July 2012 MREA REPORT Providing service and leadership for electric cooperatives

Decisions Made

he June MREA Board meeting Senate leadership reports and best educated in the nation and Tchanged the format of the MREA state legislative visits. Tuesday educational provider of choice. annual meeting, tuned the strategic evening will feature the MREA The Loss Control Dept. controlling plan, amended the Resolutions reception and Wednesday will mission is zero accidents. Committee process and agreed to include MREA-related reports, • The amended Resolutions host a legislative fundraiser. Here action on resolutions and other Committee policy includes the are the goods: MREA-related business with an Board to appoint alternates and adjournment slated for noon. • The 2013 MREA annual meeting committee members to report at is slated for March 5-7. The • The MREA Board strategic July district meetings. MREA Board will meet on planning patina included • The Board voted to host a Monday. Tuesday, the traditional establishing dues-non dues at fundraising event for Albert Lea legislative day will include the full 55-45%, filling the lobbyist and State Senator at their membership with caucus votes Loss Control vacancies, and the August 21 Board meeting. in the morning and then House/ Board continued to ensure that MREA members would be the

Annals of Annuals

or as long as anyone can substation will be named the Jeff Fremember, North Itasca CEO Ortman Substation. This is the Jeff Ortman has pestered, in the first-time GRE has dedicated a words of GRE CEO Dave Saggau, facility for a co-op manager. the G&T to build a radial line to the co-op for enhanced reliability. “Best thing that has The facilities needed for the radial feed, included tapping into an ever happened to existing transmission line owned by three utilities, including a Canadian this Co-op” province. To that, an enormous to the co-op” and Board Chair investment in a substation would It was a fitting tribute to Ortman, Terry Schmitz took a long-time to not have likely occurred had it not who announced his retirement after recount Jeff’s accomplishments to been Ortman’s polite but persistent nearly 40 years directing the affairs include creating hundreds of jobs. badgering. Saggau, who gave of the co-op whose lines cross the The mere mention of Jeff, whose a terrific speech, told the annual Big Fork Wilderness area. Attorney emotion-laden farewell to the co- meeting assembly held at the North Andy Shaw said Ortman was the op where he poured his all, netted “Best thing that ever happened Itasca Co-op’s garage, that the . . . continued on page 2

MREA Report www.mrea.org 1 continued. . . Annals of Annuals

North Dakota numerous standing ovations. booths, including the Consumer- owners for Political Action (COPA) Giving The Lyon-Lincoln Electric A year or so ago minded by Director Ken Prestegard Cooperative’s 73rd edition took who added seven more to the 327 floodwaters sufficient to place at the 4-H pavilion building support an ark wiped his efforts (and others) enrolled. located in Tyler. Some 200 of the U.S. Senator Amy Klobuchar was out much of the service faithful, curious and “hey honey, territory of the Minot-based the featured speaker(on DVD) and dinner out tonight attended.” After spoke highly of SWCE CEO Syd Verendrye Electric. Much the chow, the meeting started with of the co-op’s recovery Briggs, which made her a favorite of The Song of the Prairie Chorus, at least one attendee. was found in the assistance a female group hailing from from neighboring co-ops nearby Marshall, who sang their At the North Itasca meeting, GRE’s who traveled yet again to hearts out. Most stayed to hear Dave Saggau said some 20 years rewire a state park. Our pal Board Chair Merv Anderson who ago the average consumer used and VEC Manager Bruce cited the cooperative principles about 2% of their income on Carlson was astounded akin to the Ten Commandments electricity. Despite rate increases, the at the co-op Okies who for Southwest Minnesota, known percentage has not changed. Still, descended to again light for its preponderance of co-ops. for consumers of lesser means – or the popular park. Co-ops In attendance were numerous your co-op membership – pay about helping co-ops. Hey, that state legislative candidates and 10% of their income for electricity. If could be a principle. incumbents – Rep. Joe Schomacker the co-op member is on welfare, the and Senator , along energy burden is, on average, seven with others vying for open seats. times greater than for families at Manager Tim O’Leary gave a terrific median income. overview on the co-op including ACRE All the incumbents were easily We’ve hectored you on welcome news that he had secured FEMA funds for the co-op building re-elected at these three meetings. springing dough to support Lyon-Lincoln and Steele-Waseca your local legislator or toppled by last year’s straight-line winds. gave the nod for bylaw changes candidate that you find including ending nominations much to your liking. We’re Over at Steele-Waseca some 1,000 from the floor and allowance for not done. Be sure to attendees moved around numerous electronic voting. hit the next sequenced number check payable to Action Committee for Rural Praising People’s Electrification or for those in the know, ACRE for $100 (at eople’s Cooperative Services CEO Elaine Garry and husband least). Don’t forget REPAC PGerome Garry hosted a fundraising event for Rochester State (Rural Electric Political Senator . Majority Leader Dave Senjem and Senate Energy Action Committee) for $25, Committee Chair also attended. The event was held at which allows MREA Director the Salem Vineyard co-owned by PCS Chair Tony Ebert and his son. of Government Affairs Joel All three touched on energy issues and credited Elaine for her role in Johnson (and you too) educating them on energy-related issues. to attend state legislative fundraising events. MREA member-system board chairs received an email from MREA Board Chair Fran Bator urging them to both invite the local legislators or candidates to learn more about the costs of everything energy and then spring for some American banknotes to help fund their campaign. The easy thing is to blow that suggestion off. Come November, however, you may find that sort of disinclination particularly costly.

