A Homage To My Friend, H. Jefferson Herbert

This is posted as my personal tribute to Jeff Herbert, but I only knew him for the second half of his life. There is much more to him and a lot of it can be found in his obituary at https://www.hatchersaddler.com/obituaries/hiram-herbert-jr

Even those of us who are not Jedi knights felt a huge disturbance in the Force on December 15 when Hiram Jefferson Herbert, Jr., left our dimension.  This is no surprise. When titans like Jeff leave us, such a mighty void results that everyone is affected. His impact on the community of friends he held dear was that immense.

I first met Jeff in 1983, shortly after becoming Superintendent of Glasgow Electric Plant Board. He was already there when I arrived, and he was bristling with knowledge that he was anxious to share with me. In addition to being Corporate Counsel for EPB, he quickly became my friend, mentor, and the bright star I used to navigate the balance of my career. And I was not alone in seeing Jeff this way. He was also Corporate Counsel to other booming concerns in Glasgow. He represented City of Glasgow, Gray Construction Company, TJ Samson Hospital, and many others. In short, just about every business or board or commission that played a major role in the success of Glasgow through the 80s, 90s, and beyond, had Jeff Herbert playing a big part of their success. Maybe you didn’t know that, but you should.  

I cannot fill in all the stories about how he impacted other businesses, but I can tell you about the Jeff Herbert I knew through our work at Glasgow EPB, because I am convinced that the EPB was his favorite client. I should also point out that Jeff’s personality and knowledge warped the classic definition of the lawyer-client relationship. It is a bit difficult to explain this, but Jeff just couldn’t be contained to focus on legal matters for his corporate clients. Rather, he was more of a “corporate gadfly.” That is to say, he developed such a vast understanding of the inner workings of the businesses he represented that he moved around in the organizations with the aplomb of attorney, board member, technician, accountant, and engineer. As he did this, he could also go back and forth between valued advisor and exceedingly frustrating meddler. There, I said it.

Over the last 40 years, he had a knack for being at the right place at the right time while armed with the right tools. In a way, he was like Forrest Gump.  For example, when I arrived at Glasgow EPB, my first assignment was to try to complete several hydro-electric projects which EPB held licenses to develop. My first airliner ride was with Jeff to Washington, D.C. to discuss the Barren River Reservoir project with the folks at Army Corps of Engineers. Jeff also arranged a meeting with Congressman William Natcher. I followed him around in slack-jawed awe of the way he navigated the Metro subway system and the halls of Congress. I sat in a corner of Natcher’s office while Jeff and he kicked around ideas about convincing the ACOE to allow our project to move forward, but the bigger item of discussion was the recent general election of 1984 (just a couple of weeks before) when Walter “Dee” Huddleston lost his Senate seat to an unknown, Mitch McConnell. I was mesmerized as these two masters of political science observed that there was simply no reason for Huddleston to have lost to McConnell. The consensus opinion was that Huddleston simply failed to identify and promote a big initiative for Kentucky. Jeff agreed and even suggested a couple such projects. Natcher agreed with Jeff. Many years later, I realized that McConnell’s rein began right then and there. Had Dee Huddleston taken the counsel of Jeff Herbert and Bill Natcher, everything about our country, from that moment on, would have been different.

It is certain that similar events occurred within the bounds of the other corporations he helped. These events should be catalogued and recorded as the Jeff Herbert Effect. For Glasgow EPB, the biggest of those events was the development of Glasgow’s Broadband Network, which largely exists because, at the right time and place, Jeff Herbert was there. The EPB elected to build the first municipally owned broadband network in 1987. Construction began about a year later, and by early 1990, the incumbent cable television company (Telescripps Cable at that time) filed a federal lawsuit, followed closely by a state lawsuit, against Glasgow EPB in an attempt to stop the project. It was going to be a big fight...just the kind of thing Jeff was born to participate in.  

In 1990, Jeff led me into the Federal District Court Building in Bowling Green. A hearing was held there to consider Telescripps Cable’s motion for a Temporary Restraining Order against our construction of the network in Glasgow. Judge Ronald Meridith was United States District Judge handling the complaint filed by lawyers for Telescripps,  and they were an imposing group. Four members of a prestigious Washington D.C. law firm made a compelling and impassioned argument against Glasgow EPB’s project. Jeff, aided by Uhel Barrickman and Randy Young (a friend also from Washington), defended the EPB project. Jeff controlled the narrative and used up most of the oxygen in that courtroom. He spoke about local economics, the inability of cities to actually regulate the cable companies, and he talked about our vision for a high-speed data network. Most of all, he focused on the propriety of a distant corporation controlling the programming for a rural community like Glasgow. After the arguments were completed, Judge Meredith gazed over his glasses and looked at Jeff, in apparent full agreement with Jeff’s statements, when he then moved his glare to the assembly of Telescripps lawyers and said, “After considering this motion and hearing all of the arguments, I am convinced that you bastards (looking directly at the Telescripps team) just do not want any competition. The motion for a restraining order is denied. Further, if you all do not come up with something more clever than you brought to my courtroom today, you will not enjoy being here.” Whereupon Jeff leaned over and spoke in my ear, “That is good.” The initial victory in Judge Meredith’s courtroom paved the way for Glasgow’s successful construction of the first municipal broadband network in the United States. After that victory, all other legal challenges against Glasgow’s project dissolved. Once again, Jeff Herbert, armed with his education, rapier wit, and dedication to a cause, was, at that precise moment, exactly what was needed to change the world. Since then, over 750 similar municipal broadband networks have been built across the country, and none of them faced successful legal challenges. Jeff Herbert’s work that day in 1990 is the reason for that. It was another Forrest Gump moment.

