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For years, President Obama has been exhorting the U.S. to be more like Spain, a country heavily invested in renewable energy and green jobs. In January, the Spanish government, drowning in debt, made an about-face on this plan. Strangely, though we also have a serious debt problem, the Obama Administration has chosen not to follow this example and despite little success to show for such policies is insisting on spending even more.
Spain announced all the way back in January that it was no longer subsidizing renewable energy projects, still, the Energy Department just announced yesterday that they are embarking on a new, exciting, way better than all the other plans that failed, loan program for green energy companies.
Spain’s reversal hardly came as a surprise to many, the green energy crunch has been a long time coming. From the Institute for Energy Research yesterday:
A couple years ago, President Obama hailed Spain’s promotion of wind and solar energy through massive subsidies as a way to grow the economy and create jobs. At the time, Dr. Gabriel Calzada explained that the Spanish success was a mirage and that Spain’s “success” was actually costing jobs and creating a huge financial liability. Now, the reality of Spain’s disastrous policies is clear to the Spanish government. Hopefully, the unsustainable nature of subsidies will become clear to the promoters of wind and solar as well.
Two years ago, Investor’s Business Daily also reported on the Calzada findings, noting that a new Spanish government report had confirmed Calzada’s claims that “attempts by his country to create a green economy would fail.” Here are some highlights:
In 2011, the American Enterprise Institute also looked at the “Spain problem.” Not only did they look at the exorbitant costs associated with green jobs:
The study calculates that since 2000 Spain has spent €571,138 to create each “green job,” including subsidies of more than €1 million per wind industry job.
But they also point out the corruption that seems to go hand in hand with this the brave, new green economy.
An audit of solar-power generation from November 2009 to January 2010 found that some panel operators were paid for doing the “impossible”—producing electricity from sunlight during the night, El Mundo reported today, citing a letter from Secretary of State for Energy Pedro Marin.
Further, it appears that solar power producers “may have run diesel-burning generators and sold the output as solar power, which earns several times more than electricity from fossil fuels.” Nineteen people have been arrested in Spain’s “clean energy” sector on charges ranging from bribery, to unsavory land deals, to issuing licenses to friends and family, and simple construction fraud. The Guardian adds, “When Spain's National Commission for Energy decided to inspect 30 solar gardens, it found only 13 of them had been built properly and were actually dumping electricity into the network.”
There’s little point in wondering, “What took Spain so long?” At least the political will was finally found to stop sinking funds into a worthless program and to tackle their power-system’s $31 billion in debt. Here in the U.S. in the face of repeated failure and equally failed experiments abroad, we are going to stubbornly adhere to our renewable guns. When promising to create jobs and rebuild the economy, President Obama determined that green jobs were the way to go. Mark Steyn writes:
But not to worry. On Thursday night, the president told a Democratic fundraiser in Washington that the Pass My Jobs Bill bill would create 1.9 million new jobs. What kind of jobs are created by this kind of magical thinking? Well, they’re “green jobs” – and, if we know anything about “green jobs,” it’s that they take a lot of green. German taxpayers subsidize “green jobs” in their wind-power industry to the tune of a quarter of a million dollars per worker per year: $250,000 per “green job” would pay for a lot of real jobs, even in the European Union. Last year, it was revealed that the Spanish government paid $800,000 for every “green job” on a solar panel assembly line. I had assumed carelessly that this must be a world record in terms of taxpayer subsidy per fraudulent “green job.” But it turns out those cheapskate Spaniards with their lousy nickel-and-dime “green jobs” subsidy just weren’t thinking big. The Obama administration’s $38.6 billion “clean technology” program was supposed to “create or save” 65,000 jobs. Half the money has been spent – $17.2 billion – and we have 3,545 jobs to show for it. That works out to an impressive $4,851,904.09 per “green job.” A world record! Take that, you loser Spaniards! USA! USA!
So, based on previous form, Obama’s prediction of 1.9 million new jobs will result in the creation of 92,000 new jobs, mostly in the Federal Department of Green Jobs Grant Applications.
Outside of jobs bills or stimulus plans, the Obama Administration is equally adept (inept?) at throwing good money after bad. Despite the repeated failures when it comes to green energy loans (Solyndra, Beacon ”Empty Shell” Power, First Solar, Ener1), the Department of Energy announced last week that it has $170 million for new loans to green energy companies. The difference this time?
