Joseph Krist

Publisher

HOSPITAL MERGER

Saint Peter’s University Hospital is the largest component of Saint Peter’s Healthcare System, Inc. approximately $587 million in FY 2022 total revenue system located in New Brunswick, New Jersey. It was upgraded to Baa2 by Moody’s in 2023. While the hospital has managed to maintain adequate financial results, it faces potential pressures from the need to update an aging physical plant. It also sticks out in its market as a single site hospital which is dominated by larger systems.

This has led the hospital (owned by the Catholic Church) to pursue mergers with one of the large multi-hospital competitors in New Jersey over the last several years. Saint Peter’s previously tried to partner with RWJ Barnabas Health but ran into anti-trust action from the federal government related to the parties no longer having to compete to provide the lowest prices and the best quality and service. Both organizations mutually agreed not to go forward with that merger in 2022.

Atlantic Health System (AHS) is a large multi-hospital (6 acute care sites) system with numerous ambulatory and physician practice sites and over $5.1 billion in revenue. The System provides a broad range of adult and pediatric services over an eleven county service area, including services to Pike County in Pennsylvania and Orange County in New York. The flagship hospital, Morristown Medical Center, includes a Level III NICU, a cardiac surgery center and a children’s hospital.

In June 2024, AHS and Saint Peter’s University Hospital, NJ (Baa2 stable) signed a definitive agreement to merge. The organizations had not yet received regulatory approval as of July of this year. Now, the two entities announced that the proposed merger has been called off. This puts St. Peter’s in a tough spot as it does not have the resources on its own to make significant capital expenditures needed to keep up with competitors.

ILLINOIS AND FEDERAL CUTS

The Illinois Governor’s Office of Management and Budget (GOMB) has released its annual assessment of the state budget and its outlook reflecting a quarter of activity. Through the first three months of fiscal year 2026, several revenue sources have shown stronger than expected results, but GOMB expects the negative impacts of H.R. 1 on business tax collections will far outweigh any overperformance in other areas. As a result, GOMB estimates a combined $449 million net decrease to the General Funds revenue forecast.

The State’s three largest revenue sources (individual income tax, corporate income tax, and state sales tax) are estimated to total $43.548 billion, a net decrease of $827 million (1.8 percent) from the revenue estimate at the time of the fiscal year 2026 budget enactment.

The fiscal year 2026 budget’s revised estimated operating expenditures are $55.115 billion. This amount includes a $303 million continuing appropriation that was invoked by the State Employees’ Retirement System (SERS) at the start of the fiscal year. This continuing appropriation authority may be invoked annually to true-up the State’s contribution to the system if the previous fiscal year’s General Revenue Fund appropriated amount is less than what the certified percent contribution relative to actual General Revenue Fund personal services payments would require.

The result is an estimated deficit for fiscal year 2026 of $267 million. Based on the current assessment of revenues and maintenance budget pressures for fiscal year 2027, estimated expenditures would exceed revenues by $2.2 billion. Illinois now joins Florida and Colorado in facing looming budget gaps in the wake of the OBBBA.

OREGON TRANSPORTATION FUNDING

The Oregon legislature finally passed a transportation funding package which allows the state to avoid layoffs in the Oregon Transportation Department (ODOT). The final votes to enact the legislation were held up by one member’s health issues with interim actions keeping funding alive until a vote could be held. The legislation would raise about $4.3 billion over the next 10 years to fund road maintenance and operations by raising the gas tax by six cents, nearly doubling most vehicle registration fees and doubling the payroll tax used to support public transit from 0.1% to 0.2% of a paycheck  — among other fee hikes for electric vehicles. 

The details include a gas tax increase from $0.40 to $0.46, effective Jan. 1, 2026; an increase in annual registration fees from $43 to $85 for passenger vehicles; $63 to $105 for utility vehicles, light trailers, low-speed vehicles and medium-speed electric vehicles; and $44 to $86 for mopeds and motorcycles. The bill increases title fees for passenger vehicles from $77 to $216. The legislation also funds public transit by doubling the payroll tax used to support public transit from 0.1% to 0.2% until Jan. 1, 2028.