There are likely dozens of other similar events in which Jeff was prepared, fearless, and educated enough to win the day. However, there was always someone he feared – Betty. When I first met Jeff, his courtship of the former Betty Reece had already begun, and I got to watch as some friends exploited this obvious weakness in his armor. In 1985, at a meeting in Los Angeles with a construction company interested in the hydroelectric project, we found time to play a round of golf. Betty was along for the trip and had planned a little reception at the hotel where we could honor the newly engaged couple. Now, Don Doty was in the golf foursome, and no one enjoyed making Jeff sweat more than Don.  We were scheduled to finish in plenty of time to be there for the reception. But things didn’t stay on schedule. Don began to take a lot of time with the golf, and even more time with the drive back to the hotel, laughing all the while. Jeff got more and more nervous, as he compared his watch to our progress. When we finally arrived at the parking structure for the hotel, Jeff jumped out of the still-moving car and sprinted to a bank of elevators while practically crying in the prospect of being late. So, take note that his fearlessness had limits. 

In addition to putting fear in his heart, the romance between Jeff and Betty changed him, for the better. With Betty’s influence, he became an advocate for justice far beyond the bounds of those who hired him for that purpose. Jeff became a citizen of the planet. He also became very adventurous in the restaurants and bars he was willing to try. I will never forget a time we were in Louisville, and he wanted Betty to meet us at a new place (at the time) called Rudyard Kipling. He wanted to show off his skill at finding really new and cool places, and this place was, in a word – terrible. But he didn’t complain, he just beamed at the hilarious nature of the scene and that Betty had seen him stumble but not fall. Under Betty’s influence, he became a kinder, gentler person. Betty even made Jeff a John Prine fan, but sort of by accident. They found themselves in a restaurant/bar out west where a young musician with an acoustic guitar was belting out John Prine's ballad about western Kentucky -- Paradise. Jeff had never heard of John Prine or his music, but the song about the coal fields of Western Kentucky made Jeff instantly proud of his home state, and thereafter, every time he encountered anyone with a guitar, he begged them to sing Paradise. As a certified wordsmith, Jeff was struck by John’s earth-shaking truth in lyrics like:

“And Daddy, won't you take me back to Muhlenberg County? Down by the Green River where Paradise lay. Well, I'm sorry, my son, but you're too late in asking Mister Peabody's coal train has hauled it away.”

No matter how you feel about lawyers, learning that Jeff was a John Prine fan must make you feel a little different. Would Judge Meredith have bought his argument if he had known Jeff was a John Prine fan? We’ll never know. 

 Jeff Herbert could not be defined, nor understood just by his profession. Although certainly successful fighting battles in a courtroom, Jeff was also constantly fighting battles in the pursuit of justice in every room. If you became a friend, he was constantly struggling to make you better by using his knowledge and understanding of the world to help you become more like him. His work to improve our lot was also applied to those who didn’t know him as a friend. As a true public servant, the ways he fought to make his family, his neighborhood, his community, his state, and his country more in tune with the beatitudes, was always on his mind and displayed in his actions. All of this adds up to why we felt a shudder in everything around us when he passed. Now we are tasked with remembering Jeff by attempting to pick up the gauntlet of beliefs he left behind. For my part, Jeff Herbert was one of the best friends anyone ever had, and I will do my best to carry on in a world he no longer shares with me. I will bet though, that his final wish went like this:

When I die, let my ashes float down the Green River

Let my soul roll on up to the Rochester Dam;

I‘ll be halfway to Heaven with Paradise waitin'

Just five miles away from wherever I am.

A Four-Count Rhythm

Back in my grade-school days, everyone was treated to a basic music education that included something about notes, scales, timing, and melody. I can only vaguely remember that class, but I am sure there was a piano in the room and that the room still exists in the repurposed Liberty Street School building in Glasgow. Beyond that, everything about that segment of my education is fuzzy. But I feel sure that was when I was first introduced to the concept of the four-count rhythm and that rhythm has followed me for all the ensuing decades. 

Like most things we were taught in our pre-teen years, that rhythm is a part of the fabric of my understanding of everything, though it is rarely front-and-center in my consciousness. Still, it is there. I also never really think about my pulse, but thankfully, so far it has always been there too. 

I’m visiting this odd subject today mostly because of the recent passing of Robert Redford. Thinking about him always leads me to thinking about Norman Maclean and his novella – A River Runs Through It which was the basis for the movie directed by Redford. For me, it is something I read repeatedly, and Robert Redford’s passing has caused me to do that again. The story is chock-full of goodness and some of the best use of the English language that has ever been composed, but for me it is the closing passage that always grabs me by the throat when the author says: 

              “Now nearly all those I loved and did not understand when I was young are dead, but I still reach out to them." 

“Of course, now I am too old to be much of a fisherman, and now of course I usually fish the big waters alone, although some friends think I shouldn’t. Like many fly fisherman in western Montana, where the summer days are almost Arctic in length, I often do not start fishing until the cool of the evening. Then in the Arctic half-light of the canyon, all existence fades to a being with my soul and memories and the sounds of the Big Blackfoot River and a four-count rhythm and the hope that a fish will rise."

