Joseph Krist

Publisher

WIND

A federal judge ruled that Orsted could restart work on Revolution Wind, a large wind farm off the coast of Rhode Island. The $6.2 billion Revolution Wind project was 80 percent completed when the Interior Department ordered construction to stop. The Interior Department cited unspecified national security concerns and argued that the project failed to comply with some conditions of its permit, including coordinating with the U.S. Navy to avoid risks to military operations.

The judge found that Revolution Wind “has demonstrated likelihood of success” on its claims, and said the company would suffer “irreparable harm” if the Trump administration order to stop work remained in place. That meets the test for rejecting efforts to dismiss the suits. A loss for the Administration would be seen as positive for the Vineyard Wind project in Massachusetts and the proposed project off the Maryland coast.

It’s just another step in what has become a confusing process if you are trying to see trends in the wind sector. The same administration that is fighting the Massachusetts and Maryland projects is supporting other projects in court. On Sept. 8, the Interior Department’s Bureau of Ocean Energy Management filed a letter which indicated that it wants to dismiss a lawsuit brought by the anti-wind group Protect Our Coast NJ that challenges New York’s Empire Wind.

The judge noted that ​“mandating the immediate pause to construction of a project whose approval the Bureau continues to defend in other cases is the height of arbitrary and capricious.” Coastal Virginia Offshore Wind the only offshore wind farm currently being built in a Republican-led state. There is also a gubernatorial and legislative election in Virginia this November. So, there is an interest in letting the project continue at least through the election.

BRIGHTLINE SAFETY FUNDING

The Trump administration announced it is committing $42 million to address safety concerns along the Brightline route, as officials respond to the train’s record as the deadliest major passenger railroad in the nation based on deaths per million miles traveled. More than 180 people have been struck and killed by Brightline trains. Some 104 of those incidents were in the three years ending August 31 of this year. The company has not been found liable for any fatalities. Just over 40% of the incidents were suicides.

The USDOT is releasing funding for four grants that had first been announced under the Biden administration but were lacking finalized agreements. Some $25 million in federal funds are dedicated to 33 miles of protective fencing and landscaping at trespassing hotspots, warning markings at rail crossings and 168 crisis-support signs meant to address people who are suicidal. The Florida Department of Transportation and Brightline have each committed an additional $10 million for the measures. Construction is expected in 2026.

RENEWABLES

According to the US Energy Information Administration, batteries are expected to account for roughly a quarter of all installations to the grid this year. According to the American Clean Power Association, in the second quarter of this year battery installations were 63 percent higher than the same period last year. At the same time, the Trump administration’s continuing efforts to eliminate renewable power continue unabated.

The market is clearly sending a different signal than does the President. The One Big Beautiful Bill Act includes  “foreign entities of concern” (FEOC) provisions set to take effect in in January aiming to prohibit imports of components from primarily China. The impact is clear given how China is the leading producer of battery components.  In 2026, storage projects will need to spend 55 percent of costs on non-FEOC components, a percentage that increases to 75 percent by decade’s end.

LNG TERMINALS

Louisiana’s four operating LNG export facilities are the most of any state in the country, and by themselves represent more than 60% of all LNG exports from the U.S. So, it is not a surprise that Woodside Energy’s $17.5 billion production and export facility broke ground in Calcasieu Parish. It is the first LNG plant to receive approval after President Trump declared a domestic energy emergency. The plant is expected to begin operations in 2029. It will add 16.5 million metric tons per year of LNG, and could grow to produce and export another 11 million.

The project is projected to support more than 4,400 jobs at the site during construction, a majority of which will be American workers. It expects another 15,000 direct jobs on the project once complete. The project is also being constructed within a designated foreign trade zone, which offers some relief on taxes and customs duties. Woodside – an Australian firm – took over the Louisiana LNG project in its billion-dollar acquisition of the Houston-based Tellurian in 2024.

TRANSPORTATION FUNDING

The realities of the current economy combined with efforts to reduce federal financial support for transportation continue to show up as one indicator of a less rosy outlook for state finances. Efforts to resolve the Commonwealth of Pennsylvania’s FY 2026 budget continue to drag on. Funding for mass transit is being held back as legislators battle over to raise new funds or reallocate existing funds.

In Oregon and Vermont, shortfalls in transportation revenues are leading to job cuts. In Oregon, a proposed agreement to fund transportation has been repeatedly postponed due to a legislator’s health issue. The transit agency for the Portland, Ore., area, Tri-Met, announced it would eliminate up to eight bus lines as well as reduce the frequency of service on other lines as soon as November without a funding package.

Vermont’s Department of Transportation is laying off 16 employees and cutting a dozen more vacant positions. The cuts are designed to offset losses of revenue. Beyond laying off workers, the plan will save $2 million by delaying the planned replacement and expansion of a vehicle garage, save $500,000 by putting off a plan to improve the platform at the Amtrak station in Rutland, cutting back equipment acquisition.  