The DOE promised that it will back these new loans only after "rigorous internal and external review of each application."
I am sure this will work way better.
Maybe if President Obama knew it wasn’t just his Spanish friends that were slashing green energy funds in response to looming debt, Germany too is cutting subsidies. Miranda Schreurs, the director of the Environmental Policy Research Center at the Free University Center of Berlin even states, “Everybody knows we can’t go the way we’ve been going. It’ll break the bank.”
Unfortunately, rather than truly learn from Spain’s example and turn from our big spending ways as they have, we seem to be following the dead end of Greece. Unlike Spain and Germany who have halted or cut their green-energy projects to deal with the debt crisis, Greece has pinned its hopes on renewable energy.
According to Business Green, the country has even touted an investment of €20bn in solar which is part of the government’s plan to deliver 100 percent of its energy needs through renewable sources by 2050.
PM Lucas Papademos, who recently spoke at a renewable energy and infrastructure development summit in Athens, said that investment in green energy was a “national priority” to boost economic growth. Project Helios is the Greek government’s massive initiative to ramp up solar power production from 206 MW to 2.2. GW by 2020 and up to 10 GW by 2050. The country is aiming to become the EU’s largest exporter of green energy.
This should bode well.
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Need to make some serious money? Childhood “firefighter by day, Batman by night” dreams not working out? Here’s how to cash in on the green energy racket.
Step 1: Think of a “green” idea: renewable energy, plug in cars, $50 light bulbs.
Step 2: Get government funding, subsidies, and/or mandates.
Step 3: Roll around in your amazing new money pool.
Probably one of the best parts about this genius plan is that your green idea doesn’t even have to be that good. It doesn’t have to work at all. Your company can totally fail. Sometimes, if you are lucky, the government will pay you NOT to work. Best of all, the system is so bogged down in bureaucracy; it could be years before anyone even notices. Here’s just one example:
From the Pacific Northwest, wind farms that are paid to shut down:
Wind farms in the Pacific Northwest -- built with government subsidies and maintained with tax credits for every megawatt produced -- are now getting paid to shut down as the federal agency charged with managing the region's electricity grid says there's an oversupply of renewable power at certain times of the year.
Now, Bonneville is offering to compensate wind companies for half their lost revenue. The bill could reach up to $50 million a year.
The extra payout means energy users will eventually have to pay more.
"We require taxpayers to subsidize the production of renewable energy, and now we want ratepayers to pay renewable energy companies when they lose money?" asked Todd Myers, director of the Center for the Environment of the Washington Policy Center and author of "Eco-Fads: How the Rise of Trendy Environmentalism is Harming the Environment."
"That's a ridiculous system that keeps piling more and more money into a system that's unsustainable," Myers said.
That is as good a deal as being paid not to farm! And what makes this scam all the better is that even when wind farms are working, even with all the subsidies and renewable energy mandates, wind provides less than half a percent of the total energy generated each day worldwide. This, of course, is shocking considering what a killing one could make off it. And when I say killing, I’m referring to birds and bats.
Of course putting up giant windmills all day is hard work. An even smarter way to grab taxpayer cash is to make big promises, get a giant loan from the Department of Energy, give yourself an enormous bonus and get out of town. It is essential in this scenario that you are an executive, and not someone lower on the food chain who will simply be out of work in a tough job market. ABCNews explains how Solyndra was far from an isolated incident, indeed it is practically a recipe for success in today’s corporate welfare world:
EnerDel, maker of lithium-ion battery systems, landed a $118.5 million energy grant in August 2009. About one-and-a-half years later, Vice President Joe Biden toured a company plant in Indiana and heralded its taxpayer-supported expansion as one of the "100 Recovery Act Projects That Are Changing America."
Two months after Biden's visit, EnerDel corporate parent Ener1 paid $725,000 in bonuses to three executives -- including $450,000 to then-CEO Charles Gassenheimer, who led Biden on the tour. This January, Ener1 filed for Chapter 11 bankruptcy protection.
At least two other firms that benefited from Energy Department funding -- one a $500,000 grant, the other a $535 million loan guarantee -- handed out hefty payouts to executives and later went bankrupt.
