District Energy: Politics

And Now We Start to Talk Politics

I hope readers' heads are swimming from my discussion about the economics of district energy. That was the point. Sometimes I hear people talk about business as if it is simply a question of research and mathematical analysis. To hear them talk, all you have to do is develop a sound business plan and if the numbers work out, you borrow the money, and, make your millions. Well, it ain't that simple. Many business folks won't admit it, but a great deal of what you need to be successful in business is luck. That's because even if you are the greatest financial genius who ever lived, there are always going to be a great many things that you simply don't know enough about to make a "fool-proof investment". That's why I put in an editorial talking about "wicked problems" because if ever there was one, this is it.

As a general case I find that it's more useful to look at political conflict from the point of view of policy and general trends instead of personality, which I find may make for a more "juicy" story, but not one that helps people get a handle on a complex issue. But having said that, I realize that politics is also important. So it's time to put on my rubber Wellies, get out the manure fork, and get to that nasty job that took up so much time in my childhood.

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So what exactly am I doing with this blog? For one thing, I'm trying to fill a void that currently exists in local news. Secondly, I'm trying to create something of a "public record" that students, researchers, and, concerned citizens can use to learn about local issues. Based on feedback I get, I know that for at least some Guelph citizens I'm already filling that goal. I'm also trying to convince people to totally rethink their relationship to the news media in general. That's what this blue type part is about. I'm trying to convince people that they should be prepared to pay for the news they consume and stop relying on giant Internet companies to provide it for free. Mainly that's because it really isn't, there's always a hidden agenda of one sort or another when it comes to something that's "free". I'm also having some success on that score---people are subscribing through Patreon and contributing through the tip jar. But to really make the point I need to have more subscribers so other people can have a chance of following Adam Donaldson and myself, and try to make a living by creating truly independent news sources. If you can afford it, why not sign up as a regular subscriber? Patreon allows very small regular payments, and the important thing is to get a lot of people making small payments rather than a small number of people making bigger ones (although that would be appreciated too!)

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I've been working through back issues of Gerry Barker's Guelph Speaks, Adam Donaldson's Guelph Politico, and, using the Internet Archive's "Wayback Machine" to look at Cam Guthrie's election blog and as near as I can tell, the district energy systems were not an issue during the 2014 election. The big thing that people were hammering away at instead was the legal problems associated with the company that build the new city hall: Urbacon. It appears that district energy only became an issue after the new mayor had taken over from Karen Farbridge.

The first indication I can find that Guthrie was interested in district energy comes from an item on the Mayor's blog dated October 8, 2015 where he says that in the past ten months 

I think we’ve made some wonderful inroads in developing a new culture throughout city hall, and around the community for that matter, which is focused on the betterment of the city on the whole.

he also wrote later on

If we as a city are stating these goals publicly, and the C.E.I. [Community Energy Initiative---ie, the over-arching framework that the district energy systems fit into] policy, framework and current governance and oversight structure are setup to help direct us to achieve those goals, then perhaps we should make sure they’re realistic and that we’re actually making a positive difference.

This is why very soon the community will see on an upcoming council agenda a request from me for staff to explore the best way to present a progress report on the C.E.I and to explore the best governance and oversight structure for implementing it.

These two quotes are filled with wonderfully ambiguous, emotive terms---like "a new culture" "focused on the betterment of the city on the whole", "realistic", and, "actually making a positive difference". It's hard to understand exactly what they mean other than being the bland "positive speak" blather that we expect from politicians and sales people. (It's the nature of the beast nowadays, so I don't really blame anyone who talks like this---even though in doing so they really don't convey much information.)

After looking through a lot of electioneering I did find one particular instance where I thought I actually saw some real emotional commitment from the mayor that I think is particularly relevant to this discussion. In Mr. Guthrie's campaign website (accessible through the Wayback Machine) I caught the following post on April 2, 2014. I think it's a rare look into what an elected official really feels, so I'm going to post it in it's entirety.

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Taxpayer or Citizen? 

There’s been quite a discussion going on in Guelph around the concept of whether those who live in the city are “taxpayers” or “citizens.” 

The discussion seems to have been started by Guelph Mercury columnist Susan Ratcliffe. It was continued in a Guelph Politico blog entry by Andy Donaldson. And recently culminated in panel discussion moderated by Mike Schreiner, leader of the Green Party of Ontario and included political advisor Ralph Benmurgui, CFRU’s Beyond the Ballot Box radio host Jan Hall and Guelph Citizen blogger Andy Best. All of these discussions have led to two conclusions. 

