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I have been toying with the idea that our modern form of federal government has expanded its power beyond its ability to make good governing decisions on several issues that used to be the responsibility of states. One of the key problems at the federal level is the disconnect between tax revenue and government benefits. It is natural to expect that if spending limits are not placed on federal politicians, they will take advantage of the situation to expand benefits. As a result programs such as Social Security and Medicare which started out with good financial intentions quickly degraded into programs that were dependent on the next generation to pay the bill. It was inevitable that these programs would run into a population mismatch between the group receiving the benefits and the group paying the bill. Asking the next generation to pay for the politically sound but financially stupid management of these programs is not really feasible. This is a lousy way to run a program but is the natural result of deficit spending at the federal level. If we cannot institute spending controls at the federal level, it makes sense to transfer control of these programs to the state level where balancing the budget and spending controls is a more familiar practice.

The modern administrative state is a behemoth incompatible with the rule of law.

Government By ‘Expert’ | Hoover Institution

Two months ago I wrote in Follow up on Green Technology that pays for itself that by my calculations the extra insulation I put in the ceiling resulted in a 10.2% drop in kilowatt hours and a $29.78 drop in the total bill. Earlier this month I looked at the January electric bill and said I was disappointed when I found only $7 of savings. I just received this months bill and this month’s bill is $115 lower than last year and I found an error in last month’s savings calculation. Last month’s savings attributable to insulation is now $34 and this month’s savings is $58. My favorite metric, the ratio of Average KWH per day over the Average Heating Degree Day is now solidly under 4. Here is my updated graph using some forecast data for 2012

When I lived in Texas cogeneration was a popular option with chemical plants who required high pressure steam for their processes. When I moved to Ohio I was surprised that steel plants were not taking advantage of their process. Today I found this article in the Dayton Daily News, Bill clears path for $310M AK project.

Senate Bill 289 would allow AK Steel Corp. and Air Products and Chemicals Inc. to build a $310 million facility to capture waste gas vented from an AK Middletown Works blast furnace to generate steam and electricity as part of the state’s renewable energy market.

Today, the gas is burned off. But with this proposed facility, it could be used to generate steam and electricity for AK’s Middletown plant — about one million megawatt hours annually, enough to serve more than 85,000 Ohio homes, according to Air Products, which would own and operate the facility.

State Sen. Bill Coley, R-Middletown, who introduced the bill, wants to amend Ohio law so the blast furnace gas would qualify for the renewable energy market.

Companies that generate power from renewable energy sources — usually wind and solar — can sell Ohio renewable energy credits to other, less energy-efficient companies or to organizations that want to support renewable energy. The credits are meant to be incentives to pursue renewable energy creation.

The interesting twist in this bill is that the flue gas will qualify as a "Renewable energy resource". This allows the company to get a little more profit by selling renewable energy credits. It seems an odd match but it looks like a win-win situation. We get cleaner air, possibly lower electrical rates, and AK Steel gets a little more profit from the plant. Every day it stays open is a good day for the folks whose jobs are dependent on the plant. Although opening the “Renewable energy resource” credits to flue gas seems to be a stretch, there really are not that many feasible solar or wind projects in this part of the state. Although I think renewable energy credits is a dumb idea that should quietly go away, I understand why the Senator sponsored the bill. The wording in the bill is pretty restrictive on who qualifies. Here is what the bill says:

energy produced by cogeneration technology for which more than ninety per cent of the total annual energy input is from a waste or byproduct gas from an air contaminant source in this state, which source has been in operation since on or before January 1, 1985

From the Spiegel Online we get this update on solar power and subsidies in Germany. For people who have done the solar power calculations for northern latitudes the findings in this article are not surprising. The math is pretty easy. What is newsworthy is that it took €8 billion ($10.2 billion) in subsidies in 2011 before someone in Germany finally spoke up.

The Baedeker travel guide is now available in an environmentally-friendly version. The 200-page book, entitled "Germany – Discover Renewable Energy," lists the sights of the solar age: the solar café in Kirchzarten, the solar golf course in Bad Saulgau, the light tower in Solingen and the "Alster Sun" in Hamburg, possibly the largest solar boat in the world.