Electric vehicle owners will see an increase to registration surcharges for electric and highly fuel-efficient vehicles, from $35 to $65 annually for cars with a 40+ mpg rating and from $115 to $145 annually for electric vehicles. The legislation also phases in a mandatory road usage charge program for electric vehicles by 2031. Electric vehicle drivers have been able to opt into the OReGO and pay 2 cents per mile in exchange for lower registration fees. The proposed change would mandate electric vehicle drivers participate in that program or pay a flat $340 annual fee. 

CLIMATE AND ENERGY

The Nebraska Attorney General sued the Omaha Public Power District (OPPD) this week seeking to stop a plan to retire three of five power-producing units at the utility’s North Omaha Station and switch the other two coal-fired units to natural gas. The suit seeks to stop the changes as well as prevent OPPD from pursuing any policy that prioritizes considerations other than price or reliability, including “environmental justice.” 

The issue will come down to whether the plan violates a 1963 Nebraska law requires that the state “provide for dependable electric service at the lowest practical cost.” OPPD’s plan says moving forward is contingent on opening new power-generation facilities this year. The politics of the move are obvious as the defendants in the lawsuit are OPPD, its CEO and president and six of eight elected OPPD directors who support the plan.

The goals of the plan are not new as they date back to 2014 and 2016, when OPPD directors agreed that, by 2023, OPPD would retire the three North Omaha units in operation since the 1950s and switch the other two in operation since the 1960s from coal to natural gas. The oldest three units switched to natural gas in 2016. The plan was revised in 2022 and then made contingent upon the construction of two new power-producing stations. Those facilities would produce 600 megawatts, more than all of the units operating now in North Omaha.

As that litigation unfolds, another front has opened in the carbon sequestration debate. The Tallgrass’ Trailblazer pipeline, which extends several hundred miles and transport CO2 from ethanol plants in Nebraska, Colorado and Wyoming to an underground storage site in Wyoming, reported its first shipment. The pipeline formerly carried natural gas, but the company was able to convert the pipeline to instead sequester liquified carbon dioxide. That allowed it to avoid many of the issues stopping other carbon pipeline projects.

Nebraska does not require state approval for CO2 pipelines. 

COAL

Sandy Creek is a single-unit, 932-megawatt (MW) plant located near Waco, Texas. It is the newest large coal-fired power plant in the United States having started commercial operations in May 2013. It is the type of plant favored by climate conservatives for its reliability. That makes it a bit more ironic that the facility will generate no power until March 2027, according to the Electric Reliability Council of Texas (ERCOT). The repairs to remedy two major outages in 2025 will take that long.

Since the end of February of this year, Sandy Creek has been in operation for less than 48 hours. When the plant opened in 2013, the EIA reported that coal provided 38.1% of Texas’ power; gas accounted for 42.2%, nuclear 9.8%, solar 0.04%, and wind 9.2%. By 2024, coal had fallen by two-thirds to 12.6%. Meanwhile, gas rose to 47.8%, nuclear was 7.4%, solar rose to 7.6%, and wind increased to 24%.

SALT RIVER PROJECT

Arizona’s Salt River Project (SRP) will add a 5-MW/50-MWh iron flow battery to its system through a pilot project and storage purchase agreement with a private developer. The capacity will be sold to SRP under a 10-year energy storage agreement. The company’s technology uses a combination consisting mainly of iron, salt and water to store and discharge energy.

The unit will join others under tests at SRP’s Copper Crossing Energy and Research Center in Florence, Arizona. Those projects include a gas generation unit and a solar complex. The plant will be the second battery test which does not rely on what are generally referred to as rare earth minerals at the Florence Center. This continues into SRP’s efforts to use non-lithium batteries and support long duration energy storage (LDES) technologies. It also enables the project to claim a 90% domestic supply content.  