“Eventually, all things merge into one, and a river runs through it. The river was cut by the world’s great flood and runs over rocks from the basement of time. On some of the rocks are timeless raindrops. Under the rocks are the words, and some of the words are theirs." 

"I am haunted by waters.” 

In all the beauty of those phrases it is easy to miss his reference to a four-count rhythm, but there it is. In my life there was precious little reference to the rhythm between grade school and my late thirties, when I bought my son and myself our first fly rods. Shortly after those purchases, we traveled to Cashiers, NC for some schooling on fly casting. And there, the four-count rhythm again came into my consciousness. Count one is using the rod to pick the fly line up off the water. Count two is the back-cast which lasts as long as a quarter-note until the line is fully back and unfurled. On count three the rod is loaded with energy to propel the line forward to the intended spot on the water and count four is when the line is allowed to peacefully settle on the water to present the fly. That is what Norman Maclean was talking about. That is when the four-count rhythm associated with flyfishing became part of my fabric. 

A few years later, it sprang up in my mind again while playing golf with my forever friend, William Travis. We played a lot of golf in the 90s and I got to watch his swing a lot. It needed something. Eventually I figured it out. He needed the four-count rhythm applied to his golf swing (we all do). I couldn’t really explain that to him, so I opted to take him to an Orvis flyfishing school so he could get the rhythm from an expert. It worked, and the ubiquitous four-count rhythm deepened in both of our minds. He also became a legendary fly fisher! 

Another decade passed before I hit the four-count rhythm head-on again. I started cycling and pretty quickly, I was an avid cyclist (addicted might be a better adjective). A cyclist soon learns, especially in the hilly terrain of Kentucky and Tennessee, that an efficient partnership between the cyclist (the bicycle’s engine) and the gear-train of the bicycle must be developed if one is going to cover thousands of miles per year on the road. For me (and I suspect for many others) the same four-count rhythm became the key to developing that partnership. Modern road bicycles have many different gear ratios. Finding the right one for every segment of a ride came down to choosing the one to make my pedal revolutions fit nicely into the good old four-count rhythm. It is everywhere, and it seems to make everything work as it should.

Then last year I bought a guitar, and guess what came along with it – the same old four-count rhythm. There is no escaping it. Nearly every song I (or anyone) try to play on the guitar is in 4/4 time (fancy music talk for the timing of how the notes are played to produce what the song writer had in mind). The rhythm goes just like this: one, two, three, four (timed just that way you just read it). Playing golf, flyfishing, playing music, and even speaking in the southern drawl we use in our part of the world, all is best presented in a four-count rhythm. 

I this coincidence? I think not.  Rather, I think the universe was established in this rhythm and the sooner we figure that out and listen for this remarkable language in everything we do, the sooner we will finally understand each other. 

Unraveling Your Electric Bill in Nashville

As this is the time of year when many are seeing really big power bills, and also since many local power companies are in the process of increasing their retail charges, I recently wrote this piece for a monthly publication I've been doing for my neighborhood. Most of the issues addressed here are also applicable to other utilities, especially those who purchase power from TVA. I hope you enjoy the read.

There is a good chance that the most recent electric bill you got from NES is the most expensive you’ve seen for your Stephens Valley home. It is also likely that you don’t spend a lot of time studying your NES bill. That might be exactly the way you want it, but if you decide to read this issue, you’ll learn some interesting facts about your energy consumption here in SV, the way NES bills you for that energy, and how your billing could be a lot fairer, and more effective.

Looking at the bill, you don’t get a lot of information, and, unfortunately, that is by design. The generic electric bill in the United States only shows you the difference between your meter readings for the current month and the preceding last month. Those readings are used to determine your kWh consumption for the month. The kWh usage is then multiplied by just over eleven cents and that becomes your simple energy charge. The net bill also includes a NES customer charge of $16.90 (unless you’ve had a month in the last year where your home used over 2,000 kWh, which makes your customer charge $24.90) and a TVA grid access charge of $6.66 for a total Customer Charge of $23.56 for an average residential account. This simplistic billing seems to best suit the customers who are not energy experts, but is that reason enough to use it?

Just how are these simple rates derived? If you want to know that answer, prepare yourself for a little mathematical discussion that will reveal some intrinsic, yet bizarre issues with the way NES (and, for that matter, all retail rates presently implemented by TVA’s local power companies) designs its retail electric rates. Where does the 11 cents per kWh cost come from, and what is the deal with the additional customer charge? Well, here goes. Out of that 11-cent charge, about 8.4 cents is collected just to pay for the power purchased from TVA (the TVA wholesale cost varies by time, day, and month, so that 8.4 cent cost is averaged here for simplicity). The remaining 2.6 cents per kWh is retained by NES to help cover their non-energy costs of accomplishing their mission (these are called Fixed Costs in utility speak). So, NES is using a volumetric adder to kWh consumption (which is sort of invisible to the customer) and a Customer Charge to collect the revenue needed to cover their Fixed Cost for serving each account.