The only thing that’s missing at the moment is sunshine. For weeks now, the 1.1 million solar power systems in Germany have generated almost no electricity. The days are short, the weather is bad and the sky is overcast.

As is so often the case in winter, all solar panels more or less stopped generating electricity at the same time. To avert power shortages, Germany currently has to import large amounts of electricity generated at nuclear power plants in France and the Czech Republic. To offset the temporary loss of solar power, grid operator Tennet resorted to an emergency backup plan, powering up an old oil-fired plant in the Austrian city of Graz.

Solar energy has gone from being the great white hope, to an impediment, to a reliable energy supply. Solar farm operators and homeowners with solar panels on their roofs collected more than €8 billion ($10.2 billion) in subsidies in 2011, but the electricity they generated made up only about 3 percent of the total power supply, and that at unpredictable times.

Last week I signed up for the Hillsdale online course called Constitution 101 and purchased a copy of the The U.S. Constitution: A Reader. One of the commenters on the Powerline Blog mentioned the course and considering my recent fascination with our founders arguments in the process of writing the Constitution. Over the last two years this curiosity has led me to listen to audiobooks on the Anti-Federalist and Federalist papers and to purchase a pocket copy of the Declaration of Independence and the Constitution. What I found so fascinating about these documents and their authors is that the language and the factions may have changed but the problems they faced are very similar to the problems we face today. We are still arguing over the definition of equality, what is the scope of federal power, and how to a form of government that works for the people. To further my understanding of our Constitution, I am hoping to stretch myself mentally and try to imagine what the constitution writers in Iraq and Egypt are facing.

Here is the comment I made on the Powerline Blog called Liberals and the Constitution.

Since I recently finished listening to the audio-book version of "The Original Argument: The Federalists’ Case for the Constitution, Adapted for the 21st Century", I was surprised with Justice Ginsburg’s comments. She starts out her interview congratulating Egypt on deposing Hosni Mubarak and then she immediately jumps to promoting human rights in the new Egyptian constitution. Since I doubt Egyptians and Justice Ginsburg agree on the definition of human rights, this was a curious effort on her part.
I was also surprised that she so quickly wrote off the constitutional efforts of our founding fathers at forming a stable government and balancing the political powers. Alexander Hamilton and James Madison tried to incorporate the best parts of existing governments at that time when they put together the Constitution. They also tried to balance the expectations of the various political factions. I expect the Egyptians will do the same  unless they suddenly have a change of heart toward Mubarak and the competing political interests. Egypt does not need to follow our constitutional model but they absolutely must find an appropriate balance of political power and safeguards to prevent the next dictator from attaining power. If they can show the world that they have a stable, workable government then they can start making some progress knocking down the unemployment and defusing the widespread distrust. Human rights issues are important but like the United States, this balance of power issue must be solved or there will blood in the streets.

Here is an interesting solution to the contraceptive debate. You change the policy to allow pharmacists to determine whether a female can purchase contraceptives. This policy could be extended to several drugs that presently require prescriptions such as Viagra. Increased access typically results in lower costs. This could  lower health care costs without lowering health care outcomes.

What is the regulation? It’s the one that requires contraceptive pills to be prescription drugs. If, instead, drug companies were allowed to sell contraceptives over the counter, access would rise and cost would fall.

But let’s say that you think that’s a little too much freedom for women to have. I don’t think that, but it’s not unusual that I’m in the minority here. I think women should be much freer than most people think. I think they should be free to buy foreign trucks without paying a tariff and should be free to buy goods from Cuba and Iran, to take two examples.

But, OK. Let’s say I can’t convince you. So how about this? Have the government keep insisting that contraceptives be prescription drugs–can’t trust those women, don’t you know–but let pharmacists decide whether to sell them to women who ask for them. In other words, cut the high-priced doctor out of the loop. This is done in many countries and, in fact, was done in the United States before 1938. Pharmacists often have more information about drugs than doctors do: fancy that.

With that little step, access would rise and cost would fall.