This is a great time to be a not so great entrepreneur. In the old days, you had to make something better or cheaper than others to compete in the marketplace. Luckily, those uncivilized days are over and now all you need is someone in government to make people buy your product, or to give your business special treatment that others can’t compete with.
Do you have a great product no one wants to buy? Extra oil tanker bladders you need to get off your hands? Not to worry, here are two simple ways to get someone on the inside to pull a few strings: donate money to their campaign, or make them stockholders. It’s just that easy.
Now go enjoy your new taxpayer funded money pool.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Today, the Senate Finance Committee is marking up their transportation bill with an eye toward adding billions in tax increases to cover the overspending in the bill. More spending, more tax hikes to pay for it. Stop me if you've heard this before. But there are two proposals in particular that gave me a little bit of policy deja vu.
First, the so-called "Chairman's mark" includes a $3 billion retroactive tax increase targeting the "carrying forward" of credits claimed back in 2009. You might remember 2009 as the year before the year before this year. The halcyon days when we passed a "stimulus" bill that was going to help our economy boom by 2012. The optimistic times when we could totally afford a trillion-dollar government-run health care program and our debt was "only" $10-11 trillion (as opposed to $15 trillion and counting today). Some on the Senate Finance Committee apparently would like to relitigate tax policy from that wonderful era in American history and enact a retroactive tax hike.
Now, it should be noted that the two credits they're targeting (the alternative fuel mixture credit and the cellulosic biofuel producer credit) are not ideal tax policies by any stretch of the imagination. Particularly the alternative fuel credit, given that it's "refundable" and thus acts like government spending rather than simple tax reduction. A smart tax code wouldn't include either of these policies but would levy low, consistent taxes across the board for all types of fuels and producers. But enacting retroactive tax increases is a much more egregious violation of principles of sound tax policy than either of those dumb credits.
The second effort, a proposed amendment to the Chairman's mark from Senator Robert Menendez (D-NJ), would target the oil and gas industry for punitive tax treatment by eliminating provisions like the Section 199 manufacturer's deduction or the "dual capacity" credit for them alone. If we've written it once, we've written it a hundred times: singling out oil and gas companies for higher taxes is bad tax policy and it's bad energy policy. Thankfully, the Congress has thus far largely agreed with us as the dozens of attempts in recent years to impose Menendez-like tax increases have all failed at one point in the process or another.
The Senate Finance Committee will be taking up these issues this afternoon and we hope they focus their efforts on reducing wasteful spending and not on retroactive tax hikes or tired attempts to punish an unloved industry.0 Comments | Post a Comment | Sign up for NTU Action Alerts
The Dirty Reality Behind Obama's Clean Energy Standard
For the second year in a row President Obama used his State of the Union to call for the creation of a “clean energy” standard (CES). Although various proposals have been knocking around Congress the past several years, the key feature is a requirement that electric companies generate a stated percentage of their electricity from certain enumerated “clean” sources.
President Obama hasn’t been shy about his desire to create a green (or clean) energy economy. In fact, one of his oft-repeated campaign promises was to invest $150 billion and create 5 million green jobs. Obama has been doing his best to make good on the promise by using deficit financed loan guarantees, cash grants, and subsidy payments to try and jumpstart the market for green energy.
The result, as one executive of a green-energy company told the New York Times, “I have never seen anything that I have had to do in my 20 years in the power industry that involved less risk than these projects. It is just filling the desert with [solar] panels.”
States have also been chipping in, offering their own tax breaks and clean energy standards, but the results have led many to reconsider. The New York Times reports:
These mandates often have resulted in contracts with above-market rates for the project developers, and a guarantee of a steady revenue stream.
“It is like building a hotel, where you know in advance you are going to have 100 percent room occupancy for 25 years,” said Kevin Smith, chief executive of SolarReserve. His Nevada solar project has secured a 25-year power-purchase agreement with the state’s largest utility and a $737 million Energy Department loan guarantee and is on track to receive a $200 million Treasury grant.
Because the purchase mandates can drive up electricity rates significantly, some states, including New Jersey and Colorado, are considering softening the requirements on utilities.
