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Reliant Energy
09 сентября 2015, 11:11

Calpine Corp (CPN) - компания из списка Trophy-20

Компания из списка Trophy-20 (ссылка на список в комментариях для внимательных). Резюме — CPN — интересная компания — независимый генератор электричества в наиболее зарегулированных и энергодефицитных регионах США. Имеет большой парк современных эффективных газотурбинных и геотермальных станций, входит в топ-10 генераторов США. Менеджмент опытный, но достаточно крепко сидит в финансовых инструментах (у компании большие долги, деривативы, деривативы на долги — всё в ходу), что может стать проблемой для финансирования развития в дальнейшем. Компания уже переживала поход к банкротству в 2005 году опять же из-за чрезмерной закредитованности (было 22млрд долга, котировки упали с 50 долларов до 0,30), но после смены руководства выползла к 2008 году. Сейчас CPN торгуется чуть выше стоимости ее станций, если бы их можно было продать на распродаже, и совокупного долга — по 15 долларов за акцию, что делает её интересным кандидатом как на покупку, так и на игру с опционами — любые изменения ставки, погоды в Калифорнии/Техасе/Северо-Востоке, цен на газ или налоговые маневры достаточно сильно шатают показатели компании и котировки. Долгосрочное преимущество компании — 
 1) современные, экологичные, эффективные электрогенераторы, позволяющие поставлять энергию на рынок со значительной маржой, превосходящей большинство конкурентов 
 2) (он же трофейный актив) 6% бесплатной, суперэкологичной геотермальной генерации на гейзерах в Калифорнии, позволяющих получать супер-прибыль и вдобавок торговать квотами (по закону каждая компания должна иметь 20% энергии из возобновляемых источников, у CPN в Калифорнии этот показатель составляет 30%, что позволяет ей на 10% объемы даже прямым конкурентам) 3) сроки входа на рынок велики, поставка маленького генератора 1ГВт — 3-4 года и 500 млн долларов, рынок зарегулирован и не особенно инвестиционно-привлекателен — многие компании предпочитают просто платить дивиденды в удачные годы, не занимаясь развитием. Подробнее: Показатели и сравнение с конкурентами смотрите на PVA — там все достаточно наглядно, весь сегмент под ударом. По CPN p/e 7,28 p/b 1,88 debt/equity 3,8 По сути бизнеса: CPN — независимый производитель электроэнергии. Начали развиваться с законодательным антимонопольным регулированием отрасли в США в 199х-200х годы и развитием альтернативной возобновляемой энергетики, наибольшее присутствие — Калифорния, Техас, СевероВосток США как наиболее потребляющие и энергодефицитные регионы (Калифорния 30% энергии закупает из других штатов, Техас нейтрален но больше всех в абсолюте производит/потребляет, северо-восток так же хронически энергодефицитен весь).  88 электростанций + 1 строится (26,548 Мвт и 309 МВт строится (даст +1,1% к генерации)). В 2014 выработали 103 млрд квтч. Крупнейший потребитель газа в США, потребили 793bcf (млрд.куб.футов) газа (10% потребления в США) в 2014. Газотурбинные установки — 71 (17 +теплостанции), нефтяная — 1 (требовалась по какому-то закону, поэтому используется для минимальной генерации), геотермальные станции 15 шт: Geysers (CA) — крупнейшее в США геотерм, 15% от всей выработки восполняемыми ресурсами в CA в 2013, позволяет также получать доход от торговли квотами. Geysers Assets генерируют примерно 6 млн МВт из возобновляемых источников в год. (6% от суммарной генерации CPN); солнечная — 1 (5МВт, маленькая но так же позволяет торговать квотами). Средний возраст станции (в пересчете на МВт) 15 лет (средний по отрасли 42), средний КПД 46% (7,384 Btu/KWh) (средний по отрасли 29-39%). Коэффициент простоя в среднем 1.9%. Коэффициент доступности геотермальных 94% (что гораздо лучше ветро и солнце-генерации). Площадки гео — в аренде от государства, штата и частных собственников примерно 60 на 40, сроки аренды заканчиваются примерно в 2020 году но все договоры с возможностью продления и разной оплаты в случае коммерческого использования/неиспользования, оцененные запасы энергии позволяют считать возможность коммерческой добычи до 2068 года. Есть еще площадка примерно на 40 скважин на другом участке, перспективных с точки зрения коммерчески осмысленной генерации, но переговоры по ней не завершены. Компания является выгодоприобретателем как сланцевой «революции», так и колеблющихся пиковых цен на газ, т.к. порядка 70% генерации на би-топливных (газ + fuel oil) генераторах с возможностью как снижать мощность в периоды малого потребления, так и буст-увеличений при необходимости. Эффективные современные генераторы позволяют держать косты ниже конкурентов, что позволяет получать доход даже на зарегулированном рынке электрогенерации. В некоторых случаях используются толлинговые схемы (компания получает доход за произведенную генерацию независимо от стоимости топлива). Компания очень экологична (находясь на 8 месте по объемам генерации, она на 77 месте по объему выбросов), что позволяет получать преимущество и от дальнейших законодательных «закручиваний гаек», так, в США в 2014 39% генерации на угле, 19% ядерной, 27% газовой, 6 % гидро и 7% прочих источников, с явной тенденцией к ужесточениям выбросов (касается генерации на угле и нефти в первую очередь). Кроме того, у компании нет рисков отмены субсидий ветро- и солнечным генерациям (солнечная генерация мизерная). Дополнительный плюс от засухи в Калифорнии, что приводит к меньшей гидрогенерации и росту доходов газогенераторов втч CPN. Вывод — компания очень комфортно расположена как географически (CA, TX, North-East), так и в сегменте генерации (газ + геотерм), её ждет светлое бесперебойное ближайшее будущее, это же подтверждается долгосрочными контрактами. M&A&RND достаточно динамичный, постоянно идут покупки-продажи станций, апгрейды реакторов и контрактуются новые: энергобаланс ввод/вывод 2014: +1050+400+260+260-6 станций 3500 (за 1,57B)+809-1 станция маленькая (за 0,166B по антимонопольному закону) + 309 (2015)+760 (2017-2018) + 345 (2018) (в станциях +8 блоков -7блоков сбросили, в балансе текущем минус, с 2017 вернутся на текущий уровень). Генерация физически падает (110-102-101 млрд квтч 12-13-14 год), но первый кв 2015 принес рост в Калифорнии из-за просадки в гидрогенерации в штате из-за засухи (на 15 год суммарная генерация составит примерно 108 млрд квтч). 
По MA в 2012-2014 можно оценить справедливую стоимость: в 2014 CPN купили блоки 1050МВт за 625млн, 809МВт за 530млн. в 2012 цены были примерно такими же, у конкурентов есть покупки и подороже.  Таким образом при тотальной распродаже исходя из оценки стоимости генерирующих мощностей получаем оценку имущества компании снизу в $16B (это при рыночной капитализации в 5,5B и консолидированном долге = 11,3B). То есть совсем безопасный уровень покупки при капитализации $4,7B или цене акции в 13 долларов. На 4 сентября цена была 15,07. Вывод: компания очень активно крутится и хозяйство содержит в полном порядке, но при этом уже сейчас «не»оценена рынком, её можно и нужно следить. При этом даже в самом негативном сценарии активы компании будут работать и приносить доход — никто не выключит современные электростанции в энергодефицитных Калифорнии или Нью-Йорке с Вашингтоном, найдут денег или госгарантий. Проблемы: Компания исторически сурово закредитована еще с прошлого банкротства, совокупный долг на 2014 год 11,3 млрд (в 2005 году было 22 млрд), используются все возможности перекредитования — от выпусков First Lien бумаг до револьверных кредитных линий. В 2014 выпущено 2,8 млрд unsecured notes по ставкам 5,375-5,75%, увеличен револьверный кредит с 0,5 млрд до 1,5 млрд (вроде как закрыты first lien notes с ближними сроками погашения и ставкой 8%).  7+ млрд долга с погашением после 2019 года, постоянно происходит перевыпуск долга на более поздний.
Рейтинг -4 уровня от инвестиционного, B+. Эфф. ставки по бондам при этом 5,8-6,5% что далеко от дефолтного но имеет влияние на фин. показатели (купоны в среднем 7% от номинала). Обслуживание долга 600+ млн в год, при операционной прибыли 800-1900 млн, стоимость обслуживания долга в последние годы снижается примерно на 50 млн/в год.  При этом компания дофига тратит на обратный выкуп акций — в том же 2014 потрачено 3,5 млрд на выкуп акций по 21,68-22,14 (сейчас 15). В 2015 уже потрачено более 0,5 млрд на выкуп. Дивиденды не платятся. Вывод — компания имеет много долгов и тратит много денег на его обслуживание, в сложной истории новых денег могут не дать. Хотя текущий долг достаточно долгосрочный. Агрессивно идет обратный выкуп в ущерб сокращению и так достаточно дорогого долга. Компания креативно использует всякие деривативы — опционы и фьючерсы как на топливо и энергию, так и на производные. Закладывает долгосрочные контракты (например диапазон цен «оценки»энергии 10-100$/МВтч). Манипулирует ценами на все в том числе в бухучете, для оценки, переоценки и тд, что может сильно влиять на отчеты и скелеты в шкафу. Менеджмент не очень дерзко наживается, так что скорей всего играют/крутятся по каким-то правилам, но все это выглядит сложно и весьма запутанно. Вывод — отчетность местами нарисована по картинкам из хрустального шара и при переоценках могут всплывать помои. Потребление электричества в США падает на 0,5% в год. Что впрочем сопровождается выводом из эксплуатации неэкологичной генерации в первую очередь, т.е. угольных и нефте-электростанций, которых у CPN нет. Вывод — CPN крутится в правильном направлении, являясь по сути пионером в обновлении генерирующих мощностей в США. Примечание:  Крупнейшие торгуемые электрогенераторы — конкуренты в США:  название, мощность (тикер, капитализация млрд долл) AES Corporation (AES 7,5B) Southern Company, 42 GW (SO 38B) American Electric Power, 38 GW (AEP 25B) Duke Energy, 36 GW (DUK 47B) Reliant Energy, 14 GW (NRG 5,9B) Pacific Gas and Electric Company (PCG 23B) Dominion Resources (D 45B) Exelon Corporation (EXC 26B) Повторюсь — буду рад помощи тех, кто может придумать опционную тактику по компании в разных ситуациях. Кроме того, подискутировать на тему электроэнергетики представляется правильным, т.к. все компании в секторе находятся на низах, могут быть и не менее интересные кандидаты. Обычная критика, вопросы, уточнения — категорически приветствуются. Для анализа компаний изучите наши новые бесплатные уроки по продвинутому Анализу Компаний.