Here we should discuss this important difference between volumetric charges and fixed charges, as that is the big argument among retail electric rate experts at the 3,000 electric utilities in the United States. Volumetric charges are derived by measuring the volume of something, then multiplying that volume by a per unit amount. That works fine for kWh, because utilities like NES also buy their kWh from a wholesale vendor that charges them volumetrically. The problem comes when a utility tries to collect a fixed amount, to cover a fixed cost, via an added amount to a volumetric per unit amount. Since the volume purchased varies wildly, it is certain that any volumetric collection of a fixed cost is going to be inaccurate, unjust, and discriminatory. NES, and scores of other local utilities, try to skirt this issue by doing some of both, which guarantees that their rates are not actually cost-based, but it allows them to bury some Fixed Cost revenue collection by disguising it within the cost per kWh. Other utilities serving SV do the same thing. HVUD and Piedmont Natural Gas both employ the monthly fixed charge plus a per unit adder as well. This system isn’t fair because it is invisible to most customers. This situation is just another example of the struggle we all face in the search for equality of treatment from vendors we count on to make us feel secure.

For a residential electric customer of NES, the assigned Fixed Cost is somewhere around $54.00 per month (this is an educated guess from experience). So why are we charged $23.56 (or $31.56) per month for the customer charge? Why isn’t everyone charged $54.00 instead? This is where the commitment to ancient metering infrastructure, ancient rate architecture, and political philosophy rears its head, as discussed above. If everyone were paying a customer charge equal to the Fixed Cost of keeping our home attached to the NES grid, then we should only have to pay that average 8.4 cents per kWh, which is the wholesale cost, for our actual energy usage. Instead, mainly because of the momentum of the way electric utilities have operated for the last century, NES marks up each kWh by 2.6 cents to collect a portion of their Fixed Costs AND they also charge a customer charge which is also intended to collect another portion of the Fixed Costs. As explained above, this is a problem that results in practically no one paying their fair share of a utility’s Fixed Costs.

When NES (and nearly every other electric utility) tries to collect the $54.00 Fixed Cost per residential customer (which covers all their costs that are not directly related to your volume of energy consumption) with a customer charge AND a markup on each kWh, practically no one pays an amount equal their cost of being served. Nearly everyone either overpays or underpays. In Nashville, the average monthly kWh usage is currently about 1,250 kWh, so if we multiply 1,250 kWh by 2.6 cents, we get $32.50, which is more than half of what NES needs to pay their Fixed Coster per residential customer! If you add that $32.50 to the $23.56 Customer Charge, then NES neatly collects nearly exactly $54 to cover the Fixed Cost for the average residential customer (this makes sense because retail rates are designed around the average customer). So, for the handful of residential accounts that regularly consume the average 1,250 kWh per month, the NES rate architecture works quite well. But it gets remarkably unfair (and remember, this is not a NES exclusive problem), when we examine what happens to residential accounts whose monthly consumption of kWh is lower, or higher, than average.

Stay with me now. That 8.4 cent per kWh average wholesale cost has several components besides the varying cost of a wholesale kWh. For example, a very large component of the wholesale power cost is the monthly peak demand charge. This can amount to 40% of NES’s monthly wholesale power bill from TVA, and while modern electric meters like the ones on our houses in SV can determine just how much each home contributes to that peak demand, the local power companies choose to ignore the opportunity to determine that amount and bill each account for their actual contribution to that cost. Rather, the local power companies choose to socialize the demand charge and include that cost as a portion of the 11 cent per kWh charge for a residential account. A residential account’s contribution to NES’s monthly peak demand charge can vary wildly. In the summer, NES’s peak demand will always happen between noon and 6 PM on a weekday. If your home is only using air conditioning during the peak, it is likely that the socialized rate over-estimates your contribution to peak demand such that you over-pay. If you throw a roast in the oven, or wash and dry clothes during the peak hour, your actions might drastically eclipse the amount NES has estimated in the socialized retail rates, which means that you under-pay. This is a demonstration of how no one really pays the true cost of buying electric power using the simple rate architecture employed by NES and most other local power companies.

In summary, NES needs to collect a bit over $54 from each residential customer over and above what the actual wholesale energy cost is for each customer. To accomplish that, they have implemented a Customer Charge of $16.90+$6.66 ($23.56) for those accounts who use something near 1,250 kWh per month, and that works quite well. But this system fails for any residential accounts who use less than the average amount. Those accounts are served at a loss, and it might amaze you to know that many of us in SV fall into that category! For those who use more than 1,250 kWh per month, things go really off the rails. At present NES published retail rates, if an account has used over 2,000 kWh in the last year, the Customer Charge goes to $24.90+$6.66. Also, that 2.6 cent markup would produce about $55 in net income (for a residential account using just 2,100 kWh). For that volume of kWh (an amount used by many homes in SV), NES is thus collecting about $87 to cover its Fixed Cost estimated at $54 per month. As consumption goes beyond 2,100 kWh per month, the problem just gets worse. These customers are being forced to subsidize the Fixed Costs of those who use less than 1,250 kWh per month. That bears repeating. That large home just down the street from you is likely averaging over 2,000 kWh per month of electricity consumption, and they are being forced to pay more than their actual Fixed Cost for being connected to the grid. The Fixed Cost of serving each residence in SV does not vary, but what those residential accounts are being charged for Fixed Cost recovery varies greatly!

