Recovering from the Heat of Grand Rounds

I'm still recovering from all the work of putting Grand Rounds together. It was fun, but I needed to be away from the keyboard for a few days. On Tuesday, the day Grand Rounds was posted, I got over 1,000 visits to my blog, which is a testament to how well organized this carnival is. I'm still catching up with all the comments and email I received as a result.

The days are getting hotter here on Saipan. Although we have the most stable temperature in the world, staying right around 85F year round, the sun is HOT this close to the equator, and because of typhoons, houses are built of concrete, which are ovens. The utility is limping along, with power outages rotating around the island all day long to conserve the fuel supply. At the office, we have a generator, so we can keep functioning, but at the house we're in right now, no such luck. Last night, the power went out around 8 PM. I don't think it was scheduled because it was preceded by lots of browning out of the lights. It came on briefly around 10:30 PM, but went out again for the rest of the night. We slept in the sweltering heat, with damp paper towels on us to keep us cool.

Saipan's Flirts with Third World Status

In his book, and The End of Poverty: Economic Possibilities for Our Time, economist Jeffrey Sachs points out,

When the preconditions of basic infrastructure (roads, power, and ports) and human capital (health and education) are in place, markets are powerful engines of development. Without those preconditions, markets can cruelly bypass large parts of the world, leaving them impoverished and suffering without respite.

Let’s take a closer look at this dense statement, that gives a very simple formula for economic success of a people. Development requires the combination of human capital (which consists of two parts – health and education) and basic infrastructure (which consists of three parts – roads, ports and power). Here on Saipan we lack reliable power, and therefore, we simply lack one of the key elements required for development. The lack of power is not just an inconvenience. It changes our status as a developed jurisdiction

Yesterday, at our home we had over five hours of unannounced power outages spread throughout the day. One came during mealtime, another just as we were getting children to bed. We were unable to cook, and our children cried as they tried to fall asleep in the sweltering heat. This is not a scene that you expect in a developed place, especially when it happens daily, as it is now. Power is part of basic infrastructure, and without it, there is limited opportunity for our markets to develop. I hate to say it, but our protracted power problems now bring us into the company of most third world countries. Our power situation puts us in a particular category of underdeveloped nations, and market opportunities cruelly bypass us.

Green Power in Saipan

It's been a year or two since the "Green Power" law was passed. Basically, it allows for a concept called "net metering." There are two basic ways people use alternative (solar/wind) power. First, you can buy the power generating stuff -- solar panels, windmills -- and buy batteries that store the power generated, and use it when you need it. There are a couple of difficulties with this. First, the batteries are really expensive, so cost goes up. Second, you have to generate enough power to meet your demands. This is the method people use to live "off the grid." You generate and store their own power.

The other method is "net metering." You buy the solar panels or windmills, but your house is still connected to the utility. The power you generate is gets fed into the city power grid. If you don't generate enough to meet your needs, you get the extra you need from the utility. If you produce more than you need, you feed it into the grid for others to use, and the utility pays you for the power. The excess feeds through your meter and runs your meter backwards, thus the term "net metering". With this method, you use the grid as your "storage" so you save the cost of batteries. Of course, without storing the power yourself, when the CUC power goes out, yours does too.

The fact that we have this net metering law opens some huge possibilities for the consumer to bring down the power rates and also to contribute to power generation for other customers. The glitch for us has been that although the law has been passed, the regulations that define the practicalities of implementing the law have yet to be written.

I fired off an email to an undisclosed source close to the issue to find out about the status of the regulations. Here is a summary of the reply I received. It looks like we're getting close.

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The net metering regs are being drafted right now. They are a blend of regs from a US green power NGO and 3 or 4 states. The adminstration is committed to making net metering happening, so that the private sector can help CUC meet its customers' needs cost-effectively and reliably. Oil will soon become unaffordable to small markets like the CNMI. We will need the sun, the wind, the ocean and geothermal resources to power our lives.

The consumers issues will be, of course, cost/revenue and reliability (both of your system and CUC). The regs should lock you into revenue of 1/2 the price of power at the time you install the solar. Solar is relatively expensive, but, when installed correctly and maintained (so the panels are clean and connections are protected from the salt air) should last for 10-20 years.

1. The kwh. As you may know, solar panels don't start working at 100% capacity the day you install them. The solar capacity increases to manufacturer's specs over a couple years, then slowly, slowly degrades over time. So, if you are figuring revenue, you will multiply an average output percentage times manufacturer's spec times "availability", or the number of hours per year expected of the "insolation".

