January 15, 2021

New Rules and Old Plants May Strain Summer Energy Supplies

But that may not be the case in the future as stricter air quality rules are put in place. Eastern utilities satisfied demand that day — July 21 — with hefty output from dozens of 1950s and 1960s coal-burning power plants that dump prodigious amounts of acid gases, soot, mercury and arsenic into the air. Because of new Environmental Protection Agency rules, and some yet to be written, many of those plants are expected to close in coming years.

No one is sure yet how many or which ones will be shuttered or what the total lost output would be. And there is little agreement over how peak demand will be met in future summers.

The E.P.A. estimates that a rule on air toxins and mercury that it expects to complete in November will result in a loss of 10,000 megawatts — or almost 1 percent of the generating capacity in the United States. Electricity experts, however, say that rule, combined with forthcoming ones on coal ash and cooling water, will have a much greater effect — from 48,000 megawatts to 80,000 megawatts, or 3.5 to 7 percent.

The Southern Company, which like most coal-burning power companies opposes the new standards, said on Aug. 4 that it would retire 4,000 megawatts of coal-fired generation under the proposed rules. It warned that the closings would “significantly impact customers and the overall U.S. economy as a result of higher costs for electricity and reduced reliability.”

American Electric Power, a multistate utility based in Columbus, Ohio, is saying it will retire 6,000 megawatts. Much of that was scheduled to retire anyway, but the rules have stepped up those retirement dates.

Robert W. Perciasepe, the deputy administrator of the E.P.A., said his agency had not estimated all the retirements that would be set off by rules it was still preparing. His agency, he said, was trying to move promptly through rulemaking and “provide the rational basis for utility planning, instead of this continually rolling ball of uncertainty, which allows people to speculate, and creates a situation where it’s very difficult for competent utility planners to do the work they need to do.”

He said the E.P.A. had been regulating power plant emissions for 40 years, and where necessary to keep the grid stable, had granted delays and exemptions.

The industry is concerned. PJM Interconnection, the regional unit that set the demand record on July 21, has suggested that the E.P.A. rules would put the grid’s reliability at risk. “E.P.A.’s analysis of the impact of the proposed rule may understate the level of expected generation of plant retirements and does not provide sufficient flexibility or time to address potential localized reliability concerns,” it wrote in a statement filed with the agency.

The most likely replacement for the coal plants is new natural gas-powered generators. But PJM and others are complaining that if the E.P.A. follows its intended schedule, utilities will not have much time to decide whether to close or upgrade their old plants, and no one will have time to build new ones.

Marc de Croisset, an analyst for the investment bank FBR, said the uncertainties arose from the scale of the plant closings. “It’s a major transformation,” he said — the biggest since the electric companies shifted away from oil in the 1970s, possibly larger.

On July 20, a record was also set farther to the west, reported by the Midwest Independent System Operator, a parallel organization that stretches from Michigan to Montana and Manitoba.

On Aug. 1 and 2, the Southwest Power Pool, which covers an area from Kansas to New Mexico, set a record. Texas, which is an electrical island in its grid operation, also set new records. And New York State, which forms its own electrical jurisdiction, has come within a whisker of doing so.

Most of the old records had been set in a heat wave at the end of July 2006. Peak electricity use in the intervening years has been stunted by the natural variability of weather and a recession.

The new peaks will shape the planning of the grid. In the eastern United States, electricity is mostly generated near where it is consumed, and if some producers disappear, someone will have to build new generation or new transmission to supply the area from a distant source.

“You always manage toward the peak, and have a reserve margin based on your latest peak,” said Tom Williams, a spokesman for Duke Energy, which does business in areas that experienced a new peak.

Article source: http://feeds.nytimes.com/click.phdo?i=b3a6a8cce52f55a54c7512be94cc9995

Pork Belly Futures Market Closes, but We’ll Still Have Bacon

CHICAGO, July 15 (Reuters) — Chicago’s pork belly market has closed after 50 years of being the subject of jokes for movies and TV shows and satisfying Americans’ hunger for bacon, lettuce and tomato sandwiches. The Chicago Mercantile Exchange said it shut the frozen pork belly futures market at the end of business on Friday.

The closing had been expected. Trading in pork belly futures had dropped to zero in recent years after the meat industry became integrated and used fresh pork bellies instead of frozen ones to make bacon.

The contract started trading in 1961 and was the oldest existing Chicago Mercantile Exchange livestock futures contract.

Pork bellies, as the name indicates, are cuts of pork that come from the underside of the hog and are made into bacon. Demand for pork bellies and bacon increases in the summer, when tomatoes ripen and people make bacon, lettuce and tomato sandwiches.

Because pork production peaks in the autumn, the frozen pork belly contract was created as a way to give pork companies a means to cover the cost of storing, or freezing, pork bellies until the next summer, when they were thawed and processed into bacon, said a longtime Chicago trader, Bob Short.