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

RESILIENCE AND A NEW REALITY

In communities participating in the federal flood insurance program, any home that has been “substantially damaged” must be rebuilt to the latest flood-resistant standards or demolished. Under the rule, “substantial damage” means the cost of repairing the home would exceed half its market value, as determined by local officials. FEMA estimates that buildings constructed to floodplain management standards sustain, on average, 80 percent less damage during floods.

In Pinellas County, where Gulfport is, officials have processed about 250 demolition permits for homes in unincorporated areas since October — about four times the number issued during the same period last year. A Republican whose district includes most of Pinellas County, has pushed to waive the rule, calling it an “overreach” by the federal government.

The potential for problems extends beyond Florida. Recent reporting has found that there are huge discrepancies between what higher income households receive and what lower income individuals receive from FEMA. It’s the product of many factors but for those who receive lower amounts of assistance, it can be a real barrier to rebuilding to the new standards.

MEDICAID WORK RULE REALITIES

Fiscal conservatives have pushed for years for work requirements be applied to Medicaid recipients. In October 2020, Georgia received federal approval to test Medicaid work requirements for an initial 5-year period. Its program, called Georgia Pathways to Coverage, is available to people between the ages of 19 and 64, with incomes at or below the federal poverty level, who would not otherwise qualify for Medicaid. Georgia originally planned to begin enrollment in July 2021, but legal challenges delayed implementation until July 2023.

As of May 2025, Georgia reported that 7,463 people were enrolled, far fewer than the 25,000 the state had expected to enroll during the first year of the program. No surprise there since one of the unstated aims of the program is to make enrollment and reporting more difficult. The low number of enrollees qualifies as mission accomplished for the idealogues. For the pure fiscal hawks, the Georgia experience could easily be a cautionary tale for states implementing work rules.

The Government Accounting Office (GAO) has released a report documenting the Georgia program’s operations. Between 2021 and June 2025, Georgia spent $54.2 million on administrative costs, compared with $26.1 million on providing medical care, according to GAO. About $50.8 of the administrative spending went toward changing the state’s system for determining people’s eligibility and enrolling them. In addition, the state used $20 million it received under the American Rescue Plan Act of 2021 to advertise the program.

STATES

The first quarter for most states ended this week so we will soon get an opportunity to see what the impact of all of the economic and policy uncertainty will be on state budgets. We are starting to see signs that states face an increasingly difficult time in recent budget analyses in several of them.

Florida faces significant budget gaps going forward. The legislators chose to put off hard decisions until after the 2026 gubernatorial elections. This has resulted in several multibillion dollar projected budget gaps for the fiscal years beginning in July of 2026. Add on the uncertainty that many important sectors of the state economy rely on and you have a formula for negative credit pressures.

There was one piece of good news. The Federal Emergency Management Agency gave the state $608 million to pay for the construction and management of Alligator Alcatraz and Deportation Depot, which Florida officials say are totally state-run facilities.

Kentucky has been embarking on a program of tax cuts even as it faces long standing budget issues like pension funding. The Commonwealth recently released tax collection data for July and August which show declines in tax revenue beyond any projected by the legislature. In Colorado, state economists projected that the general fund, which covers most day-to-day operations in the budget, would be about $841 million in the hole if state spending continues on the current trajectory into next year. 

Federal cuts to states of $911 billion over 10 years would represent 14% of federal spending on Medicaid over the period. The spending cuts vary by state; Louisiana, Illinois, Nevada, and Oregon are the most heavily affected with spending cuts of 19% or more over the period.

SHUTDOWN COSTS

Ports will be one of the first sectors to see the impact of the federal government shutdown. Customs and Border Protection (CBP) inspects import shipments at maritime centers, airports and land border crossings with Mexico and Canada. The most recent government shutdown lasted 35 days from December 2018 to January 2019, and saw 800,000 federal workers furloughed or forced to work without pay.

CBP remained operational but lower staffing levels led to slower inspections and longer dwell times for shipments moving through major ports. Delays grew by as much as 15% to 20% through the Port of Los Angeles-Long Beach, while importers of regulated goods such as perishables and pharmaceuticals faced shipment holds.