First: Citizens = good 

This is best seen in Ratcliffe’s column, where she wrote: “Taxpayers are focused only on the monetary cost of government actions to an individual. Broader-minded ‘citizens’ care about social benefits and community values. Taxpayers ask about the benefits to themselves. Citizens ask about the benefits to community building and well-being.” 

Second: Taxpayers = bad 

“I find the word ‘taxpayer’ deeply offensive,” the Guelph Mercury quoted Benmergui as saying. “Everyone has adopted this notion of corporate service. Taxpayers want the service they want and they don’t want to pay for services they don’t personally need. The notion of the common good has deteriorated. I’m worried there may be a crisis of citizenship.” 

As Donaldson wrote: “This vision narrows the complexities of governing on any level to utterly simplistic terms: taxes are fees for service, and we should pay the absolute minimum to get the services we want and just the services we want. That means garbage collection, hydro and water services, police, emergency responders, and clean and easy to navigate roads. Public transit, the arts, cultural events, environmental initiatives, and sustainable planning are luxuries, investments desired by the leftie elites who want to use the blood, sweat and tears of the ‘Taxpayer’ as seed money.” 

Mayor Karen Farbridge emphasized this concept during a question and answer period following one of her state of the city addresses. When asked why residents should pay increased taxes for downtown redevelopment when the return on investment could take at least a decade, Farbridge replied: “You’ve got to prime the pump”. 

The duality between “taxpayer” and “citizen” is ingenuous. The arguments are being made to frame the political discourse in one particular direction. If a politician wants to focus on the needs of the taxpayer, it means they have only one goal in mind: to cut taxes, reduce services and destroy the fabric of the community. If a politician speaks about citizens, it means, no matter the cost, they are concerned about the better good and that they feel they have the best interests of the residents in mind. 

There is no difference. We are both taxpayers AND citizens.

Whether we pay taxes directly through property taxes, income taxes or payroll taxes, or indirectly through user fees such as transit fares, recreational centre charges or development charges, we are taxpayers. And we benefit from those taxes. 

So, is it too much to ask those administrating the hard-earned dollars provided by taxpayers, to be good stewards of that money? We ask the same thing of the various non-profit organizations to which we contribute, so why can’t we ask the same thing of our municipalities? 

People also contribute to their community as volunteers, parents, voters, individuals, homeowners and employees. Everything we do contributes to the fabric of our community without any expectation of return. 

Are we “taxpayers?” Yes. 

Are we “citizens?” Yes 

We are all “citizen-taxpayers” or “taxpayer-citizens,” whichever you prefer. And there are probably a host of people living in the City of Guelph who define themselves the same way. 

It’s time to stop reviling “taxpayers” and celebrating “citizens.” It’s time to recognize and honor “citizen-taxpayers.” 

Thank you, 

Cam Guthrie

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I suppose the best statement of the citizenship ideal that Mr. Guthrie is taking issue with comes from the inauguration of President John F. Kennedy.

The idea is that living in society comes with just as many---if not more---responsibilities than rights. This is also an idea that the holocaust survivor and psychiatrist Viktor Frankl raised in his book Man's Search for Meaning. The thesis of that work is the idea that people are only really happy when they are able to believe in some purpose greater than themselves. He found that the only people who had a chance to survive in the NAZI concentration camps were those that had such commitments, whereas those who just lived for themselves simply withered and died under the harsh conditions. Based on this idea, he suggested that the United States should put up a statue of "Responsibility" to balance out the statue of Liberty. (Indeed there have been serious efforts to fund raise for and build such a thing.)

Artist's rendering of proposed San Diego 

"Statue of Responsibility", image from San Diego City Beat.

Image used under the "Fair Use" copyright provision.

The idea of calling voters "tax payers" instead hearkens to the idea that people live their own personal lives and that great, civic projects are just "moonshine" that wastes their hard-earned cash. That reminds me of my interview with Liz Sandals. In it I was asked what she thought was motivating the  Doug Ford government and Conservatism in general. She answered that she thinks that it comes down to a very simple prescription "the two things that I think he does believe, really strongly believes in, are "taxes are bad" and "government is bad"".