HOSPITALS

The Westchester County Health Care Corporation (WCHCC), operates the Westchester Medical Center including operations at the Valhalla campus and the MidHudson Regional Hospital in Poughkeepsie, New York. The system will assume full ownership and operational control (previously 60% owned) of Bon Secours Charity Health System with hospitals in Rockland and Orange Counties.  It is the sole member of HealthAlliance’s hospitals in Ulster and Delaware Counties. The Valhalla campus is leased from Westchester County, although WCHCC has not been required to pay rent under the conditions of the lease agreement.

WCHCC is the only tertiary and quaternary care provider between New York City and Albany. Often a provider of regional trauma care, it is highly dependent on Medicaid for revenues so it is at risk for changes going forward as the impacts of the OBBBA roll out over the sector. As it faces these pressures, WCHCC has received a boost in its ratings outlook.

Moody’s) has revised the outlook for Westchester County Health Care Corporation (WCHCC) (NY) and Charity Health System (CHS) (NY) to positive from negative. The Caa1 revenue bond ratings were affirmed. The outlook revision to positive from negative reflects stabilizing liquidity as new bond proceeds will cover CHS’ November bullet payment, vendor obligations, and provide working capital. As these issues are addressed, the expectation is that additional outside liquidity support would be available.

One of the constraining factors on the credit is the low level of liquidity on the balance sheet. Some of that reflects the construction of a new building which is expected to generate higher more profitable demand beginning next year.

Owensboro Health, Inc. (OHI) is a three hospital system with the flagship hospital located in Daviess County in western Kentucky. The hospital is designated as both a sole community provider and a rural referral center. That puts it at the center of the debate over the federal role in funding these safety net facilities. A heavy reliance on government payors and the risks to Medicaid funding posed by recent legislation create challenges for a system which already was supported by state Medicaid supplemental funding.

Nonetheless, Moody’s revised OHI’s rating outlook to positive from stable and affirmed its Baa2 revenue rating. It cited a lack of new debt and sufficient cash flow to service debt. The plan is to reduce leverage and build cash to debt over 80% next year. 

CHICAGO

The Chicago City Council members approved an agreement to pay $90 million to 180 people who said they were victims of a unit with corrupt police officers who fabricated evidence, charged drug dealers a “street tax” and falsely arrested people at a public housing complex in the early 2000s. The settlement is expected to be paid next year which means it should be accounted for in the city budget which is due for submission to the Council in mid-October. It is no secret that the City faces the next stage of an ever-worsening fiscal crisis, with a projected deficit of $1.15 billion for the next year.

The Civic Federation has weighed in on the approval of a balanced budget by the Chicago Public Schools (CPS). “The District continues to face projected structural deficits of over $500 million annually, carries pension obligations and debt burdens that constrain its flexibility, and oversees aging facilities with an estimated $14 billion in backlogged maintenance.” The plan represents a political defeat for the Mayor in that it does not include a $175 million pension contribution from CPS.

FEDERAL HOUSING POLICIES

The New York City Housing Authority provides affordable housing for nearly 521,000 New Yorkers through buildings it owns and operates, as well as through rental subsidy vouchers that enable low-income tenants to afford to rent units in the private market. NYCHA carries out federal housing programs largely relying on federal funding, with smaller revenue streams from tenant rents and City and State sources. The current estimate to bring NYCHA’s apartment real estate portfolio into a state of good repair is estimated to top $78 billion over 20 years. Nevertheless, NYCHA now faces federal proposals to substantially reduce funding for public housing and vouchers.

NYCHA owns and operates about 157,000 apartments in 251 housing developments serving more than 312,000 residents across all five boroughs. NYCHA is by far the largest Public Housing Authority (PHA) in the United States. For context, the locations with the next largest PHAs are Puerto Rico (54,000 apartments), Chicago (20,000 apartments), and Philadelphia (13,000 apartments).3 Over 300,000 New Yorkers live in NYCHA public housing. There are currently over 241,000 families on NYCHA’s waitlist.

The median household income is about $26,000 for public housing residents, and the average rent paid by a NYCHA tenant is $628 per month. NYCHA’s operating expense budget for fiscal year 2025 is $5.4 billion. The largest expense is Section 8 payments, inclusive of Tenant-Based and Project-Based Vouchers. Other expenses in NYCHA’s operating budget include staffing, utilities like fuel and water, contracts for maintenance such as plumbing and painting, and fringe benefits to employees.

NYCHA’s operating expense budget for fiscal year 2025 is $5.4 billion. The largest expense in NYCHA’s operating budget is Section 8 payments, inclusive of Tenant-Based and Project-Based Vouchers. Other expenses include staffing, utilities like fuel and water, contracts for maintenance such as plumbing and painting, and fringe benefits to employees.

NYCHA has several revenue sources, but most of these operating expenses are funded by the federal government. In 2025, 67% of NYCHA’s revenue comes from the federal government—43% from Section 8 and 24% in other federal subsidies, mainly HUD’s public housing operating subsidy. Tenant Rents comprise 20% of 2025 revenues. Only 5% of NYCHA’s operating budget is funded by the City.

