Joseph Krist

Publisher

It’s time to take some time to enjoy the summer here in the mountains. To that end, we will publish our next issue dated September 1. Enjoy the weather and the long Labor Day weekend!

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CHICAGO

The budget season is officially under way in Chicago as the two major entities – the City and CPS- begin their budget processes. CPS has an earlier deadline for submitting its budget – this month versus mid-October for the City. As things stand in Chicago, a budget gap for fiscal 2026 has been forecast for the City’s budget of $1.1 billion. This most recent estimate comes as the Chicago Public Schools face near term deadlines for the development and enactment of a budget. CPS also faces a significant budget gap but it also is dealing with requests by the City that CPS pick up additional pension costs currently funded by the City.

The funding of those pensions has been a core source of dispute between the Mayor and the City. The last school CPS CEO left after disagreeing with the Mayor’s plan for CPS to issue debt to fund annual pension requirements. So, it came as a bit of a surprise when the replacement CEO also did not want the pension hit on their budget or balance sheet. That major dispute needs to be worked out.

The City faces a range of unsavory choices in taking steps to fill the projected budget gap. Among them are raising garbage collection fees from the current $9.50 a month to as high as $52 could net $296.9 million a year, according to the mayor’s list of ideas. Others include reviving a head tax, under which big companies pay $4 a month per employee, which could raise $25.6 million; reinstating a property tax escalator that pegs annual property tax increases to the rate of inflation.

New items could include charging a professional services tax on things like haircuts, lawn care and car repair which could yield an estimated $305 million for the city. That would require approval in Springfield, making any effort too late for the FY26 budget. The Mayor is considering asking universities, churches and other nonprofits to make a payment in lieu of property taxes (PILOT) which could raise $52 million annually.

WIND

Recently, it was estimated that as much as $317 billion in lost investment could result from efforts by the Trump administration to stop wind generation development. That figure is based on the 790 projects totaling 213 gigawatts that developers plan to build in the years to come — all of which are at risk of delay or even cancellation under the administration’s policies.

One approach is that the US DOT has proposed a 1.2-mile setback in a country with as many highways and railroads as ours would restrict development on a huge swatch of the country’s land. Even just accounting for the Interstate Highway System and the network of U.S. highways, this would go a long way to stopping many projects in their tracks.

The New Jersey Board of Public Utilities delayed offshore wind power transmission infrastructure in the state by more than two years. The BPU said the decision follows President Donald Trump’s move to block plans for offshore wind development. The board also canceled its approval of the Atlantic Shores wind project, a two-phase wind farm between Atlantic City and Barnegat Light. The developer had requested that the contract for the project be cancelled this past June.

Orsted, the large Danish renewable energy developer, said that it would issue new shares worth 60 billion Danish kroner, or about $9.4 billion. The company said it was issuing the new shares because it was unable to carry out plans to sell a portion of Sunrise Wind, a large offshore wind project it is building 30 miles off Montauk Point in New York. Orsted expects Sunrise to begin operations in 2027.

Ørsted originally planned on building three projects serving New England and New York with Eversource Energy, a New England utility. However, Eversource sold its shares in those projects in 2023. Ørsted purchased complete control of Sunrise Wind for $625 million.

The Town of Nantucket has agreed to extend deadlines in its approval process for the Vineyard Wind project. The Town has made 15 demands of the operator after pieces of a wind turbine washed up on shore after an accident. The town’s demands fall into three broad categories: adequate communication, lighting, and emergency response planning. 

MTA

S&P Global Ratings raised its long-term rating and underlying rating on Metropolitan Transportation Authority (MTA), N.Y.’s transportation revenue bonds (TRBs) outstanding to ‘A’ from ‘A-‘. The upgrade reflects New York State’s decision to increase the payroll mobility tax for MTA’s capital programs, the initial financial success of MTA’s Manhattan congestion pricing program, ongoing recovery in ridership levels, maintenance of healthy liquidity levels, clarity regarding funding sources of the recently approved 2025-2029 capital program, and manageable projected out-year deficits.

BRIGHTLINE

This week brought the second S&P downgrade of the year for debt issued to finance the Brightline high speed rail project in Florida. S&P Global Ratings lowered to ‘BB-’ from ‘BB+’ its issue-level rating on the unenhanced bonds issued by the Florida Development Finance Corp. for the benefit Brightline Trains Florida LLC (Brightline). Brightline is looking to refinance some $985 million of project debt.