2. The rate. You will want as much guarantee as possible that the rate you sign up for is the one you get. One argument from the statute is that your rate will vary as the CUC's rates vary. That means that if oil gets outrageously expensive (it's at $127/bbl now and on its way to $200/bbl by year end), our rates will increase past the 26 cents/kwh we now pay just for the oil, and you will like the variance. (Overheads, operations and maintenance and debt service typically cost about another 8-10 cents/kwh.) If we discover geothermal sources on Saipan, however, the bulk of our power will cost less than 10 cents/kwh total. You won't like that, because you will have paid for expensive solar and CUC won't be paying you very much back.

3. Rate stability. One way to make this all stable is through the regs. Another way is through a contract. The law will protect you better from the Legislature's rate orders for rate decreases if you have a contract. Ordinarily regs are a strong way to protect a customer, but a new statute trumps regs. Also, someone might argue that the CUC's interpretation of PL 15-87 to allow long term stability will stretch the statute's terms.

4. Another consideration for you is batteries. With solar, of course, you are unlikely to generate enough power during bad weather to run your house. And CUC may not be reliable during a supertyphoon. But batteries can easily double your investment. Many people use their utiltiy company as the "battery", relying on their own power when the sun shines.

If cost is not a big issue with you, you will want to buy a system that makes you energy independent -- oversize it, so you never peak in excess of your capacity, and use batteries. Of course you will also purchase very efficient mechanicals and appliances and superinsulate your home, and design a home that orients properly to the sun and the wind. These strategies provide you with much more value than buying the solar panels.

ONLY if there is an active group of potential green power producers examining the draft regs and contracts will you wind up with something satisfactory.

Movies, Power, Federalization and Pew

(My Saipan Tribune column for this week.)

Well, it’s been a newsworthy couple of weeks. The closing of Hollywood Theaters has definitely put a damper on spirits, even for those who never went to the movies. Its presence made us feel like a part of the “civilized” world. I was in Guam earlier this week, and when people asked me “How are things on Saipan,” the best way to sum it up was to say, “Our only movie theater just closed.” People immediately understood, and shook their heads in disbelief. Yes, things are bad, and “consumer confidence” is dwindling.

People would ask me what I think needed to be done to improve things, and really, I don’t think there is an easy solution. Certainly, we need a reliable utility. But we don’t control the price of oil, and it’s predicted to climb from its current level around $100 a barrel, up to $200 a barrel within the next year or two. Repairing the power plant can give us reliability, but it might not prevent the cost of power doubling. How can we cope with that? Alternative energy sources such as solar and wind power are simply not cost effective, however, they may become so as the price of oil rises.

Certainly another area that still needs improvement is government waste. We’d have more money available for various public services if waste wasn’t present. And honestly, much of that waste is related to power. Anytime I visit a government office, I take a jacket with me, because I know I’m going to be cold. It’s still beyond me why we don’t just adjust the thermostats around here.

A couple of years ago at the energy symposium that was sponsored by the Chamber of Commerce, one of the presenters told the story of a utility in California that was meeting increasing demand for power and was faced with building a new power plant. They analyzed the situation and realized that it would be more cost effective for them to hand out free energy saving light bulbs so that every home and business would convert to the compact fluorescent technology. It cost the utility money to give away the bulbs, but it saved them the expense of building a new plant. Just an idea that might help address a piece of our current problem. But honestly, there is no silver bullet.

Tourism is generally holding steady, but it’s clear that with rising travel costs, we cannot expect to see a significant rise in the coming months. There are no new industries, and we’re scratching our heads wondering how we can stimulate the economy, attract investors, create jobs. But we’re not alone. I take some consolation that at least the entire globe is flirting with recession.

And of course there is federalization. Whether you were for it or against it, it’s now a done deal, and though it’s certain that it’s going to happen, we don’t know what it’s impact will be. There will be things that some of us like about it, and things that we dislike. It will require the passage of time to sort it all out.

A ray of hope that was on the horizon was the proposed “Sanctuary at Sea”. Forget about all the arguments about more jobs, more tourists, and more federal money. Certainly those are beneficial outcomes. But for every good thing, someone else can give evidence of some possible bad outcome. Arguments at that level of “what can we get out of it” can go on forever. I felt that the monument was simply the opportunity, perhaps never to come our way again, for us to have the privilege of giving a gift to the world. The practicalities will work themselves out, if the desire is there. Let’s set our gaze outward, and into the future, and think of this as a gift worth giving to humanity. “Why should I? Maybe there are diamonds there for me! Maybe there are fish there for me!” Maybe. Yet, maybe, we can rise above these “me” centered concerns and think of leaving a legacy. Maybe centuries from now, we will be remembered in human history for our foresight and generosity in preserving a piece of the planet that increasing population pressures will threaten. The “Monument at Sea” is an opportunity for us to leave a positive mark, to create a positive image. And for people that care about being respected, that’s worth more than diamonds. It’s an opportunity for us to live up to our heritage as people of the land, people of the sea, people of the planet for whom we’ll serve as trustees. The monument is a small ray of hope that doesn’t solve all the problems we face, but it is something that lifts the spirit. And I have a feeling that with the myriad challenges sure to mount, it will be our spirits that guide the way.