The proposals from the Trump administration would combine these programs into one backed by block grants. They proposed a two year cap on rental assistance for all “able-bodied adults” to “ensure a majority of rental assistance funding through States goes to the elderly and disabled.” Given the acute shortage of affordable housing in New York City and notably low rents relative to market rate housing, the average tenancy of a NYCHA resident is 25 years and 15 years for a Section 8 voucher holder

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

ZONING EARTHQUAKE

A long term goal of California advocates for denser transit oriented housing is on the edge of achievement as we go to press. Senate Bill 79 would “upzone” neighborhoods immediately surrounding train, light rail and subway stations in many of the state’s most populous metro areas. That means apartment developers will be able to construct residential buildings — some as tall as 75 feet — regardless of what local zoning regulations dictate.

The legislation is meant to create a path for more apartment developments in areas closest to jobs and services. By centering that development around public transit stations, it’s meant to steer more people away from cars and towards buses and trains. SB 79 would also give transit agencies the ability to develop their own land, giving them another potential revenue source.

SB 79 only targets homes within a half mile of train stations, subway stops, “high-frequency” light rail and commuter rail stops and fixed-route “bus rapid transit” lines. Buildings within the nearest quarter mile of Amtrak stations, Bay Area Rapid Transit stops and Los Angeles subway stations can top out at roughly seven stories. The rezoning with the new rules not taking effect until at least 2032. The legislation would only apply to counties with at least 15 passenger rail stations. According to its sponsors, just eight counties fit the bill: Los Angeles, San Diego, Orange, Santa Clara, Alameda, Sacramento, San Francisco and San Mateo.

SOLAR CHARGE PROPOSALS

There are some 9,000 residential solar installations in the Colorado Springs Utilities (CSU) service area. Calculations done by CSU revealed non-solar customers are covering on average $600 annually for solar customers. The utility says the issue stems from timing mismatches between energy production and consumption. It’s the old argument that solar is produced in the daytime but energy demand is highest in the nighttime.

A rate case hearing is scheduled with city council for Oct. 14. If passed by city council, the increased rate would go into effect Jan. 1, 2027. Solar customers with Colorado Springs Utilities could see their monthly bills increase by $50, potentially matching what non-solar customers pay. CSU customers are already seeing a series of five annual general rate increases. The credit is a solid AA so there doesn’t seem to be a financial issue driving the new solar rate.

In Nevada, the Public Utility Commission of Nevada unanimously approved a new rate design for customers in the southern portion of the state. It adds a daily demand charge for residential and small business customers that could add more than $30 to some monthly bills. It is designed to make solar less attractive for small scale sites. Shifts to the net metering program in the utility’s northern service territory, where it will calculate credits for energy returned to the grid every 15 minutes, rather than monthly as it does now are expected to negatively impact solar power users. The net metering changes would reduce annual solar customer compensation by $136

ELECTRIC ECONOMY

The US solar industry installed 7.5 gigawatts (GW) of capacity in Q2 2025, a 24% decline from Q2 2024 and a 28% decrease since Q1 2025. Solar accounted for 56% of all new electricity-generating capacity added to the US grid in the first half of 2025, with a total of 18 GW installed. Combined, solar and storage accounted for 82% of new capacity in the first half of the year. Texas installed the most solar capacity in the first half of 2025 (3.8 GW), followed by California, Indiana, and Arizona.

Every segment saw declining volumes except for commercial solar. Much of that growth was specific to California In Q2 2025, the residential segment installed 1,064 MW of solar capacity, declining 9% year-over-year and 3% quarter-over-quarter. Several bankruptcies of major residential solar companies also contributed to lower installation volumes. Then there are the implications of the OBBBA.

The solar industry will no longer have access to the Section 48E and 45Y tax credits after 2027 or the Section 25D tax credits (for customer-owned residential solar) after 2025. if a solar project starts construction on or before July 4, 2026, it has at least four years to come online to earn tax credits. Otherwise, solar projects that begin construction after that date must be placed in service by the end of 2027 to be eligible for 48E and 45Y credits.

The geopolitical aspect of new regulations could prove to be another hurdle to solar. The share of a project’s costs that cannot be paid to “companies that are headquartered in China or that have ties to China” starts at 40% in 2026 and increases five percentage points a year to 60% in 2030 and beyond. US solar projects rarely source solar panels from China. Many parts of the supply chain are fed by China headquartered companies or include technologies with patents held by Chinese companies.

While all of this is sorted out, Rivian the electric truck manufacturer officially broke ground on its huge manufacturing facility in Georgia. The news comes in the wake of concerns raised by ICE arrests at a Hyundai plant in Georgia. The company currently makes a high-end pickup truck and SUV in Normal, Illinois, as well as delivery vehicles for Amazon and others. Its truck prices start at $71,000.

The Illinois plant will begin making the smaller R2 next year, with prices starting at $45,000. The Georgia factory is projected to be able to make 200,000 vehicles yearly starting in 2028. Rivian plans another 200,000 in capacity in phase two, volume that would spread fixed costs over many more vehicles. the Rivian expects to produce 40,000 to 46,000 vehicles to deliver this year, down from 52,000 last year. The company says it’s limiting production in part to launch 2026 models.