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This hearkens back to one of the ideas that I harped on in the editorial about wicked problems. People come to them with different agendas, even if they say that they are all in favour of same goal. I tossed out the idea that we should think about the term "preventing climate change" as another way of saying "preventing the human race from committing suicide". By doing so, I'm "upping the ante" when it comes to discussing the issue. Lots of people don't really think of it in terms of an existential crisis, but rather as "something nice if it doesn't lead to tax increases". This difference in emphasis isn't just a minor disagreement, but rather a totally different worldview that fuels completely different agendas. 

Totally by coincidence (this blog is not meant to be topical), this issue has recently become a big deal because Councilor James Gordon and Leanne Piper are calling for Guelph to follow Kingston and Hamilton's lead in Guelph declaring a climate change "emergency". Mayor Guthrie seems to opposed to this idea and was quoted in The Mercury website as saying 

“Declaring an emergency is not something to take lightly, and there are implications to doing so,” and,
“I am a person of action, not platitudes of words, and my fear that these types of discussions
get us away from actions and it’s more about just optics.”
Guelph's Mayor, Cam Guthrie. Photo from official City Website

I'm not about to make any definitive statement about where Mr. Guthrie fits on the "taxes are bad" Conservative scale. He does seem to be genuinely concerned about people with drug addictions and the homeless---among other things. I can also remember that the first time I met him he was involved in some sort of environmental project (sorry Cam, it was long time ago and I simply cannot remember what it involved.) He certainly seems like a nice guy. But he has "hitched his wagon" to the "taxes are bad" crowd, and even with the best of intentions, he's going to have to at least pay lip service to their worldview. And no matter how much he might protest, it is clear to me (ever looked at Guelph Speaks?) that a large percentage of those people have zero interest in the JFK motto of "ask not what your country can do for you, but rather what you can do for your country."

Having said all of that, this knife cuts both ways. People can say that they are in favour of preventing climate change and really mean "if it doesn't mean that we raise taxes". But other politicians can say exactly the same thing and mean "Goddam it, we've got to stop the human race from committing suicide!!!!!" But the fact of the matter is that because of the real and perceived attitudes of voters, both types of politicians can easily find themselves "biting their tongues" and offering bland platitudes about "baby steps". I suspect that that's part of the reason why emotions have risen both when people tried to make a distinction between "citizens" and "tax payers", and, when Councilors asked if the city should declare a climate change an "emergency". In both cases people are being asked to be "punk and plain" about what they really think in a system that often punishes them badly for doing so.

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If we keep the above issue in mind, I think what happened to the District Energy hubs makes perfect sense. They were designed not to be immediately cost-effective projects, but rather something like the "nose of the camel in the tent". 

Public domain image from "Windtoons.com", 

For those who haven't heard it, there is a teaching story about a Bedouin who allowed a camel to shove his nose in his tent only find out that once the nose was in, the rest of the beast inevitably follows. In the same way, if Guelph got used to the idea that energy for heating and air conditioning was just another commodity for the city to pipe under the roads, it would inevitably become just an accepted part of infrastructure---like water and sewage. And this would be one of those things that a Conservative hates: an increase in government size and a reason for taxes to go up.

In contrast, for anyone who has the hidden agenda of not wanting the human race to commit suicide there is a lot in favour of a district energy system. That's because the key part isn't the efficiencies that come from having one centralized source of hot and chilled water, but rather the distribution system that connects a bunch of different buildings to one centralized source. Right now the two hubs run off natural gas, but the  real hope of the people behind the system was that this could eventually be replaced by more sustainable fuel sources such as waste heat from industrial processes, geothermal or thermal-solar.

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Once this last point is understood, then it becomes easier to understand how another aspect of wicked problems comes into play. The point wasn't to come up with a system of heating and cooling buildings that would immediately pay for itself, but rather to be the first part of a new system that was going to be the first part of a revolution in how Guelph uses energy. If you looked at the systems from that perspective there really wasn't much wrong with them.

I've been told that the city hired outside consultants to do an analysis of the district energy hubs and I've found a staff document that was presented to Council on July 18th, 2016. It was prepared because Council wanted to make public a document that related to various items that they'd seen before in in camera (private) meetings.

“That the presentation and report on the financial history of the GMHI
[Guelph Municipal Holdings Incorporated---the city-owned company set
up to manage things like the district energy plants. WDH]
group of companies be referred to the June 13, 2016 Council meeting” 

“That the closed minutes and accompanying material of November 23,
2015 with respect to District Energy Strategic Long Term Financial Plan,
with the necessary redactions, be made public in conjunction with the
materials for June 13, 2016 Council.” 

