables. Keep in mind that it costs the city $50,000 to $80,000 to hire, equip and train a new firefighter. If they leave within 1-3 years, that is money that is mostly wasted.

More Georgetown Pension Info

The Texas Municipal Retirement System (TMRS) provides city specific funding and contribution information annually. Here is the pension liability for Georgetown at the end of 2015. Click on table to expand.

Observe that the pension liability for Georgetown increased $9M in one year, from 2014 to 2015. This was caused by decreasing the assumed investment rate of return, single discount rate above, and the poor actual investment rate of return for 2015, 0.34%.

These factors caused the funded ratio to decrease from 86.5% to 80.4% in one year.

The primary pension fund health indicator of funded ratio of >80% indicating a healthy fund is a myth according to the American Academy of Actuaries. They recommend that pension funds be funded at 100%.

Thus Georgetown needs to increase their annual pension contributions while the local economy is healthy, not wait until the inevitable economic downturn occurs. 

City Retirement Investments Earnings Rate

The official investment report from the Texas Municipal Retirement System (TMRS) for the quarter ending September 30, 2016 will not be available until the December board meeting. However, the unofficial rate of return for the calendar year to date through September 30 is 5.5%.

TMRS reported that the ratio of funded assets to total liability was 85% at the end of 2015. All the pension gurus exclaim this is "good" and the pension fund is healthy. Remember, this ratio is based on an assumed return rate of 6.75% annually for the next 30 years.

If one uses the end of 2015 assets and liabilities and the most recent annualized rate of return of 5.5%, then the funded ratio is only 60%. This is not viewed as healthy by pension experts and the only way to cure this low ratio is to increase the contributions of the city and the employees, increase investment risk and try to achieve a 6.75% return, or some combination of these two approaches. Otherwise the "can" is just kicked down the road for future generations as the unfunded pension liability grows.

SunEdison Subject of Another Law Suit

SunEdison creditors launch a new lawsuit against lenders in the bankruptcy battle.

NEW YORK (Reuters) - A group of SunEdison Inc (SUNEQ.PK) lenders took control of the renewable energy developer after inking a "sweetheart deal" to try to save their investment as the company approached bankruptcy, hurting other creditors, according to a lawsuit filed late Thursday in U.S. bankruptcy court.

SunEdison transferred "hundreds of millions of dollars" to the lenders, which included buyout firms Apollo Global Management LLC and Cerberus Capital Management LP and more than 15 hedge funds, before it filed for bankruptcy, hurting the company's other creditors, according to a redacted version of the complaint. A full copy was filed under seal.(law suit)

Fire Department Fees Increasing!

Did you know that the fire department has an extensive list of fees that they may charge residents and non-residents alike with wide discretion afforded the fire chief.

The fire department is requesting an increase in several fees, most notably for Critical Care Transport in the amount of $1036 plus oxygen, supplies and mileage. Pity the poor soul that does not have insurance!

Calls for service at residential structure fires shall not be subject to any fees unless it is determined to be for cause, as is identified in Section 2.28.170.

The purpose of the Fee Schedule is to provide for the reimbursement of costs for emergency and/or non-emergency responses by the Georgetown Fire Department for certain emergency incidents, special events, malicious incidents, hazardous material incidents, technical or specialized rescue incidents, motor vehicle collisions, and incidents caused by negligence and/or willful disregard for established fire and life-safety codes. Additionally, the Fee Schedule shall be applied to responses to non-City residents and/or those responses not covered under an approved mutual or automatic-aid agreement. 

There are several pages of fees that the city is authorized to charge in addition to the property taxes that citizens have to pay. There is needs to be a public discussion on the scope and amount of fees that are levied by the city.

Fire Department Costs Going Up Retroactively!

The City Council is set to approve an increase in the fire department budget for last fiscal year tomorrow night, Tuesday, 10/25/2016. Last fiscal year ended September 30.

The amendment to the 2016 Annual Budget of the revenues of the City of Georgetown and expenses of conducting the affairs thereof, is in all things adopted and approved as an addition to the previously approved budget of the current revenues and expenses as well as fixed charges against said City for the fiscal year beginning October 1, 2015, and ending September 30, 2016.

The total of $525,637 is hereby appropriated for payments of expenditures. 

The citizens breathlessly await the rationale for this addition to the fire department budget. Could it be that the takeover of the EMS is costing more than promised?