04 июня 2014, 06:56

Iowa Senate Primary: Bruce Braley, Joni Ernst Win Nominations

State Sen. Joni Ernst (R-Iowa) and Rep. Bruce Braley (D-Iowa) won their respective party's nominations in the race to succeed retiring Sen. Tom Harkin (D-Iowa), the Associated Press reports. The race between the two candidates is considered one of the country's top-tier match-ups, as it could determine control of the Senate. Braley leads Ernst by five percentage points, according to HuffPost Pollster. The Huffington Post's Amanda Terkel and Samantha Lachman took a look at the race earlier this week: In recent weeks, state Sen. Joni Ernst has taken the lead in the polls in the crowded GOP primary to replace Sen. Tom Harkin (D-Iowa). She gained national prominence after an ad entitled "Squeal," in which she talked about castrating pigs. Both Sen. Marco Rubio (R-Fla.) and former GOP presidential nominee Mitt Romney have backed Ernst, while Texas Gov. Rick Perry (R) is backing former District Attorney Matt Whitaker (R). Santorum, who ran against Perry and Romney in 2012, is backing radio host Sam Clovis. But Ernst's closest rival, according to recent polling, is businessman Mark Jacobs, the former CEO of Houston-based energy company Reliant Energy. As The Huffington Post has reported, Jacobs made more than $34 million there while the company suffered major losses and at times avoided paying federal income taxes. The winner of the GOP primary will face Rep. Bruce Braley (D-Iowa), who was criticized in April for making comments that were seen as insulting to farmers.

04 июня 2014, 06:55

Iowa Primary Results: Ernst, Braley, Branstad Win Races

Iowa Gov. Terry Branstad (R), state Sen. Joni Ernst (R-Iowa) and Rep. Bruce Braley (D-Iowa) all won their respective gubernatorial and Senate primaries on Tuesday, according to the Associated Press. Branstad defeated a lesser known Republican opponent as he seeks an unprecedented sixth term. Braley, who was unopposed, and Ernst, who emerged from a multi-candidate field, will face-off in November in one of the country's highest profile Senate races. The Huffington Post's Amanda Terkel and Samantha Lachman took a look at the race between Ernst and Braley earlier this week: In recent weeks, state Sen. Joni Ernst has taken the lead in the polls in the crowded GOP primary to replace Sen. Tom Harkin (D-Iowa). She gained national prominence after an ad entitled "Squeal," in which she talked about castrating pigs. Both Sen. Marco Rubio (R-Fla.) and former GOP presidential nominee Mitt Romney have backed Ernst, while Texas Gov. Rick Perry (R) is backing former District Attorney Matt Whitaker (R). Santorum, who ran against Perry and Romney in 2012, is backing radio host Sam Clovis. But Ernst's closest rival, according to recent polling, is businessman Mark Jacobs, the former CEO of Houston-based energy company Reliant Energy. As The Huffington Post has reported, Jacobs made more than $34 million there while the company suffered major losses and at times avoided paying federal income taxes. The winner of the GOP primary will face Rep. Bruce Braley (D-Iowa), who was criticized in April for making comments that were seen as insulting to farmers.

04 июня 2014, 06:52

Joni Ernst Wins GOP Primary In Iowa Senate Race

Iowa state Sen. Joni Ernst won the Republican nomination in her bid to succeed retiring Sen. Tom Harkin (D-Iowa), the Associated Press reports. Ernst emerged from a five candidate field that also included businessman Mark Jacobs and conservative radio host Sam Clovis. She will face Rep. Bruce Braley, who ran unopposed in the Democratic primary Tuesday, in November's general election. Political observers see the matchup as as one that could tip control of the Senate. The Huffington Post's Amanda Terkel and Samantha Lachman offered more details on the race earlier this week: [Ernst] gained national prominence after an ad entitled "Squeal," in which she talked about castrating pigs. Both Sen. Marco Rubio (R-Fla.) and former GOP presidential nominee Mitt Romney have backed Ernst, while Texas Gov. Rick Perry (R) is backing former District Attorney Matt Whitaker (R). Santorum, who ran against Perry and Romney in 2012, is backing radio host Sam Clovis. But Ernst's closest rival, according to recent polling, is businessman Mark Jacobs, the former CEO of Houston-based energy company Reliant Energy. As The Huffington Post has reported, Jacobs made more than $34 million there while the company suffered major losses and at times avoided paying federal income taxes. The winner of the GOP primary will face Rep. Bruce Braley (D-Iowa), who was criticized in April for making comments that were seen as insulting to farmers.

03 июня 2014, 00:13

June 3 Primaries: The Top 10 Races To Watch

WASHINGTON -- The candidates competing in Tuesday's primaries have certainly had colorful paths to Election Day. There's been talk of castrating pigs, a bizarre scandal involving a woman with dementia and comparisons of food stamp recipients to wild animals. Eight states have elections Tuesday: Alabama, California, Iowa, Mississippi, Montana, New Jersey, New Mexico and South Dakota. The most-watched Senate primary is in Mississippi, where the tea party had hoped to unseat Sen. Thad Cochran (R). The race, however, has become dominated by a scandal involving the exploitation of the senator's bedridden wife. Voters going to the polls there should be sure to take identification: Tuesday's elections will mark the first time Mississippi will have its new voter ID law in place. In another first, California will put its new top-two primary system to the test for its gubernatorial race. Under this electoral system, the top two vote-getters in the primary advance to the November ballot, regardless of party affiliation. Here's a look at the key races The Huffington Post is watching: MISSISSIPPI SENATE: The Mississippi GOP Senate primary was thought to be the tea party's best chance to pick off a veteran Republican incumbent. But that quest may be derailed by a bizarre scandal involving supporters of state Sen. Chris McDaniel (R), Cochran's tea party-backed challenger. Several of McDaniel's supporters were recently arrested in a scheme to exploit Cochran's wife, who has dementia. A blogger allegedly broke into her nursing home and photographed her, with the intent of using the pictures in a hit piece about the senator. Authorities also arrested Mark Mayfield, vice chairman of the Mississippi Tea Party, in connection with the case. McDaniel has denied any knowledge of the scheme, but the controversy has become a focus of the race. McDaniel has garnered heavy support from the tea party, while the establishment continues to back Cochran, who has not had a competitive race since 1984 and who some activists believe is not conservative enough. Former Alaska Gov. Sarah Palin (R) and former Sen. Rick Santorum (R-Pa.) both went down and stumped for McDaniel last week.  IOWA SENATE: In recent weeks, state Sen. Joni Ernst has taken the lead in the polls in the crowded GOP primary to replace Sen. Tom Harkin (D-Iowa). She gained national prominence after an ad entitled "Squeal," in which she talked about castrating pigs. Both Sen. Marco Rubio (R-Fla.) and former GOP presidential nominee Mitt Romney have backed Ernst, while Texas Gov. Rick Perry (R) is backing former District Attorney Matt Whitaker (R). Santorum, who ran against Perry and Romney in 2012, is backing radio host Sam Clovis. But Ernst's closest rival, according to recent polling, is businessman Marc Jacobs, the former CEO of Houston-based energy company Reliant Energy. As The Huffington Post has reported, Jacobs made more than $34 million there while the company suffered major losses and at times avoided paying federal income taxes. The winner of the GOP primary will face Rep. Bruce Braley (D-Iowa), who was criticized in April for making comments that were seen as insulting to farmers.  CALIFORNIA GOVERNOR: The nonpartisan primary, in which the top two vote-getters advance regardless of their party affiliation, may have ramifications beyond determining which candidate faces Gov. Jerry Brown (D) in November. Republicans reportedly fear that if conservative state Assemblyman Tim Donnelly (R) makes it past the primary, his anti-immigration stance could drive Democratic voters to the polls, upending competitive down-ballot races across the state. Former Assistant Treasury Department Secretary Neel Kashkari (R) has put more than $2 million of his own cash into his campaign and been endorsed by Romney, former Florida Gov. Jeb Bush (R) and former Secretary of State Condoleezza Rice. That may not be enough to beat Donnelly, a former head of the state’s anti-immigration Minutemen border patrol group. The state assemblyman, who has called himself a "threat to the country-club Republicans," was arrested in 2012 for bringing a loaded gun into an airport and has compared the Minutemen’s fight against illegal immigration to a “war." He also accused Kashkari, who is Hindu, of supporting Sharia law. Recent polling shows Kashkari and Donnelly in a dead heat, though many of the state's Republican voters remain undecided.  CALIFORNIA-17: The top-two House primary in this Silicon Valley area, Asian-American majority district has it all: an infusion of campaign contributions from tech industry leaders, ethics complaints, lawsuits and heavy spending by outside groups hoping to prevent an upstart Democrat from knocking off a seven-term incumbent. Rep. Mike Honda (D-Calif.) is trying to beat back a strong challenge from attorney and former Obama administration official Ro Khanna. Honda has the backing of President Barack Obama and California's Democratic establishment, as well as support from groups like the local AFL-CIO, Sierra Club and Planned Parenthood's Action Fund. Yahoo CEO Marissa Mayer, Google Chairman Eric Schmidt, Facebook Chief Operating Officer Sheryl Sandberg, PayPal co-founder Peter Thiel and Napster co-founder Sean Parker have all donated to Khanna's campaign. Political observers expect both Honda and Khanna to advance to November's general election, though two Republicans -- Stanford physician Dr. Vanila Singh and tech recruiter Joel Vanlandingham -- could act as spoilers. CALIFORNIA-31: Democrats fear that three of their candidates could split the vote in this heavily Latino and Democratic-leaning district, in a repeat of what happened in 2012. The outspoken former Rep. Joe Baca (D-Calif.), Redlands Mayor Pete Aguilar and attorney Eloise Gomez-Reyes are vying for the opportunity to represent the seat being vacated by retiring Rep. Gary Miller (D). On the GOP side, retired Navy officer and businessman Paul Chabot is favored to advance from the primary over former Miller aide Lesli Gooch. The primary has caused a rare split in both the national Democratic establishment and among progressive women's groups: Reyes has been endorsed by both Rep. Xavier Becerra (D-Calif.) and EMILY's List, while Aguilar has the backing of the Democratic Congressional Campaign Committee and NARAL Pro-Choice America. CALIFORNIA-33: In this Hollywood, Malibu and Beverly Hills-area Democratic stronghold, a crowded field of candidates are running to succeed retiring Rep. Henry Waxman (D-Calif.). State Sen. Ted Lieu (D) has the backing of Los Angeles Mayor Eric Garcetti (D), the local Democratic establishment and labor groups, while former Los Angeles Controller Wendy Greuel (D) has been endorsed by EMILY's List. Attorney Elan Carr is running as a Republican, while numerous celebrities have donated to spiritual teacher Marianne Williamson, who is running as an independent. ALASKA SENATE: Heading into Tuesday's GOP primary, former state Attorney General Dan Sullivan is leading in the polls, with a heavy fundraising advantage and the backing of national Republicans. Sullivan -- not to be confused with the Republican mayor of Anchorage who has the same name -- formerly worked in the administration of President George W. Bush. He has picked up endorsements from his former boss, Condoleezza Rice, and the U.S. Chamber of Commerce. Karl Rove's American Crossroads has also aired ads backing him. One of Sullivan's opponents is Joe Miller, who beat Sen. Lisa Murkowski (R-Alaska) in the GOP primary in 2010, only to lose to Murkowski's write-in bid in the general election that year. Miller rose to prominence thanks to tea party support and is counting on that grassroots momentum to boost him this time as well. Lt. Gov. Mead Treadwell (R) was once considered a strong contender to win the nomination, since he had a strong ground operation in the state, but his fundraising and support in the polls have slipped. The winner of the GOP primary faces Sen. Mark Begich (D-Alaska).  SOUTH DAKOTA SENATE: Former Gov. Mike Rounds (R) has been the GOP frontrunner in the race to replace retiring Sen. Tim Johnson (D-S.D.), although state Rep. Annette Bosworth (R) has been getting a fair amount of attention in the five-person Republican primary. In April, she likened food stamp recipients to wild animals. Still, Bosworth has lagged in the polls and her campaign has been in debt. Rounds, meanwhile, has focused on the failings of Washington and said Congress needs to focus more on debt reduction. A candidate must get at least 35 percent of the vote in order to receive the nomination, otherwise a run-off between the top two finishers will be scheduled. The winner will face Democratic businessman Rick Weiland, who was once a staffer for former Sen. Tom Daschle (D-S.D.). NEW JERSEY-3: Even a former NFL offensive tackle thinks this Republican primary is a nasty one. The impending retirement of Rep. Jon Runyan (R-N.J.), a former Eagles player, initiated what he called an "ugly as hell" Republican primary between two ex-mayors -- insurance executive and former Randolph Mayor Tom MacArthur and former Bogota Mayor Steve Lonegan. Neither MacArthur, who has kicked in $2 million of his own money, nor Lonegan, a tea party favorite, hail from the bellwether district, which Obama won in both of the last presidential elections. Each campaign is accusing the other of bullying and dishonesty, and MacArthur has filed a defamation suit in response to Lonegan's accusations that he defrauded insurance claimants. Runyan has endorsed MacArthur, in a signal that the state's Republican establishment fears Democrats could pick up the seat if Lonegan, who lost to Sen. Cory Booker (D-N.J.) last year, is the nominee. Burlington County freeholder and attorney Aimee Belgard is expected to clinch the Democratic nomination. IOWA-3: Six GOP candidates are facing off for the seat being vacated by Rep. Tom Latham (R). But a recent poll found that none of the candidates appeared close to getting 35 percent of the vote. If that threshold is not reached in Tuesday's primary, the GOP nominee will be chosen at a convention of GOP activists. In a Loras College Poll, state Sen. Brad Zaun (R) had 17.4 percent of the vote, followed by businessman Robert Cramer at 8.3 percent and David Young, a former staffer for Sen. Chuck Grassley (R-Iowa), at 8 percent. Zaun recently attracted attention for saying he sometimes carries a gun to the Iowa statehouse because of the 2011 attack on former Rep. Gabby Giffords (D-Ariz.). During a recent debate, all of the candidates said they opposed Obamacare and a few also said they would like to abolish the Environmental Protection Agency. The winner of the GOP primary will face former state Sen. Staci Appel (D).