NEBRASKA CLIMATE REPORTS

A 312-page report authorized by the Nebraska Legislature in 2022 was released. It  predicts increased stress on the state’s water resources, particularly increased irrigation demand as growing seasons expand and more water evaporates from the soil and crops. The State Climatologist said “Reputable climate scientists worldwide continue to be in near unanimous agreement (greater than 99%) that human influences have warmed the atmosphere, oceans and land.”

The report was initially scheduled to be completed by the end of 2024 but was delayed by “editing concerns”. In this most conservative state, this raised suspicions about political pressure. Nonetheless, the report cites some pretty clear data regarding changes to Nebraska’s climate over some three decades. It was authorized by a conservative legislature under a very conservative Governor. That makes it a bit harder to politicize the findings.

PENNSYLVANIA MASS TRANSIT FUNDING CRISIS

The budget stalemate dragging on in Pennsylvania has been over the issue of state funding for agencies like SEPTA. Now in the midst of that fight, the National Transportation Safety Board urged Philadelphia’s regional transit authority to suspend use of more than half of the rail cars that serve the transit agency’s regional lines, saying the aging trains pose an “unacceptable” risk of fires. Urged is the important word as the NTSB has no direct authority to order such a move.

NTSB said SEPTA should lay out a plan within 30 days to replace or retrofit rail cars. There have been several fires since February of this year. They have occurred on its Silverliner IV fleet, which has been in service since the mid-1970s. It numbers some 225 cars. It will be interesting how this safety matter is treated under the current federal transit regime given the demographics of the passenger base.

The issue will highlight the problems that SEPTA has faced over the years in terms of capital spending. The agency has been a favorite target of Pennsylvania lawmakers. But, fifty year old railroad cars?

ELECTRIC VEHICLES

The expiring tax credits which drove EV sales were seen as the primary worry for electric vehicle producers. The issue raised concerns about planned new manufacturing development designed to support the electric vehicle industry. It’s clear that the momentum behind some of these projects has slowed although the car companies insist that they will move forward. What we have not seen are impacts on existing EV production.

That has changed since General Motors’ announced that it would indefinitely delay a second shift to support Chevrolet Bolt production in Kansas City, Kansas. The next news was more indicative of the pressure on EVs as the company laid off 900 local workers to facilitate a retooling. The plant had ended production of the Chevrolet Malibu sedan and recently stopped making a small Cadillac SUV. Fairfax had been slated to produce the revamped electric Chevy Bolt.

GM plans to bring gas-powered Chevrolet Equinox production to Fairfax beginning in 2027 as part of a plan to increase domestic production designed to limit losses from tariffs. Bolt production is on schedule to begin later this year for the first shift of workers. The retooling of the rest of the plant will be for gas powered models.

Colorado is increasing the amount of money offered through the state’s electric vehicle rebate program in November as a response to the elimination of federal tax credits for the same purchases. The Colorado Energy Office announced that the state rebate for new EV purchases will increase to $9,000 from $6,000, and the rebate for used EV purchases will increase to $6,000 from $4,000. The rebate increases commence on November 3, one month after the federal tax credit for purchases ended on Sept. 30.

NEW ORLEANS

Moody’s has downgraded the City of New Orleans, LA’s issuer rating, general obligation unlimited tax (GOULT) and general obligation limited tax (GOLT) ratings to A3 from A2. At the same time, it revised the outlook to negative from stable. The numbers tell a story of significant liquidity pressure.  Available fund balance and liquidity declined to -2% and 41.5% respectively in fiscal 2024, a material and unexpected shift from 6.1% and 56.9% in 2023. While additional restricted reserves are available and increase fund balance to 7.9% of revenue, management reports further decline in the city’s financial position thus far in fiscal 2025 driven by revenue declines and increased expenses due in part to unplanned, one-time events. 