Recently NES implemented their Power of Change Program, wherein they round up all energy bills to the next higher dollar (all accounts were automatically enrolled in this program, but all accounts are also allowed to opt-out if they contact NES and tell them) and many howled about this on social media, even though it would only add, on average, 50 cents to their monthly bill. What if those folks knew they are regularly forced to subsidize their neighbor’s power cost to the tune of maybe $30 per month?

Is it fair to make customers who consume more energy also shoulder more of the Fixed Cost burden, even though volume of energy consumed has no impact on Fixed Costs? Is it fair for customers who use less than average to skip by and not contribute their pro rata share of costs? The answer seems to depend on one’s perspective. While this rate practice is not equitable, and it certainly does not accurately ask each account to pay the real cost of the electricity they enjoy, nor does it properly collect NES’s Fixed Costs (no less and no more), it is a very common practice across our country. As stated earlier, a lot of this comes from the attraction to simplicity and history. The whole electric power community is wrestling with this issue now, and other utilities should be. Metering technology informs the utilities of the cross-subsidization issues, and that same technology enables the utilities to move to a time differentiated rate/billing system that would bring accuracy to bear, but it is widely resisted by the utilities and the customers alike, and that is a real shame. All too often, utility consumers would rather pay a socialized rate than endure a change.

We are in 2023, yet we are still consuming electric power, and paying for that power, using the same methods that were being used in 1953. The ancient rate practices dramatically impact the way the grid operates and the way we all use electricity. The signal from the utilities, through these good-old simple rates, is that there is an infinite amount of electric power available, and that we need not worry about how much we use and when we use it. But that signal is wrong, and it creates a feedback loop that just keeps making the grid more difficult to manage. Retail rates that have no cost differentiation for time-of-day result in spiraling consumption during peak hours. During those peak hours, utilities like TVA use generation resources that are heavy on greenhouse gas emissions. The more we use, the more we emit greenhouse gases and, in turn, globally, the hotter it gets. This loop goes on and on, and there is no need for it! In fact, the demonstrable need is for customers and utilities to partner in the goal to change our energy consumption patterns such that less non-renewable generation is needed.

If we moved to a real cost-based retail rate environment, several good things would happen. First, the electric power marketplace would become comply with our capitalistic system. No one would be forced to subsidize other accounts, and everyone would pay their fair share of fixed costs. This simple outcome would make the change worthwhile, but, if you hold the view that we should also be reshaping electric power demand to reduce capital costs of generation and reduce carbon contribution to the atmosphere, cost-based rates can deliver on that as well. In 2023, the technology is readily available in the form of smart HVAC thermostats and smart appliances to take the signals delivered by these new rates and dramatically reshape demand while lowering our energy bills. Those small changes would, when multiplied by the millions of customers modifying their usage, reduce the amount of fossil fuel used to generate on-peak power. Improving the ratio of off-peak consumption to on-peak consumption would reduce the need to build new generation and the greenhouse gas production attendant thereto.

As you can see from the last issues of The Valleyist wherein we have discussed this, the subject could easily become a book, so we will stop here. But the point is that socialized electric power rates were a reasonable solution before time-differentiated metering was available, but that is no longer the case. We deserve true cost-based rates in 2023, and all the improvements attendant thereto.    

There is a good chance that the most recent electric bill you got from NES is the most expensive you’ve seen for your Stephens Valley home. It is also likely that you don’t spend a lot of time studying your NES bill. That might be exactly the way you want it, but if you decide to read this issue, you’ll learn some interesting facts about your energy consumption here in SV, and the way NES bills you for that energy.

Looking at the bill, you don’t get a lot of information, and, unfortunately, that is by design. The generic electric bill in the United States only shows you the difference between your meter reading for this month and last month. Those readings are used to determine your kWh consumption for the month. The kWh usage is then multiplied by just over eleven cents and that becomes your simple energy charge. The net bill also includes a NES customer charge of $16.90 (unless you’ve had a month in the last year where your home used over 2,000 kWh, which makes your customer charge $24.90) and a TVA grid access charge of $6.66 for a total Customer Charge of $23.56 for an average residential account.

But how are those charges derived? If you want to know that answer, prepare yourself for a little mathematical discussion that will reveal some intrinsic, yet bizarre issues with the way NES (and, for that matter, all retail rates presently implemented by TVA’s local power companies) designs its retail electric rates. Where does the 11 cents per kWh cost come from, and what is the deal with the additional customer charge? Well, here goes. Out of that 11-cent charge, about 8.4 cents is collected just to pay for the power purchased from TVA (the TVA wholesale cost varies by time, day, and month, so that 8.4 cent cost is averaged here for simplicity). The remaining 2.6 cents per kWh is retained by NES to help cover their non-energy costs of accomplishing their mission (these are called Fixed Costs in utility speak). So, NES is using a volumetric adder to kWh consumption (which is sort of invisible to the customer) and a Customer Charge to collect the revenue needed to cover their Fixed Cost for serving each account.

Here we should discuss this important difference between volumetric charges and fixed charges, as that is the big argument among retail rate experts as the 3,000 electric utilities in the United States. Volumetric charges are derived by measuring the volume of something, then multiplying that volume by a per unit amount. That works fine for kWh, because utilities like NES also buy their kWh from a wholesale vendor that charges them volumetrically. The problem comes when a utility tries to collect a fixed amount, to cover a fixed cost, via an added amount to a volumetric per unit amount. Since the volume purchased varies wildly, it is certain that any volumetric collection of a fixed cost is going to be inaccurate, unjust, and discriminatory. NES, and scores of other local utilities, try to skirt this issue by doing some of both, which guarantees that their rates are not actually cost-based.