Airport Road Improvements

The City is anticipating growth next to the airport and to encourage and facilitate that growth, the main road into the airport is being widened and strengthened. Click on image to expand.

This project will take 6 to 8 months to acquire necessary rights-of-way, perform the design and hold a competition for the construction phase. Approval for the initial phase is scheduled for the next council meeting.

Thus we see that the initial phase is expected to cost $580,000.

The construction costs are currently estimated as follows and is expected to take 9 to 12 months.

Pension Funding Shortfalls Will Impact Everyone!

The severe underfunding of public pensions will significantly impact all of us. The situation is brewing in many states and cities. Just look at Dallas, with last year’s underfunded pension liability estimated at $1.2 billion. The situation is made worse following a 12.5% loss in the market during 2015.

So, who’s gonna pay for this mess? You, the taxpayer, that’s who.

In fact, pension problems will likely impact every U.S. taxpayer at a mind-blowing rate. And that’s true even if they are not directly connected to state and local pension programs.

Think about this …

A key factor in Detroit’s bankruptcy was unaffordable pension costs. Other cities that have “gone under” in recent memory include: Vallejo, Stockton and San Bernardino.Money and Markets

Georgetown Home Invasion

A homeowner in Escalera Ranch on Leander Road was confronted by two armed masked men Tuesday when he opened his garage door to take out the trash. The made him open his gun safe, wherein they took the guns, tied the homeowner up, then ransacked the home and left in his car. Luckily the homeowner was unharmed. KXAN News

The War on Cash Accelerates

Another war has been started by the rich and powerful people and organizations of the world.War on Cash

The war is becoming more organized and purposeful. Powerful agents have already created a perfect platform for achieving their dream: The Better Than Cash Alliance (BTCA), a UN-hosted partnership of governments, companies and international organizations. Its purpose, in its own words, is “to accelerate the transition from cash to digital payments globally through excellence in advocacy, knowledge and services to members.”

A cashless society gives the government knowledge of and eventually control of your movement and spending as well as what you have. Cash is a form of freedom. Freedom of choice. Digital assets and transactions can be easily controlled, confiscated and taxed by the government.

Electrical power outages will stop people from accessing their funds which are necessary for their survival. Electronic funds can be accessed by governments whenever they need money to operate the government. Recent outages in Baton Rouge, MS caused by floods, and storms in South Australia highlight the dangers of prolonged disruption in electrical services.

A cashless economy reduces individual's ability to protect their wealth from government confiscation.

Beware of governments and international institution's actions to force removal of cash as a method for economic transactions and wealth preservation.

SunEdison/Buckthorn-Westec Sold to NRG

"NRG Energy won its bid of up to $188 million to acquire a massive West Texas solar farm and other renewable energy projects throughout the country from bankrupt SunEdison.

The deal still needs final approval in bankruptcy court, but NRG would acquire the 200-megawatt Buckthorn solar farm in Pecos County. The delayed solar project, which is slated for completion next year, would make the city of Georgetown, a community of 60,000 people, the largest municipality in the nation powered solely by renewable sources. One megawatt can typically power 200 homes on the hottest Texas days.

The $144 million deal, which would grow to $188 million if milestone benchmarks are met, also includes solar and wind projects in Utah, Washington, California, Maine and Hawaii. The discount for NRG is steep because most of the projects remain in development and require additional investment.

As for NRG, the Houston and New Jersey-based utility giant seemingly stepped back from renewable power in December when the chief executive, David Crane, was ousted. And, while NRG has backed off somewhat from Crane’s pet projects for residential solar and electric car-charging stations, NRG is still investing in utility-scale solar and wind. New CEO Mauricio Gutierrez is adamant the company is dedicated to growing in green power.

NRG spokesman Erik Linden said in a statement Tuesday that the pending acquistion “further reaffirms our ongoing leadership and commitment to renewable energy,”

Although NRG already owns some wind projects in Texas, the deal would give NRG its first solar footprint in Texas.

Missouri-based SunEdison rapidly became the fastest-growing renewable power developer in the world, but the company grew too fast for its own good before many of its assets could become profitable. Hemorrhaging money, SunEdison filed for Chapter 11 bankruptcy protection in April.

NRG warned the deal needs to get done quickly because Buckthorn is supposed to become operational in April 2017, and the deal with Georgetown is terminated if it’s not producing power by late October, 2017.