POLITICS AND PORTS

Beginning next month, the new port usage fees will be imposed on Chinese containerships, bulk carriers, and other cargo vessels. The U.S. Trade Representative has claimed that these levies will reduce U.S. demand for Chinese shipping and provide investment incentives to U.S. shipbuilders. U.S. shipyards primarily build naval vessels, with commercial shipbuilding representing a tiny fraction of total output. Building ships in the United States is far more expensive than it is in Asia due to higher labor costs, environmental regulations, and the absence of the economies of scale enjoyed by Chinese, Korean, and Japanese shipyards. 

The U.S. LNG industry will be among the hardest hit by these new port fees. No LNG carriers have been built in the United States since the 1970s. No U.S. shipyard has the infrastructure or technical expertise to build one. Last year Chinese-built ships accounted for an estimated 30% of all visits to U.S. ports. U.S. manufacturers who rely on integrated international supply chains need costs to stay down.

It is estimated that more than half of the value of U.S. imports every year is composed of capital equipment, raw materials, and other intermediate goods – not final goods. Many of those industrial inputs – from electronics and automotive parts to machine tools and chemicals – flow into the United States on Chinese vessels.

This is driving activity at the Port of Los Angeles. We never worry about the Port as a credit but it serves as a good indicator of economic activity and trends. In August, the Port processed 958,355 Twenty-Foot Equivalent Units (TEUs), nearly the same as last year. August 2025 loaded imports came in at 504,514 TEUs, 1% less than last year. Loaded exports landed at 127,379 TEUs, a 5% improvement from 2024. The Port processed 326,462 empty container units, 1% less than last year.

Eight months into 2025, the Port of Los Angeles has handled 6,934,004 TEUs, 4.5% more than the same period in 2024. The Port expects 4Q activity to slow relative to 2024 levels. The Port cited tariff risk as well as economic signals like slowing job growth and lingering inflation to project lower volumes.

CALIFORNIA TRANSIT PACKAGE

Senate Bill 105 was approved unanimously by the California Senate. It amended the state’s FY 2026 budget to provide funding for mass transit in the Bay area. The legislation requires the Department of Finance, with support from the state’s Transportation Agency, to look for “loan or other financing options that might be used to provide sufficient short-term state financial assistance for local transit agencies.” The deadline to complete that process is January 10, 2026.

The proposed loans to the agencies with BART the most prominent among them are designed to provide a bridge until a sustainable funding package can go before voters. A November 2026 ballot measure if voters approve it, will fund transit agencies through a retail tax of .05% to 1%, starting in 2027. Before ridership collapsed during the pandemic and the rise of work from home, 70% of BART funding came from fares. By 2023 that number was had declined to only 25%.. 

FLORIDA’S LESS SUNNY BUDGET

Florida’s Legislative Budget Commission (LBC) approved state economic estimate that projects a surplus of $3.8 billion for the 2026-27 fiscal year, but a $1.5 billion gap and $6.6 gap billion in the following budget years. Some of the projected shortfalls can be attributed to moves to balance the current budget that effectively pushed the risk of budget shortfalls to later fiscal years.

Education and health care make up more than two-thirds of the budget. One item that is not is the cost of Alligator Alcatraz. The State insists that its $200 million of sunk costs will be reimbursed by current court proceedings have found that with no federal money having been spent on the facility, it is not a given that the facility is eligible for reimbursement.

UTILITY TAKEOVER

This summer (MCN 8.4.25) we documented the travails of a small Mississippi electric utility serving the City of Holly Springs. This week, the Mississippi Public Service Commission voted unanimously to place Holly Springs Public Utility (HSPU) in receivership. By going into receivership, a chancery court judge will determine the future of the utility’s operations. Options outlined by the commission included being placed for sale, becoming a cooperative model, or eminent domain.

The utility has not completed an audit in several years. The utility’s attorney explained that HSPU is audited with the city, and Holly Springs has not had one since the early 2020s. It owes its electricity provider, the Tennessee Valley Authority, more than $6 million as well as $3 million to contractors. The report estimates the debt is between $20 to $30 million. The city admitted HSPU is understaffed and lacks qualified managers and that it cannot provide adequate service to its 12,000 customers.

MEDICAID

We have commented on the potentially devastating impact of changes to the federal Medicaid Program. Safety net hospitals are the ones at most risk. Now, a report from the NYC Independent Budget Office (IBO) details potential negative impacts on the nation’s largest public health system. New York City Health and Hospitals Corporation (HHC) is the largest public hospital system in the United States. HHC has over 43,000 employees, an operating budget of $13.5 billion, and serves over one million patients annually.

Over 65% of the system’s adult patients are either uninsured or enrolled in Medicaid.  51% of HHC’s $13.5 billion budget is generated through a combination of public insurance reimbursements and supplemental Medicaid payments. The City of New York provides a need-based subsidy to HHC that totaled 28% of its 2025 operating budget. The OBBBA did not directly adjust Medicaid reimbursement rates.

Federal changes primarily adjusted the populations who will be eligible for Medicaid. Changes in Medicaid eligibility, which may lead to an increase in the number of uninsured patients seeking care at HHC, will result in a reduction in revenues for the system, and a decrease in revenues will result in an increased need for external support.