As we go to press, new bonds were offered with a 10% coupon with a mandatory put on June 15, 2026 at $104.25, putting the approximate yield on the put date at 14.891%. The $985 million Aug. 13 redemption is for Brightline Florida’s commuter bonds, which carry an 8.25% coupon and a $104.25 mandatory put on Aug. 13. 

That reflects the limited market for the debt as well as the guarded outlook for improved operating results. S&P highlighted several areas of decline relative to its own projections for ridership and revenues. Long- and short-distance ticket revenue fell short of S&P’s previous base-case forecast (April 2025) by about 28% for the trailing-12-month period ending June 2025. The ability to raise prices despite year-over-year ridership increases has stalled, particularly for long-distance trips, which account for 75%-80% of ticket revenue. Year-to-date 2025 long-distance fares have declined by 2.4% compared to the same period for 2024.

The existing right of way which helped this project avoid significant environmental and land ownership issues may now be posing a problem. The Florida East Coast Railway last month sued Brightline saying the commuter service violates existing agreements and threatens its freight operations. The next 12-18 months will be a key period for Brightline to establish reasonable operating results.

TARIFFS AND PORTS

July was the busiest month on record in the 117-year history of the Port of Los Angeles. The Port handled 1,019,837 Twenty-Foot Equivalent Units (TEUs), 8.5% more than last July. Retailers and manufacturers brought in goods at an elevated pace due to concerns of higher tariffs later this year. July 2025 loaded imports came in at 543,728 TEUs, 8% more than last year and the most imports ever in a month at the Port. Loaded exports landed at 121,507 TEUs, a 6% improvement from 2024. The Port processed 354,602 empty container units, 10% more than last year.

Seven months into 2025, the Port of Los Angeles has handled 5,975,649 TEUs, 5% more than the same period in 2024. The most recent 90 day delay in some tariffs on China will help to drive higher than average handlings but we expect some moderate slowdown to reflect the acceleration (especially from China) of shipments to beat the August 1 deadline.

FRACKING AND THE ECONOMY

About this time two years ago, we commented on the results of a report put out by the Ohio River Valley Institute regarding the impact of fracking on the economies of counties in Appalachia. (See 8.28.23) The data from that report showed that the benefits of fracking on local economies are often overstated. The project included 22 counties which produce 90% of fracked gas. The region is nicknamed Frackalachia.

The Institute has now released findings including two additional years of production. It also includes 8 additional counties which allows the report to cover 95% of the production in the area. Frackalachia is now a 30-county region in the Ohio River valley and northeastern Pennsylvania that is home to one of the world’s richest natural gas fields. The Marcellus and Utica shale plays produce nearly a third of US natural gas, an amount equivalent to 3% of global natural gas consumption. 

Between 2008, prior to the start of the Appalachian natural gas boom, and 2023, GDP in the 30 principal gas-producing counties of Ohio, Pennsylvania, and West Virginia grew nearly 13% faster than that of the nation. The Frackalachian counties, which are clustered in north-eastern Pennsylvania and in the greater Ohio River Valley, have a combined population of 1.85 million people as of 2024. If Frackalachia were a state, it would rank 39th in population just behind Idaho and ahead of West Virginia.

So that’s been good for residents, no? Apparently not. When measured by growth in population, jobs, and other measures of prosperity, Frackalachia would be one of the poorest and fastest declining states in the nation. The number of jobs based in Frackalachian counties fell by one percent even as it grew 14% nationally. Incomes in the Appalachian natural gas counties grew at a rate that was only three-quarters that of national income growth. The Appalachian natural gas counties’ population declined by 3% while the nation’s population grew by 10%.

The report comes out in the wake of ongoing efforts to push natural gas as the fuel of choice for large industrial uses. Just this year, the Ohio legislature enacted Senate Bill 2 and House Bill 15 4, which encourage the development of gas-fired power generation, particularly in conjunction with the construction of data centers, and reduce the power of local governments to regulate such development.

The Pennsylvania Senate has passed Senate Bill 102, which would prevent any municipality that imposes limits or requirements on natural gas development that are more onerous than those contained in state law from receiving any share of Act 13 impact fee revenues paid to the state by the gas producers. And West Virginia recently enacted House Bill 2014 5, which is designed to encourage the development of data centers powered by coal and natural gas.