For a residential customer in Nashville, the assigned Fixed Cost is somewhere around $54.00 per month (this is an educated guess). So why are we charged $23.56 (or $31.56) per month for the customer charge? Why isn’t everyone charged $54.00 instead? This is where the commitment to ancient metering infrastructure, ancient rate architecture, and political philosophy rears its head, as discussed above. If everyone were paying a customer charge equal to the Fixed Cost of keeping our home attached to the grid, then we should only have to pay that average 8.4 cents per kWh, which is the wholesale cost for our actual energy usage. Instead, mainly because of the momentum of the way electric utilities have operated for the last century, NES marks up each kWh by 2.6 cents to collect a portion of their Fixed Costs AND they also charge a customer charge which is also intended to collect another portion of the Fixed Costs. As explained above, this is a problem.

When NES (and nearly every other electric utility) tries to collect that $54.00 with a customer charge AND a markup on each kWh, practically no one pays the right amount. Nearly everyone either overpays or underpays. In Nashville, the average monthly kWh usage is currently about 1,250 kWh, so if we multiply 1,250 kWh by 2.6 cents, we get $32.50, which is more than half of what NES needs to pay their Fixed Coster per residential customer! If you add that $32.50 to the $23.56 Customer Charge, then NES neatly collects nearly exactly $54 to cover the Fixed Cost for the average residential customer (this makes sense because retail rates are designed around the average customer). So, for the handful of residential accounts that regularly consume the average 1,250 kWh per month, the NES rate architecture works quite well. But it gets strange (and remember, this is not a NES exclusive problem), when we examine what happens to residential accounts whose monthly consumption of kWh is lower, or higher, than average.

Stay with me now. That 8.4 cent per kWh average wholesale cost has several components besides the varying cost of a wholesale kWh. For example, a very large component of the wholesale power cost is the monthly peak demand charge. This can amount to 40% of NES’s monthly wholesale power bill from TVA, and while modern electric meters like the ones on our houses in SV can determine just how much each home contributes to that peak demand, the local power companies choose to ignore the opportunity to determine that amount and bill each account for their actual contribution to that cost. Rather, the local power companies choose to socialize the demand charge and include that cost as a portion of the 11 cent per kWh charge for a residential account. A residential account’s contribution to NES’s monthly peak demand charge can vary wildly. In the summer, NES’s peak demand will always happen between noon and 6 PM on a weekday. If your home is only using air conditioning during the peak, it is likely that the socialized rate over-estimates your contribution to peak demand such that you over-pay. If you throw a roast in the oven, or wash and dry clothes during the peak hour, your actions might drastically eclipse the amount NES has estimated in the socialized retail rates, which means that you under-pay. This is a demonstration of how no one really pays the true cost of buying electric power using the simple rate architecture employed by NES and most other local power companies.

In summary, NES needs to collect a bit over $54 from each residential customer over and above what the actual wholesale energy cost is for each customer. To accomplish that, they have implemented a Customer Charge of $16.90+$6.66 ($23.56) for those accounts who use something near 1,250 kWh per month, and that works quite well. But this system fails for any residential accounts who use less than the average amount. Those accounts are served at a loss, and it might amaze you to know that many of us in SV fall into that category! For those who use more than 1,250 kWh per month, things go really off the rails. At present NES published retail rates, if an account has used over 2,000 kWh in the last year, the Customer Charge goes to $24.90+$6.66. Also, that 2.6 cent markup would produce about $55 in net income (for a residential account using just 2,100 kWh). For that volume of kWh (an amount used by many homes in SV), NES is thus collecting about $87 to cover its Fixed Cost estimated at $54 per month. As consumption goes beyond 2,100 kWh per month, the problem just gets worse. These customers are being forced to subsidize the Fixed Costs of those who use less than 1,250 kWh per month. That bears repeating. That large home just down the street from you is likely averaging over 2,000 kWh per month of electricity consumption, and they are being forced to pay more than their actual Fixed Cost for being connected to the grid. The Fixed Cost of serving each residence in SV does not vary, but what those residential accounts are being charged for Fixed Cost varies greatly!

Recently NES implemented their Power of Change Program, wherein they round up all energy bills to the next higher dollar (all accounts were automatically enrolled in this program, but all accounts are also allowed to opt-out if they contact NES and tell them) and many howled about this on social media, even though it would only add, on average, 50 cents to their monthly bill. What if those folks knew they are regularly forced to subsidize their neighbor’s power cost to the tune of maybe $30 per month?

Is that fair? Well, it seems to depend on one’s perspective. While this rate practice is not equitable, and it certainly does not accurately ask each account to pay the real cost of the electric power they consume nor does it equitably collect NES’s Fixed Cost, it is very common across our country. As stated earlier, a lot of this comes from the attraction to simplicity and history. The whole electric power community is wrestling with this issue now. Metering technology informs the utilities of the cross-subsidization issues, and that same technology enables the utilities to move to a time differentiated rate/billing system that would bring accuracy to bear, but it is widely resisted by the utilities and the customers alike, and that is a real shame.