SunEdison scheduled two major solar projects in Texas to begin operations this year, but both were delayed at least into 2017. The other is the 116-megawatt Castle Gap solar farm in West Texas that’s supposed to sell power to Dallas-based Luminant. But NRG isn’t trying to buy that one as part of this deal.

SunEdison also is building the two phases of the 500-megawatt South Plains Wind farm in Floyd County near Lubbock, but its status is unclear. The Route 66 Wind project in the Texas Panhandle was completed this year, but SunEdison sold a majority stake in it to JPMorgan Asset Management." fuel-fix

Unfunded Pension Liabilities

Another way to look at public pensions is to look at the unfunded liabilities that the citizen is on the hook to pay. Remember, the amount of the unfunded liabilities depend significantly on the assumed investment rate of return. Georgetown citizens are on the hook for the following unfunded public pension liabilities.

Thus we see that the citizens of Georgetown are liable for $1308 in unfunded pensions per capita.

A sustainable fix to America’s public pensions will likely require intensive reforms to state and local governance, including the replacement of defined-benefit plans with 401(k)s and robust checks on the lobbying and political power of public sector unions. But the first step toward implementing these changes is for public administrators to come clean with taxpayers about the real unfunded liabilities.

Both the GISD and Wico pension funds assume an 8% annual return, while the Texas Municipal Retirement System (TMRS) that city uses, assumes a 6.75% rate of return. Until these pension funds adjust their assumed rates of return to a more realistic level, approximately 5+% over the last 5 years, the citizens will not know the actual liabilities.

Public sector pension funds need to be governed by the same rigorous accounting rules that apply in the private sector. Until these reforms are implemented, it’s likely that states and localities will continue to govern by crisis, propping up the current system with every last cent and then declaring bankruptcy or asking for bailouts when it all comes tumbling down.

Is LoneStar Rail Really Dead?

There are a number of sceptics  questioning whether LSR is really dead. here

Some believe that LSR is not really dead until the legislature repeals the enabling legislation and the remaining $9M is returned to the taxpayer. Evidently there is not much enthusiasm among the lawmakers for such action.

Transit planners in San Antonio and Austin remain in the thrall of a vision to link the two rapidly growing metropolitan areas by rail. They want to spend the remaining $9M on another transportation study!

What a waste of taxpayer money!

Climate Change Corruption Has Reached Texas

Texas has been cooling since 1895, but that doesn’t suit National Oceanic and Atmospheric Administration's (NOAA) global warming agenda. So they keep cooling the past further and further to create the appearance of a warming trend. realclimatescience





NOAA ramped up their massive fraud sometime in the last five years. They turned their own cooling trend into a warming trend, by doing nothing other than data tampering.

More government fraud and corruption!

Lone Star Rail Dead!

The Capital Area Metropolitan Planning Organization (CAMPO) killed Lone Star Rail at tonight's meeting.

This was approved on a voice vote with one abstention and no objections. The Mayor of Georgetown voted to take Lone Star Rail out of the 2040 Transportation Plan.

An update on a Mobility Study between Georgetown and San Antonio was presented.

During the discussion period it became clear that rail was not off the table for future projects. Potential projects ranged from increasing capacity and frequency of AmTrak service to connecting to a high-speed rail system.  

With funding and planning precursors accomplished, TxDOT, working closely with CAMPO and AAMPO, will develop and lead a study that considers alternative modes of transportation between Austin and San Antonio. The study emphasis would be on solutions that go beyond adding single occupancy vehicle capacity. At a minimum, the study would include the IH-35 corridor but encompass the broader corridor and have a medium- to long-term planning horizon. Additional components of the study would: 
 Involve a comprehensive stakeholder coordination effort. 
 Recognize the interconnectedness of infrastructure, land use, and sustainability 
 Involve scenario planning – recommend ten, 20- and 50-year timeframes. 
 Encompass all reasonable modes of transportation.  Incorporate emerging technologies and their potential effect on future transportation. 
 Include cost-effectiveness of solutions and reasonable funding scenarios. 
 Consider, and incorporate where practical, the documents and other information from the Lone Star Rail study effort. 
 Result in a decision that would lead into a NEPA, project-specific study 

We are again being placed at the mercy of a regional planning organization over which the citizens of Georgetown have little input and even less influence, since only the Mayor of Georgetown has just one vote out of many.