When measured by growth in population, jobs, and other measures of prosperity, Frackalachia would be one of the poorest and fastest declining states in the nation. The findings mesh with similar shortfalls in overall economic benefits of energy development in other parts of the country. Increases in drilling in existing traditional oil fields has not increased despite the increased activities. Technological advances have enabled producers to increase production without increasing employment.

NUCLEAR

The U.S. Department of Energy (DOE) announced that 11 advanced reactor projects will participate in the Nuclear Reactor Pilot Program to move their technologies towards deployment.  The goal of the Reactor Pilot Program is to expedite the testing of advanced reactor designs that will be authorized by the Department at sites that are located outside of the national laboratories. Each company will be responsible for all costs associated with designing, manufacturing, constructing, operating, and decommissioning their test reactors. 

Disclaimer:  The opinions and statements expressed in this column are solely those of the author, who is solely responsible for the accuracy and completeness of this column.  The opinions and statements expressed on this website are for informational purposes only, and are not intended to provide investment advice or guidance in any way and do not represent a solicitation to buy, sell or hold any of the securities mentioned.  Opinions and statements expressed reflect only the view or judgment of the author(s) at the time of publication, and are subject to change without notice.  Information has been derived from sources deemed to be reliable, but the reliability of which is not guaranteed.  Readers are encouraged to obtain official statements and other disclosure documents on their own and/or to consult with their own investment professional and advisors prior to making any investment decisions.

Joseph Krist

Publisher

AUTONOMOUS VEHICLES

A Florida jury last week found that flaws in Tesla’s self-driving software were partly to blame for a crash that killed a 22-year-old woman in 2019 and severely injured her boyfriend. The jury verdict, if upheld on appeal, would require Tesla to pay as much as $243 million in punitive and compensatory damages. The jury found that Tesla bore 33 percent responsibility for the crash, and blamed the driver

for the remainder. 

The trial, in U.S. District Court for the Southern District of Florida in Miami, focused attention on the safety of Tesla’s driver-assistance system, known as Autopilot. This was the first federal jury trial stemming from a fatal accident involving Autopilot. Tesla has won at least one similar case filed in a California court and settled several others.

The decision comes just weeks after Tesla began limited testing of autonomous taxis in Austin, Texas. Elon Musk said in a recent conference call with investors that the service could cover half the population of United States by the end of the year. That would be unlikely. Federal safety officials were aware of at least 211 accidents from 2018 to 2023 involving Tesla cars operating with Autopilot engaged, according to evidence presented during the trial.

FEMA AND A DISASTROUS SUMMER

FEMA has been in the news for mostly the wrong reasons whether it be delays in request processing, poor communications and cumbersome processes. Originally, the Trump administration pledged to end the agency at the end of fiscal 2025 in September. That idea was quickly undermined by the magnitude of the Texas flood disaster. It is emerging how unprepared Kerr County was.

FEMA provides two types of aid after a declaration – one program is for individuals and one for local governments. The fund available to localities (Public Assistance) is much bigger. They get reimbursed for debris removal and repairs to public buildings. These grants operate as a cost-share, with the federal government covering a minimum of 75% and localities paying the rest. The program has indeed grown exponentially over time.

In fairness, two of the highest spending years were for costs related to COVID-19 responses. Nevertheless, the trend of annual growth would still be on a steady trend upwards without those “black swan” events. Now, the Trump administration is following through on an earlier pronouncement. FEMA comes to town when damages exceed a certain threshold: a state’s population multiplied by $1.89. 

NASHVILLE TUNNEL

Transportation has been a significant issue in Nashville. Prior efforts to expand transit service as well as improve traffic conditions in the city. One project which failed to get voter approval would have involved the construction of a tunnel designed to speed through traffic. It succumbed to issues of equity and cost as well as current political winds.

Now, the state’s Governor seems to have decided that what Nashville needs is not a tunnel to move traffic through town but instead a tunnel to the City’s airport. The Governor seems to feel that cutting the commute to the airport from 15 to 8 minutes warrants a tunnel. He’s been helped to that conclusion by the Boring Co., the Elon Musk entity that digs tunnels to support proposed “hyperloops”.