This comes at a time when hospitals all over are considering cutbacks in the face of uncertainty. Seattle Children’s Hospital plans to lay off 154 employees due to state and federal funding cuts. The hospital, which has an estimated 10,275 employees, said it also is eliminating 350 unfilled positions. The cuts were mostly administrative, but some clinical roles were affected. Memorial Sloan Kettering Cancer Center plans to lay off between 1 and 2% of its staff.  

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

TRANSIT FUNDING BATTLES

In Pennsylvania, Gov. Josh Shapiro’s administration approved the use of hundreds of millions of dollars in capital project funding for Philadelphia’s public transit agency to help it restore bus, trolley and rail services that it had eliminated to shore up its deficit-riddled finances. The move comes in the face of stubborn resistance to any new revenues to be generated to fund mass transit. The opposition is largely partisan based. It has held up enactment of a FY 2026 budget for the Commonwealth.

The Southeastern Pennsylvania Transportation Authority [SEPTA] serves 800,000 daily riders. SEPTA had made the request to comply with a judge’s order to undo the two-week-old cuts. Those cuts were cited as factors in diminished school attendance in a system which depends on SEPTA for student transit.

The Commonwealth’s next largest city is facing a similar problem. Pittsburgh Regional Transit [PRT] is expected to ask for similar authorization. PRT has been considering service reductions of 35% to help close what it calls a roughly $100 million deficit this year. That could include eliminating 45 bus routes, reducing 54 others and eliminating one of three light rail lines.

In California, Senate Bill 63, a sales tax measure that would fund Bay Area transit was stalled in the Legislature. A state loan is intended as a “bridge” until the tax is enacted, since that funding wouldn’t start flowing until 2027. If SB 63 passes the state Legislature, it would need to go before voters. SB 63 would authorize a half cent regional sales tax in Alameda, Contra Costa, and San Francisco counties and allow Santa Clara and San Mateo and to opt in. Officials said the do-or-die deadline for transit agencies to receive the funding is spring 2026. 

In Texas, Dallas Area Rapid Transit approved plans to reduce or eliminate several bus and rail routes. The changes, set to take effect Jan. 19, 2026, are expected to save the agency $18 million in its first year and $24 million annually in future budgets. The plan includes the elimination of seven bus routes, reduced peak-hour frequency on light rail and many bus lines, and modifications to several on-demand service zones.

TRANSIT EMPLOYMENT

The impact of economics, immigration policies and trade policies is showing up in terms of employment in a sector like transportation. The Bureau of Transportation Statistics released August employment numbers. Seasonally adjusted, employment in the transportation and warehousing sector rose to 6,747,700 in August 2025 — up 0.1% from the previous month and up 1.3% from August 2024. 

The sectors which reflect commercial trade all show slowing patterns. Air transportation fell to 580,100 in August 2025 — down 0.1% from the previous month but up 2.5% from August 2024. Truck transportation fell to 1,523,000 in August 2025 — down 0.1% from the previous month but up 0.4% from August 2024. Warehousing and storage remained virtually unchanged in August 2025 at 1,829,800 from the previous month but down 1.4% from August 2024.

Transit and ground passenger transportation remained virtually unchanged in August 2025 at 484,900 from the previous month but up 3.2% from August 2024. Rail transportation remained virtually unchanged in August 2025 at 152,800 from the previous month but down 1.6% from August 2024.

You can see the rush to get ships to ports in the summer driving water transportation employment. It rose to 71,900 in August 2025 — up 0.1% from the previous month and up 2.6% from August 2024. Energy exports helped pipeline transportation rise to 61,300 in August 2025 — up 0.8% from the previous month and up 10.1% from August 2024. One source of uncertainty is the coming harvest with several crops facing lower or even no export demand. Without export markets there will likely be less shipping demand.

PUBLIC POWER AND DATA CENTERS

Salt River Project (SRP) and Google announced a first-of-its-kind research collaboration to evaluate the real-world performance of emerging non-lithium ion long duration energy storage (LDES) technologies. Google will fund a portion of the costs for LDES pilot projects developed for SRP’s grid. This is not the first time Google and SRP have worked together.

Sonoran Solar Energy Center, a 260 MW solar facility with a 1 gigawatt-hour battery energy storage system, Storey Energy Center, an 88 MW solar and battery energy storage system,and Babbitt RanchEnergy Center, a 161 MW wind farm, all support the energy needs of Google’s future data center in Mesa. Google’s current projections indicate these projects will help its Arizona operations reach at least 80% Carbon Free Energy (CFE) on an hourly basis by 2026.

SRP is a community-based, not-for-profit public power utility and the largest electricity provider in the greater Phoenix metropolitan area, serving about 1.1 million customers. SRP has nearly 1,300 MW of energy storage currently supporting its grid, which includes 1,100 MW of battery storage— spanning eight facilities— and 200 MW of pumped hydro storage. 