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David Khorram, MD is a board certified ophthalmologist and director of Marianas Eye Institute and the author of the book, World Peace, a Blind Wife, and Gecko Tails. Comments and questions are welcome. Call 235-9090 or email him through www.MarianasEye.com, or leave comments at www.MarianasEye.blogspot.com. Copyright © 2008 David Khorram

Stuck to the Toilet

(Here is my Saipan Tribune column for this week.)

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A few weeks ago, the news story was published about a woman who walked into her bathroom one day, and just decided to stay. She took a seat, and for two years, she sat on the toilet, until eventually, her skin grew around the toilet seat, linking her to it. Her partner commented that he thought that when she went into the bathroom, she would be out soon, but the minutes stretched into hours, days, weeks, months, and that it just became a way of life for them. Everything was normal, except that she was stuck on the toilet. Things become so weird, and you don’t know how to cope with them, so you eventually start to think they’re normal. Then one day, someone walks into your bathroom and you realize the anomaly of your situation. “Hello Mr. Fireman. What brings you into my bathroom today?”

Gradually, over the past few months, the city water supply to our home has diminished. We already only get water for an hour a day, but for years it’s been enough to fill our tank. Now, every few weeks, the tank runs dry. I call the ever-ready trouble desk at the utility. I say something like, “Salutations. Thou art hearkening to the namesake of biblical kings. I summon thee from yonder naval knoll. Liquid hath gone thither. Wherefore art thy words to bring peace to puzzled souls?” As expected, the answerer at the trouble desk says, “huh?” So I repeat myself, word for word.. “Hello. This is David Khorram. I’m calling from Navy Hill. Our water has run out. Can you help us.” Well, if I’m going to say the same thing, then the answerer is going to say the same thing. He responds, “huh?” This will go on for several exchanges, each time with me using fewer words to simplify the description of the situation, until finally, I’m down to “Nothing water Navy Hill.” The response: “Call back tomorrow.” I call back tomorrow. We do it all over again. Day after day, this exchange takes place with high anticipation of a different outcome. But every day, it ends with the same Shakespearean quote rambling in my head -- “Tomorrow, and tomorrow, and tomorrow creeps in this petty pace from day to day to the last syllable of recorded time; and all our yesterdays have lighted fools the way to dusty death.” I find myself getting used to the absence of a solution. So, we’ve been paying an extra $100 or so a month to have water delivered to our home when we run out. “Hello Mr. Fireman. Why are you bringing a crowbar into my bathroom today?”

I’ve been doing some work with a freelance graphic artist who lives in a country where snow is currently falling on the ground. All of his work is for clients that live around the world, all done through the internet. I was going to suggest to him that he move to Saipan. After all, his location matters not, because he is “internet based”. Then I realized I had forgotten that a one man show like his, and like thousands around the world, who would love to relocate to a low-tax tropical island and set up clean environmentally friendly businesses that consume and generate only electrons, needs a reliable source of electrons. Power. Electricity. Sure, bigger businesses can buy a generator. But the little guy can’t. And, wow, the economy that could be built around selling Saipan to these freelance internet entrepreneurs! But, people from most developed countries don’t think about the prospect of not having power for hours at a stretch, certainly not for days out of a month, and absolutely not on a scheduled rotating basis. “Hello Mr. Fireman. Look, my skin has grown into the toilet seat! Please don’t pry me loose.”

Let’s just fix it. Power and water. Those are some pretty basic first steps toward calling yourself a developed “investor friendly” “tourist friendly” “resident friendly” place. C’mon guys. It’s time to pry ourselves off the toilet seat.

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David Khorram, MD is a board certified ophthalmologist and director of Marianas Eye Institute, as well as the author of World Peace, a Blind Wife, and Gecko Tails. Comments and questions are welcome. Call 235-9090 or email him through www.MarianasEye.com, or leave comments at www.MarianasEye.blogspot.com. Copyright © 2008 David Khorram