Despite pitches to cities like San Jose, Nashville and even Dubai,just one of Boring Co.’s public proposals have progressed beyond the planning stage. To date, the company has only begun construction in Las Vegas, and while the city has approved 68 miles of tunnels, Boring has dug about eight miles, with fewer than four miles currently operational.

Given the highly politicized history of mass transit funding and development in Nashville, the approval of a lease of state land and the proposed tunnel has been a driver of opposition. The project was announced on one day and a lease approved later that same week. Then it was found that on July 18, the state issued a temporary license with the company, permitting it to access the three-quarter acre lot to begin work nearly two weeks before the lease was approved. 

The company is on the hook for $250,000 if conditions of the agreement are not met, but is otherwise permitted to use the property for free during the 22-month lease. 

SOLAR

The Minnesota Court of Appeals ruled that Xcel Energy can retroactively reduce payments to most of the roughly 30,000 Minnesotans who subscribe to community solar gardens. Community solar subscribers pay solar garden operators for the energy produced by their shares and receive corresponding bill credits from their electric utilities. Xcel used the standard cost shift arguments to support their position.

Minnesota cities, school districts and universities warned reducing the credit rate would broadly increase costs to the public. In public comments, the cities of St. Paul, St. Cloud and Burnsville said the change from bill credits based on the retail rate of electricity to a lower “value of solar” formula would cost them each millions of dollars over the remaining years of their 25-year contracts. Minneapolis said 65 of its 80 community solar subscriptions would flip from saving to costing the city money, risking a property tax rise.

In California, the California Supreme Court ordered a lower court to reconsider a state policy that reduced how much utilities have to pay homeowners with rooftop solar panels for the energy that they send to the electric grid. The court did not deem the new net metering policies were illegal but said a State Court of Appeal had erred in affirming the policy without fully reviewing it and by being too deferential to state regulators.

The Los Angeles Department of Water and Power (LADWP) announced the completion of the Eland Solar-plus-Storage Center project. The power generated by both phases of the Eland project will meet 7% of LA’s total energy consumption. The Eland Solar and Storage Center is located across more than 4,600 acres of desert. Eland’s massive facility includes 1.3 million solar panels and 172 storage batteries.

In December 2024, the first phase of the project was completed. The full operational Eland facility can provide more than 1,170 megawatts of renewable energy to Los Angeles, according to the LADWP. All energy generated from the project will be sold to Southern California Public Power Authority participants, including the LADWP under 25 year contracts.

Eland is unique in that it is LADWP’s first utility-scale, integrated solar and battery project. LADWP has over 1,100 megawatts (MW) of utility-scale solar previously installed. two large-scale solar facilities will capture a combined 400 megawatts of solar energy and store up to 1,200 megawatt-hours (MWh) of energy.

CLIMATE LITIGATION

A South Carolina state judge dismissed the City of Charleston’s lawsuit against fossil fuel companies. The judge found that while the lawyers argued the claims were about deception, “they are premised on, and seek redress for, the effects of greenhouse gas emissions.” He said that those issues fall squarely under federal and not state law, and that the court lacked jurisdiction over out-of-state companies. A 2021 U.S. Court of Appeals decision in the Second Circuit in a similar lawsuit filed by New York City against oil companies found that the municipalities could not use state tort laws to hold multinational companies liable for damages caused by greenhouse gas emissions.

At the same time, three state supreme courts that have affirmed lower court rulings against the companies’ motions to dismiss, in cases brought by Boulder, Colo., Honolulu and the state of Massachusetts. The Supreme Court in January of this year declined to hear a challenge to a lawsuit filed by Honolulu against oil companies over their role in global warming.

The Supreme Court in March declined to entertain argument that aimed to restrict states from suing oil companies for financial damage related to climate change.

The argument was brought to the high court by 19 Republican attorneys general, representing states including Alabama and West Virginia, who were trying to prevent other states, led by Democrats, from pursuing lawsuits against the oil industry. Those states include California, Connecticut, Minnesota, New Jersey and Rhode Island.

