The Power and Perils of Cooperatives – Episode 12 of the Building Local Power Podcast

Welcome to episode twelve of the Building Local Power podcast. For full transcript of the podcast, click here.

In this episode, Christopher Mitchell, the director of ILSR’s Community Broadband Networks initiative, interviews Hannah Trostle and Karlee Weinmann, Research Associates for the Community Broadband Networks and Energy Democracy initiatives, respectively. The three discuss the cooperative model of ownership and how this model can enable investment in gigabit Internet connections for their member-owners, but also how they are subject to a low participation rates in their elections.

The trio details the challenges of cooperative ownership and the myriad of benefits for active and engaged cooperative boards and administration structures.

“There are co-ops out there that are finding ways to…have their members understand how solar can work for them,” says Karlee Weinmann on the benefits of cooperatives for renewable energy. “[They’re] finding ways to implement solar in a way that is financially feasible and financially beneficial.”

Here are everyone’s reading recommendations from this week:

From Hannah:

Vivek Shraya’s collection of poetry titled; “even this page is white.”

Available from an independent retailer here: https://vivekshraya.com/books/even-this-page-is-white/.

From Karlee:

Matthew Desmond’s book on Milwaukee’s segregated housing environment titled; “Evicted: Poverty and Profit in the American City.”

Available from an independent retailer here: http://www.evictedbook.com/.

From Chris:

Calvin Trillin’s short-form poetry on politics, available at The New Yorker here (http://www.newyorker.com/contributors/calvin-trillin).

Cathy O’Neil’s book detailing the “dark side of big data,” titled “Weapons of Math Destruction.”

Available from an independent retailer here: https://weaponsofmathdestructionbook.com/.

If you missed our previous episodes make sure to bookmark our Building Local Power Podcast Homepage. Please give us a review and rating on iTunes or wherever you subscribe to podcasts.

View the full transcript of the podcast, below.

Full Transcript of Podcast:

Christopher Mitchell: Karlee, why don’t you tell us a statistic?
Karlee Weinmann: Well Chris, 70% of rural electric co-ops have a voter turnout rate of less than 10%.
Christopher Mitchell: How many?
Karlee Weinmann: 70%.
Christopher Mitchell: 70%?
Karlee Weinmann: Right
Christopher Mitchell: Wow. Hannah, about how many electric co-ops are there in the country?
Hannah Trostle: There are about 890.
Christopher Mitchell: Okay. I’ve seen 867. I think these things are hard to count.
Hannah Trostle: 867 are the distributional electric co-ops and then there’s another couple that are just generation and transmission.
Christopher Mitchell: How did I know that you would have a more specific answer on that if I pushed you a little bit?

Today, we’re going to talk about cooperatives and specifically electric cooperatives; what we’re kind of calling “The Promise and the Perils of Co-ops”. You’re listening to Building Local Power from the Institute for Local Self Reliance and the first voice you heard was Karlee Weinmann.

Karlee Weinmann: Hello.
Christopher Mitchell: And the second voice was Hannah Trostle.
Hannah Trostle: Hey.
 Christopher Mitchell: And they’re both research associates with the Institute for Self Reliance. Karlee focuses on energy and Hannah does more of the broadband-type work and does a lot of our work specifically in rural broadband. And I’m Chris Mitchell, I kind of run the broadband worker. I guess I think of it more of managing it because almost all of the work is done by other people. And we’re gonna be talking about cooperatives today and how they can build local power really with a focus on how they can build power in rural areas. And we’re gonna be talking about power in a different sense as well. So, let’s get to it.

So I think we will start, a little bit, with the peril, and ask a question about why it’s a problem that many people are not participating in the democratic governance of their co-ops where, just to be clear for people who may not be as familiar, being member of the co-op, taking service from the co-op, means that you are a voter and you helped to pick the board that sets the direction of the co-op. Effectively, you should be participating in running it, but many people are not doing that.