28 мая 2014, 02:36

Joni Ernst Keeps Up Momentum With Ad Support From Chamber Of Commerce

DES MOINES, Iowa (AP) — Ads for Republican Joni Ernst by a powerful business group add to the sense of momentum for the state senator who would be the party's first woman nominee for Senate, should she win on June 3. The U.S. Chamber of Commerce's television advertising in the final week of the campaign also could nudge Ernst closer to breaking through the elusive Iowa glass ceiling. No woman has ever been elected governor nor to Congress from Iowa. It also marks the uncommon alliance nationally of right-wing conservative groups and more traditional pro-business GOP interests. "She's got a lot of endorsements from a lot of different directions. Everything from the U.S. Chamber of Commerce to the National Rifle Association. It's pretty impressive," said Iowa Gov. Terry Branstad, who has not endorsed a Senate candidate but has spoken very highly of Ernst throughout the campaign. U.S. Rep. Bruce Braley, a four-term Democrat, is unopposed for his party's nomination. Ernst is the only woman in a five-candidate field, and has led in recent polls. She is competing with former Reliant Energy CEO Mark Jacobs who has contributed $3 million of his own money to the campaign. If no candidate reaches 35 percent of the vote in the primary, the nomination would be decided at a special convention, where radio host Sam Clovis would have a devout following. Ernst has been hovering at above 30 percent support in some recent polls. But Ernst is the first candidate this year to receive the support of the U.S. Chamber of Commerce and Senate Conservatives Fund. The latter has endorsed GOP primary challengers and non-establishment Republicans in high-profile Senate primaries this year in Kentucky, Mississippi, Nebraska and elsewhere. Former Alaska Gov. Sarah Palin and 2012 Republican presidential nominee Mitt Romney, who seldom are allies within the Republican party, have also endorsed Ernst. Senior Ernst adviser David Polyansky said the U.S. Chamber of Commerce ads show Ernst unifying the party in a way Jacobs, who has tried to corner the GOP's business community, has been unable to do. "To have their support really neutralizes his message, that he has tried and failed to solidify that box," Polyansky said of the U.S. Chamber's ads. The chamber advertisements tout Ernst's farm, legislative and military background. Ernst is a lieutenant colonel in the Iowa National Guard who served as captain of a transportation company during the Iraq War, leading daily convoys into combat areas from April 2003 to April 2004. Iowa and Mississippi are the only two states never to elect women to Congress or governor. Hillary Clinton used the distinction as ammunition for a parting shot at Iowa after her disappointing third-place finish in Iowa's 2008 Democratic presidential caucuses. Republican U.S. Sen. Charles Grassley has been a senator since 1981, and the retiring Democratic Sen. Tom Harkin defeated five male candidates in his 30 years in Congress.

28 мая 2014, 02:36

Joni Ernst Keeps Up Momentum With Ad Support From Chamber Of Commerce

DES MOINES, Iowa (AP) — Ads for Republican Joni Ernst by a powerful business group add to the sense of momentum for the state senator who would be the party's first woman nominee for Senate, should she win on June 3. The U.S. Chamber of Commerce's television advertising in the final week of the campaign also could nudge Ernst closer to breaking through the elusive Iowa glass ceiling. No woman has ever been elected governor nor to Congress from Iowa. It also marks the uncommon alliance nationally of right-wing conservative groups and more traditional pro-business GOP interests. "She's got a lot of endorsements from a lot of different directions. Everything from the U.S. Chamber of Commerce to the National Rifle Association. It's pretty impressive," said Iowa Gov. Terry Branstad, who has not endorsed a Senate candidate but has spoken very highly of Ernst throughout the campaign. U.S. Rep. Bruce Braley, a four-term Democrat, is unopposed for his party's nomination. Ernst is the only woman in a five-candidate field, and has led in recent polls. She is competing with former Reliant Energy CEO Mark Jacobs who has contributed $3 million of his own money to the campaign. If no candidate reaches 35 percent of the vote in the primary, the nomination would be decided at a special convention, where radio host Sam Clovis would have a devout following. Ernst has been hovering at above 30 percent support in some recent polls. But Ernst is the first candidate this year to receive the support of the U.S. Chamber of Commerce and Senate Conservatives Fund. The latter has endorsed GOP primary challengers and non-establishment Republicans in high-profile Senate primaries this year in Kentucky, Mississippi, Nebraska and elsewhere. Former Alaska Gov. Sarah Palin and 2012 Republican presidential nominee Mitt Romney, who seldom are allies within the Republican party, have also endorsed Ernst. Senior Ernst adviser David Polyansky said the U.S. Chamber of Commerce ads show Ernst unifying the party in a way Jacobs, who has tried to corner the GOP's business community, has been unable to do. "To have their support really neutralizes his message, that he has tried and failed to solidify that box," Polyansky said of the U.S. Chamber's ads. The chamber advertisements tout Ernst's farm, legislative and military background. Ernst is a lieutenant colonel in the Iowa National Guard who served as captain of a transportation company during the Iraq War, leading daily convoys into combat areas from April 2003 to April 2004. Iowa and Mississippi are the only two states never to elect women to Congress or governor. Hillary Clinton used the distinction as ammunition for a parting shot at Iowa after her disappointing third-place finish in Iowa's 2008 Democratic presidential caucuses. Republican U.S. Sen. Charles Grassley has been a senator since 1981, and the retiring Democratic Sen. Tom Harkin defeated five male candidates in his 30 years in Congress.