GEORGIA P3 FEDERAL LOAN

The U.S. Department of Transportation announced a loan of up to $3.89 billion from the Build America Bureau to a public-private partnership between the Georgia Department of Transportation (GDOT), the State Road and Tollway Authority (SRTA), and SR 400 Peach Partners LLC (Peach Partners). The State Route 400 Express Lanes Project will add new lanes in both directions along a 16-mile section from the Metropolitan Atlanta Rapid Transit Authority (MARTA) North Springs Station to one mile north of McFarland Parkway.

The design is intended to facilitate current MARTA and XPress bus connections.  Peach Partners will also provide $75 million in future bus rapid transit (BRT) related improvements. MARTA will operate the future BRT system, which is expected to share the express lanes for approximately 12 miles. The USDOT previously allocated up to $3.4 billion in Private Activity Bonds to this project, bringing the total investment to approximately $7.5 billion. This piece of the financing is a TIFIA loan.

The project calls for Peach Partners to provide a $3.8 billion concession fee to GDOT that can help fund other roadway projects as part of the public-private partnership agreement.

WIND STILL BLOWING

The federal government can stop a lot of things on public land and right now those efforts are aimed at renewables especially wind. Whether at sea or on land, the Trump administration will do all it can to slow wind generation deployment. That doesn’t mean that all new projects will be halted in their tracks. Private projects on private land are not in the federal purview.

Minnesota Power has released plans to construct the 200-megawatt Longspur Wind project in west-central North Dakota. The proposed wind farm will consist of 45 turbines and will be located in Morton and Mercer counties, just west of Bismarck and adjacent to the company’s existing Bison Wind Energy Center—a facility with 165 turbines already generating around 500MW of wind power for the region.

The Longspur project will employ the existing infrastructure, including substations and the company’s 465-mile transmission line linking central North Dakota to northeastern Minnesota. Construction is scheduled to commence in 2026, with commercial operations expected to begin by the end of 2027. All this pending required multiple approvals at both state and county levels.

Dominion Energy’s 2.6-GW Coastal Virginia Offshore Wind project is still on schedule for completion by the end of 2026, and should qualify for Inflation Reduction Act tax credits under the new safe harbor deadlines according to company management. Dominion estimates that the new tariffs will make the project more expensive by $506 million, increasing the total cost of the project to $10.9 billion. The added expenses will increase customer bills by an average of three cents a month over the entire life of the project.

CARBON CAPTURE

Archer-Daniels-Midland anticipates resuming injection later this summer at its storage site in Decatur, IL. For more than 10 months, the carbon dioxide injection well which typically sends 2,000 metric tons of CO2 underground per day has been idled. It has gone unused after testing showed evidence of a potential fluid leak. Last year EPA issued a violation order to it, alleging the company had failed to meet the requirements of its Class VI permit and allowed CO2 and other fluids to move into unauthorized zones.

Class VI wells are used to inject CO2 underground for long-term geologic storage.

EPA said ADM needs to complete steps documented in an April letter from EPA to ADM before resuming CO2 injections. EPA has 235 applications for a Class VI now under review. Half of those applications have been submitted over the past 12 months. ADM is in the process of seeking approval from to EPA to add another Class VI injection well.

NUCLEAR

NextEra Energy has filed a request with the US Federal Energy Regulatory Commission seeking to reclaim interconnection rights that were previously transferred from the no longer operating Duane Arnold nuclear power plant in Iowa to a solar energy project. The single-unit 615 MWe boiling water reactor plant was taken out of service in 2020. The plant was the only operating nuclear unit in Iowa and had been producing around 9.2% of the state’s electric generation and 19% of its emission-free electricity.

A year ago, NextEra confirmed that it is looking into restarting the Duane Arnold nuclear power plant. In January this year, the company filed a licensing change request for Duane Arnold with the US Nuclear Regulatory Commission. The company said that instead of developing a solar energy project at the site, it now plans to “reaggregate Duane Arnold’s original interconnection rights to accelerate the recommissioning of the facility”.

In New York State, the Department of Public Service proposed extending the current subsidy program for Constellation’s four nuclear reactors from the current end date of 2029 through 2049. The payments would come from ratepayers. New York was one of the first states to subsidize nuclear power plant operations with direct funding to operators.

SEPTA FUNDING

Like its compatriots in Chicago, California and Seattle, SEPTA the Philadelphia area mass transit agency is facing its own “fiscal cliff”. This week, SEPTA said that the legislature needs to approve new funding by Aug. 14 or it would move forward with its first stage of fare hikes and service cuts. The state legislature is considering a plan which would increase the amount of state sales tax revenue transferred to public transit by 1.75 percentage points.