Karlee Weinmann: Right. So many people don’t even realize that by getting their electricity from a co-op, they, in fact, are an owner of that co-op which gives them, theoretically, a say in the strategic direction, policies, and other decision making that happens at the co-op board level. So how it’s supposed to work is that all the member-owners of a co-op will elect a board that theoretically represents them and their interests and can advance policies that they’re on board with. Unfortunately, that’s not happening in very many cases as the statistics shows. Engagement is low, people aren’t realizing that they have this opportunity–
Christopher Mitchell: Or obligation.
Karlee Weinmann: Or obligation, yeah, in fact in many cases, there are barriers put in place requiring in-person voting or other restrictions that make it difficult to participate in that process. So, while co-ops sort of exemplify this democratic ideal and principle, that’s not translating to reality in a lot of cases today.
Christopher Mitchell: It seems like there might be at least two separate issues. One is apathy, a natural apathy of people that are not participating. And the second might be some cooperatives that are going out of their way to make it harder for people to participate.
Karlee Weinmann: Exactly.
Christopher Mitchell: Okay. Because I know, for instance, when I’m a member of a couple of co-ops and, for the most part, I get something in the mail and I send it back. And that’s a very easy way to vote, but you mentioned in-person voting where some of these cooperatives make it very hard to vote.
Karlee Weinmann: Right, there’s in-person voting requirements that we’ve seen. In some cases, there’s this convoluted nomination process that favors incumbent board members which contributes the intransigence we see in policy and that shuts people out.
Christopher Mitchell: Lets just ask why that is a problem. Because, the rural electric co-ops have still done an incredible job. I think of- If you wanna look at rural electricity versus other infrastructures, for instance, broadband, the rural electrics do an amazing job and in many cases they are starting to get involved in broadband.

But, fundamentally, they have continued to provide reliable power at low cost. And I suspect that that is a part of the apathy, that people are sitting there thinking, “Well, if my power was flickering on and off everyday, I’d probably be more interested in voting. But it’s not, it works.” So why is it a problem if we have these low voter turn-outs or barriers to voting for co-ops.

Karlee Weinmann: I think, fundamentally, the more people that are involved, the better these co-op strategies and policies are going reflect what people truly need. And that also ensures that there’s space for changes and adjustments and improvements as markets change.

So, with regard to electricity, there is a lot of movement happening in that market place right now. There needs to be room available to develop distributed resources like solar, like wind, and in a lot of cases, we’re seeing co-ops that, for a variety of reasons, including obligations to coal and general wariness of change, that are preventing that development from happening and pretty soon that’s not just going to be a bad decision but it’s going to be highly destructive to their customers, their members, their owners.