25 мая 2014, 19:00

Republicans Worry Candidates' Primary Tactics Could Haunt The Party

WAUKEE, Iowa (AP) — Concerned murmurs are rippling through Iowa's Republican circles, worried that the ways U.S. Senate primary candidates are appealing to the base now could haunt the party come November, despite chipper talk that the five-way race is a healthy way to ignite the GOP. Some Republicans say state Sen. Joni Ernst's recent campaign ad featuring her firing a handgun will not sit well with some swing voters when Democrats resurrect it. Likewise, others say former Reliant Energy CEO Mark Jacobs' past public statements supporting climate-change legislation make him indistinguishable from likely Democratic nominee Bruce Braley. In what is their best chance to win the Senate seat in 30 years, Republicans have accepted the risks of focusing on GOP-favored issues in the June 3 primary after failing to convince the state's better-known Republicans to run once Sen. Tom Harkin, a six-term Democrat, announced he wouldn't seek re-election. So, it's become a delicate balance for candidates: Convince the party faithful they have the conservative chops to distinguish themselves from the Senate's longtime liberal lion, then turn around and face one of the nation's most politically balanced statewide electorates in a general election that could determine which party controls the powerful chamber. "Braley has had the luxury of messaging directly to general election voters, where our candidates are messaging to a narrow segment," former Iowa Republican Party Chairman Matt Strawn said. Each candidate's position is being closely noted by Braley's campaign, and top advisers said those will be used against the eventual Republican nominee. In an appeal to GOP-leaning gun owners and noting her backing by the National Rifle Association. Ernst is airing an ad where she fires six shots from a handgun on a shooting range. "Give me a shot," she says at the end. Ernst mentioned her self-described "exciting ads" to a round of applause at a meeting of supporters Wednesday in Waukee. But some Republicans say it could turn off swing-voting women, a group Republicans in Iowa and other closely contested states have lost in recent presidential elections. Fewer than 20 percent of Iowa adults, across party lines, supported relaxed gun restrictions, according to The Des Moines Register's Iowa Poll in February 2013. "The gun ad is a problem for her, if she wins, in the fall with suburban women," said Des Moines Republican fundraiser Doug Gross, who supports Jacobs. But in the past week, Jacobs has aired an ad reprising its images, while criticizing her for missing votes in the state Senate. It's been 18 months since Harkin's announcement shook up Iowa's political climate. Behind the scenes, Republican Gov. Terry Branstad had unsuccessfully urged 10-term U.S. Rep. Tom Latham to run; a perennial target and winner. Then National Republican Senatorial Committee leaders courted but failed to land Lt. Gov. Kim Reynolds. Their strengths likely would have prevented a contested primary— a strategy Braley managed by meeting with potential Democratic rivals early and announcing his only a month after Harkin's announcement. To be sure, Braley has handed his general election opponent ammunition as well. Last month, anti-Braley PAC released a video of the congressman in January telling fellow lawyers in Texas that electing him would put "someone with your background, your experience, your voice ... on the Senate Judiciary Committee," and not "a farmer from Iowa who never went to law school, never practiced law." Braley was a private-practice lawyer before entering Congress in 2007. U.S. Sen. Charles Grassley, R-Iowa, is not a lawyer in line to become chairman if the GOP gains the six seats required to take control of the Senate. Whether Iowa can assist in that goal remains to be seen. In the meantime, the five candidates have only a week to stake their claim to the Republican nomination. "Sure, there can be a down side to having a primary," Iowa GOP strategist Sara Craig said. "But the good outweighs the bad in that we're going to have a very fired up Republican base in June." That is a disingenuous fallback position for a party that fails to avoid a primary, top Braley consultant Jeff Link said. "Anyone who says different is in a primary," Link said.

21 мая 2014, 23:29

Mark Jacobs, Iowa Senate Candidate, Made Millions As Company Paid No Taxes

WASHINGTON -- Mark Jacobs, a top GOP contender for the seat of departing Iowa Sen. Tom Harkin (D), made more than $34 million as a top executive at Reliant Energy, while his company repeatedly suffered major losses, at times avoided paying federal income taxes, and in some years even received annual net tax benefits from the Treasury Department. Jacobs is one of five Republican hopefuls who will square off in a June 3 primary. HuffPost Pollster's average of all publicly available polling shows Jacobs currently running second in the race, behind state Sen. Joni Ernst, with much of the primary electorate undecided. Presumptive Democratic nominee U.S. Rep. Bruce Braley leads all Republican challengers in current polling -- but the race is closest against Jacobs, with some conservative pollsters giving Jacobs a slight edge.  Reliant Energy's low -- and sometimes negative -- tax bill while Jacobs was CEO accompanied major losses, and firms can usually discount losses in one year against tax bills that come due in the future. Jacobs left Goldman Sachs to become CFO of Reliant in 2002 and was named CEO in 2007. He sold off part of the company to NRG Energy in 2009, and the remainder to energy giant Mirant in 2010, to form GenOn, which was itself eventually subsumed into the NRG conglomerate. NRG declined to comment for this story. There is no indication that Reliant ever violated tax laws during Jacobs' tenure. Reliant also never turned a profit during Jacobs' years as CFO, and only landed in the black in two of his four years as CEO -- 2007 and 2009 -- according to Securities and Exchange Commission filings. The company's total net earnings for the four years he was CEO come out to just $5 million, while its tax bill was negative $2 million -- a benefit from the Treasury Department to the company. Jacobs received $23.4 million in total compensation during the years he served as CEO. "When I joined the company, it was on the verge of financial collapse," Jacobs told HuffPost, saying that he negotiated a $6.2 billion financing deal with 23 banks to keep the firm afloat. Jacobs says that four of Reliant's competitors filed for bankruptcy in the years after he became CFO, and that he protected his shareholders from that fate. He also says that his pay was in accordance with industry norms. "The company paid market-based compensation for all employees," Jacobs said, "including myself." The SEC does not require companies to disclose their actual tax bill in a given year. Instead, companies list a host of different tax estimates and metrics that represent different aspects of their payments. Independent experts, including the nonpartisan, nonprofit Citizens for Tax Justice, rely on a metric called "current federal income taxes" to gauge a company's annual tax payments. By that measure, Reliant received a net federal tax benefit in 2002, 2003, 2004, 2009 and 2010, paid no taxes in 2006 and 2007, and paid a $7 million IRS bill in both 2005 and 2008. If 2010 is excluded from the earnings and tax calculations, Reliant secured a federal income tax bill of zero dollars during Jacobs' years at the helm, based on the current federal income tax metric, as the company earned a total of $55 million. Jacobs said he prefers a different metric that shows his company paid over $20 million a year in taxes between 2005 to 2008, while receiving net federal income tax benefits in 2003 and 2004. Jacobs' metric includes federal, state, local and international income taxes (Reliant operated a subsidiary based in the Netherlands for most of Jacobs' tenure). Jacobs also argued that the most important factors for the profitability of the company were unrelated to the performance of the company's management team. "The power market is a deeply cyclical business, and it's very dependent on commodity prices," Jacobs told HuffPost. "As managers in the industry, what you can do is make sure you run the plants very well. But the biggest driver of profits are the prices of commodities." Jacobs said fracking and natural gas development drove energy prices down, as did the reduced demand for electricity caused by the Great Recession. "Control the things that you can control," Jacobs said. "You obviously can't control the commodity prices and the overall economics." Jacobs was paid handsomely as his industry cratered. His single-most lucrative year, according to SEC filings, was 2010, when he was paid $9.7 million after turning the company over to Mirant CEO Edward Muller mid-year. Jacobs left GenOn in 2011. While the Senate primary race in Iowa has been close all year, Ernst, Jacobs' chief competition for the GOP nomination, has received a few prominent endorsements of late. The Des Moines Register and the U.S. Chamber of Commerce, corporate America's most powerful lobbying group, both gave Ernst the nod this month. But Jacobs' personal wealth would allow him to self-finance a campaign that is likely to stay tight into November.  Iowa is a critical state in the 2014 midterms. The Senate electoral map has Democrats playing defense in many conservative states. Republicans have won Iowa just once at the presidential level since the Reagan years, but margins are typically close, and the state is a hotbed for hardline social conservatives like GOP Rep. Steve King. Harkin, the state's outgoing Democratic senator, is one of the most liberal members of the Senate. Republicans need to gain six seats in order to wrest the Senate from Democratic control. Democrats are retiring in Montana, South Dakota, West Virginia and Iowa, and the GOP is looking to unseat Sens. Mark Begich (D-Alaska), Mark Pryor (D-Ark.), Kay Hagan (D-N.C.) and Mary Landrieu (D-La.), while Democrats are on offense in Kentucky and Georgia. Republicans appear likely to pick up South Dakota and West Virginia, and polling shows very close races in the other states. Jacobs' campaign website describes him as a "successful, principled businessman" who "navigated Reliant through an unprecedented series of extreme challenges." "I think we're all frustrated with Washington, D.C. today. Congress has less than a 10 percent approval rating, and if we really want change, we've got to send a different type of person over there. We're not going to change Washington by sending a same old, same old career politician there," Jacobs said, taking a shot at both Braley and Ernst, a state senator. "I learned a lot through that private sector experience about how to handle a big financial problem," saying that he paid down $7 billion of the company's $9 billion debt burden before selling the firm.