Transit has been a major obstacle to budget enactment. The commonwealth has roughly $11 billion in financial reserves. This will quickly be pressured as many agencies especially non-profit service providers rely on timely state payments for payroll and operating expenses. Republicans who control the state Senate have argued that more transit funding should be accompanied by a dedicated funding stream, such as taxing slot-like skill games, and more money for roads and bridges.

Neither the state House nor Senate is scheduled to return to Harrisburg for voting sessions until next month. It is possible that as has been the case in past years, lawmakers could adopt a short-term, six-month deal. After a period of timely budgets followed years of delayed ones, the Commonwealth seems to be falling back into its old ways.

Disclaimer:  The opinions and statements expressed in this column are solely those of the author, who is solely responsible for the accuracy and completeness of this column.  The opinions and statements expressed on this website are for informational purposes only, and are not intended to provide investment advice or guidance in any way and do not represent a solicitation to buy, sell or hold any of the securities mentioned.  Opinions and statements expressed reflect only the view or judgment of the author(s) at the time of publication, and are subject to change without notice.  Information has been derived from sources deemed to be reliable, but the reliability of which is not guaranteed.  Readers are encouraged to obtain official statements and other disclosure documents on their own and/or to consult with their own investment professional and advisors prior to making any investment decisions.

Joseph Krist

Publisher

TOURISM – NY LAS VEGAS

Evidence is starting to amass which shows the impact of efforts to restrict immigration is lowering economic activity. The impact is clear in places where tourism is a significant contributor their local economies. Las Vegas has been seeing a decline in visitors and casino handle. According to data from Smith Travel Research, hotel occupancy in Las Vegas fell 14.9% in June. The data worsened in July, with the city posting the sharpest decline in the nation for the week ending July 5, when occupancy fell to 66.7% — down from last year.

A major factor in the decline is fewer international visitors, which dropped more than 13% in June alone. International visitors will soon need to pay a “visa integrity fee” of $250. The fee will apply to all visitors who are required to obtain nonimmigrant visas to enter the U.S. This comes as Las Vegas was already battling with the economic impacts of lower visitor levels. According to the Nevada Department of Employment, Training, and Rehabilitation, the Las Vegas metro area ended 2024 with an unemployment rate of 5.9%, the highest of any large metro area in the country.

New York City expects 2 million fewer international visitors in 2025, a 17% decline with $4 billion in lost tourism spending. It is a problem because foreign visitors make up only 20% of arrivals but account for 50% of all tourism spending. The steepest declines are from Western Europe (Germany down 28%, UK down 14%) and Canada (car trips down 38%, air travel down 24%). The numbers were expected to be positive at the beginning of 2025. The impact has been so pronounced that estimates were significantly reduced in May.

VINEYARD WIND

Vineyard Wind, the offshore wind farm off Massachusetts, is now sending power to the grid from 17 of its planned 62 turbines, and another six are fully installed. This despite the pressures from the effort by the Trump administration to not only stop supporting wind turbine generation but to try to impede the operation of the existing wind generation fleet. A broken turbine blade and its impact on Nantucket is expected to lead to litigation against the project.

In the interim, Nantucket’s select board gave Vineyard Wind two weeks to respond to a list of demands, including that it meet deadline requirements for notifying local officials of emergencies. Violations could result in fines up to $250,000, the town said, although it was unclear how such a policy would be enforced. Fiberglas fragments of a massive wind turbine blade that broke apart off Nantucket began washing ashore last summer during the peak of tourist season after pieces of the blade at the Vineyard Wind project began falling into the Atlantic Ocean in July.

NATURAL GAS

The federal court for the Northern District of New York upheld New York state’s “gas ban” legislation. New York’s legislation is the first statewide law that restricts natural gas use in new buildings, effectively banning gas stoves and other fossil fuel appliances in most new construction starting in 2026. The plaintiffs argued that New York’s legislation is preempted by the federal Energy Policy and Conservation Act (EPCA), which prevents state and local governments from setting their own standards concerning energy efficiency or energy use of appliances.