Christopher Mitchell: Okay. So, we’re talking about someone that may be living in this territory of a cooperative and wants to put solar on their roof. What kind of barriers might they face?
Karlee Weinmann: In Minnesota, something that we’ve seen arise in many years, as interests in rooftop solar has risen, is that the imposition of outsize fees for those rooftop solar installations. What that means is that the co-ops are charging enough in cases in extra fees specifically for rooftop solar projects to make it financially not feasible. And there is some dispute resolution proceedings ongoing at the Public Utilities Commission right now and, in fact, this is enough of a problem that it’s become, sort of, a spotlight issue, this legislative session with the advent of proposed legislation that would remove dispute resolution proceedings like that from the PUC to the co-op’s board instead. So, that would essentially, potentially, give the co-ops free reign to impose these fees–
Christopher Mitchell: So what we’ve long seen with co-ops is that a lot of times state and federal law will often carve out space for co-ops that’s different than like Duke Energy, or Entergy, or Excel Energy, these big electric providers, they get regulated closely. But co-ops, because they are so responsive to their members in theory, they have more authority to impose these sorts of fees that if Excel Energy was doing this, the Public Utilities Commission, theoretically, would be all up in arms saying, “Nope, you cannot impose these fees.”
Karlee Weinmann: Or at least it’s a guaranteed check on those fees.
Christopher Mitchell: Sure. Now, I think it’s worth noting that on the flip side of the coin, the co-ops have more power to be self governing. We’re seeing some co-ops really doing smart things. Which are–
Karlee Weinmann: True, very true. I spent a few days in Iowa last summer learning more about a co-op called Farmer’s Electric Cooperative, about 30 miles south of Iowa City, that has made solar work in spades in their community. There are farmers all across the hills that you can see when you come into town that have solar panels on their roofs. Businesses in town have solar right on the front of their buildings and I think that’s really an indicator that there are co-ops out there that are finding ways to not only have their members understand how things like solar can work for them, but actually finding ways to implement solar in a way that is financially feasible, financially beneficial and just really a good idea for the people that they serve.
Christopher Mitchell: Hannah, I want to bring you into the discussion about co-ops. I’m curious- we, from the broadband side, I think are just so thrilled and excited about what the rural electric co-ops are doing. Can you tell us a little bit about that?
Hannah Trostle: Yeah. There are, right now, just about 50 electric co-ops thinking about doing some sorts of fiber projects. Some have already started and completed them, others are working with the local telephone companies. Some have actually worked together to build middle mile networks and its overall pretty exciting, but it’s also rather new.
Christopher Mitchell: Right. As you were saying that, I was thinking that, because I think a discussion I recently had with someone from, I believe it was, north Arkansas Electric Co-op and he’s also the president of the co-op trade organization. He was saying- I said, “10 years ago, not very many were doing this,” and he said, “Oh, five years practically no one was doing it.” So this is rather new development.
Hannah Trostle: It’s not entirely brand new, in the sense that electric co-ops have been in this space before with the broadband over power line experiments that didn’t really go very many places.
Christopher Mitchell: Many of them have also experimented with partnerships with satellite. I mean, they’re aware of the need in rural areas and they’ve been trying to find ways of responding to it and they’ve also, historically, run their own fiber optic lines to substations for monitoring and quality purposes and that sort of thing. So, even though they haven’t made fiber available to others, it’s something that they’re very familiar with technologically.
Hannah Trostle: Yup. It’s already part of their networks. So, right now it’s just figuring out ways to extend it further, whether that be to businesses or just to the community anchor institutions like schools and libraries. Most of the 50 electric cooperatives now seem to be interesting in fiber to the home.
Christopher Mitchell: Yes. So, I guess I would just be curious. We haven’t really said why. Why, from the ILSR perspective, from a perspective of local self-reliance, do we care that co-ops are getting into this? Why is it a big deal?
Hannah Trostle: From the ILSR perspective, it’s a big deal because this is another way that people in the community can actually own their internet infrastructure. They don’t have to rely on big corporations and it’s a good way of getting things that are beyond DSL out in rural areas.
Christopher Mitchell: Right, making sure that these rural areas aren’t left behind. They actually have infrastructure that’s comparable to what we have in urban areas and, in many ways, superior even. I mean, if I could move to Missouri and take service from one of these co-ops, I would have much better service than what I get in St. Paul, where I live. We’re gonna–
Hannah Trostle: Yeah, actually, we should just move the ILSR office up to my home town which already has fiber to the home and it would be fun.
Christopher Mitchell: And interestingly enough, it’s pretty close to my wife’s parent’s place so I’d have a place to stay and I’d be okay with that. At least, maybe, on Fridays and Mondays.
Hannah Trostle: Only on Fridays and Mondays.
Christopher Mitchell: Right–
Hannah Trostle: These fiber projects really do have to be democratically owned, so that goes back to Karlee’s point about how the voting structure of electric co-ops right now is not really great for making sure that works.
Christopher Mitchell: You know, it’s interesting because I wanted to just press her on that. Why do they have to be democratically owned? But I also want to follow up on the board questions. So, when you say they have to be democratically owned, it’s a technology, anyone could do it, what does the democratic ownership matter?
Hannah Trostle: Well, there’s so many different ways to do fiber projects. It really matters what the local community needs. If the people on the board aren’t representing what the community actually wants, then it’s not going to work real well. If they go about doing a fiber to the home project and no one actually wants high speed internet service at home, what they really want is high speed internet service at their local businesses, in their schools, then the co-op has just wasted a lot of time doing these really small test projects when they could have been going out and doing a lot more throughout the entire community because they serve a really large area.
Christopher Mitchell: Right, and I think it’s worth noting that one of the things that we see co-ops doing is, after there’s a change in general manager or on the board you might see more willingness to engage in this because you may have people that have been on the board for 40 years and their mind is set in a certain direction and the idea of getting involved in something so new and risky, relative to everything else the co-op does, is different and scary in some ways.

Now, one of things that I just wanted to throw out is that I remember that most of the Midwest co-ops that I have talked to, they have a real sense- the cooperative spirit is that you serve everyone. But I’ve heard that some of the co-ops that were built in areas that used to be rural and are increasingly exurban. They may be thinking about doing fiber to those exurban parts, but leaving behind the more rural points and I don’t know exactly how you deal with that.

Clearly, the economics of doing fiber in these exurban neighborhoods is going to be better than out in the farming areas. I think there’s gonna be a crisis of leadership that will come forward and you’d really want to make sure people are active in their voting as those decisions are being made.

So, I’d like to turn to some of the economics of this and, Karlee, one of the questions that I had for you to lead this off is: Why should we be so concerned? I still think a lot of people think of solar as something that’s nice to have, but you pay a premium and then you can say that you’re not burning fossil fuels and things like that. Is there an economic imperative to get away from coal and can you tell us a little about how these things work?

Karlee Weinmann: Distributed generation, such as solar panels, particularly on a person’s roof are becoming more and more affordable as time goes on, putting them in reach of more and more people. So, if you think about the wider impact of that, that’s pretty huge when you factor in, not only, the financial bottom line but the environmental benefits, the social benefits, and all these other things. With relation to the cost to the fossil fuels, in those same regards, I think that the benefits are very clear and I think that as the marketplace shifts to make more space for these new technologies, we need to be really aware of how we can use them to create economic benefit particularly at the community scale, which is something that we’ve seen pioneered in communities like the one in Iowa that I mentioned earlier.