Failing to learn from the example of such states, President Obama is now proposing to create a national standard. The result will be a windfall for clean energy companies and a serious hit for taxpayers.
A clean energy standard “works” by taking lower-cost choices away from consumers. By requiring utilities to buy certain forms of energy, namely, wind, solar, biomass, and other Washington-approved fuels, a stable, but artificial market is created. It’s the equivalent of trying to reduce car emissions by mandating that everyone get around using roller-skates at least 80 percent of the time. Sure, it would take a lot longer to get to places, would be completely unworkable for many people who regularly travel long distances, and would create an overnight market for roller-skate makers.
But whereas Americans would largely pay for the roller-skate mandate in wasted time, a clean-energy mandate would result in vastly more expensive electric bills. Those higher prices arise by forcing providers to use costlier forms of energy than they would otherwise use. And those higher costs would go straight to the clean energy companies that President Obama has been so keen on subsidizing.
You see, Obama made a promise to create 5 million green-energy jobs. And that’s a promise he intends to keep…even if it just means shuttling money out of American’s wallets and into “clean” energy companies. Gives new meaning to the words money laundering.
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So President Obama's 2012 State of the Union is over now and everybody's analyzing the details of what he said (including our NTU Foundation, where researchers are working on figuring out exactly how much his proposals would cost for taxpayers). For someone who claims to be laser-focused on economic growth and job creation, we couldn't help but notice that he left a few things out that SHOULD have been in the speech. For example...
The Keystone XL pipeline
The President conveniently neglected to mention that his Administration just last week denied a permit to build the Keystone XL pipeline, a project to safely deliver Canadian energy resources to the American market. Construction of Keystone XL could have generated as many as 20,000 jobs while bringing much-needed energy to a hungry domestic market that has faced obstacle after obstacle from this Administration. We've been calling for its approval since last summer, but unfortunately for taxpayers and consumers, the President ignored those calls and put the kibosh on the project.
Unlocking valuable spectrum
Cost-free to taxpayers, beneficial in reducing our staggering deficit, and absolutely vital to the continued growth and innovation of technology and the internet. What no-brainer policy am I talking about? Competitive spectrum auctions. Did the President talk about it last night? Of course not! There have been rumblings from both sides of Capitol Hill and both sides of the aisle about spectrum for some time, but some Presidential leadership could work wonders in ushering a win-win policy to completion.
Allowing businesses to...you know, conduct their business
This one's sort of a personal pet-peeve, but of course the President failed to mention the meddling in which his Administration has engaged/will engage in private business operations. Things like the AT&T - T-Mobile merger (which NTU supported) that his Justice Department and FCC squashed last month. Or the ongoing FTC antitrust investigation into Google, a company which charges its users exactly $0 to access its search engine and other services. Or the ongoing process of the Express Scripts - Medco Health Solutions merger. Keeping the federal government out of the way, by and large, is the best way to foster economic growth, but this Administration has time and again shown a tendency towards populist intervention that is unhelpful to say the least.
An energy strategy not centered on subsidies
The President did talk about energy last night, and some of it was commendable. He talked about opening up some more areas under federal control to energy exploration, though I'll await further details before judging. But most of what he said focues on how we should be showering even MORE subsidies on energy technologies that are to the liking of Barack Obama (namely: solar, wind, anything vaguely "green" or "renewable"). And of course he did it while taking swipes at the "Big Evil Oil Companies" he so frequently derides. Funny side note: the biggest of the oil companies that are the focus on Obama's vitriol was just passed as the most valuable company in the U.S. by Apple. The wife of the late Steve Jobs sat beside the First Lady during the speech and got a specific shout-out (a positive one!). I guess he doesn't mind that they're "the 1%" of companies and that they're sitting on tens of billions in largely idle cash reserves, another practice he has criticized elsewhere.
Any serious discussion of bipartisan spending reductions
The President made some vague remarks about "working together" in a bipartisan fashion, along with some passing comments about reducing waste in the federal budget. But he didn't come anywhere close to making it a serious and substantive part of his speech. Too bad. We already worked with the liberal U.S. Public Interest Research Group to give him a $1 trillion head start on spending cuts that left and right could agree upon and stand ready to assist him. Let's just say I'm not eagerly awaiting his call.