20 февраля 2014, 18:23

Why Simple Brands are Profitable Brands

Q&A with Rick DeLisi, co-author of “The Effortless Experience: Conquering the New Battleground for Customer Loyalty.” A few years ago, we at CEB noticed something. Brands that spent their time trying to be everything to everybody – to cover every social media channel, to market to every niche, to make products that cater to tinier and tinier market segments – weren’t seeing much return on all that extra effort. On the other hand, brands that kept it simple – ones who exercised good judgment about what kinds of channel, service, and product investments make sense – seemed to grow faster and to inspire more loyalty.  Why? Well, we surveyed consumers, and we found that choice has a negative relationship with profitable consumer behavior. In other words, the more choice you give consumers, the less likely they are to be loyal. It’s complicated, but the psychological reason behind this is that the more choices we have, the less effective our reasoning is, and the more likely we’ll be to switch away from products – even those we like. And so the goal for brands should be decision simplicity – making the purchase process easier. (If you’d like to explore this in more detail, check out the Forbes piece we wrote awhile back.) We also spent some time studying the power of simplicity in the world of customer service and customer experience, and the result is a new book, The Effortless Experience, by CEBers Matt Dixon, Nick Toman, and Rick DeLisi. Rick was kind enough to do some Q&A with me for the blog – check it out below, and add your questions in the comments section!  Tell us about the idea behind “The Effortless Experience.” What is the ah-ha moment here? Although the book is about both customer service and the customer experience, it’s ultimately a book about customer loyalty – and specifically, the impact on loyalty when a customer has a problem or an issue that needs to be resolved. The conventional wisdom in the service industry has always been, “When a customer is having a problem, we need do provide them with an experience that’s so above-and-beyond that the customer becomes more loyal as a result. We need to create a true WOW moment!”  This is often referred to as “a strategy of delight.” But what we’ve learned in more than 5 years of research, collecting data from over 125,000 customers in every imaginable industry is that this strategy is doomed to fail for three reasons:  Unfortunately, delight simply doesn’t happen that often (only about 16% of the time). It costs more (10-20% more). And, the worst news is that those customers who ARE delighted don’t actually become any more loyal than those whose service experience simply met (rather than exceeded) expectations. The ultimate issue when there’s an immediate problem to be solved isn’t making customers more loyal, it’s preventing them from becoming disloyal (which is four times more likely to happen!) When a customer has a problem or an issue, they don’t want to be delighted, they want the problem to go away – in the fastest, easiest way possible. They want the resolution to be effortless. Customers who have a low-effort experience are 10 times less likely to become disloyal than those who have a high-effort experience.  What’s at stake for customer experience leaders? What are the implications? Among the hundreds of companies and brands that are beginning their journey in this direction, virtually all of them tell us that using “customer effort” as the focal point for service has provided the entire organization with a degree of clarity and alignment they never had before.  Ironically, by focusing on creating an effortless experience for customers who have a problem or issue that needs to be resolved, you make the business of running the company much more effortless. Regardless of what division or department you work in, there’s a strongly heightened sense of simplicity of mission and purpose. At companies where the goal is “customer satisfaction” (which certainly sounds like a worthy goal) it’s often hard to reach any consensus or alignment around exactly how to accomplish that outcome. Or, if your organization is oriented toward getting customers to be “willing to recommend” your brand, what exactly are you supposed to DO in order to achieve that? But when everyone agrees that reducing customer effort is the goal, it becomes immediately evident what any one team or division should be doing – and, it becomes glaringly apparent that divisions and departments need to work together and collaborate in new and better ways. There’s a sense of simplicity about all this that many companies tell us they can feel almost immediately. What brands are doing this right? Perhaps the best thing about committing to low-effort service is that it seems to be applicable to every company, in every industry. Yes, the specifics of what needs to be fixed and how will vary, but the concept itself cuts across all segments including both B2Bs and B2Cs.  In our book we tell in-depth stories about how creating an effortless experience during customer service transactions has had a profound positive impact at financial services companies like American Express and Fidelity, at consumer products companies like Bose and Sylvania, and even utility companies like Reliant Energy.  For each, the pathway looks a little different, but what they each have in common is that they’ve used the “lens of low-effort” to bring into focus some easy fixes that no one had previously thought were problems. At each company, their live service team, as well as their web self-service team have come together to examine the path a customer has to take when there’s a problem, and have simplified the route to resolution at every turn. You mention Zappos in the book, how do you think they would approach “The Effortless Experience” concept? We – like almost everyone in the service industry – have a great deal of respect for Zappos.  Here’s what we’ve discovered after talking to many customers who use them – while there’s no question that Zappos is at an overall level a true “delight” brand, the reason why so many people love Zappos is because they make things easy. Sure, their reps will stay on calls for 9 hours to help customers and you can order a pizza through the Zappos call center. But, when was the last time you, personally did any of those things? In fact, when’s the last time you had to call Zappos for any reason? Chances are you, like most other customers out there, never have to call Zappos at all. Everything you need – to confidently purchase something and then even return it if it doesn’t work out for you – is right there on their website. Not to mention, shipping is covered both ways! They just make everything SO easy. So, in essence, Zappos is the poster child for creating an effortless experience for customers. In fact, they are among the best in the world at executing an effortless experience. We greatly admire them for that.   Rick DeLisi is a senior director at CEB and co-author of “The Effortless Experience:  Conquering the New Battleground for Customer Loyalty.”

17 сентября 2013, 22:25

Alex Salmond former aide attacks 'tired, tedious' independence campaign

Alex Bell accuses SNP leader of singing the 'old songs' and failing to offer radical reforms a year before referendumOne of Alex Salmond's former closest advisers has attacked the Scottish independence campaign for relying too heavily on "tedious" ideas and "tired policies".Alex Bell, who quit as head of Alex Salmond's policy unit in July after two years working on his independence strategy, said the first minister was failing to present a radical, daring vision for Scotland and so was facing defeat in next year's referendum.Writing for the Guardian, as the independence movement prepares to mark a year to go before the referendum, on 18 September 2014, Bell said: "The campaigns to date have been a tedious parade of union jacks versus saltires, of pop identity about caring Scots versus heartless Tories."Bell warned that Salmond's white paper on independence, touted as his prospectus for independence and due to be published in November, fell into the trap of singing "the old songs" for short-term tactical reasons rather than offering voters bold, radical reforms.That approach included focusing heavily on nationalist arguments about Scottish identity and culture rather than being brave enough to see Scotland's problems as part of a global crisis that also affected England and the rest of the UK."At its best, the Scottish nationalist movement knows this and offers a critique of what democracy and the UK state can achieve," Bell said. "At its worst, it succumbs to the temptation to focus on old songs and tired policies. In this, Salmond is wrong."Bell's criticisms are shared by senior figures on the left of the SNP and within the Yes Scotland independence campaign, who believe Salmond is being too timid by offering a more moderate version of independence to win over sceptical and unpersuaded middle-ground voters.Salmond rejected that, saying Scotland was already proving itself to be radical with its innovative programmes on green energy, free education and healthcare. He said independence was a natural continuation of devolution."Scotland can more than afford to be a successful independent country. We have enormous advantages in terms of our human and natural resources, but we need the political and economic tools to help create a wealthier and fairer society," the first minister said."This referendum is not about any one politician or party – it is about completing Scotland's 'home rule' journey, which has been under way for more than a century."The latest poll for the Guardian by ICM has 32% of British voters backing Scottish independence, roughly the same level of support found in Scotland, with 52% of British voters in favour of keeping the UK intact.Significantly, it finds the highest level of support for independence amongst Labour voters across Britain, with 35% believing that Scotland should split from the UK, and 52% against.That rate is more than double the level of support for independence among Scottish Labour voters found by other polls and 10 percentage points higher than the 25% of pro-independence Labour supporters found in a Scotland-only poll by ICM published at the weekend.That finding will alarm Ed Miliband, the party's UK leader, and Scottish Labour leaders as they struggle against internal opposition to agree a new blueprint for greater Scottish devolution that could include splitting up parts of the welfare state and giving the Holyrood parliament greater tax powers.Analysts believe this higher rate reflects increasing unhappiness in England about the perception that Scotland gets unfair levels of subsidy – a view rejected by Scottish ministers and Treasury officials; jealousy of Scotland's free prescriptions and universities; and irritation with the continuing right of Scottish MPs to vote on England-only measures at Westminster.Labour is pressing ahead with plans to offer Scottish voters greater powers for Holyrood if they reject independence next September, and could agree to sign a joint declaration with the Tories and Liberal Democrats pledging to introduce further reforms.Alan Trench, an academic specialising in devolution and adviser to expert government commissions, said: "It's clear that Labour voters generally have concerns about how things are at the moment. In England, they're struggling with a sense of unfairness about how the system works. It's Labour's job to square the circle."Meanwhile, the dispute over whether an independent Scotland would remain able to sustain high levels of public spending deepened after a senior ex-Treasury economist warned that an independent Scotland would face spending cuts of more than 5% and much higher borrowing costs if it followed Salmond's proposals for a sterling currency union with the rest of the UK.Dr Angus Armstrong, director of macroeconomic research at the National Institute of Economic and Social Research, said many lenders and investors would be very nervous about a newly independent country having significant debts and also being reliant on volatile oil receipts.Scotland could instead hand over all its North Sea oil tax income to the UK in exchange for writing off its share of the UK national debt, Armstrong said, or it could instead set up its own currency."The greater the amount of public debt an independent Scotland assumes, the greater the importance of retaining some policy flexibility and the stronger the case for introducing a new Scottish currency," he said.The Scottish government rejected his arguments, saying their economic advisers, including two Nobel prize economists, said that a sterling union was the best option for Scotland. Even with a full population share of UK debt, Scotland would still have less debt compared to GDP."An independent Scotland will be in a stronger financial position than we are at present," a spokeswoman said.ScotlandAlex SalmondLabourEd MilibandSeverin Carrell theguardian.com © 2013 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds     

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13 сентября 2013, 03:48

Clean Energy Damaging Europe’s Competitiveness

For years Europe has been at the forefront of the renewable energy revolution, promoting and establishing global rules in this sector. There are signs however that this trend might change.The economic crisis has forced many European countries to reassess their clean energy policies, heavily reliant on substantial, and often irrational subsidies, that have started to severely bite into the seriously strained European budgets. So far, Spain, the Czech Republic and Bulgaria have decided to retroactively tax renewable energy operators.It is widely…Read more...

11 сентября 2013, 21:19

Meanwhile, This Is What Putin Is Doing...

