During the debate on a bill a in 2017 that removed electric co-op "member/customer protections by eliminating third party oversight of member disputes that are currently under review by the Public Utilities Commission (PUC)," rural electric cooperatives argued that they are self-regulated through democratic control by their members.
A recent column by Star Tribune business writer Lee Schafer, Crow Wing Power co-op should look after members, not insider executives, took issue with that notion.
Now a Good Thunder area energy industry developer and consultant is taking matters to court. BENCO member Cameron Raether filed a claim on August 23 in Blue Earth County Conciliation Court (commonly know as small claims court) for $65.33 for failure to represent Raether and his wife, who are BENCO members.
The figure is based on the $200,427 Wells has received in compensation as BENCO director from 2011-2017. The Raethers have repeatedly requested meetings with Wells to discuss the cooperative's business. According to the claim, Wells has refused to meet with the members.
The case will be heard by the court on October 22, 2018.
A call by Bluestem to Wells' number on the BENCO board of directors' page was not returned, nor was an email sent to the cooperative's communication staffer. We'll update the post should we hear from them.
BENCO is short for the Blue Earth-Nicollet-Faribault Cooperative Electric Association, a southern Minnesota electric cooperative which purchases its wholesale power from Great River Energy (GRE).
Here's Raether's complaint:
In a phone interview, Raether said that he wished to discuss issues such as BENCO's involvement in GRE's Spiritwood coal plant and its related partners. One partner, Cargill, will close its malting plant at the site in October. His questions about the site as a cooperative member relate to involvement in activities other than power generation for members.
Raether said that he is not against coal or other energy sources; rather, he seeks the best rate for his electrical service. Nor is he anti-cooperative. He simply wants financial information about costs of production and such matters. He cited Lake Country as an example of an organization that shares such data with members--and explains it.
In an email Monday, Raether wrote that he had not seen the Schafer column. Bluestem thought that some of the points the Star Tribune columnist was making echoed those Raether raised. Schafer observes:
With the notable exception of Dakota Electric in the southern Twin Cities metro, the state’s electric power cooperatives receive very little oversight from the Public Utilities Commission.
You can quickly see why if you read through the famous seven principles of cooperatives, a brief but inspirational manifesto for a democratic form of business where the customer-members hold the power.
No one needs to look out for co-op members. They are well-equipped to look out for themselves.
That’s the idea, anyway, although it’s now being tested by Crow Wing Cooperative Power & Light Co., an electric cooperative that serves members in three counties with headquarters near the Brainerd International Raceway.
Crow Wing has invested 10 years and least $23 million into trying to develop a manganese mine near the small town of Emily. While that’s certainly odd for an electric utility, it’s not the oddest part of this story.
As reported by colleague Mike Hughlett last weekend, it turns out the insiders had negotiated what’s effectively the personal ownership of 5 percent of the manganese mine and then never got around to disclosing that to co-op members.
Co-op members can’t really look out for themselves when they don’t know what they are supposed to be looking out for. . . .
One problem that’s obvious right away is that consumers don’t really choose to be members.
Our state is carved up into electric power service territories. Minnesotans in areas served by co-ops have the option of connecting to a co-op’s electric service or pulling an Abraham Lincoln and trying to do homework all winter by candlelight.
The members don’t have that much say, either, not like public company shareholders who might vote on executive compensation. And so voter participation, the percentage of members who participate in the election of directors, can struggle to get out of the single digits. . . .
That doesn’t mean there’s little reason to stand for election as a director. The board seats at the power company can pay a lot. The pay approaches $50,000 per year for the largest electric co-op, Connexus Energy of Ramsey, according to its most recently available annual federal tax filing. There’s a lot of responsibility in board service and doing it well takes time, but that’s more than our state legislators make.
Cooperatives generally must stick to their knitting, although co-ops including Crow Wing have a record of doing well in ventures besides retail electric power. . . .
There wasn’t a word about any of this in the most recent Crow Wing Power annual report. The mining venture appears to have been included in the roughly $13.3 million of “other” investments on the most recent summary balance sheet.
According to a brief description in a Crow Wing member newsletter, the annual member meeting this summer was all smiles. Everybody got fed by an entertaining pancake flipper, and the kids got to ride horses, thanks to the Crow Wing County Sheriff’s Office.
And not quite 4,800 Crow Wing members voted in the election for directors, or about 12.5 percent of them.
Is this what democracy looks like? Perhaps not. Check out Mike Hughlett's report about the mining venture in Crow Wing Power's $20-million-plus investment in manganese mine raises questions.
Perhaps some oversight--from ensuring responsiveness to members to transparency in investments--might be helpful. Hollow talking points about electric service cooperatives as democratic institutions just might not be enough.
Image: Willie Wiredhands, electric co-ops' answer to Reddy Kilowatts, urging civic engagement by voting. Sadly, in most Minnesota electrical co-ops' own elections, a tiny percentage of members vote in a process that some researchers consider a bit less than democratic. Via the Jasper County REMC:
Willie Wiredhand (©NRECA) is the longtime friendly face and spokesplug of rural electric cooperatives nationwide. Adopted in 1951 by the National Rural Electric Cooperative Association, Willie’s last name is one of the original nicknames for rural electric cooperatives: “wiredhand” (because electricity brought to rural America by co-ops in the 1930s and 40s was the never-tiring, always available hired hand to assist the nation’s farmers.) Willie — with his light-socket head, wire body and electrical plug for his bottom and legs — is now considered an icon among many in the pantheon of corporate advertising characters.
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