The court also ruled that New York’s prohibition on the installation of fossil-fuel equipment does not concern the “energy use” of covered products as defined by EPCA and is therefore not preempted. 

NUCLEAR

The Nuclear Regulatory Commission issued a series of approvals that allows the owner of the closed Palisades Nuclear Plant in Michigan to continue its process of restarting operations. The approvals allow Holtec to begin the fuel loading process starting in August. The Nuclear Regulatory Commission said that this is the first time a nuclear plant has been granted an operating license after being licensed for decommissioning.

ELECTRIC VEHICLE SALES

A record 607,089 EVs were delivered in the first six months of the year, but sales in the second quarter were still lower than in Q2 2024. A big part of that Q2 decline has to do with Tesla. Tesla doesn’t report its sales, but it delivered an estimated 60,000 fewer vehicles in Q2 compared to a year ago. General Motors sold 46,280 EVs in Q2, more than double its sales in the same period last year. Rivian reported lower deliveries in the second quarter. It reiterated that it still expects to build a new headquarters and an EV factory in Georgia. Smaller EV company Lucid says it delivered 3,309 cars in Q2. 

BIG BEAUTIFUL IMPACTS

Cuts to SNAP are coming. The One Big Beautiful Bill reduces federal spending on the program by 15% by 2034. One in five New Mexicans uses SNAP—the highest rate in America. The state reckons that it is set to lose somewhere between $224m and $352m in federal funding in the first year alone. Almost 60,000 New Mexicans are likely to become ineligible for support. SNAP is available to those at or below 130% of the federal poverty line, around $3,400 per month for a family of four. 

Previously, the federal government paid for all SNAP benefits, ensuring that even poor people in poor states received support.  From 2028, the amount states will pay will be based on the amount of SNAP payments they disburse incorrectly, known as the error rate, on a sliding scale. Those with a low-enough rate can avoid paying entirely, while those that send more than 10% of payments incorrectly will have to pay for 15% of benefits. The national average is 11%

INCOME EXPERIMENT OUTCOMES

The movement to provide guaranteed incomes as a way to improve the lives of lower income Americans has long championed the perceived value of these plans. In some places like Stockton, CA, a guaranteed income program was conducted on a small scale with some positive results. Monthly payments were provided and contrary to the predictions of many, recipients used the money responsibly and the program was seen as a limited success.

Now, a new study of certain guaranteed income programs has challenged those results. Baby’s First Years is the first study in the United States to assess the impact of poverty reduction on family life and infant and toddlers’ cognitive, emotional, and brain development. One thousand eligible mothers were recruited in hospitals at the time of their child’s birth across four sites — New York City, greater New Orleans, the Twin Cities, and the Omaha metropolitan area. Mothers receive a monthly unconditional cash gift of either $333/month or $20/month for the first 52 months of their child’s life. Recruitment of study participants began in May 2018 and ended in June 2019. 

What the study found was that after four years of payments, children whose parents received $333 a month from the experiment fared no better than similar children without that help, the study found. They were no more likely to develop language skills, avoid behavioral problems or developmental delays, demonstrate executive function or exhibit brain activity associated with cognitive development.

Children in the families getting the higher cash payments did no better on tests of vocabulary, executive function, pre-literacy skills or spatial perception. Their mothers did not rank them more highly on assessments of social and emotional behavior. And they were no more likely than the children in the low-cash group to avoid chronic health conditions like asthma.

FIRE INSURANCE

Wildfires continue to pressure utilities as they attempt to manage the risk of wildfire associated with poorly maintained equipment and management of the environment susceptible to damage from their equipment. The companies have been seeking a variety of ways to reduce or eliminate their potential for claims for damages from wildfires. The latest iteration of such a financial management strategy is being reviewed in Nevada.

In January, NV Energy asked the Public Utilities Commission (PUC) to allow it to establish a $500 million wildfire self-insurance policy to protect its customers from risk associated with a catastrophic fire caused or exacerbated by the utility’s equipment. the self-insurance policy would see NV Energy collecting funds from customers to cover potential losses, instead of purchasing traditional insurance from a third party insurer. The policy would cover any damages utility customers sustained in a fire if the blaze was found to be started by NV Energy’s equipment — it would not cover damages to the utility’s equipment or facilities.