2 www.mrea.org Meters smarter than some Mercury

ikipedia, which ended the 244-year run of As a kid, I recall pushing a WEncyclopedia Britannica, reports that The bead of mercury around. American Academy of Environmental Medicine (AAEM) is interested in the clinical aspects of ecological or environmental illnesses. Created in 1965, AAEM recently sent a letter to the Florida PUC asserting, according to my very able Florida counterpart Bill Willingham, that so-called “smart meters” are a contributing factor to diseases that weekly confound Dr. Gregory House. AAEM Good thing my proclivity, suggested the Sunshine State yank those meters, at least then, wasn’t to put which can, and do control load, to the old the Hg into my nose as was “analog” meters which would reduce the MREA embarrassingly true with other associate member program by several, including things my Mom recalls when Landis+Gyr. one-half of her twins netted at We shake our heads at these claims and other maladies including least one trip to the medical declarations that smart meter signal can be both purloined by terrorists clinic. Today mercury is seen and are seen by others as a way to spy on consumers. That anxiety was similarly as spent uranium, highlighted in yet another terrific column by PKM Manager Chuck Riesen with helpful advice from EPA who assured, at least one worried reader, that PKM uses smart meters (or in on how to dispose of the stuff, our lingo: automated metering infrastructure or AMI) to record usage and outside of Yucca Mountain, would never, ever, share what little the AMI records, with anyone. should you break a CFL. Mercury then, is said to be the reason why EPA is pushing What Sheldon Said the MACT rule, which stands for “Maximum Achievable Control Technology, which here are 841 distribution and 65 G&T cooperatives in 47 states, which would require G&T’s to install must see a mess of invitations to the programs’ luminaries. Somehow T pollution control technology BENCO/Brown CEO (and former CFC Board Chairman) Wade Hensel already achieved by the snagged both CFC Governor Sheldon Petersen and NRECA VP Martin top 12% best-performing Lowery (who will be presenting at the Energy Issues Summit) for those co- similar facilities. EPA states ops’s strategic “thinking” session. Here’s what the Guv’ner had to say: the cost of the rule will be • Unemployment (8.2%) + underemployment (14.8%) = 21% of the $9.6 billion annually. Few country’s workforce without a job, or much of a job. believe those numbers and one independent analysis • Fifty percent of college graduates do not have a job, (my son Cody has projects capital costs could one, of sorts, dealing poker at the Chinook Winds Casino in Lincoln total up to $84 billion through City, Oregon) which means 14% of 24-35 year-olds living in their Mom’s 2015, according to the House basement, which also represents a winning pick-up line. Committee on Energy and • The prospect of economic growth is likewise dim. According to Harvard Commerce. Mercury, unlike Professor and Economist Ken Rogoff, a nation’s economy hits the “danger most pollutants (and CO2 is zone” when government debt exceeds 90 percent of the nation’s GDP. At an emission, not a pollutant) that level, annual GDP growth drops by an average of 1.2 percentage poses health risks not via points. Today, U.S. debt stands at 100 percent of GDP, and recent inhalation but after being quarterly growth has just been anemic. deposited in lakes. • The Fed has every reason to keep interest rates low. A 1% increase in Safety interest rate on the country’s accumulated debt of $15 trillion would cost $150 billion. Section