So, it’s definitely possible to use these new technologies for economic, social, environmental benefit. I think we need to recognize and not be afraid to innovate, particularly in rural areas where these utilities have a huge opportunity to make it happen for themselves.

Hannah Trostle: You mentioned earlier that the electric cooperatives have these contracts with coal and these sorts of things. How long are these contracts? What is, sort of, the format?
Karlee Weinmann: What’s happening in a lot places is that the distribution co-ops that will actually distribute your energy and deliver your bills get their energy from, what are called, Generation and Transmission, or G&T co-ops. So, those larger co-ops are the ones that are making sure that your distribution co-op can get power to you, to your house, to your business. Where those Generation and Transmission co-ops are sourcing their power is pretty dirty these days.

So, distribution co-ops are under contract, in many cases very long term contracts, with those G&T co-ops to source their power.

 Christopher Mitchell: And very long term means 60, 70 years?
Karlee Weinmann: Means decades, generations maybe, in some cases.
Christopher Mitchell: Okay.
Karlee Weinmann: So, the co-ops that serve every day customers are bound to these contracts with G&T co-ops, which rely on coal for decades, in some cases generations, and onsite power like rooftop solar, for members, is exempt from those contracts but the co-ops themselves remain on the hook for that coal generation and the infrastructure it requires to process it. So, big plans, all these things that the industry is generally moving away from.
Christopher Mitchell: Right. So in some ways, and this is something I really feel for co-ops, for generations we saw electric growth growing, demand was increasing and you know we’re gonna have a lot of people demanding this. Now, you have a twofer hitting these rural electric co-ops. One is, in many cases, their losing populations, so their demands actually declining now.
Karlee Weinmann: Mm-hmm.
Christopher Mitchell: They still are on the hook to buy all that power. People are using LEDs, they’re doing energy efficiency stuff so their needs are going down and then people are putting solar on their roofs. So, they really feel like they’re stuck.
Karlee Weinmann: Right, and when the utilities are not keeping up with the way the markets changing and what their members want- because remember that if a co-op is facing this dilemma, it’s because it has members that want to install rooftop solar and when they’re not responsive enough, they’re just wasting time that they could be spending trying to find solutions which are available and need to be available, frankly.
Christopher Mitchell: Right. Now, Hannah, one of the things that this plays in with the fiber, I think, is that where we see co-ops building fiber, their demand is decreasing less or it starts increasing again. Because one of the reasons people are leaving these territories is because they do not have good internet access. Whereas, the electric co-ops that are building the networks have some of the best access you can get in the entire country, and in fact, in some cases, in the world I would say. Because you can get a gigabyte for less there than you can almost anywhere else.
Hannah Trostle: Yeah, and they will also have way more devices if they have good internet access and all those devices need electricity. Even if each device on its own is, actually, not using that much but collectively, they will increase your energy needs. I can remember- I grew up up north with an electric co-op.
Christopher Mitchell: And when Hannah means up north, she means north of Brainerd. For a lot of people that have never been to Minnesota, but have only seen the movie “Fargo”, Brainerd has a lot of Minnesota to the north of it and that’s where Hannah’s from. I’ve been up there as well, it’s great country.
Hannah Trostle: Yep, it’s sort of not really northern iron range, but not really central Minnesota–
Karlee Weinmann: It’s up there.
Hannah Trostle: It’s pretty far up there. I remember when we started getting better internet access. We started getting more devices and my dad looked at the power bill and was like, “What happened?” And went through the house and pulled out all of the cables.
Christopher Mitchell: Right, the Xbox that never turns off.
Hannah Trostle: Yes, the Xbox never turns off, the PlayStation never turns off.
Christopher Mitchell: Right, so in some ways, if co-ops would take all of our advice, I think we’d solve all of their problems. That’s what I’m hearing.
Karlee Weinmann: They just need to take their member’s advice. I think we can settle for that.
Christopher Mitchell: Yeah, fair enough. All right, moving on to that part of the show in which we give a little bit of reading advice. Hannah, what do you have to suggest that people might want to check out?
Hannah Trostle: I would suggest Vivek Shraya’s “Even This Page is White”. It’s a collection of poetry. It’s made by this Canadian artist about anti-blackness. That is the topic of poetry, it’s pretty fun. I believe its V-I-V-E-K S-H-R-A-Y-A.
Christopher Mitchell: I have to admit, I’m a little weak on poetry myself. I read magazines cover to cover, because I’m a giant dork, but I skip the poetry because I find its too hard to understand for my brain. So, I’m curious about your brain, Karlee.
Karlee Weinmann: Well, I’ve got some non-fiction for you this week Chris.
Christopher Mitchell: That is a little bit more my speed, I’m afraid to say.
Karlee Weinmann: So, I would highly recommend a book called “Evicted”, it’s by–
Christopher Mitchell: Oh yeah!
Karlee Weinmann: Have you read it?
Christopher Mitchell: I have not read it, I’ve heard the interviews.
Karlee Weinmann: You have to read it.
Christopher Mitchell: I really want to do a show on it in the future.
Karlee Weinmann: Yes, everyone must read it. It’s by a Harvard Sociologist named Matthew Desmond who writes in a way that no sociologist I’ve ever read, can. It’s very journalistic and very focused on storytelling. It’s about the way that our housing economy is so inequitable. Specifically, with regard to low-income renters, he does deep ethnographic research into the rental economy in the poorest sections of Milwaukee, which is one of our nation’s most segregated cities, to show just how hard it is for, particularly women and children, to get any sort of leg up, whatsoever and, as an extension of that, how hard it is to build any kind of stability or wealth when you can’t have a home.
Christopher Mitchell: It’s great that you recommend that. One of things that I really like about it is that it really gives a full picture. He talked with a lot of landlords too.
Karlee Weinmann: Right.
Christopher Mitchell: And dealt with them to give a sense that, it’s not like one side is the good side and then you have the bad people that are ripping them off. It’s very complicated.
Karlee Weinmann: It’s very complicated. His telling is very even handed and some of the landlords are sympathetic to. It’s a story without an agenda that leaves you feeling called-to-action, which I think is very difficult to achieve and also really emphasizes the urgency of the issue.
Christopher Mitchell: All right, so I want to make two recommendations building off of those. One is Calvin Trillin, a poet that I have read because he writes very short poems and they are very funny; two things that I love.
Karlee Weinmann: Chris is a haiku guy.
Christopher Mitchell: Yes, and ideally a haiku that has a pun in it. The–
Hannah Trostle: You can read all of Vivek’s poetry in under two hours and she also is a music artist so you can just listen to it.
Christopher Mitchell: Ah! Okay. So, I need to broaden my horizons. I want to recommend a non-fiction book also which is Kathy O’Neil’s “Weapons of Math Destruction”, which I’ve been recommending to people before I read it and now that I’ve read it, I really want to recommend it to people. Because, it’s a very short, engaging, fast read. In fact, I would say that, unless you’re really into the weeds like I am, you can just read the first 100 pages and you’ll get most of what you’ll need out of it. But it’s incredibly important for the modern era, where these algorithms are determining so much about what we’re paying for cars, what we’re paying for many of the products that we buy. If we deal with the justice system, whether we’re likely to get justice or not. It’s incredible how these algorithms are taking over and how little people actually understand about how flawed they are. So, highly recommend it.