MUNICIPAL SOLAR

An Italy-based independent power producer has brought its first U.S. project online. ContourGlobal, headquartered in Milan, on September 4 announced the state of commercial operation for Black Hollow Sun I, the 185-MW first phase of a solar power project in Severance, Colorado. The installation is providing electricity for the Platte River Power Authority, the community-owned utility serving Fort Collins, Loveland, Estes Park, and Longmont, north of Denver.

ContourGlobal also is building the second phase of the project—the 139-MW Black Hollow Sun II—which is expected to come online by year-end 2026. the first two phases of the project, with total capacity of 324 MW, will represent the largest solar photovoltaic installation in Northern Colorado.

California’s Turlock Irrigation District announced that construction is complete at the wide-span section of Project Nexus, and the solar array is now generating electricity. California’s first solar over canals pilot project. Project Nexus combines the wide-span section with a narrow-span portion, completed earlier in March, giving the project a total generation capacity of 1.6 megawatts.

Solar over canals has long been promoted as a mitigant to two of the state’s great shortages – water and renewable energy. Evaporation from aqueduct systems is reduced thereby helping more water to flow towards end users. The idea of covers for the canals as a water conservation technique is long standing. It’s the idea of pairing it with solar that is new. It offers both environmental benefits and eliminates issues like right of way acquisition.

ENERGY SUBSIDIES

We saw them first used to support nuclear power. Energy subsidies have been provided in states like New York, Illinois and Ohio. The carbon-free nature of the generation being preserved allowed many to overcome philosophical objections to them. One had to wonder if other energy providers facing issues with economically inefficient projects might seek similar help.

In Ohio, legislators are looking for ways to subsidize the operation of coal generating facilities in the Buckeye State. There isn’t the climate angle on this issue just a desire on the part of the Ohio Legislature to help generators. The effort to support nuclear plants went so well that the Ohio House Speaker is now doing 20 years in prison.

In California, the State has offered Valero financial help to keep its refining plant in Benicia open. Benicia is home to 26,000 people and its biggest employer is Valero Energy Corporation with about 400 workers. Valero has cited costs of compliance with regulatory issues to decide that the plant is not profitable. Now, the Legislature is considering a package of financial assistance to cover between $80 million and $200 million. 

The state would pay Valero to continue operating its Benicia refinery. The state funds would likely be earmarked for routine maintenance work. The City estimates that the plant closure would have a negative $10 million impact on the City of Benecia’s budget in addition to the hit to local employment and economic activity. The refinery produces 9% of the state’s gas supply. It has been estimated that $8 a gallon gas would soon follow any closure.

GAS BANS IN COURT

Washington’s high court will directly review a lower court ruling invalidating Initiative 2066 that was approved by a narrow majority in 2024. The initiative is intended to slow Washington’s shift from natural gas toward technology like electric heat pumps. It targets changes made to the state’s energy code that offer builders incentives in the permitting process for choosing electric heat pumps – which provide both heating and cooling in the same unit – instead of natural gas furnaces. It seeks to repeal provisions in a year-old state law  intended to accelerate Puget Sound Energy’s transition away from natural gas. It prevents approval of utility rate plans that end or restrict access to natural gas, or make it too costly. 

Upon voter approval, the state’s building associations went to court to challenge the initiative. Initially, King County Superior Court Judge ruled that the initiative is because it runs afoul of a provision limiting citizen initiatives to no more than one subject and requiring them to contain the full text of the portion of state laws they would alter. Supporters of the initiative are the parties which drove the request for direct Supreme Court review.

KEY BRIDGE REPLACEMENT

Rebuilding Baltimore’s Francis Scott Key Bridge could cost more than $5 billion — more than double the $1.9 billion estimate Maryland officials outlined in the immediate aftermath of the collapse. In the final days of former President Joe Biden’s administration, Congress enacted a bill requiring the federal government to fully fund the bridge’s rebuild. Now, the President is threatening to defund the project by withholding federal dollars.

Two representatives have introduced amendments to reduce the federal cost of replacing the bridge. One would provide $1 billion now but with the prospect that that could be the end of funding. Other representatives have suggested that no federal dollars be committed until insurance payments and yet to be litigated payments are tallied. That doesn’t get the bridge rebuilt. It does lengthen the time of the project, raise its costs, likely result in a larger net federal spend than would have been the case.

COLORADO RIVER

Negotiations drag on over disagreements between the seven Colorado River states on how to reallocate ever declining water flows. Current regulations are in effect through the end of 2026. While efforts to reach an agreement continue, the Bureau of Reclamation announced cuts on the river would continue into next year. In 2026, the river will again be in what are known as Tier 1 shortages, with Arizona and Nevada facing cuts. Arizona’s will amount to roughly 18 percent, or 512,000 acre-feet.  The Bureau of Reclamation expects water levels at Lake Powell to only be 27 percent full next year. 