We are in 2023, yet we are still consuming electric power, and paying for that power, using the same methods that were being used in 1953. The ancient rate practices dramatically impact the way the grid operates and the way we all use electricity. The signal from the utilities, through these good-old simple rates, is that there is an infinite amount of electric power available, and that we need not worry about how much we use and when we use it. But that signal is wrong, and it creates a feedback loop that just keeps making the grid more difficult to manage. If we moved to a real cost-based retail rate environment, we would have an incentive to reduce our usage during peak hours, while freeing us to use more to cool our homes and charge electric vehicles during off-peak hours. Immediately those small changes would, when multiplied by the millions of customers modifying their usage, reduce the amount of fossil fuel used to generate on-peak power. Improving the ratio of off-peak consumption to on-peak consumption would reduce the need to build new generation and the greenhouse gas production attendant thereto. Discussing that subject could become a book, so we will stop there, but the point here is that socialized electric power rates were a reasonable solution before time-differentiated metering was available, but that is no longer the case. We deserve true cost-based rates in 2023.

Once Upon a Time

 https://www.c-span.org/video/?12188-1/cable-industry-competition

Electric Vehicles as part of the Grid

I am working on a book about what we learned about operating electric utilities, and where I think that journey will ultimately lead...for those who continue the journey. This is an early excerpt about how electric vehicles fit into that future.

Electric vehicles (EVs) have arrived, even though there is a stubborn and hostile contingent of the population that claims they will never have anything to do with one. In 2022 EV sales hit nearly 6% of the total vehicle sales (double where they were at this time in 2021) and there is nothing to suggest that the surge in sales is over. Prices are coming down. Range is growing. The charging options are increasing, and even a non-car person must notice that the best designs and most clever technology is going into the EV offerings of each manufacturer.

All of this is happening as EVs are viewed only through the lens of transportation options, but EVs will soon be much more than a transportation option. EVs will become, once more electric utilities get in the game and offer non-volumetric, cost-based retail rates, fixtures of the grid itself. For the homeowner or small business owner, an EV will become a transactional device that will facilitate exchanges between the electric utility and the EV owner. This dispersed set of battery storage resources will also dramatically improve the efficiency of the grid generation assets. The impact of the coming of the EVs really cannot be overstated.

With modernized retail electric rates, and slightly improved EV chargers, an EV will be capable of entering a matrix of available retail rates, and the user’s transportation needs, to find a solution which will result in taking energy from the grid to store in the EV batteries at a near-zero energy cost. Conversely, if the EV is plugged into an advanced smart charger, and if the EV owner so chooses, the utility will be able to buy energy back from the EV when the utility needs additional resources. This transaction is generally called Vehicle to Grid (V to G) and all the technology we need to deploy this system already exists. That’s right. Your new EV can generate revenue for your home or business! TVA can expedite the availability of these modernized retail rates in the southeast by pricing their wholesale power accordingly. There is not a technology problem, there is only the love of the status quo that separates us from having the electric rate environment we desperately need.

Beyond a new revenue stream for the EV owner, EVs will also transform the grid and help dramatically reduce carbon emissions associated with electric power generation. EVs will perform this magic by reshaping the problem that vexes the utilities and creates a large amount of their carbon emissions. Everyone in the electric utility fraternity knows about the big problem they all share. The problem is that each day the grid must deliver the precise amount of energy required to satisfy the demand of the loads connected to the grid, and that demand, when expressed as a simple graph depicting demand vs. hours of the day, is not a neat flat line. Rather, it is actually a daily sine-wave with the peak of the wave lasting about 12 hours and the valley of the wave occupying the other 12 hours. It is the up and down shape of electric power demand, which has existed for the last one hundred years, that makes the generation of electric power so inefficient.

Up until recently, grid connected batteries simply didn’t exist on any significant scale, so energy storage doesn’t exist on any significant scale. As a result, utilities must follow that sine wave of daily demand up and down, starting generation assets as load increases, idling those assets as load eclipses the capacity  of those units and starting larger units (and if the happen to be starting something like a coal fired unit that was idled 12 hours earlier due to declining load, the starting routine is quite medieval – tons of fuel oil are dumped into the boiler and set ablaze to get it ready to burn coal) resulting in massive carbon emissions, as well as financial cost, every single day. EVs as part of grid can begin to solve the problem. They can utilize the massive excess capacity that is available each night, thus allowing the utilities to keep generation units running, especially non-carbon emitting units like nuclear assets, and renewables, thus stabilizing the grid and reducing the sine-wave daily load shape. Thus, the amateur “analysis” of the carbon emissions density of EVs, wherein some “expert” alleges that all kWh used to charge an EV is directly associated with increased greenhouse gas emissions, is completely and totally wrong, just like so much of what one finds on social media. EVs functioning as grid appliances, as described here, will not only erase the greenhouse gas emissions of today’s internal combustion engine powered vehicles, they will also act to erase smokestack emissions from the generation of electric power, by improving the daily load shape the grid must supply.

At the same time, a charged EV will also become the standby power generator for the home, small business, or even a neighborhood, when a critical mass of EVs is in place in a neighborhood. Indeed, that EV that you are snarling at as you cling to your ancient internal combustion transportation device, is set to make your life better from many different perspectives.  

The Class of 1972 -- May Our Circle Be Unbroken

Figure 1 The Glasgow High School Class of 1972 at their 10-year reunion at the home of Bettie Biggers.