For the last few days we have been bombarded with words that appear 'peaceful' and problem-solving from Russia with love. Of course, 'no change' benefits mother Russia the most as his government's gas revenues (and political power) will continue to flow from Europe (a quarter of Russian government income comes from being Europe's gas supplier). So it will come as no surprise that amid the Mother Theresa acts, The Telegraph reports that Putin is readying delivery of more S-300 air-defense missile systems to Iran and will continue to discuss "working together in the nuclear energy spehere." Combine that with experts' views that Russia's plan to dismantle Syria's stockpiles of mustard gas, sarin, VX nerve agents is a long shot; initially "sounding attractive, but very quickly, operational problems could derail obtaining international control, much less actually destroying the arsenal." It would appear, despite all the chatter, that Putin is increasing his power-base in the region. Iran-Aid (via The Telegraph), President Hassan Rouhani is set to meet Putin on the sidelines of a summit of the Shanghai Cooperation Organisation held in Kyrgyzstan on Friday, in the newly-elected centrist cleric's first meeting with a major world leader. The Kommersant business daily reported Wednesday that Putin will offer to supply Iran S-300 air defence missile systems as well as build a second reactor at the Bushehr nuclear plant. The S-300 offer would be a particularly contentious development given it would essentially revive a contract for similar missile systems that Russia cancelled in 2010 after heavy Israeli and US pressure. Putin's spokesman Dmitry Peskov told Kommersant that Putin and Rowhani were expected to discuss "working together in the nuclear energy sphere" and "questions of military technical cooperation" at the summit in Bishkek.  Chemical Weapons Decomissioning ain't gonna happen (via WSJ). Of course, the practicalities of dismantling and storing these weapons is hugely problematic. Carrying out Russia's plan to dismantle Syria's stockpiles of mustard gas and sarin and VX nerve agents is viewed as a long shot by many diplomats, top experts and current and former U.S. officials. "The Russian proposal sounds attractive, but very quickly, operational problems could derail obtaining international control, much less actually destroying the arsenal," said Amy Smithson, an expert on chemical weapons at the James Martin Center for Nonproliferation Studies in Washington, D.C. ... Syria's chemical-weapons arsenal has been developed and stored in at least eight sites across the Arab country. Many of the missiles and artillery pieces are believed to have been moved since civil war broke out in 2011, according to current and former U.S. officials. ... A U.S. official cast doubt about how any deal to strip Mr. Assad of his weapons could be verified. "That is a problem," the official said. "How verifiable does it need to be? Getting 50% or 60% of the chemical weapons is not good enough. We would have to get 90% to 95%." ... Mr. Assad's arsenal is significantly larger than Col. Gadhafi's was. And many experts don't believe the Syrian leader intends to give up his weapons, in part, because his government is still at war. "The Libyans basically decided to show us everything," said Ms. DeSutter. "I can't believe this will be the case with the Syrians."  and by way of background - why Putin will defend this side of the game... (via Golem XIV's blog), European Energy dependence Europe needs gas. Russia has it. Only Norway provides more gas to Europe (35% versus 34%). As Europe continues to rely more heavily on gas, as it will especially if Germany does phase out its nuclear reactors, then Russia will, unless something changes, become the number one supplier. Europe also depends on Russia for 27% of its oil imports, 24% of its coal imports, 30% of its Uranium imports and Russia is the third largest supplier of Europe’s electricity imports. (Figures are from Congressional Report – Europe’s Energy Security. Many thanks to reader Pamela Law for bringing it to my attention.) It is clear, Europe is dependent on Russia to keep the lights on. That dependence and power is not, however, spread evenly.  To understand who is dependent we need to see who imports how much and who from. Using figures from 2012, Germany is the largest gas importer in Europe at 3065 billion cubic feet annually. Next is Italy with 2359 billion, then Britain with 1734, France with 1600 , then Spain with 1225 and Belgium with 1084 (half of which it uses itself and half it re-exports).  But this only gives you a partial picture because not all this gas comes from Russia. The chart below while a little confusing does give a clear general picture of who is dependent on Russia.  The lighter the colour the less reliant the country is upon Russia. The darker the colour therefore, the more power Russia has, potentially. Spain, for example, though reliant on gas imports does not get its gas from Russia. Neither does Britain (at least not directly). While Austria, though its imports are small in volume, depends very heavily on Russia. In fact the whole central block of Europe, from Greece and Cyprus in the South up to Germany and Belgium in the North depend on Russia. Austria is the most dependent of the ‘core’ nations. Austria’s weakness and Russia’s power were recently made very clear. Until recently Austria was going to be the European terminus of the newest Russian gas pipeline project – the Southstream. Southstream which is now under construction will run under the Black Sea into Bulgaria, pumping 2.2 Trillion Cubic feet of gas per year. To be the European terminus would have brought money and certain power to Austria. However, when the Russian gas giant, Gazprom’s purchase of a 50% stake in a the Central European Gas Hub (CEGH), which is in Austria, was blocked by the European Commission, Russia changed the terminus from Austria to Italy. Italy has traditionally had closer relations with Russia on energy. Divide and rule. So much for the vulnerable.What about the powerful? Germany  is Europe’s paymaster and arguably its most powerful nation. However Germany also relies on Russia for 35% of its gas imports and is Russia’s largest client. Russia has considerable power over Europe and has every reason to make sure it stays that way. No surprise therefore, that  Russia has not been idle when it comes to protecting its share of the European Natural Gas Market. Moscow, including the state controlled company Gazprom, has attempted to stymie, European-backed alternatives to pipelines it controls by proposing competing pipeline projects and attempting to co-opt European companies by offering them stakes in those and other projects. It’s worth noting that Russia gets not only political power but also massive income from this arrangement. In 2011 Gas exports generated at least half of all Russian government revenue and half of that came from exports to Europe. Thus a full quarter of all Russia’s government income comes from being Europe’s gas supplier. European nations have responded to this situation in different ways.  Spain is lucky, it already imports most of its gas by pipeline from Algeria, so Russia has little leverage over Spain from gas sales at least. You might have thought Spain would join the US coalition against Syria and Russia. But then again Spain has little in the way of an armed force, so maybe not. Italy has a pipeline from Libya but hopes to remain the terminus for Russia’s South Stream pipeline. So no surprise Italy didn’t join the ‘bomb Syria’ chorus. Italy’s main energy concern recently has been to make sure that in a post Gaddafi Libya, Italy is still a preferred customer. The UK has chosen to invest in LNG (Liquified Natuiral Gas as opposed to merely CNG, Compressed Natural Gas  - the Russian pipeline variety). Britain is Europe’s leading importer of LNG, which you would have thought, might have given it considerable freedom from Russia. Must have been a surprise all round that GB didn’t join the USA. France relies on Russian gas nearly as much as Italy does. However, unlike Italy, France has also been building LNG capacity like Britain. The largest supplier of LNG to Europe is Qatar. For its part Germany has decided to get closer to Russia rather than diversity its supply. Germany supported the building of the Nord Stream pipeline  which connects Germany directly to Russia via a pipeline under the Baltic. This direct connection means Germany is reliant on no third party’s relations with Russia. But those in Europe downstream do rely on Germany. This can only add to Germany’s pre-eminence. Putting this together it seems clear to me we have most of Europe already considerably captured by their energy dependence upon Russia. Germany is not going to anger Russia because of Nord Stream and neither is Italy, because of South Stream. Read more here         

08 сентября 2013, 01:27

Clean Energy Finally Has The Major Catalyst In Production

By Stone Fox Capital:In the past, Clean Energy Fuels (CLNE) was a stock to be bearish on as the company developed America s Natural Gas Highway while the trucks needed to fill up at those fueling stations weren't in production yet. Conversely, the company wasn't able to open numerous LNG fueling stations and the quarterly numbers for the firm were not overly impressive. The concept was something that investors could get behind, but investing is about finding ones that make financial sense and this was one didn't at the start.The company is the leading provider of natural gas fuel for transportation in North America. It builds and operates compressed natural gas (CNG) and LNG fueling stationsThough Clean Energy has continuously made progress on the conversion of the nations transportation system to CNG or LNG fuels, the market remains focused on the regional haul trucking system that has been reliant Complete Story »

07 сентября 2013, 02:21

Further Market Erosion Possible for US Coal-Fired Power Hit Hard by Natural Gas

As the largest power grid in North America, the Eastern Interconnection encompasses 39 U.S. states, eight Canadian provinces and the District of Columbia. Some 84 percent of all U.S. coal-fired capacity falls within its jurisdiction. Given the Eastern Interconnection's lion-sized role in hosting the flow of coal-fired electrons in the United States, the findings of a recent report by the consultancy ICF International are unlikely to bring much comfort to the nation's faltering coal industry. The report, commissioned by the Eastern Interconnection States' Planning Council (EISPC) and the National Association of Regulatory Utility Commissioners (NARUC), finds few challenges to natural gas's current price advantage within current market or regulatory conditions. Natural gas has increased its share of the U.S. power mix dramatically over the past two decades, taking a steadily larger toll on coal's own share as U.S. energy consumption flatlined during the past six years. Coal dropped from 46 percent of the power mix in 2007 to 35 percent in 2012, according to data from the Energy Information Association (EIA). In the Eastern Interconnection region, home to some of North America's most coal-reliant jurisdictions, the drop is even more dramatic -- down from its average of 60 percent over the last 30 years, coal accounts for about 41 percent of all electricity generation today. Low natural gas prices remain the single largest barrier to new coal-fired generation, with existing clean-air standards posing a threat to older, smaller units already threatened by cheap energy prices. The prospect of a carbon tax or similar market-based mechanism "remains a wild card for existing plants," the report notes. "Any requirement to add [carbon capture and storage technology or CCS] to existing plants can result in significant retirements, especially since the technology remains expensive and is not yet fully commercialized," it notes. One possible silver lining in coal's otherwise bleak landscape has been a gradual rise in gas prices over the past year, which has allowed coal to regain some of its lost dispatch. The report also notes recent heavy federal investment made into research and development of CCS technology that may help bring down costs and cushion the effects of future climate regulation on more modern coal-fired capacity. "At the current state of development of CCS, the incremental cost of adding the technology to new power plants makes coal less economically competitive than gas in most cases," said Ananth Chikkatur, a manager at ICF. "Our analysis looked at only existing technologies -- as prices come down over time, the picture could change." A market mechanism mandating a more diverse mix of fuels could benefit coal in regions where gas is currently dominant, but such a mechanism is unlikely in the current regulatory environment, Chikkatur said. "If power markets were to say that, for purposes of security or to hedge against price volatility in natural gas, you have to have a percentage of coal in the mix, then that would benefit the industry. But at the moment, no such mechanism exists," he said. Further environmental regulation, such as a carbon tax, would likely disadvantage coal more, given its large carbon footprint relative to other fossil fuels, he said. Clinging to a smaller slice of the pie Despite coal's decline in recent years, the ICF report notes that more modern plants, particularly those equipped with sulfur dioxide "scrubbers," will likely remain online for the foreseeable future. Stable gas prices and environmental retrofits have allowed some coal-producing regions, like the Illinois Basin, to stage a comeback. While new thermal generating units have primarily leaned toward natural gas, many of the coal-fired power plants built over the last 10 years will be around for decades more to come. This existing base of plants, which operate more efficiently than their predecessors, could continue to support a domestic, if reduced, coal extraction industry for some time. Already, though, older sections of the coal power plant fleet are looking toward closure. The average age of coal plants in the Eastern Interconnection's top five coal-burning states -- Indiana, Illinois, Ohio, Pennsylvania and West Virginia, which collectively consume a third of the region's coal -- will be half a century as of 2015. Utilities and other power generation owners have announced planned cuts in coal-fired generation of up to 47 gigawatts in 2012 and beyond, according to the report. Internal projections by the ICF indicate that nearly 85 percent of total retired coal capacity will be within three regional transmission operators -- the Midcontinent Independent System Operator, PJM Interconnection and SERC -- all of which fall within the Eastern Interconnection. The EISPC, which commissioned the ICF's report, was established by the Department of Energy using stimulus funding to coordinate government officials operating in the Eastern Interconnection. It was established to facilitate regional interconnection planning and provide informational resources to regional grid operators. Nathanael Massey, E&E reporter Republished from GreenWire with permission. GreenWire covers the energy and environmental policy news. Click here for a free trial Copyright E&E Publishing      