GEORGIA BATTERY DILEMMA

“When you build a factory or install equipment at a factory, you need technicians. But the United States doesn’t have that workforce, and yet they won’t issue visas to let our people stay and do the work,” he said. “If that’s not possible, then establishing a local factory in the United States will either come with severe disadvantages or become very difficult for our companies. They will wonder whether they should even do it.” – South Korean President Lee Jae Myung

There are real concerns about the implications of the raid on a Hyundai battery factory. The factory uses non-American parts and systems and given the difficulties manufacturers face generally in finding employees, the move is problematic. The State of Georgia and the county where the plant is located have pledged some $2-3 billion in tax incentives. Georgia is home to about 100 Korean-owned facilities employing 17,000 people. That includes an SK Battery America EV battery factory, Hanwha Qcells’ solar panel plant, and a Kia EV manufacturing facility. Now, operations will be delayed by three months.

This situation parallels many other factory startups. Modern manufacturing relies on a wide variety of proprietary systems and parts. Often, a company will employ contract workers with particular skills to get plants up and running. As is the case in Georgia, those workers train the ultimate local holders of those jobs. It is a dynamic repeated across the country, the difference is that the needed skills and technology are not available here but from a foreign source.

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

GAS

Jacksonville Electric Authority (JEA), the municipal utility for Jacksonville, Florida, plans to spend $1.57 billion to develop a 675-MW combined cycle gas plant, replacing an older unit that will retire in 2031. The new gas plant will be located at the site of the former St. Johns River Power Park, a complex of coal fired generation developed in the early 1980’s to move JEA off imported oil. It would replace a 50 year old unit.

In Texas, legislators conceived of the Texas Energy Fund in the spring of 2023, with the goal of incentivizing and accelerating the construction of more natural gas power plants to support the state’s strained power grid. In the aftermath of the disastrous winter storm experience in 2021, the idea certainly made sense to some. The Fund was authorized to make $7.2 billion worth of low-interest loans and bonus grants to fund gas generation.

That has not resulted in large scale development of gas generation. Only two new proposals have been approved so far through the Fund’s In-ERCOT Generation Loan Program, one of four programs included in the fund intended to motivate energy companies to building new gas power plants. The two loans, both to be paid back over 20 years at a 3% interest rate, would account for $321 million of the $7.2 billion total. The plants would have a capacity to generate 578 megawatts of electricity.

The program is running into a problem. Of the 25 total loan applications that have advanced to the fund’s due diligence review stage, seven have been pulled from consideration by the companies that filed them, citing supply chain issues or forecasts that the projects would not be as profitable as expected. An eighth application was denied funding last fall when there were charges of fraud.

The Electric Reliability Council of Texas (ERCOT), the state’s power grid operator, is predicting energy demand in the state will double by 2030. Legislators this spring extended the deadline for spending the $5 billion they approved in 2023. Under the original legislation creating the fund, the PUC had until the end of this year to distribute the money earmarked for power plant construction loans.

RENEWABLES

The United States added more than 15 GW of new electricity generation resources between January and May this year, according to the Federal Energy Regulatory Commission. Renewables dominated the growth led by 11.5 GW of solar, followed by 2.3 GW of wind and 1.3 GW of gas. Gas still constitutes 43% of the country’s total generating capacity. Coal is 15% and declining; solar is a little over 11%; wind is 11.8%; and nuclear is 7.7%.

Out of 133 GW of “high probability” additions expected to come online by 2028, FERC projects that 84% will be from solar (90 GW) and wind (23 GW). Gas is projected to make up about 20 GW — just 15%. Solar continues to grow as it has been the largest source of new generating capacity added each month for 21 consecutive months, since September 2023. It is estimated that at least 25%-30% of U.S. solar capacity comes from small-scale systems, such as rooftop arrays, that are not included in FERC’s data. In addition to new generation, the grid saw 244 miles of new transmission lines reach completion.

The growth of renewables and the cost effectiveness of those facilities is what makes the federal attitude towards wind seem insane. The recent spate of threats to “de-permit” offshore wind and the infrastructure to support wind threatens way more jobs than the average American thinks. One of the factors supporting the decision to relent on efforts to stop the Empire Wind project off NYC was the 1,000 on-shore jobs that were expected to result from the project.

That economic and jobs impact has not been enough to change the administration’s mind towards wind. Several projects had received federal support in great part because of the jobs potential of supply terminals for the industry. Just this week, the administration’s meat ax was taken to the Sparrows Point Steel Marshalling Port Project, which had been awarded $47.3 million in Port Infrastructure Development Program.

Others on the hit list include the Arthur Kill Terminal, an offshore wind port in New York, which had been allocated $48 million in PIDP funding; and the Humboldt Bay Offshore Wind Heavy Lift Multipurpose Marine Terminal, which had been allocated $426.7 million in Nationally Significant Freight and Highway Projects funding.

These decisions come in the wake of the Department of the Interior issuing a stop work order so that the 700 MW project off the Rhode Island coast could no longer proceed.  The administration also intends to revoke the approved construction and operations plan for the 2 GW Maryland Offshore Wind project off the coast of Maryland and Delaware.

SINGING FOR THEIR RATING

The Metropolitan Opera is the largest performing arts organization in the United States. The Met’s annual budget is about $334 million. The loss of attendance during the pandemic began to accelerate trends of declining financial results and attendance. That led to drawdowns on the Met’s endowment is now valued at $232 million, down from $306 million in 2022. That was already considered small for an institution of its size.