In the end, governance is a key driver of this rating action, reflecting budget management practices that have led to escalating reliance on reserves beyond planned levels and ongoing narrowing of the city’s financial position. 

SHELBY COUNTY

While the City of Memphis deals with troop deployments, the county it is the seat of is struggling with basic financial operations. The Comptroller of the State of Tennessee has rescinded their approval of the Shelby County budget for the fiscal year beginning July 1. The County noted that in its approval for last year’s budget, “it outlined very specific future requirements that the County had to meet in order to receive an approved budget from our Office.”

“Because the County failed to meet those requirements, we are unable to approve the County’s fiscal year 2026 budget as explained below. Pursuant to state law, outside of an emergency, the County may not issue debt or financing obligations without an approved budget from our Office. Our Office has statutory authority to waive this limitation for emergency financial transactions.”

The problems are pretty basic. “First, the detailed budgets for Memphis-Shelby County Schools were not included. Second, the detailed budgets were not consistent with state law that requires presentation consistent with generally accepted accounting principles.” In addition, cash projections were incomplete and no explanations of negative balances was provided. This all information required under state law.

BRIGHTLINE WEST COST UPDATE

Brightline West’s 218-mile railroad will now cost $21.5 billion, according to the United States Department of Transportation, The initial projection was $16 billion. The higher cost has led the projects’ ultimate sponsor and “deep pocket” Fortress Investment Group to seek a $6 billion loan from the Trump administration for its “privately financed” project. The increases are driven by construction costs were increasing due to rising labor and material costs.

The federal loan will take the place of a $6 billion bank facility in Brightline West’s original financing plan. The company plans to raise equity to cover most of the $5.5 billion increase in construction costs. It initially targeted an equity raise of $1 billion. Given the steadily increasing costs, private financing was just not effective enough. The loans are being made under the Railroad Rehabilitation and Improvement Financing program. A loan can fund as much as 100% of a railroad project with repayment periods of as long as 35 years and interest rates equal to the cost of borrowing to the government plus a premium to account for credit risk.

We continue to be amused at best by the way the Brightline projects continue to tout themselves as private enterprises. Both the East and West Brightlines received significant advantages in terms of favorable right of way situations as well as tax- free debt financing. Now, the managers of Brightline West have admitted that a subsidized loan from the federal government is key to the success of the project.

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

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.

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%.

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

CHICAGO PUBLIC SCHOOLS

CPS projects a budget of $8.43 billion for FY 2026, with $5.8 billion in personnel costs and $2.6 billion for operations and funding charter schools. The district spends $817 million a year in loan repayments alone. Without cuts and revenue boosts, CPS projects a $1.3 billion deficit by 2030.

Three main factors are driving the deficit, according to CPS: Costs to serve students with disabilities, which have grown by $450 million since 2019. Building expenses that include $14 billion for backlogged repairs, and costs for more engineers and maintenance that have boosted spending by $100 million since 2019. Growing pension payments, including the $175 million CPS took over from the city.

CPS must present a balanced budget to the board by Aug. 28.

PENNSYLVANIA BUDGET

Pennsylvania has become a regular when it comes to being unable to make a budget before the start of the fiscal year. Pennsylvania’s 500 school districts face particular fiscal uncertainty. Cash reserves vary from district to district and may be earmarked for capital expenses like new school buildings, rather than operating expenses like staff salaries and utilities.

Pennsylvania’s Department of Education said it would not be able to make payments for adult basic education and the Early Intervention, Pre-K Counts, and Head Start programs on July 21, which is when payments for these programs are made each month. If there’s no deal by July 31, PDE will also miss payments for special education and community colleges. And if there’s no deal come Aug. 28, more substantial payments will be missed, including for basic K-12 education.

The state’s university system announced its first tuition hike in seven years, citing the unfinished budget.  SEPTA, serving Philadelphia and its suburbs, and Pittsburgh Regional Transit, serving Allegheny County — have approved budgets that will reduce service if no deal to raise transit funding comes through. State payments are due in August for county services like child welfare, mental health, and substance use disorder programs.