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27 апреля 2013, 17:33

GOP Faces Woes In Key States

DES MOINES, Iowa -- Republicans are struggling to recruit strong U.S. Senate candidates in states where the party has the best chances to reclaim the majority in Washington. It's a potentially troubling sign that the GOP's post-2012 soul-searching could spill over into next year's congressional elections. The vote is more than 18 months away, so it's early. But candidate recruitment efforts are well underway, and thus far Republicans have been unable to field a top-tier candidate in Iowa or Michigan. In those two Mideast swing states, the GOP hopes to make a play for seats left open by the retirement of veteran Democrats. The GOP is facing the prospect of contentious and expensive primaries in Georgia and perhaps West Virginia, Republican-leaning states where incumbents, one from each party, are not running again. President Barack Obama is not on the ballot, so Republicans may have their best chance in years to try to retake the Senate. Changing the balance of power in the Senate would put a major crimp on Obama's efforts to enact his agenda and shape his legacy in the final two years of his presidency. Republicans need to gain six seats to gain control of the Senate. Democrats will be defending 21 seats to Republicans' 14, meaning the GOP has more opportunities to try to win on Democratic turf. Only recently, Republicans were reveling in the fact that several veteran Democrats were retiring in states where the GOP had not had a chance to win in decades. Last week, Democrat Max Baucus of Montana became the latest to announce his retirement in a state that typically tilts Republican. But so far there's been a combination of no-thank-you's from prospective Republican candidates in Iowa, slow movement among others in Michigan and lack of consensus elsewhere over a single contender. All that has complicated the early goings of what historically would be the GOP's moment to strike. In the sixth year of a presidency, the party out of power in the White House usually wins congressional seats. Democrats, despite this historical disadvantage, are fighting to reclaim the majority in the U.S. House, where control will be decided by a couple of dozen swing states. After embarrassing losses in GOP-leaning Indiana and Missouri last year, the new Republican Senate campaign leadership is responding by wading deep into the early stages of the 2014 races. Strategists are conducting exhaustive research on would-be candidates, making hard pitches for those they prefer and discouraging those they don't, to the point of advertising against them. The hope is to limit the number of divisive primaries that only stand to remind voters of their reservations about Republicans. "It's more about trying to get consensus and avoid a primary that would reopen those wounds, rather than the party struggling to find candidates," said Greg Strimple, a pollster who and consultant to several 2012 Republican Senate campaigns. The party's top national Senate campaign strategists are so concerned about squandering potential opportunities by failing to persuade popular Republicans to run in critical states that they were in Iowa last week to survey the landscape. The visit came after top Senate prospects U.S. Rep. Tom Latham, a prolific fundraiser, and Lt. Gov. Kim Reynolds, a rising star, decided against running despite aggressive lobbying by the National Republican Senate Committee. The committee's senior spokesman, Kevin McLaughlin, and its political director, Ward Baker, met privately Wednesday with state Agriculture Secretary Bill Northey and state Sen. Joni Ernst, who have expressed interest. They invited Mark Jacobs, the former CEO of Reliant Energy, to breakfast Thursday. They also tried again, and in vain, it turns out, to persuade Terry Branstad, Iowa's longest-serving governor, to run for Senate instead of seeking another term as governor. Despite all that, the Washington delegation shrugged off the recruitment troubles. "It's more important to take the time to get it right than it is to rush and get it wrong," McLaughlin said. McLaughlin and others have lamented the national party's decision not to intervene in the candidate selection last year, when Republicans lost races viewed as winnable in Indiana, Missouri and elsewhere. The mission in Iowa for 2014 is to beat Democrat Bruce Braley, a four-term congressman trying to succeed retiring six-term Democratic Sen. Tom Harkin. Braley is the party's consensus prospect. He's won Harkin's endorsement and already has raised more than $1 million for his campaign. Democrats are similarly set in Michigan, where Democrat Carl Levin is leaving the Senate after six terms. The Democratic field has been all but cleared for three-term Rep. Gary Peters, who already has more than $800,000 toward his campaign. Last week, Debbie Dingell, wife of Michigan Rep. John Dingell, opted not to run for the Senate, after some of her key donors made clear they were for Peters. But, as in Iowa, Republicans have faced recruitment challenges in Michigan. The GOP's Senate campaign committee is planning a visit soon to Michigan and hopes to coax U.S. Rep. Mike Rogers into the race. There's a belief in GOP circles in Washington and in Michigan that the seven-term Rogers, a former FBI agent who's chairman of the House Intelligence Committee, would be a stronger candidate than two-term Rep. Justin Amash, a tea party favroite with little money in his campaign account. National Republican officials also are working to head off primaries in several states and are taking sides when they can't. That includes in West Virginia, which Republican president nominee Mitt Romney won in 2012 and where six-term Democratic Sen. Jay Rockefeller is retiring. Rep. Shelley Moore Capito quickly announced her candidacy and became a favorite of the GOP establishment. Some conservatives complained about her votes for financial industry bailouts, and former state Sen. Patrick McGeehan has announced plans to challenge her. National Republican Senate Committee officials said they would campaign and run ads against McGeehan if he appeared to be a threat. In Georgia, several Republican candidates are considering trying to succeed the retiring Republican Saxby Chambliss. But so far, the two who have entered the race are arch conservative House members Paul Broun and Phil Gingrey. National Republicans are treading carefully to avoid enraging the conservative base in Georgia. But the primary field could eventually include up to a half-dozen people. At the local level, some Republicans are worried the delay is costing precious organizing and fundraising time. "Every day Iowa Republicans spend talking about potential candidate deliberations ... is a day lost," said Matt Strawn, a former Iowa Republican Party chairman. But others say that the meddling from Washington stifles the voices of voters, who they say ought to be in charge of shaping the party's future, even if the primary is loud and divisive. "It's a truer reflection of where the Republican Party needs to go," said Iowa Republican Doug Gross, a veteran adviser to Branstad.

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25 марта 2013, 17:51

Think Tank: Cyprus 'Saved'; But At What Cost?