How to Cut the Cost of Contraceptives by Regulating Less, David Henderson | EconLog | Library of Economics and Liberty

I do not have a problem with other people using contraception or getting it paid as part of their health plan. I do have a problem with me paying part of it. The simple solution is for contraception to be a benefit of the Affordable Care Act’s “Gold” plan or as an extra cost item for the Essential Benefit’s option. Sex is a choice not an “Essential Benefit”. As part of my health insurance I can pay extra for dental coverage. I think benefits like dental coverage and contraception should be extra cost options.  Our policy wonks seem to be locked into thinking that health care must be locked into a fairly rigid structure. The plans must be follow a “Bronze”, “Silver”, and “Gold” structure with no exceptions. A “cafeteria” style plan is a more flexible and logical alternative and is the more typical offering in the real world. It would at least show that the policy wonks were not asleep in Marketing 101. This is a pretty common practice in the insurance industry.

The fundamental question is whether society is better served with heath care under the tax model or the insurance model. Since most of our health care is paid for by a third party system, it works and feels like a tax. For people purchasing health care insurance directly it works and feels like an insurance policy. The interesting irony is that ACA realizes that the third party payment system is not affordable or sustainable and their first act is to make individual health care insurance unaffordable and not sustainable. This is not a strategy to lower health care costs. In a previous post I compared Ohio health care insurance to Massachusetts. The cost of “Essential Benefits” in Ohio was $305 per month and the cost in Massachusetts was $1,296. To put this in perspective I purchased a two year old car last year for what I would have paid for “Essential Benefits” health insurance premiums in Massachusetts. I could have bought a new car with the cost of a “Gold” plan. In my entire 35 years of paying health care costs for my family, we have not spent what the average Massachusetts person pays in one year for their “Gold” plan. Our health care costs do not make sense so our first attempt at fixing the health cost problem is to model a national system after Massachusetts! With Massachusetts as our model why do we expect health care costs will slow down? It is a sign of insanity when you keep doing the same thing and expect different results.

The wife gave me the look when I made this dish for the Super Bowl. She was still giving me a suspicious look even after I told her how the dish was made with low fat and fat-free cheeses. It is good and it took us several days to finish it off.

Lightened Seven Layer Taco Dip
56 servings (seriously)
Adapted from All Recipes.
1-oz. package taco seasoning mix (or make your own )
16-oz. can fat-free refried beans
8-oz. package fat-free cream cheese, softened
16-oz. container fat-free sour cream
16-oz. jar salsa
1 large tomato, chopped
1 green bell pepper, chopped
1 bunch chopped green onions
1 small head iceberg lettuce, shredded
6-oz. can sliced black olives, drained
2 cups reduced-fat shredded Cheddar cheese (or shred your own 8-oz bar)
1) In a medium bowl, mix taco seasoning thoroughly with refried beans. Transfer it to a large platter or bowl, spreading it out on the bottom
2) In a separate medium bowl, mix sour cream and cream cheese. Pour it over refried beans and spread.
3) Pour salsa over sour cream/cream cheese mixture. Spread out. Then, layer with: tomato, bell pepper, onions and lettuce. Finish with cheese and sprinkle olives over everything.
Approximate Calories, Fat, and Price per Serving
36 calories, 1 g fat, $0.25
Calculations
1 (1 ounce) package taco seasoning mix: 45 calories, 0 g fat, $0.25
1 (16 ounce) can fat-free refried beans: 385 calories, 0 g fat, $0.89
1 (8 ounce) package fat-free cream cheese, softened: 218 calories, 3.1 g fat, $2.69
1 (16 ounce) container fat-free sour cream: 336 calories, 0 g fat, $1.20
1 (16 ounce) jar salsa: 123 calories, 0.7 g fat, $1.50
1 large tomato: 22 calories, 0.2 g fat, $1.00
1 green bell pepper: 24 calories, 0.2 g fat, $0.50
1 bunch chopped green onions: 32 calories, 0.2 g fat, $0.79
1 small head iceberg lettuce: 45 calories, 0.5 g fat, $0.99
1 (6 ounce) can sliced black olives: 80 calories, 6 g fat, $1.49
2 cups reduced-fat shredded Cheddar cheese: 720 calories, 48 g fat, $2.50
TOTAL: 2030 calories, 58.8 g fat, $13.80
PER SERVING (TOTAL/56): 36 calories, 1 g fat, $0.25

Lightened Seven-Layer Taco Dip: A Super Bowl OF FLAVOR

Last month I wrote a follow up, Follow up on Green Technology that pays for itself, in which I said that the additional insulation I put in the ceiling resulted in a 10.2% drop in kilowatt hours and a $29.78 drop in the total bill. Another month has passed and I was hopeful that the January bill would show an even larger drop. The January bill has arrived and I am disappointed. The bill came in much lower, $63.92, but most of the lower cost can attributed to a warmer January. The amount of money I can attribute to the insulation is only $7. I have a couple ideas on how we used more electricity. Oh well!