Tax Credits Power Wind Energy

Tax credits, paid by all taxpayers subsidize the construction and operation of wind turbines.Wall Street Journal

In a report last year, the U.S. Government Accountability Office said the Treasury has forfeited more than $8 billion in revenue as a result of the tax credit, and faulted Congress for repeatedly renewing the credit without requiring any agency to study its impact on renewable-energy development.

Texas has been a major beneficiary of this transfer of wealth from the other 49 states.

Georgetown in particular has benefitted from this wealth transfer. All Texas ratepayers are paying for the $7B construction costs for the transmission lines from West Texas, yet all electric consumers do not participate directly in the lower cost of wind generated electricity. The current Federal subsidy is 2.3 cents per kilowatt-hour for those wind generating electrical plant owner/operators.

Texas Municipal Retirement System Investment Results

TMRS is scheduled to release its latest investment results by the end of the week. The last quarter's results were not very pretty, but, OK given the market environment.  Here are the results for the quarter ending June, 30, 2016.

1.8% gross return over the last year and a 5.6% gross return over the last 5 years. The net returns are smaller. In the face of these returns TMRS continues to assume a 6.75% annual return when they calculate the unfunded amount of pension obligations. This allows them to claim the benefits are 85% funded.

Notice how the performance of the Real Return and Absolute Return assets are dragging down the total fund performance over 5 years. The rationale for investing in these riskier asset classes is that diversification decreases the overall risk of the total fund. Well, the risk may be less, but, the performance is definitely less and substantially lags the performance of the traditional fixed income and U.S. equity classes.

Update on Austin Avenue Bridges

The city staff recently provided an update to the City Council on the status of the Austin Avenue bridges. The complete presentation can be found here. Following are highlights.

The city will follow the National Environmental Policy Act requirements to assure that the bridges project is able to access federal funds.

National Environmental Policy Act (NEPA) requires
•Overarching environmental regulation
•Evaluation of a range of alternatives
•Requires coordination with multiple Federal and State agencies

Steel samples from the existing bridges were taken and analyzed.

Consultant has reanalyzed the load rating of the controlling span using the new yield strength and recommends, determined in accordance with TxDOT procedures, the following:

•Axle 20,000 lbs(legal limit)
•Tandem axle 34,000 lbs(legal limit)
•Single Gross vehicle 69,000 lbs(legal limit)
•Combination vehicle 79,000 lbs(legal limit is 80,000)

This indicates that perhaps lower load limits need not be imposed on the existing bridges. The only question is the combination limit which is 1,000 lbs below the legal limit.

TxDOT is reviewing the report, and guidance is expected by the end of the year.

The staff and council reiterated their commitment to not close Austin Avenue, except for a few hours during the night, if necessary. 

The rough schedule of remaining tasks follows:

•Consider Public Meeting #3 (Mar 2017)
•Workshop with Council on Alternatives Analysis (June 2017)
•Submit Environmental Assessment to TxDOT (June/July 2017)
•Environmental Assessment review period (Aug 2017)
•Public Hearing (Oct 2017)

The staff also indicated they are running out of money with 50% of the planned work accomplished and 75% of the scheduled used. They are requesting approval to transfer $280,000 from the Streets Arterial Reserve Account.

Pension Fund Woes

California Pension Fund Threatens to Renege on its Promises for the First Time (Pension Woes)

When a small town decides that it wants to withdraw from Calpers, the big California pension fund, it finds out it owes $1.6M to exit because Calpers used realistic assumptions, including no new money coming into the city share of the pension fund.

The city thought they were nearly fully funded as they had been paying into Calpers for many years. Surprise! They get a bill from Calpers for $1.6M.

The problem besetting municipalities across the country is that public pension authorities have been assuming unrealistic discount rates and rates of return on their investments for decades. 

It's time for Texas municipalities, including Georgetown, to require TMRS to use real-world discount rates and investment return rates when assessing the health of the fund.

Solar Generated Electricity Costs the Taxpayer $$$

One of Hillary Clinton’s wackier ideas is to build half a billion solar panels — at taxpayer expense. It would be one of the largest corporate welfare giveaways in American history. The Institute for Energy Research (IER) estimates that the cost of the plan will reach $205 billion. That’s a lot of money to throw at Elon Musk and all of Hillary’s high-powered green energy friends. Washington Times

Look at the relative size of the subsidies for the different energy sources provided by the U. S. Government, ie taxpayers!