FIRE

Fire has been on everyone’s mind after the fire disaster in greater Los Angeles to start the year. While the area continues to attempt to recover and/or rebuild, wildfires are becoming a real concern nationally. So far this year, there have been 41,069 wildfires reported in the United States and a total acreage of 2,892,545 has burned. This is higher than the 10-year-average number of fires, but lower than the average number of acres burned. 

As this is written, three new large incidents have been reported for a current total of 83 large incidents nationwide. Nearly half of the active fires are in Alaska which had its first heat advisory ever. California, Colorado, Oregon, and Washington all are the site of six fires.

OREGON TRANSPORTATION FUNDING UPDATE

Gov. Tina Kotek will call lawmakers into a special session in late August to take up the issue of road funding in the state. In the meantime, the Governor will delay nearly 500 layoffs at the Oregon Department of Transportation, ensuring 12 maintenance facilities throughout the state remain operational. Those layoffs were scheduled to take effect July 31. (See MCN 7.14.25). They will instead be delayed 45 days.

The current estimated funding shortfall for ODOT for fiscal 2026 is $354 million. A variety of proposals have been offered ranging from expense cuts to a significant gas tax hike. The process is complicated in that the ODOT budget fixes will be part of the state’s overall transportation funding plan. Any increased revenues from a higher gas tax would be shared with cities, counties, transit agencies, and bicycle group.

A 6-cent hike to the state gas tax is estimated to be enough to forestall ODOT layoffs and send money to city and county road departments that are also strapped for cash.  a 0.1% tax on Oregonians’ paychecks that goes to public transit. Transit agencies have warned that funding shortfalls will lead to future service cuts if that isn’t increased. Democrats proposed increasing the tax to 0.18% during this year’s session.

MILEAGE FEES

The move to use mileage fees as a base source of user funding for roads is about to receive a potential boost politically. In testimony before Congress, the American Trucking Association said “We’re looking seriously at advocating for a registration fee that applies to everybody – trucks, cars, electric vehicles,”. “You already register your vehicle at the state [motor vehicle agencies], you simply pay for what you normally would pay in fuel costs at the pump. You get rid of the gas tax, the tire tax, and put it in a registration fee.”

There is less unanimity in the industry among the small carrier and owner operator segments. Their trade group supports a registration fee to capture electric vehicles while actually advocating for a rise in the federal gas tax.

HE’S NOT DOING THE WIND THING

The Trump administration has canceled a $4.9 billion loan guarantee for the Grain Belt Express. (See 7.7.25 and 7.21.25 MCN). The Energy Department said Wednesday that its Loan Programs Office has terminated a commitment for the first phase of the Grain Belt Express project. The loan was issued by the Biden administration in November 2024.

When it approved the project, the Missouri Public Service Commission found that Grain Belt would save Missourians $17 billion in lower electric bills. The private developer of the project, Invenergy says it has obtained the vast majority of those easements through voluntary negotiations with landowners. For the rest, the project was granted the right of eminent domain. That is what opponents of the project seized upon to stop the project. As is the case with carbon pipelines, eminent domain has emerged as a primary source of opposition.

We find it interesting that the announcement of the cancellation of the loan highlights that it is at the request of Missouri Senator Josh Hawley. Initially, opposition was driven by the fact that so little of the power being transmitted was to be available to Missouri utilities. Overtime, the project has contracted with 39 municipal utilities in Missouri, including Columbia Water and Light. 

PUERTO RICO SOLAR

A private provider has been selected to install and maintain Energy Resilience Hubs in five Puerto Rico communities in 2025. Each site will feature solar generation and battery storage to maintain electricity for essential services during outages caused by natural disasters or grid failure. The 2025 effort is funded through a cooperative agreement with the U.S. Department of Energy and is expected to be completed by September.

For the past two weeks, LUMA Energy, Puerto Rico’s grid operator has relied on tens of thousands of batteries scattered across the island to overcome energy shortfalls and help deliver power. It is the first operational behind-the-meter virtual power plant in Latin America and the Caribbean. In May, Puerto Rico’s Energy Bureau, which regulates utilities, approved an emergency expansion of the “customer battery energy sharing” program in anticipation of a projected generation shortfall during the summer.