For kicks I decided to run the 2011 data(minus the air conditioner months of June through September) through a linear regression. A polynomial equation fits the data better, but the linear equation gives me a nice multiplier to work with. Here is my graph.

A few weeks ago I made a comment on an article, Energy Efficiency: Cheapest Power Around, but Getting More Expensive, about my belief that we were wasting money on some of the energy efficiency initiatives sponsored by electric utilities. In the article they state,

IEE’s report didn’t get at how each dollar of utility energy efficiency money was spent, though it’s clear that the majority is still coming from simple steps like replacing lights and appliances with newer, more efficient models, as well as encouraging people to change behavior in energy-saving ways, Wood said.

In my comment I pointed out that when our heat pump broke down in 2010, we were going to buy a high efficiency heat pump regardless of the rebate. Although the rebate was appreciated it was not very important in our decision. The other major energy efficient effort by our utility was to give away compact fluorescent lights(CFL). Since I already had extra CFLs on my shelf I will probably not use these new CFLs for a couple of years. From my experience rate reduction was a better use of money that more people can take advantage of.

In a subsequent comment I was surprised to find that this comment offended someone and he attempted to defend the policy by claiming that he knew what I would really do. Here is the quote,

How can you really say you would have purchased the high efficiency model? What people say is often not what they do – despite what classic economic theory says about rational behavior.

So I went back and reviewed the marketing brochures, cost estimates, and the decisions made by my wife and myself in replacing the heat pump. My conclusion is unchanged except I am now convinced that the energy efficiency experts slept through their Marketing 101 class. The most important reason my wife and I were going to buy a high efficiency model is that buying a low cost, inefficient model was not an option. Using the 2010 Bryant brochure as an example we were offered three different models that varied from the less expensive model with a 13+ SEER and  9 HSPF to the most expensive model with a 16+ SEER and 9 HSPF. It is interesting to note that all of the brochures talked primarily about performance, warranty, and special additions available on the more expensive models.  None of the brochures used the rebate as a selling point. By chance one of the brochures mentioned  that the Energy Department had decided in 2006 that all new AC units or heat pumps would have a minimum of 13  SEER. When I look at various 2010 brochures it appears that all of the manufacturers complied. From a general viewpoint it is easy to conclude that the 2006 Energy Department decision was primarily responsible for the energy efficiency gains. It is this simple stuff that "green" investment advocates cannot get a handle on.

Even if we delve into more specifics, the argument for energy efficiency rebates does not get any better. At our house we consume half of our annual electric power in the three coldest months. Naturally the most important energy efficiency specification is the heating system performance(HSPF). Since our old heat pump had a 9.2 SEER and an unknown but undoubtedly low HSPF, I was happy with all of the models offered by Bryant. All of the specifications were much better but the heating system performance had improved dramatically for heat pumps in the last ten years. My wife had an additional requirement, she wanted a heat pump with a good warranty. She wanted the moderately expensive model since it had a good warranty. It was nice that it qualified for the energy rebate but as you can see it was not an important factor in our decision making. Since the HSPF numbers for the different models were the same, our annual kilowatt usage was going to be about the same regardless of the model we selected.

Whichever way I looked at energy efficiency rebates, it was primarily a political idea that was not going to change our behavior. I suspect other people replacing AC and heat pumps came to the same conclusions. The rebate was 3% of the total bill. Since the rebate is no longer being offered in 2012, I have to conclude that the saner minds in government agree that this an incentive we can live without. I chalk this up as another #greenfail like the bankrupt firms of Solyndra and Ener1. Much ado about nothing!