MREA Report www.mrea.org 3 Defining the Outcomes of Minnesota’s Diverse Views Ideal Electrical Energy System • Conservative estimates say that meat accounts for about a third of greenhouse gas t the April REMA (Rural Electric Management Assn.) meeting chaired emissions and consumers use Aby Beltrami CEO Lynette Nieuwsma, Annie Levenson-Falk gave an 2,500 gallons of water per overview of the Citizen’s League electrical energy project calling for, yes, two half-pounders (minus the and the “ideal” electric energy system. Then Ms Levinson Falk said that cheese). study suggested that ½ of the juice consumed within the state’s latitude and longitude should be, like, generated by our own selves. That observation • According to the American wasn’t particularly well met. No matter, the Citizen’s League will press Coalition for Clean Coal forward (MREA is arranging for at least one hearing at a co-op) to develop Electricity, “over the last “ideal” outcomes for identified challenges. four decades, regulated emissions from coal-fueled Then there is a Wall Street Journal article reporting on stores, like Best Buy, plants have been reduced selling energy related products, if not providing access to the electricity by nearly 90 percent. With itself. To that, Tri-County Board Chair Jenny Scharmer kicked over a video the coal industry investing entitled “Power 4 Patriots” offering to sell do-it-yourself solar and wind and $100 billion to significantly well, the Amish heater, now has abundant competitors. reduce emissions—and $125 billion by 2015— research The August 1-2 MREA Energy Issues Summit will feature emerging and innovation continue technologies designed solely to grab your market share if not meet the to contribute to these goal(s) of the Citizen League Energy project which, as may have been decreasing emissions.” mentioned, is all-about “ideals.” To that array of can-you-believe wind and solar application, author and New Yorker contributor David Owen will • Washington Post columnist discuss the “energy efficiency dilemma,” or the more we save, the more Charles Lane observed: we use. Our pals at the National Information Solutions Cooperative or “U.S. energy subsidies — NISC (be sure to get all your software from there!) are covering Owen’s spending, tax breaks; loan speaking fees. Much of what may happen will be dependent upon the guarantees — increased November elections. Laying the odds on those outcomes will be David from $17.9 billion in fiscal Wasserman from the Cook Political Report who has a virtual knowledge 2007 to $37.2 billion in of every candidate in all 435 House races and 1/3 of the Senate up for fiscal 2010, according to the election. David is sponsored by Felhaber Law firm, which includes MREA Energy Department.” barrister Hap LeVander. Added to the line-up, is St. Thomas University Dr. • Dark chocolate is good for John Abraham who will tell you why the electric co-op should affirmatively your heart. A daily “small” respond to climate change. It is the 17th iteration of this event, which bar can reduce cholesterol started in 1995 as the Minnesota Update. It remains the most important and blood pressure. meeting MREA holds annually and is a tribute to MREA Director of Education and Communications Alison Deelstra, who continues to educate our membership about Minnesota’s energy future.

Think Locally, meet Globally The Environmental Summit held in Rio de Janeiro, which attracted 50,000, issued a rainforest of reports. Some are instructive including ones noting U.S. carbon emissions have dropped by 7.7 percent since 2006, which the International Energy Agency said, is the largest reduction of all countries or regions. Despite this country’s reductions, greenhouse gases are up 50% since 1990 and last year saw an increase of 3.2% or 32 billion tons, again, according to the International Energy Agency. Back when the “United Nations Conference on Sustainable Development” was held in Copenhagen, or some other exotic locale not called Minot, the call from developing countries was to “contribute” $100 billion for clean energy development. The tab in Rio was “only” $30 billion and that didn’t get much.