This is another massive wealth transfer mechanism from all the taxpayers to the select few that have solar generated electricity available. Of course the banks, solar electric plant constructors, operators and the Chinese that manufacture the solar panels are the real winners. What a great deal - NOT! 

SunEdison in More Trouble?

As reported in the WSJ SunEdison Inc. received a subpoena from the Securities and Exchange Commission seeking emails and other electronic communications in connection with a non-public, fact-finding investigation.

The solar-energy company said the Oct. 5 request covers communications sent or received by “certain current and/or former directors and/or officers” of SunEdison and/or its two yieldcos, TerraForm Power Inc. and TerraForm Global Inc.

SunEdison filed for chapter 11 bankruptcy protection in April, pledging to curb debt-fueled global expansion that pushed the company’s stock to great heights before fueling its rapid collapse. The company disclosed in March that it received an inquiry from the SEC and a subpoena from U.S Justice Department.

The company’s yieldco strategy, which played a key role in its growth plans, was criticized in 2015 by David Tepper’s Appaloosa Management LP, a big investor in TerraForm Power.

The two yieldcos weren’t included in SunEdison’s bankruptcy, but they claim SunEdison has done more than $3 billion worth of damage in the aggregate to their businesses. SunEdison said Oct. 3 that it disagrees with many of their claims but is in settlement talks with them.

Regulators have been looking into issues including SunEdison’s disclosures about its cash on hand and financing activities related to a planned $1.9 billion purchase of residential-rooftop installer Vivint Solar Inc. that was eventually terminated.

Citizen Survey Results

Georgetown embarked on a survey of citizens to assess how well the City is meeting the expectations of its citizens. The survey was conducted by Texas State University with the assistance of the city staff. The entire survey can be found here

Following are several of the key findings.

It is not a great surprise that the overall assessment is that the quality of life in Georgetown is exceptional.

Mobility is another story, significant improvements could be made in traffic flow and parking, especially downtown.

The survey indicates that the respondents are satisfied with the protective services provided by the city. 

It appears the respondents believe streets and traffic are in need of improvement, especially traffic signals and street repair.

73.8% think that the city is growing too fast or much too fast. In keeping with the principle of limited government intervention, it seems the city should only try to accommodate the growth, not impede the growth. 

Economic Growth Slowing

The Austin area economy is slowing according to the most recent Dallas Federal Reserve report. DallasFed Georgetown is part of the Austin metropolitan statistical area and should be exercising caution with respect to spending so that there are no "unexpected" surprises.


"The Austin economy slowed slightly in August. Growth in the Austin Business-Cycle Index has steadied over the last two months but remains well below its long-term trend. The unemployment rate increased for the third consecutive month, although it held below other large Texas metros. Jobs declined in August for the first time since March 2016."

The Austin–Round Rock metropolitan statistical area (MSA) encompasses Bastrop, Caldwell, Hays, Travis and Williamson counties.

Here are a couple of relevant charts.

"The median home price for Austin rose for the third consecutive month in August to $283,667. This contrasts with the median price for Texas homes, which increased only slightly to $210,171. Year over year, Austin home prices have appreciated at an 8.9 percent rate, compared with 6.4 percent for Texas, and Austin’s median home price remains the highest of any of the major metro areas within the state. Home inventories have held at 2.4 months’ supply for the last three months, well below the six months’ supply generally considered to be a balanced market."

This chart shows two significant characteristics affecting Georgetown. First, housing is becoming less affordable for the average Texan. Second, property taxes are becoming an unsustainable burden on property owners. As property owners know, it's not the tax rate that matters, it's the annual property tax payment that matters!

"Austin job growth has been uncharacteristically weak this year, as softness in professional services, leisure and hospitality, and health care has dragged on overall hiring. Historically, Austin adds jobs at a significantly faster rate than Texas. However, a steep decline at the beginning of this year pushed Austin’s six-month annualized growth rate slightly below that of Texas for the first time since 2010. Recently, Austin jobs have recovered slightly to 1.7 percent in the six months ending in August."

More Government Intrusion

It was reported this week by the WSJ that Federal Immigration and Customs Enforcement(ICE) agents persuaded local police officers to scan license plates of vehicles at gun shows. They then compared those plates with those of vehicles crossing the U.S.- Mexico border. So here we have no probable cause of a crime committed, yet federal agents are gathering information to try and link citizens with cross border criminal activity.