Authored by Raoul Ruparel, originally posted at Open Europe blog, The most positive aspect of last night’s deal was that a deal was reached at all, and that some steps have been taken to counter moral hazard. However, overall, this is a bad deal for Cyprus and the Cypriot population. Cypriot GDP is likely to collapse in the wake of the deal with the possible capital controls hampering the functioning of the economy. The large loan from the eurozone will push debt up to unsustainable levels while the austerity accompanying it (along with the bank restructuring plan) will increase unemployment and cause social tension. There is a strong chance Cyprus could become a zombie economy – reliant on eurozone and central bank funding, with little hope of economic growth. Meanwhile, the country will remain at the edge of the single currency as tensions increase between members with Germany, the ECB and the IMF now looking intent on a more radical approach to the crisis. The eurozone took this one down to the wire. But late last night, after a week of intense back and forth negotiations, a deal was reached on the Cypriot bailout. Below we lay out the key points of the deal (the ones that are known, there are plenty of grey areas remaining) and our key reactions to the deal. Key points of the deal: Laiki bank will be fully resolved – it will be split into a good bank and bad bank. The good bank will merge with the Bank of Cyprus (which will also take on Laiki’s circa €8bn Emergency Liquidity Assistance – a last-resort funding system outside the usual ECB operations). The bad bank will be wound down over time with all uninsured depositors (over €100,000) taking significant losses (no percentage yet but some could lose all their money above the threshold). The Bank of Cyprus will be recapitalised using a debt to equity swap and the transfer of assets from Laiki. Uninsured depositors will take large hits in this process – again no percentage but reports suggest up to 40%. These actions will be taken using the new bank restructuring plan passed in the Cypriot Parliament on Friday. Crucially, no further vote will be needed in the Cypriot parliament since there is no direct deposit levy. The banks will not receive any of the €10bn bailout money, the entire recapitalisation will be done using the tools outlined above. Not clear when the banks will reopen but significant capital controls are likely to be in place, creating a risk of Cypriot euros being “localised”. Further tax increases may be included in the detailed plan to be drawn up between the two sides. What does this deal mean for Europe? 1. Europe once again sidestepped democratic procedure to secure a deal: By removing the deposit levy and forcing losses on depositors through the bank restructuring the eurozone was able to dodge a tricky second vote in the Cypriot Parliament. Although the bank restructuring proposals were approved in the Parliament on Friday, it is not clear that all Cypriot MPs were fully aware of how far the restructuring tools could be pushed. However, it’s likely that the final deal that will actually activate the bailout loan – the Memorandum of Understanding – will need approval of the Cypriot Parliament, so there may be another vote yet to come. Parliamentary approval is not guaranteed but voting it down would again be close to a vote to leave the euro.   2. A change in tack from Germany and the ECB: Germany has made it clear that it is no longer willing to foot the bill for extensive bailouts without the recipient country taking a share of the burden and making some radical changes. The ECB, by setting an ultimatum, has signalled that it is willing to use the significant leverage and control which it has to force what it sees as the desirable outcome, meaning it is becoming an increasingly political actor (which its mandate does not allow). In combination with the sense of unfairness that has been built on all sides, this could serve to entrench the North-South standoff in the Eurozone, making future talks trickier.   3. Will the Troika break up? Reports overnight and throughout the week have shown that this relationship has become increasingly strained, particularly between the IMF and the European Commission. Some strains were visible also over the Greek debt sustainability analysis, but looks to be far worse this time around. With Germany and the northern countries insistent on the IMF’s continued involvement there could be further conflict. Any future bailout deals will likely remain strained because of this.   What does this deal mean for Cyprus? 1. Despite avoiding taxing small depositors, political upheaval looks likely: Although the most controversial aspect of the original plan was dropped there will likely be some political fallout. Ultimately, the government in Cyprus has been shown up by the crisis, with both the Finance Minister and President reportedly threatening to resign at various stages. Furthermore, the bank restructuring will likely cause significant unemployment.   2. The standard of living and the wider economy could collapse: Cyprus’ position as a financial centre could be over. There are few other alternatives for growth. One option that remains is tourism, but with a significantly overvalued currency it is not clear to what extent Cyprus can take advantage of this. The capital controls will severely hamper liquidity in the economy, while it will be very difficult for the small island to trade with the rest of the world (it is far from self-sufficient). The collapse in GDP could be anywhere between 5% and 10% this year, depending on how long capital controls are imposed, while the resulting collapse in tax revenue could make the government’s position worse. There is a strong chance Cyprus could become a zombie economy – reliant on eurozone and ECB funding to function, possibly requiring further bailouts.   3. The capital controls will keep Cyprus teetering at the edge of the euro: As we noted over the weekend, these controls are severe and could de facto lead to Cyprus being seen as out of the euro. Ultimately, money is no longer fungible between Cyprus and the rest of the Eurozone and, at this point in time, it’s hard to argue that a euro in Cyprus is worth the same as a euro elsewhere. The real problem though may not be imposing the controls but removing them – Iceland still has capital controls in place, five years after it installed them (despite having the advantage of a devalued currency).   4. Is Cypriot debt sustainable? A key goal throughout these negotiations has been to make Cypriot debt sustainable (unlike under the Greek bailouts). We do not believe this has been achieved due to the likely collapse in GDP noted above. A €10bn bailout will push Cypriot debt to GDP to 140% - if Cypriot GDP falls by just 5% this year, that rises to 148%.   What is the geopolitical fallout of this deal? There is yet to be a clear reaction from Russia but Russian depositors are likely to be hit hard by this deal. Russia’s First Deputy Prime Minister Igor Shuvalov has suggested today that an extension of the €2.5bn loan given to Cyprus is not guaranteed – something which the eurozone indicated was necessary last night. Separately, Russia remains the key energy supplier for most of the EU and has already issued veiled threats around this deal – such as a withdrawal of money from the EU and a switch-away from euro currency reserves.   Central banks once again dodge losses: Overnight it became clear that the ECB and IMF were insistent that the ELA must be moved from Laiki bank to the Bank of Cyprus as part of the deal. The main reason for this must be to avoid the Cypriot Central Bank taking losses on the ELA, which would have been counterproductive as it would have to have been recapped by the Cypriot government, a cost which would need to be added to the bailout bill. This episode does highlight that the assets pledged as collateral at the ELA are basically worthless and that avoiding central bank losses will always be a key objective in any bailout negotiations. Worryingly, once the banks reopen (capital controls notwithstanding) money will likely flow out, leading to an increase in ELA and reliance on central bank funding.   Are there any positives from this deal? The main positive is that a deal was finally reached, the alternative would likely have been messy for the eurozone and the EU. There is some reduction in moral hazard, since those who invested in the large undercapitalised banks are footing the bill – as opposed to all depositors. Some trust in terms of the deposit guarantee below €100,000 may have been restored. Senior bank bondholders in Laiki and possibly Bank of Cyprus will be bailed in (taking losses) – although this may not raise much cash, it is the correct order in which to restructure the banks. These small points will provide little comfort as the Cypriot population endures the harsh reality of rising unemployment, fiscal consolidation, private sector stagnation and internal devaluation, all while under stringent capital controls.  

23 марта 2013, 01:51

Poster Contest Celebrating Fossil Fuels Triggers Heated Energy Debate In Utah

A controversial, state-sponsored pro-fossil fuels Earth Day poster contest for children has triggered a heated and divisive debate about Utah's reliance on non-renewable energy resources. The debate has revealed a much more complicated struggle -- fueled by politics, big business, and a concern for the environment -- that is now being waged to determine the future of Utah's energy resources and environmental health. Organized by Utah's Division of Oil, Gas and Mining and sponsored by the Society of Petroleum Engineers, the 2013 Earth Day poster contest's theme was "Where would WE be without oil, gas and mining?" The contest was open to Utah students in grades K-6, and according to the informational pamphlet provided to principals and teachers, the first objective of the competition was to "improve students’ and the public’s awareness of the important role that oil, gas, and mining play in our everyday lives." The deadline was March 20. (Story continues below)Credit: Facebook/Utah Division of Oil, Gas and Mining Jim Springer, the Division of Oil, Gas and Mining's Public Information Officer, told The Huffington Post that this was the second year the contest had been held. Informational pamphlets for the contest were given out to all Utah schools, but it was then up to the discretion of the schools themselves as to whether or not they would participate, he said. When asked if he thought the poster contest was in any way problematic, Springer said teaching children about fossil fuels is important because they're an indispensable part of modern life. "Fossil fuels are not going to go away anytime soon. Alternative forms of energy are great and continue to be explored, but they're not going to be able to meet our [global] demand in the future," he said. "Even around Earth Day, we need to think about the responsible development of oil, natural gas [and other fossil fuels]. Without them, we don't have the economy, we don't have jobs, we don't have modern society." While the poster contest has apparently remained under the radar since its inception, over the last few weeks, a wave of indignation has been swelling as parents, activists and concerned citizens alike have voiced their shock and outrage at the competition's premise. Over the weekend, a parent of an elementary school student in Farmington, Utah, wrote a letter to the editor of the Salt Lake Tribune expressing his exasperation. "I’m furious," wrote Colby Poulson, whose son was provided materials for the contest by his teachers. "Why is the state backing an "Earth Day" contest that celebrates fossil fuels, while completely ignoring the adverse effects that their use and extraction can too often have on our air quality, water quality, public lands and the other organisms we share the world with?" After Poulson's letter was published, a movement against the poster competition began to rally. And now, pushing back against the original contest, the grassroots environmental advocacy group Utah Moms for Clean Air has organized an alternative competition of its own. Also open to students in grades K-6, the counter-contest's theme is "Explore the Economic, Environmental and Health Costs of Fossil Fuels on Utah." The deadline for the contest is April 19. "I was horrified and dumbfounded when I heard about the [Division of Oil, Gas and Mining's] contest," Cherise Udell, the group's founder, told The Huffington Post over the phone on Thursday. "So I took my outrage and turned it into a Jon Stewart-style skewering." "Utah is a laughing stock of the nation, if not the world, for the absurdity of promoting a fossil fuel contest for Earth Day," she continued. "We need to show the world that not everyone in Utah is on board with this. We're getting back some of our dignity, dignity for our state." In a follow-up conversation with Udell on Friday, she said that Utah Gov. Gary Herbert, who endorsed the Division of Oil, Gas and Mining's poster contest last year, had refused to endorse the Utah Moms' competition. "It's a blatant bias that's totally inappropriate," she said, adding that she feels let down by the state's leadership. The poster contest has cast a spotlight on a pressing and continuing debate about energy resources in Utah -- a state that is heavily reliant on nonrenewable fossil fuels and that some environmental activists say is in the pocket of Big Coal and the fossil fuel industry. "It's certainly safe to say that Utah is the most fossil fuel-dependent state in the nation," Matt Pacenza, Policy Director of HEAL Utah, an environmental organization that has for years pushed back against the state's nuclear energy program and that advocates for sustainable energy production and use, told HuffPost. "There is almost no renewable electricity made in Utah that's used in Utah." Coal, petroleum and natural gas account for 98 percent of Utah’s energy consumption, according to a 2011 report about Utah's energy issues published in the Hinckley Journal of Politics. Coal itself, described as a "backbone" of Utah's economy, supplies almost half of the energy consumed in the state. Utah's dependence on fossil fuels, such as oil and coal, has been a central factor in the state's worsening pollution problem. As the New York Times reported in February, air pollution in and around the state's capital has become so bad in the last few months that it has "prompted warnings from local doctors, spawned protests at the State Capitol and [has] led to a variety of legislative proposals in the hopes of confronting the problem before it gets worse." Fracking for natural gas (an industry that is fast becoming a "key sector Utah’s economy, valued at over 2.6 billion dollars in 2008") is also potentially a problem for the state, said author Caroline Gleich in her Hinckley Journal report. "[T]he state is failing its residents, present and future," she wrote. "This failure is from a lack of preparation, planning, and oversight for future energy production and consumption, and overall ignorance of adverse environmental impacts from Utah’s current energy portfolio." Environmentalists say that one of the most distressing things about the current energy situation in Utah is that the state actually has a huge potential for producing renewable energy, such as wind and solar power. In fact, in a 2010 study commissioned by HEAL Utah, it was found that "careful development of Utah’s abundant renewable energy resources can provide a technically sound, economically feasible, and reliable long-term strategy to meet Utah’s growing energy needs through the middle of this century." The state's wind, solar, and geothermal resources could fulfill almost 100 percent of Utah's energy needs, the study concluded. Terry Marasco of the Utah Clean Air Alliance said that, ultimately, the state-sponsored poster contest has revealed a deep-rooted imbalance in Utah -- an imbalance that has pitted the people who are pro-renewables and those who are pro-fossils against one another, rather than promoting dialogue and cooperation. "Utah has such a huge reserve of gas, shale, coal, tar sand, etc. and it's become a 'let's burn, let's get the income' kind of state. [The state's leadership] is careful not to tread on the toes of the fossil industries -- huge amounts of income come from that," Marasco, who's also a member of Utah Moms for Clean Air, told HuffPost. "The thing is, it's not that we want [fossil fuel production] to stop altogether, it's more a question of how to make it cleaner and to mitigate it so that health risks and costs are reduced dramatically." As for the poster contest, which Marasco called "insidious," he said the problem was not just that the competition was aimed at children who are "very vulnerable" and whose "belief systems are just beginning," but that it didn't provide a balanced perspective. "It implants in children the idea that this stuff is okay. It doesn't include the down side of these things -- like, my grandmother might die two years sooner, or I might get asthma. That's the balance that's missing in Utah," he said. "We need to show the balance and what the real cost [of fossil fuels] is and then kids can make their own decisions."