4 www.mrea.org Customer Choice

ecently, the “EnPower” sign across Pennsylvania, Illinois and Texas (where retail competition in electricity). The Rthe way from MREA was replaced by and large, co-ops are exempted). Minnesota Chamber of Commerce with one announcing “Delta Dental.” has long advocated for choice for EnPower, a marketing entity formed The Chicago-based Exelon, a its large commercial and industrial by GRE, Basin, Minnkota, Dairyland 25,000 MW utility, is embarking on customers. Since 1974, MREA and a number of distribution co-ops, an effort to compete in deregulated members, by law, have competed was the co-op’s effort to compete markets, if not make, a play in for new loads over two MW, located in a deregulated industry. EnPower, state’s contemplating customer outside incorporated areas. While led by Mark Laub, actually caged choice. The Wall Street Journal said Exelon isn’t likely to dabble in Minnesota’s sole experiment in the drop in rates driven largely by providing renewables (the company customer choice back in the late the influx of Natgas as a generation said the prices are too high), the MN 90s when Koch Refinery, a 100 MW fuel is stimulating competition for Dept. of Energy Resources’ infatuation load, left then NSP for the co-op large industrial loads. According with net metering which requires comfort. Enron’s manipulation of the to my able Colorado counterpart utilities to pay exorbitant prices for West Coast electric market which led Kent Singer, former Denver Mayor, renewable generation up to two MW, to brown-outs and rates this side of The Department of Energy (DOE) is a short step from deregulation and Alaska, pretty much put an end to this Secretary Federico Pena, is promoting an even shorter distance, given the state’s dabbling into customer choice, a competitive marketplace (Pena chamber’s embrace. MREA annual but several states continued retail is now the national co-chair of the meeting speaker Jack Uldrich predicts wheeling, as it was known, including COMPETE Coalition, a coalition that within ten years 60% of customers of utilities and others supporting will be competing with the co-op.

A Glimpse into the Future...

Your Customers Becoming Your Competitors Are you Ready? Energy Issues Summit August 1-2, 2012 St. Cloud Civic Center & Kelly Inn, St. Cloud, Minnesota

MREA Report www.mrea.org 5 Romping through Ron Carter Duncan Schwartau’s Readings chosen as 2012-

2013 Youth obles Board Chair, MREA and NRECA Director NRon Schwartau recommended the book entitled: Leadership Council “Abundance – the Future is better than you think” to the MREA Board and management. It’s a great read – one you Rep might contemplate – which foretells what is coming faster than you might think. Runestone Milsoft VP Steve Collier, teed up for the Energy Issues Electric Summit, has long mentioned Moore’s law, which posits that Association every 18 months computers get twice as fast for the same chose Carter price. Here is how that works: In 1982, an advanced Duncan as a computer called the “Osborne Executive Portable” weighed 2012 Youth about 28 pounds and cost $2,500. The iPhone, first Tour Delegate released in 2007, weighted 1/100th as much, 1/10 the cost to Washington, while sporting 150 times the processing speed and more D.C and while than 100,000 times the memory. That’s Moore’s law and as there, MREA the book’s authors Peter Diamandis and Steve Kotler noted, leaders selected Carter from 11 bright Moore’s law won’t change anytime soon. and talented candidates who interviewed to be Minnesota’s Rep. on the Youth The book’s premise - the future is better than you think – Leadership Council (YLC). Carter is rests on arresting world hunger, disease and unemployment. president of the National Honor Society Doing so requires a number of things – including clean at his school, has a 4.0 GPA, and a water and saving time. The authors said the Internet will very humble helpful demeanor. He will evolve into trillions of devices all connected and all with graduate from West Central Area School their own IP (Internet Protocol) address which can monitor all in Barrett in 2013 and aspires to become things including electric at residences and businesses (if not a rural family practice doctor. switching among utilities to get the cheapest rates). Moore’s law, again, says every 18 months computing speed doubles The NRECA Board of Directors at the same price – or less – and you begin to understand established the NRECA Youth Leadership the implications for our industry. Council in 1977 with objectives to foster and involve youth in the principles and That brings us, coincidently, to the Germans. You may recall practices of cooperatives, promote that GRE, among others, participated in a trip to Germany and encourage the program of rural to examine that country’s all-in investment in renewables. electrification among America’s youth We, particularly this writer, sniffed at the rates to-do-so (three and educate youth on all aspects of times that paid in Minnesota) but forget that technology is energy production and its uses. Carter also subject to Moore’s law, which in turn will decrease the will join Youth Leadership representatives cost of renewable. (Two revolutionary wind projects – Makani from around the country in Washington, and Sheer Wind will be previewed at the EIS). While it is D.C. in July to focus on leadership and appropriate for MREA to rail against regulations designed presentation skills and will volunteer as to increase the rate of generation to benefit competing a Red Shirt at NRECA’s 2013 Annual renewables, it is even more appropriate to keep an eye on meeting in New Orleans. the acceleration of those competing sources.