Let me just take a minute to thank those of you that have been rating us on iTunes and in other places where you may get your podcasts. It’s really gonna help us to make sure that we’re showing up in the rankings somewhere and that people are serendipitously finding us. So, please do take a minute to rank us wherever you found us.

But with that, we’ll hang up the microphone and we’ll just encourage people to go out and build local power for another two weeks and we’ll come back and talk about this again.

Karlee Weinmann: Thanks Chris.
Hannah Trostle: Thanks Chris.
Christopher Mitchell: Thank you.
Lisa Gonzalez: That was Karlee Weinmann from the Energy Democracy Initiative and Hannah Trostle from the Community of Broadband Networks Initiative. They sat down with Christopher to ponder building local power and electric cooperatives. Christopher is director of the institute’s community broadband networks initiative.

For more on electric cooperatives, you can check out ILSR.org and also muneenetworks.org if you’re interested in how they’re bringing internet access to members. We encourage you to subscribe to this podcast and all of our other podcasts on iTunes, Stitcher, or wherever else you get your podcasts. You can also sign up for our monthly newsletter at ILSR.org.

Thanks to Dysfunction-Al for the music license through Creative Commons. The song is “Funk Interlude”. I’m Lisa Gonzalez from the Institute for Local Self Reliance, thanks again for listening. This has been episode 12 of the Building Local Power Podcast.

Audio Credit: Funk Interlude by Dysfunction_AL Ft: Fourstones – Scomber (Bonus Track). Copyright 2016 Licensed under a Creative Commons Attribution Noncommercial (3.0) license.