The Puerto Rico Energy Public Policy Act of 2019 codified the role of solar and storage in the island’s energy system and set a 100% renewable energy target by 2050. There are about 175,000 households with solar, and at least 160,000 of those also have storage. Puerto Rico’s Republican governor, Jenniffer González Colón

recently expressed support for maintaining the existing net metering system. Unsurprisingly, Puerto Rico Electric Authority opposed that. PREPA is seeking to add a fixed charge to net metering program participants. 

LAND PORTS

There has rightfully been emphasis on levels of activity at the country’s marine ports in the ever changing tariff environment. We don’t know how this will all play out by the latest deadline of August 1. We do know where to look for potential impacts on cross border land traffic between the U.S., Mexico, and Canada.

Detroit, Port Huron, and Buffalo are the top truck ports for U.S. freight flows with Canada, while Laredo, El Paso, and Otay Mesa are the top truck ports with Mexico. Detroit, Port Huron, and International Falls are the top rail connection ports for U.S. freight flows with Canada, while Laredo, Eagle Pass, and El Paso are the top rail connection ports with Mexico.

Chicago, Port Huron, and Minneapolis are the top pipeline connection regions for U.S. energy freight flows with Canada. El Paso, Hidalgo, and Laredo are the top pipeline connection regions with Mexico. Port of Boston, Arthur, and Portland are the top water port connections for U.S. energy flows with Canada. Port of Houston, Arthur, and Texas City are the top water port connections for U.S. energy flows on the Southern border.

REBUILDING L.A.

Some 800 homeowners who lost homes in areas affected by wildfires applied for rebuilding permits as of July 7, according to the Los Angeles Times. Fewer than 200 have received the permits, however. The City of Los Angeles takes about 55 days on average to approve a wildfire rebuild, and the broader Los Angeles County takes even longer.

Insurance companies in California have been dropping some of their customers in high fire-risk areas, leaving them no option besides the FAIR Plan, the state’s high-priced, limited-coverage insurer of last resort. As the result of the scale of the fires, the FAIR Plan had to collect levy additional assessments totaling an additional $1 billion from its member companies, a move that will raise property insurance prices.

The realities of the current situation are that a combination of underinsurance, inflated construction costs, competition for skilled workers and pressure on the general unskilled workforce in the region resulting from the immigration crackdown. All of those factors are driving an increased fear that many victims will move rather than rebuild. 

COAL

The U.S. Energy Information Administration reports that coal-fired power plants will remain relatively well-stocked through the end of next year. Power plants in the United States had 124 million short tons of coal on-site at the end of June for them to consume that coal at a rate of about 1.3 million short tons per day, meaning they had about 93 days’ worth of fuel on-site. 

Days of burn is calculated by dividing coal inventories held at power plants by a seasonal consumption rate. EIA forecasts days of burn will range between about 90 and 120 days between now through the end of 2026, or about a month’s worth of coal more than power plants had on-site between 2019 and 2022. The clear impact of policy changes including the mandated operation of coal generation is showing up.

Coal inventories held at U.S. power plants have fallen since early 2024, coal consumption in the U.S. electric power sector has also fallen since then, so the supply measure of days of burn remains relatively high. Coal shipments to power plants have declined in line with coal consumption in the U.S. electric power sector.

The electric power sector accounted for more than 90% of U.S. coal consumption in 2024. U.S. coal consumption in the first quarter of 2025 was 18% more than in the first quarter of 2024. In its short-term forecast, EIA expects coal’s share of U.S. electricity generation to increase from 16% in 2024 to 17% in 2025 and then decrease to 15% in 2026. It’s clear that the use of coal does correlate with the price of natural gas. As natural gas prices increased in the first quarter of 2025, coal became more competitive driving an estimated 6% increase in 2025 consumption.

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.