6 www.mrea.org This could be the end

he final fate of how service Eicher for lost revenue (the other say it is. Both the PUC and the MN Tterritory acquisition payment is factors are largely uncontested: Court of Appeals discarded FMV calculated will be decided sometime reintegration cost and depreciated seeing it as a way for the munis to this year by the state Supreme cost of poles and wire acquired). grab territory at prices that would Court. In 1974 the Minnesota The Clay County District Court ruled encourage even more grubbing. Legislature established exclusive that the city of Moorhead had to pay service areas but allowed municipal Red River Electric some 33 mills (3.3 MREA attorney Hap LeVander, who utilities to acquire territory from cents/KWH) over 10 years. That has successfully represented MREA either co-ops or IOUs. They have netted the ninth appeal, which the members before the courts and PUC done so abundantly: over half of State Supreme Court decided to on service matters over 38 years, MREA members have lost load to hear. will represent Red River. MREA, acquisitive municipals. The two along with Otter Tail, GRE, Xcel, venues to decide appropriate The municipals argue that the Minnesota Power and Alliant Energy compensation – the PUC or the compensation formula should filed an “amicus brief” (friend of the courts – have long embraced include fair market value (FMV). court) siding with Red River that the the formula largely developed FMV, which essentially sets appropriate compensation is the by consulting engineer Dennis compensation for purloined territory, one that has been in place since and is based on what the munis 1974.

Safety Culture Roundtable

Basin Electric Cooperative is very proud of their investigation process, and contractor safety safety program and safety culture. Continuous at their facilities. Upper management improvement in safety and safety culture is a never- supports these initiatives and help to make ending process. Basin’s core safety program consists Basin Electric’s Facilities safer for everyone. of strong programs and procedures, which not only meet - but often exceed - regulatory requirements. It To carry the message of safety 24/7, Basin’s includes a message to be safe not only while at work, CEO, Andrew Serri summed it up recently but at home as well. Safety is 24/7. by stating, “Safety never clocks out and it applies to all.” He expects safety to be a Basin continuously strives to identify areas that need part of everything employees do at work and improvement. They create plans, set realistic goals, home. Mr. Serri stated, “Our next generation implement and get feedback on any additional must grow up in this culture, so they carry improvements needed. This continuous cycle safety values into the schools and ultimately involves all levels of employees. to the workplace. It is through these practices where our nationwide averages will drop and Latest efforts include updating and improving where zero injuries in the workplace and at their existing clearance (lockout/tagout) program, home won’t just happen now and then, they behavior based safety processes, incident will be the norm.”

MREA Report www.mrea.org 7 PRESORTED First-Class Mail Minnesota Rural Electric Association U.S. Postage PAID 11640 73rd Avenue North DPC Maple Grove Minnesota 55369

Minnesota Rural Electric Association Phone: 763.424.1020 • Fax: 763.424.5820 • Website: www.mrea.org A publication for Electric Cooperative Directors and CEOs by Mark Glaess, Manager

8 www.mrea.org