The average Northern Nevada residential customer would see their bill increase by about $2.40 per month, while an average Southern Nevada residential customer would see an increase of about $0.50 per month (accounting for the higher risk of wildfire in Northern Nevada). By having customers pay into the fund over the next decade, the utility’s total wildfire insurance would exceed $1 billion.

The move comes as the availability and cost of insurance continues to steeply increase. In 2018, NV Energy paid approximately $1.35 million for insurance and received approximately $485 million in coverage, meaning each dollar paid resulted in about $360 dollars in coverage. For coverage this year, the company paid $54.34 million, receiving about $405 million in coverage — despite paying roughly 50 times more, each dollar results in less than $7.50 worth of coverage.

BIG TROUBLE FOR A SMALL UTILITY

The Holly Springs Utility Department serves some 12,000 retail electric customers in and around this small northern Mississippi town. It has provided power purchased from the Tennessee Valley Authority since 1935. In recent years, the utility has gained a reputation as an unreliable provider with opaque finances.

A winter storm in 2023 left some customers without power for two weeks. That and the lack of significant visible efforts to address reliability and/or resilience challenges drove political support to empower the State Public Service Commission to examine the utilities financial and operating issues. Now the findings of the review are out.

“Allowing them any more time would be fruitless as well as disrespectful to the utility’s long-suffering customers. “We believe our report makes clear that the City and (utility department) lack sufficient technical, operational, and management expertise to effectively reverse the downward trajectory this electric system has been on for some time,” 

That’s harsh but true. The legislation backing the appointment of the consultant also allows the PSC, if it finds the utility can’t provide “reasonably adequate electric service,” to request a court-ordered receivership for the utility. The state’s consultant found that Holly Springs service falls below that standard. So, the state appoints a receiver and problem solved? Not so fast. The consultant recommends exploring one of the following options: selling the utility to another city or cooperative utility; converting it to a cooperative to open up access to low-interest loans; or eminent domain or condemnation. There was doubt expressed as to whether another entity could be found to manage a receivership.

The Tennessee Valley Authority is suing the city of Holly Springs for breaching a contract by continuing to mismanage its electric department. TVA, which has sold power to north Mississippi city since 1935, alleges Holly Springs breached a power contract between the two parties by taking funds from its utility department when it shouldn’t have, as well as by failing to make timely payments, increase its retail rates to customers, and provide regular financial updates to TVA.

ICE AND THE CALIFORNIA ECONOMY

The actions of federal immigration officers to carry out deportation policies in greater Los Angeles and agricultural areas of the state. There has been much speculation as to the potential economic impact of the reduced pool of labor resulting from ICE efforts at enforcement. The first of what will likely be many studies is out quantifying the impact.

A June report from the Bay Area Council Economic Institute found that, based on their wage contributions to the economy alone, undocumented workers generate nearly 5% of California’s gross domestic product. With 2.28 million undocumented immigrants living in California, they represent 8% of workers in the state. Researchers calculated the state’s agricultural industry would contract by 14% and the construction industry would shrink by nearly 16%. 

Early reports from farmers are also not optimistic, with groups reporting severe labor shortages during peak harvesting season for many crops. Local hotels and other businesses that rely on tourism are heavily reliant on the immigrant workforce. Visit California, the state’s marketing agency, in May projected international visits would decline by 9.2% in 2025, due to negative sentiment toward the Trump administration’s trade policies.

MASS TRANSIT

The Los Angeles County Metropolitan Transportation Authority settled a lawsuit over alleged violations of state and federal law and Metro policy related to a multimillion-dollar contract to update subway cars ahead of the 2028 Olympics. The authority agreed to pay $250,000 to settle a lawsuit that alleged it violated state and federal law and its own manufacturing policy related to a multimillion-dollar contract with South Korean Hyundai Rotem to build at least 182 rail cars to replace much of its aging fleet.

Metro said “the delivery timeline has not been impacted” by the lawsuit. The transit agency still expects to receive 42 cars ahead of the Games, as was laid out in the original proposal. An additional 140 cars are expected to be delivered by May 2030.

In New York, the MTA is proposing raising the base transit fare by 10-cents to $3, with no customer paying more than $36 for subway and local bus rides in a seven-day period, according to the MTA. Monthly and weekly commuter rail passes would increase by 4.4% and tolls on bridges and tunnels would go up by 7.5%.

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