What else should the President have covered if he were serious about economic growth and job creation?1 Comments | Post a Comment | Sign up for NTU Action Alerts
Obama's "Subsidize-All-of-the-Above" Energy Strategy
“This country needs an all-out, all-of-the-above strategy that develops every available source of American energy — a strategy that's cleaner, cheaper, and full of new jobs.” – Obama’s 2012 State of the Union
That may be what the United States needs, but it is not what Obama is offering.
First off, it should be a no-brainer that an “all-of-the-above” strategy would include tapping into a safe, plentiful supplier of oil in our neighbor to the north. Nevertheless, the Keystone XL pipeline, a privately funded infrastructure project that would bring tens of thousands of jobs to the United States, was recently rejected by President Obama. The decision came despite a three-year environmental review that found no threat and the inescapable reality that without the pipeline the oil will just be shipped in tankers to China while we continue to import oil on tankers from the Middle East. Yet another triumph for politics over policy.
Secondly, federal subsidization of certain renewable energy technologies has more often than not been a bust. Obama may tout the increased use of renewables and the thousands of jobs created, but when set against the billions of dollars in taxpayer money that has been invested in ensuring their success, those statistics become less impressive. After all, let’s not forget that at the outset of the Obama campaign Obama promised to “create 5 million green jobs.” Now, he’s reduced to touting the “thousands” that he’s managed to prop up with deficit-financed support.
Somehow Obama still hasn’t learned his lesson from Solyndra.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Obama Ignores Jobs Council Recommendation, Rejects Keystone XL
Shot: Yesterday, Obama’s Council on Jobs and Competitiveness released a report calling for an “all-in” approach to energy.
“Continuing to deliver inexpensive and reliable energy is going to require the United States to optimize all of its natural resources and obstruct pathways (pipelines, transmission and distribution) to deliver electricity and fuel. The Council recognizes the important safety and environmental concerns surrounding these types of projects, but now more than ever, the jobs and economic energy security benefits of these energy projects require us to tackle the issues head-on and to expeditiously, though cautiously, move forward on projects that can support hundreds of thousands of jobs.”
Chaser: From today’s Washington Post:
“The Obama administration today formally rejected a bid by Canadian energy company TransCanada to build a $7 billion oil pipeline linking the tar sands of Alberta to refineries in the Gulf of Mexico.”
Hangover: In a statement President Obama said that the Congressionally-imposed deadline for review of the Keystone XL pipeline did not allow the State Department to finish a “full assessment of the pipeline’s impact.” This ignores the fact that the project has already undergone tremendous amounts of regulatory scrutiny including three years of review conducted by ten federal agencies. And thus far the Keystone XL has passed every test with flying colors.
The State Department’s Supplemental Draft Environmental Impact Statement (the second round of reviews) even found that, “from a global perspective, the project is not likely to result in incremental greenhouse gas emissions.” Even going so far as to say that the “proposed project would have a degree of safety over any other typically constructed domestic oil pipeline system.”
So it’s not the environment that Washington is endangering, it’s a secure source of energy and jobs. According to a study by the Perryman Group, over the life of the project it would lead to $20.9 billion in spending, $9.605 billion in increased output, and 118,935 person-years of employment! That’s tens of thousands of U.S. jobs that our recovery could desperately use.0 Comments | Post a Comment | Sign up for NTU Action Alerts
New Study Reveals the of U.S.'s Domestic Energy Supply
Riddle: Every year the consumption of me goes up. No more of me is created. And yet every year the supply of me increases. What am I?
Solution: The recoverable supplies of oil, natural gas, and coal in the United States.
Ok, so it wasn’t the greatest of riddles, but it highlights an interesting point – thanks to new innovations in exploration and production technology, America’s bounty of domestic energy continues to increase.
A new report released by the Institute for Energy Research reveals the extent of America’s natural riches. North America has 1.79 trillion barrels of recoverable oil – almost twice as much as the combined reserves of OPEC nations! We also have 4.244 quadrillion cubic feet of natural gas – enough to provide the U.S. with electricity for 575 years at current rates.
Despite these gaudy numbers, the Obama Administration continues to make the misleading claim that America’s consumption far outstrips its available resources. Indeed, Obama said earlier this year, “The problem is we only have about 2 to 3 percent of the world’s oil reserves.”