Read the entire article and ask yourself if this is not another overreach by federal officials into our private lives.

Do Georgetown police have and use license plate scanners? Curious minds would like to know.

Williams Drive Transportation Study

City staff presented their approach to engaging residents in the development of Williams Drive to the City Council. From the presentation we have the following:

Purpose:

Develop a plan of action that will incorporate safety, efficient transportation operations, safe accommodations of all modes, and integration of smart transportation and land use, community needs, and the future economic growth of Williams Drive.

The goals for Williams Drive include:

Enhance multimodal movements and transportation operations

Support corridor-wide and regional sustainable growth and economic development.

Protect and enhance the corridor’s quality of life.

Encourage development that creates a variety of context sensitive mixed-use services that are accessible to neighborhoods.

Objectives include:

An effective outreach program that engages stakeholders as participants in the design.

A transformative physical design based on market practicality, technical requirements, and available financial resources required for its implementation.

An engaging design process that inspires participation across the life-cycle of the study from design through implementation.

Warning! Warning!
The phrases highlighted in red are code words used by the advocates of the UN Agenda 21/30 program. Link This UN program is be implemented at the local government level by restructuring Human nature through Law and Regulation. The agency created by the UN to bring Agenda21 down to the local city and county level of the United States and the rest of the world is the International Council on Local Environmental Initiatives (ICLEI).

Georgetown was a member of ICLEI earlier, but, withdrew its membership when citizens protested.

It appears that vestiges of Agenda 21/30 still exist within the city staff. 

Limits of Wind & Solar Generated Electricity

There seems to be actual limits to the practicable application of wind and solar energy. In addition to the South Australia blackout discussed in a previous post, Hawaii has stopped net metering (giving homeowners credit for the retail cost of electricity, when electricity is sold to the grid) and phased out subsidies for renewable energy. California is on the edge of an electricity crisis because they have and are closing fossil fuel and nuclear plants and now find themselves unable to import sufficient stable power from other states. California Grid Crisis

An excellent analysis on the limits of renewable energy is presented by Gail Tverberg on her blog.  Several of her key conclusions follow:

Issue 1. Grid issues become a problem at low levels of intermittent electricity penetration.

Issue 2. The apparent “lid” on intermittent electricity at 10% to 15% of total electricity consumption is caused by limits on operating reserves.

Issue 3. When there is no other workaround for excess intermittent electricity, it must be curtailed–that is, dumped rather than added to the grid.

Issue 4. When all costs are included, including grid costs and indirect costs, such as the need for additional storage, the cost of intermittent renewables tends to be very high.

Issue 5. The amount that electrical utilities are willing to pay for intermittent electricity is very low. 

Issue 6. When intermittent electricity is sold in competitive electricity markets (as it is in California, Texas, and Europe), it frequently leads to negative wholesale electricity prices. It also shaves the peaks off high prices at times of high demand.

Issue 7. Other parts of the world are also having problems with intermittent electricity.

Issue 8. The amount of subsidies provided to intermittent electricity is very high.

Few people have stopped to realize that intermittent electricity isn’t worth very much. It may even have negative value, when the cost of all of the adjustments needed to make it useful are considered.

Energy products are very different in “quality.” Intermittent electricity is of exceptionally low quality. The costs that intermittent electricity impose on the system need to be paid by someone else. This is a huge problem, especially as penetration levels start exceeding the 10% to 15% level that can be handled by operating reserves, and much more costly adjustments must be made to accommodate this energy. Even if wind turbines and solar panels could be produced for $0, it seems likely that the costs of working around the problems caused by intermittent electricity would be greater than the compensation that can be obtained to fix those problems.

Texas is at the level of 10-15% renewable energy generation.

The WSJ recently had an article touting Texas as the leader in wind and solar electricity generation, but, did not recognize two large problems; Instability in the grid caused by intermittent renewable electricity, and shutting of fossil fuel plants because they are uneconomical competing against subsidized renewables which will ultimately cause electricity prices to rise.

Tverberg notes that due to solar and wind subsidies that electrical costs in California are 45 percent higher than the national average, over 1/3 of California’s electric grid power for non-intermittent (also called “dispatchable”) electrical back-up must now be imported from other states, up from only 25 percent in 2010.

There are always unanticipated consequences that cost more money. Texas ratepayers can expect their rates to increase or suffer the consequences.