“The name sounded attractive. Nobody knew it was bacon. It made people laugh,” Mr. Short said.

“We primarily traded the pork belly market until about five to seven years ago, when there was then no one to trade with, so we quit,” he said.

Pork bellies had their heyday in the late 1960s and 1970s, when they were the exchange’s most popular agricultural contract.

“The glamour market was the pork bellies. There was a mystique about it. Maybe it was the name,” said Harvey Paffenroth, who has been at the Chicago Mercantile Exchange since 1968.

“That was probably the biggest traded commodity at the floor of the C.M.E. They had potatoes, eggs, cattle and hogs. Cattle was a pretty good-sized contract, but it wasn’t as big as the pork bellies,” said Mr. Paffenroth.

Article source: http://feeds.nytimes.com/click.phdo?i=62a745f124a111351cb78eb8a117814a

Economix: Estimating Medicare Taxes Versus Benefits

My column this week describes some work by Stephanie Rennane and Eugene Steuerle examining the total amount of money people pay in Medicare taxes over the course of their lives, as well as the total benefits they receive. For every cohort of workers, going back to the founding of Medicare in the 1960s, the benefits exceed taxes.

If you are interested in more details, you can read this article by Mr. Steuerle. This chart has more estimates than we were able to print in the paper. This Q. and A. discusses their methodology.

To do the calculations, Ms. Rennane and Mr. Steuerle, who both work at the Urban Institute, assumed that money saved by the government would earn a 2 percent annual return, after inflation. They talk more about this in the Q. and A.

But even if they had assumed a higher rate of return — say, 3 percent — the basic finding would not change. Americans receive more in Medicare benefits than they pay into Medicare, even after including the share of the tax paid by employers and even after including Medicare premiums.

Article source: http://feeds.nytimes.com/click.phdo?i=60c3102bdffdd0721660ffd624f2e149

Eminem Lawsuit May Raise Pay for Older Artists

The artist at the center of the suit is Eminem, but some of the biggest beneficiaries of the case may be thousands of older artists who have not released an album in decades.

Four years ago, the producers who discovered Eminem sued his record label, the Universal Music Group, over the way royalties are computed for digital music, which boils down to whether an individual song sold online should be considered a license or a sale. The difference is far from academic because, as with most artists, Eminem’s contract stipulates that he gets 50 percent of the royalties for a license but only 12 percent for a sale.

“As of now it’s worth $17 million or $20 million, but on a future accounting basis, five or 10 years from now, it could easily be a $40 million to $50 million issue,” said Joel Martin, the manager of F.B.T. Productions in Detroit, which first signed Eminem and continues to collect royalties on his music. (Marshall Mathers himself, who performs as Eminem, was not a party to the suit, although he stands to earn millions from it.)

The suit reached its apparent end last week when the Supreme Court refused to hear an appeal, letting stand a lower court’s decision that digital music should be treated as a license. Lawyers and music executives say that few younger artists are likely to be affected by the decision because since the early 2000s record companies have revised most of their contracts to include digital sales among an artist’s record royalties. Eminem’s first contract was signed in 1995.

Many older artists, however, whose contracts predate digital music and have not been renegotiated, stand to profit significantly from the decision.

“This is life-changing,” said Joyce Moore, the wife of Sam Moore of Sam Dave, the duo that had hits in the 1960s like “Soul Man.” “If we were being paid a nickel a download, as opposed to 35 cents — that’s a huge amount of money for a guy that is on a fixed income or has to run up and down the road at 75 years old.”

The lawsuit argued that record companies’ arrangements with digital retailers resembled a license more than it did a sale of a CD or record because, among other reasons, the labels furnished the seller with a single master recording that it then duplicated for customers.

“Unlike physical sales, where the record company manufactures each disc and has incremental costs, when they license to iTunes, all they do is turn over one master,” said Richard S. Busch, a lawyer for F.B.T. and Mr. Martin’s company, Em2M. “It’s only fair that the artist should receive 50 percent of the receipts.”

A federal jury ruled in favor of Universal in 2009, but that decision was overturned on appeal last year. The label petitioned to the Supreme Court, which declined to hear the case.

Universal said the implications of the decision were limited.

“The case has always been about one agreement with very unique language,” the company said in a statement. “As it has been made clear during this case, the ruling has no bearing on any other recording agreement and does not create any legal precedent.”

Although current hits get more attention, older music still represents a huge portion of overall music sales, and over time durable hits can rack up significant sales. Last year there were 648.5 million downloads of “catalog” singles in the United States, meaning songs more than 18 months old, compared with 523 million for current tracks, according to Nielsen SoundScan.

Fred Wilhelms, a lawyer in Nashville who specializes in collecting royalties for musicians, said that sales of older music had provided the labels with steady income at low cost.

Article source: http://feeds.nytimes.com/click.phdo?i=082b589f0214cdbe591863b87439b4e3