The trick is all in the semantics. As the IER report reveals,
“Proved reserves represent quantities of oil that are known to exist in places where development is already occurring at current economic prices. . . These figures do not, however, account for the massive quantities of oil that exist in areas where development is not permitted to take place or where new technology will add to the reserve base.”
And under Obama, the areas where development is permitted is tiny. Current regulatory barriers only permit production on less than 6 percent of federal lands onshore and 2.2 percent offshore.
The misinformation about the size and scope of America’s energy riches has provided ammunition for lawmakers to argue the need for taxpayer funding for “green” energy. Over the past three years federal subsidies for oil and natural gas has totaled $2.8 billion. By comparison, renewable energy subsidies have nearly tripled, going from $5.1 billion to $14.7 billion. The discrepancy becomes even more apparent when you consider their share of the total energy pie. For instance, solar energy receives more than $775 in taxpayer subsidies per megawatt hour of energy created, while oil and natural gas receive $0.64 per megawatt hour.
Rather than continue to throw good money after bad in trying to prop up green energy programs, Washington should be taking steps to removing the regulatory roadblocks from utilizing the unmatched domestic oil and natural gas resources available. After all, it’s not some unbreakable riddle, it’s just common sense.
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Best Line of the Day
In discussing the EPA's attempts to increase average vehicle fuel economy, the Journal editorial board has this great line: "Yes, 13 automakers agreed to this standard in July, confirming behavioral science on hostages."0 Comments | Post a Comment | Sign up for NTU Action Alerts
America Needs Keystone Pipeline, Not Keystone Kops
Rather than move forward with the Keystone XL pipeline – a project that would provide hundreds of thousands jobs (and barrels of oil) – President Obama has turned into a Keystone Kop.
The Keystone Kops were a set of incompetent, fictional policemen that starred in silent film comedies in the 20th century. Their slapstick humor had them constantly running feverishly in conflicting directions, clumsily destroying anything in their path, grasping their bowler caps in consternation, and generally looking confused. Which pretty much sums up the Obama Administration’s response to the Keystone XL pipeline – unsure of what to do and how to do it.
Rather than move forward with the project, which was first proposed in 2008, but has been needlessly stuck in the permitting process, the Obama Administration decided to do what it always does when facing a difficult decision – punt. Yesterday, the Administration announced it was going to review the route of the pipeline, effectively delaying any decision until after the 2012 election.
The decision seems questionable in light of the regulatory hoops that have already been jumped through to ensure the environmental safety of the project. As reported by Bloomberg, “The State Department said its new study will supplement an environmental impact statement issued in August that found Keystone XL would cause “no significant” environmental damage provided that TransCanada complies with U.S. law.”
Indeed, the impact statement states that, the “DOS [Department of State] determined that incorporation of the Special Conditions would result in a Project that would have a degree of safety greater than any typically constructed domestic oil pipeline system under current regulations.”
Given the timing of the delay and the questionable basis, some have questioned whether the delay is purely political. By punting the President avoids having to make a decision that would have angered one of his core political constituencies, regardless of the position he took. Support the pipeline and risk the (misplaced) ire of the environmentalists, reject it and lose support from labor unions who realized the pipelines’ job-creating potential.
But while the political calculus was complicated, the economic math was simple – Keystone Pipeline = Jobs + Secure Energy Source.
With the economic recovery continuing to sputter along at stall speed, it is sad that narrow political interests could derail a project with the potential to create thousands of jobs right away.
With nearly 1,000 business in 47 states already providing services to the development of Canadian oil sands (which the pipeline will carry to U.S. refineries), the U.S. is already intimately tied to their success. And yet, in true Keystone Kop fashion, we may have just shot ourselves in the foot. Following announcement of the postponement, the pipeline’s developer said, “If we have to delay too long, this project will not be viable.”
Construction of the Keystone XL, and the development of Canadian oil sands that it would spur, would be a tremendous boon to our economy, both in terms of jobs and a secure supply of oil. But rather than do the obvious thing – the Obama Administration is furiously running around, spinning its wheels, creating more problems than its solving. America needs the Keystone pipeline, not a return of the Keystone Kops.3 Comments | Post a Comment | Sign up for NTU Action Alerts