Fifty years ago, the GHS class of 1972 donned caps and gowns and were ceremoniously sent out into the world. Of course, the same thing was happening in thousands of other cities, but I’m fairly certain that none of those other graduates were quite like this group. In support of my theory, let’s stand at 1972, and look back to 1922 for the fifty years before this class, and also look at 2022 – the century that surrounds this cohort.

 1922 and 2022 are equally removed from the high school graduation date of this group. As a member of the class, that statement of fact is easy to get choked on. In 1922, World War I had just ended. World War II would not begin for another nineteen years. In 1972, my class viewed World War II as ancient history, but it had only been over for twenty-seven years. We were more interested in the Vietnam War, as we hoped to not be drafted to fight in it. Luckily that conflict ended in 1975, allowing the male members of our class to escape being drafted by the skin of our teeth. The class of 2022 hardly knows anything about the Vietnam War and the rift it caused in our country. We lived, and continue to live, that rift.

1922 was lived to the music of the roaring 20s. Rock and roll had not been invented, and neither had country music. Though country music began to spring up a few years before we were born, it was our generation that morphed country into rock, and that became the tail that got our dog wagging. We were sandwiched between Woodstock (arguably the beginning of the explosion of rock music) and The Last Waltz (arguably the end of analog creative rock and roll of the 60s and 70s). Our taste in music was quenched by a dizzying array of talented writers, performers, and producers. Their products were served up to us mainly by AM radio, delivered to ancient monaural radios in our cars and homes. In 1922 radios were still too big for portability, and in 2022, no one even remembers AM radio, but we mid-century kids lived by it. We caused the mighty WLS radio in Chicago to change to The Big 89 and hire on-air talent like John “Records” Landecker, just to serve the mid-continent the kind of cutting-edge rock music we demanded. Weather conditions often combined with low quality antennae to make it hard to pick up WLS, so we adopted the cutting- edge technology of 1970 – 8-track tape players to supplant our appetite for music. We rocked, and so did the artists we worshipped. WLS and John Landecker brought us to this religious fervor. We worshiped at the altar of Pet Sounds and Led Zeppelin II.

Many of the artists that provided the soundtrack of our youth appeared at Woodstock in 1969. The information about this festival didn’t really make it to us until after the event. We were just a bit too young to attend anyway. The Woodstock t-shirts started to appear in Glasgow a couple of years later, but, fifty years later, they have never left. Check through the t-shirt collection of a member of the class of 2022, and you will likely find one. Also, if you rifle through the music collection on their Spotify or Pandora accounts, you will find music by a lot of those artists who first started singing to our class. Our music did not fade away, and it never will. New music comes and goes, but our music (as well as our t-shirts) remains. Go to a wedding or a bar mitzvah today and you will hear our music. Sometimes kids today are listening to our music without even knowing it. American Woman was not written and first recorded by Lenny Kravitz. Aerosmith didn’t write Come Together. Landslide was around long before the Dixie Chicks. Marilyn Manson cannot claim You’re So Vain, and Your Song isn’t Lady Gaga’s – it is ours and Elton John’s. Will our Circle Remain Unbroken, as our music has?

In 1922 the most popular car sold was the Ford Model T. That popularity remained unchallenged until we came along. Our generation made the Volkswagen Beetle number one. It was affordable, reliable, and marginally better than walking, but the radios worked great! Still, it wasn’t a Beetle that we really wanted. Our car lust was reserved for a Chevelle, Corvette, MG, Spitfire, Road Runner, Mustang, Olds 442, or a GTO. The parking lot at GHS was not full of these machines because few of us had cool enough parents to help us get one, but Wade Barton had a 1970 Chevelle SS, and Craig Johnson had a 1966 GTO, and they were the coolest. In case you might think that was just a 1972 thing, just check into any auto auction at the prices people are paying to get one of these cars of our era. Just like our music, today’s car market wants our cars too!

The class of 1972 was a lot more than music and cars. The mid-century babies came along at an inflection point of our country’s history. We wanted the Vietnam War ended. We wanted President Nixon out. We wanted discrimination ended. We wanted equal rights for women, and we became participants in all these movements. In Glasgow, we might not have always understood all of these changes, but we were quick studies and learned from outstanding teachers. We didn’t invent electricity or telephones, but our contemporaries made them what they are today. Our cohort includes Steve Jobs, Bill Gates, Bob Metcalfe, and Vinton Cerf. Together we built the internet, the software that makes it work, and the devices we use to communicate and learn. We are more than a list of people who were born in the middle of the 50s. Our works will endure throughout the generations to come, and I expect our circle – our bond with each other – will similarly endure.

A close bond isn’t something that exists in every graduating high school class. We have each likely noticed this in our children and their very loose bond to their class. We are different, and that is one of the things that makes us special. Fifty years after our graduation, we’ve learned that our lives didn’t pan out exactly as we expected, and as depicted in Brian Wilson’s masterpiece – Pet Sounds.  As the years roll by, our circle has shrunk by a series of painful departures, each of which brought us sorrow.  Still, it seems that our bond will remain. We will mourn the passing of one of our own and then reform our circle by grasping the hands that remain. So, here’s to the class of 1972. Have a great 50^th anniversary celebration. We’ve earned it! Let’s keep our circle unbroken – by and by Lord, by and by.

Wouldn’t it be nice?