“That the closed minutes and accompanying material of February 29,
2016 with respect to Decision Chronology: District Energy, be made public
with the necessary redactions in conjunction with the material for June
13, 2016 Council.”

The consultant is not directly mentioned, but on page three document makes reference to "Deloitte", so I think I can safely assume that it leans on work prepared by "Deloitte Touche Tohmatsu Limited", which is a multinational technology consulting firm based in London, England.

Briefly stated, the staff report says that Deloitte's analysis suggested that the energy hubs are too small to make a big enough profit to pay off the money spent setting them up. Having said that, they are working relatively well and making enough money to pay for their on-going maintenance. In addition, the operating profit that they are making isn't enough to pay for any attempt to expand their client base. In addition, the city is "locked into" contracts with existing customers which means that there would be financial penalties for shutting down the plants. As a result, Council decided to stop looking for new customers, write off incurred capital costs as a "bad debt", and, keep the physical plants working.

What the bland "bureaucrat-speak" in this document seems to miss---according to conversations I've had with various people---is that the city never planned for these limited systems to pay for themselves in the short-term.  That's why the private sector is loathe to start these things up, even though they are willing to get involved once government has "proved the concept"---like with Enwave in downtown Toronto. They were supposed to be the first stage of a long-term city investment in a much larger system. It's the nature of district energy systems that you make a long-term commitment to build a "game changing" system for long-term development. To their point of view, the Mayor didn't direct staff to look at the system and they found out that it wasn't working. Instead, the Mayor directed staff and convinced Council to sabotage the system by starving it of secondary investment by not working to get new customers and invest in the system so it could adapt to their needs. District energy is always a question of big initial investment and long term pay off---which is why it generally won't work unless it is built the same way that governments build any other infrastructure system.

In effect, the nose of the camel got cut off before the rest of the beast could make it into the tent. "Stop climate change---if there are no new taxes" won out over "stop climate change before we commit suicide!!!!!" It's just another example of a group of people trying to get society to invest in a system that might have done something impressive to cut down on carbon emissions, and which got sabotaged and destroyed by people with a totally different agenda. Another bunch of victims got into political trouble because of a wicked problem.

Or did they?

That's the thing about wicked problems, I don't really have an opinion about this thing. It might very well be that our current mayor is right and these things would never have worked as intended. One thing I won't do, however, is fault the previous mayor and Council for trying to do something big to help the city do it's bit to stop climate change. When confronted by a wicked problem the last thing a society should do is just "kick the can down the road" and ignore it. They should be willing to take risks and make experiments to see what does and doesn't work. It might very well be that some future administration on Carden Street will do some more number crunching and restart the whole district energy initiative. It might also be that some private company will step in and buy them so they can do it. It might be that new technology will make the whole thing a total anachronism. But at the time reasonable people thought district energy was a good idea and they took a chance on it. It's the easiest thing in the world to kick wicked problems down the road, but if you do that long enough it turns out the "easiest path" leads to the worst results.

Where I might be tempted to point a finger---and remember I wrote "might be tempted", not "I blame them for"---is that there wasn't enough work done building a social consensus around exactly what the long-term plan for the district energy really was. If people thought that the district energy system was going to immediately make a profit and that that was going to be high enough to fund all future expansion, then it would have been a shock to find out that these were really demonstration projects for something that would require much more ambitious long-term investment. But again, it's very hard to sell the public on something like this when there are really powerful interests in society who are bound and determined to soft-peddle the sort of crisis our civilization is really facing. The tendency is always going to be for politicians of good will to try to "schmooze" the right thing into place because they believe that they will lose all power to do good if the body politic finds out what they really want to do. It's perfectly all right for me to thunder away about the importance of dealing with climate change, but I've never been able to get a job that didn't involve heavy, unskilled manual labour---let alone win elected office. You can't do anything at all if you don't get elected---and that has to involve sucking up to the often idiotic worldview of voting citizens. (Ever wonder why politicians are the way they are? Take a look at voters---.)

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I'll leave off with the most intelligent statement I've heard about climate change in a long time. They It comes from a remarkable 16 year old Swedish girl named Greta Thunberg who is now experiencing her "15 minutes of fame". This an edited address that she gave to the World Economic Forum at Davos in Switzerland.

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Furthermore, I say to you---climate change must be dealt with!