Paid attendance is still below prepandemic levels: It was 72 percent of capacity in the 2024-25 season, compared with 75 percent before the pandemic. When the impact of discounting is included, the company took in only 60 percent of its potential box-office capacity last season. One saving grace: it raised an average of $174 million a year over the past three years.

With no real sign in sight of a turnaround in the Met’s outlook and a shrinking endowment, out of the box thinking was required. That has led to an agreement between the Met and the kingdom of Saudi Arabia which calls for the Met to perform there for three weeks each year. The deal is expected to bring the Met more than $100 million. For five years beginning in 2028 the Met will stage operas like Mozart’s “The Magic Flute” and Puccini’s “La Bohème” for three weeks each February.

The infusion of cash can buy some time from a ratings perspective but the Met still faces considerable headwinds. Attendance was significantly down before the pandemic. Changes in the offerings alienated long time attendees without generating increased attendance from younger audiences. Management acknowledges that donations – an always important revenue source – from younger donors has been disappointing.

UNIVERSITY OF CALIFORNIA

Most if not all of the attention focused on the President’s war on academia has been on private institutions, especially the Ivy League. Recent efforts by the administration have been directed at the University of California (UC). UC “receives over $17 billion per year from the federal government — $9.9 billion in Medicare and Medicaid funding, $5.7 billion in research funding, and $1.9 billion in student financial aid per year. “We would need at least $4-5 billion per year to minimize the damage” according to the school president.

Already, more than $500 million in federal grants have been suspended at UCLA. The government is asking for $1.2 billion to restore them. The Governor wants UC to sue but legally it’s not his call. The Board of Regents has that task. As this process plays out, it represents another potential source of pressure on the State’s budget. It is noted that Harvard scored an initial legal victory against its loss of research funding in its parallel dispute with the President.

PASSING ON THE SALT

The Corpus Christi, TX City Council moved to cancel a contract for a seawater desalination plant. The plant was projected to help the city attract additional industrial development. Proposed in 2019, the cost was projected at $160 million. In July, project manager Kiewitt produced an initial design and cost estimate that put the project at $1.2 billion and expected its operations to begin in summer 2028. That was not going to work. It still leaves the city in a very precarious water supply position.

The project was initially planned to begin operations by 2023. Much of the projected industrial expansion materialized but the new water supply did not. The last seven years have seen drought conditions in the city’s water shed. So, an insufficient supply of replenishing rain was accompanied by sharply increased water use by the expanded industrial base.

Initially, the proposed plant would produce 10 MGD. In 2020, the yield projection was doubled and then raised to 30 MGD. That helped to increase costs substantially. At the same time, the city is under pressure from the Governor’s office which said the state would cut all funding to Corpus Christi if it didn’t proceed with the plant. 

Without additional water supply, Corpus Christi could face an emergency situation by December 2026, city officials said, forcing a 25 percent reduction of water use by the large industrial users. Corpus Christi intensified its water-use restrictions for citizens this year in March, banning all outdoor water use. Industrial facilities were exempt from drought restrictions under special city rules. The city will explore other water projects, including groundwater import and wastewater recycling. A possible large-scale groundwater import project wouldn’t likely be completed until 2030

CLIMATE RISK

A private study funded by a real estate entity has taken another shot at quantifying the risk to real estate in the U.S. The results provide support for concerns about the potential impact of natural disasters, especially flooding. It’s findings are not really surprising.

The study finds that 26% of U.S. homes are at severe or extreme risk, with flood risks particularly underestimated by the federal government. Nearly 6 million homes ($3.4 trillion in value) face severe flooding in the next 30 years, about 2 million more than FEMA estimates, due to outdated flood maps. Major metro areas like Miami, New York, Tampa, Los Angeles, and Houston collectively hold hundreds of billions of dollars in at-risk property.

Miami-Fort Lauderdale-West Palm Beach leads in total property value at risk of severe flood and wind damage, with all homes in certain metros such as Miami and Houston classified as highly vulnerable. Miami homeowners paying an average of 3.7% of a home’s value in annual premiums—the nation’s highest rate. New Orleans and several Florida metros show the highest share of homes exposed to flood risk relative to overall property value. 

California holds nearly 40% of the nation’s total wildfire-exposed property value, some $3.4 trillion, with Los Angeles and Riverside as the hotspots of concern. Outside California, western cities such as Colorado Springs, Colo., and Tucson, Ariz., also face high wildfire-related property threats.

NUCLEAR

The Tennessee Valley Authority announced an agreement with ENTRA1 Energy to develop up to 6 GW of new nuclear power in the largest U.S. small modular reactor deployment program to date. The agreement calls for ENTRA1 to develop and own six “energy plants” across TVA’s seven-state territory. The nuclear company would then sell their output to the federal utility.

The project will utilize small modular reactors developed by NuScale Power. ENTRA1 holds the rights to commercialize, distribute and deploy NuScale’s products and services. The Nuclear Regulatory Commission in May granted approval of NuScale’s 77 MW power module and the company’s design for a small modular nuclear plant with a capacity of 460 MW.

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.