Building Local Power

By Institute for Local Self-RelianceSociety & Culture News News Commentary

Building Local Power episodes

January 20, 2022 Building Local Power Highlight: Is Amazon Picking Winners and Losers Among America’s Cities
In this miniseries, we return to our most insightful podcast conversations. These five minute episodes highlight critical themes that are still relevant today. Alec MacGillis discusses how economic concentration leads to regional disparity. … Read More
6 min
December 23, 2021ILSR’s Year in Review: Shaping Policy to Empower Communities
On this episode of Building Local Power, host Jess Del Fiacco is joined by John Farrell, ILSR Co-Director, and Ron Knox, Senior Researcher with ILSR’s Independent Business initiative. They take a look back at ILSR’s work in 2021 and share big wins, challenges, and interesting trends from the year.
Highlights of their conversation include:
ILSR’s influence at the federal level, including our 30 Million Solar Homes campaign; our research and organizing around Congressional action to reign in the power of Big Tech; and our role in the development of the COMPOST Act.
Progress at the local level, including several legislative wins in Maryland to advance composting, the launch of a New York coalition to hold powerful corporations accountable, and more.
How ILSR’s impact has grown in recent years.
Looking ahead to what 2022 might bring.

“We’re seeing some really encouraging signs that things are being taken seriously around the idea of monopoly and market power. Especially at this moment, we have so many awesome ways that we can generate energy and supply services to our electricity system in a way that’s cleaner, that can employ people who’ve been left behind, that can lower their energy bills. You name it.”

“Lawmakers have really started to listen and have really started to understand that this consolidation that’s gone on over the past several decades, half century let’s say has hurt the economy. And that in order to undo some of the bad policies and the bad legal precedents that have created this issue, the laws themselves ultimately need to change.”

Related Resources
ILSR’s 2021 Annual Report
ILSR 2021: A Year of Building Local Power
4 New Maryland Laws to Spur Local Composting
Statement on the House Judiciary Committee’s Vote Approving Legislation to Break Up and Rein In Big Tech
Fact Sheet: How Amazon Exploits and Undermines Small Businesses, and Why Breaking It Up Would Revive American Entrepreneurship
Small Business Rising
Rep. Seth Berry on the Movement for Publicly-Owned Power in Maine — Episode 132 of Building Local Power
Transcript
Jess Del Fiacco:
Hello, welcome to Building Local Power, a podcast dedicated to thought provoking conversations about how we can challenge perfect monopolies and expand the power of people to shape their own future. I’m Jess Del Fiacco, the host of Building Local Power and communications here at the Institute for Local Self-Reliance. For more than 45 years, ILSR has worked to build thriving, equitable communities where power, wealth, and accountability remain in local hands.
Jess Del Fiacco:
And hi everybody. I am joined today by my colleagues Ron Knox who’s a senior researcher with our Independent Business Initiative, as well as John Farrell who directs our Energy Democracy work and is one of ILSR’s co-directors. Our other colleague Brenda Platt was going to join us, but she’s unfortunately sick. So I am going to be sharing some highlights from our composting team as well as we go through things here. So welcome to the show, Ron and John.
Ron Knox:
Hey Jess. Good to be here. Thanks.
John Farrell:
You know, if you welcome us together, it’s Ron John. And then we’re just a surf shop instead of policy-
Ron Knox:
Just a Tampa area surf shop. Nothing more. [crosstalk 00:01:09] which is a good, strong, Independent Business by the way, Tampa area surf shop.
Jess Del Fiacco:
This is also our very last Building Local Power episode of 2021. So that’s why we’re celebrating it with the Hawaiian shirts.
Ron Knox:
Right.
John Farrell:
It’s amazing how comfortable this Hawaiian shirt is in my cold basement in Minnesota.
Jess Del Fiacco:
So we’re going to talk about some highlights from our work this year. And I wanted to start by, I’m looking at some of the work that we did at the federal level, which may not be the first thing you think of when you hear the name the Institute for Local Self-Reliance is us working at the federal level, but we were advocating for policies that center local and distributed solutions. So maybe starting with John, you want to talk about what your program did at the federal level this year? How did you work to shape federal policy for local priorities?
John Farrell:
Yeah, thanks Jess. I often talk about the Institute for Local Self-Reliance as a national local organization that we have have always had this national focus, but are really intent on prioritizing the opportunities for local communities to have more decision making power. And as it turns out, there are opportunities for the federal government to actually help in that work from time to time. And not just by getting out of the way, but by doing things.
John Farrell:
So our big project from our Energy Democracy initiative was called 30 Million Solar Homes. It actually launched back in 2020. And in a way in a response to all the shit that was hitting the fan in 2020, around racial inequality with the pandemic, the economic insecurity of the pandemic. And of course the ongoing threat from the climate crisis. And the idea was can we articulate something that’s meaningful out of our energy program that addresses all of these things?
John Farrell:
And the idea was let’s create a program, a broad federal program to prioritize rooftop and community scale solar that could help people by reducing their energy bills directly, could employ millions of Americans in installing rooftop solar. And that we could specifically target towards folks who have not often seen the benefits from the transition to the clean energy economy, or who have suffered particularly harshly under the fossil fuel economy.
John Farrell:
We worked with over 300 organizations that joined in a coalition that we were in a partnership helping to lead. And we did some advocacy and some education with folks at the federal level about why their focus on climate and clean energy should not just be over the rewards of the clean energy economy to a bunch of utility companies. And that it should really also focus on deploying energy at a scale where everybody can benefit on rooftops of homes, on the roofs of churches, small businesses, etc.
John Farrell:
And we’ve really seen a remarkable amount of the policy program and recommendations that came out of that 30 Million Solar Homes effort into a number of federal policy proposals, most directly in the Build Back Better legislation. There’s a whole slew of things I could spend 10 minutes, frankly, just reading through all the different items. But I’ll just give a few of the highlights not just in terms of what the policies were that were included, but how they actually reflect that kind of triple goal of addressing racial inequality, the climate crisis, and the economic insecurity from COVID.
John Farrell:
One of them is just the federal tax credits for solar. We’ve had them for over a decade. Just gives you a discount on your solar installation and you get it back at tax time. But the problem is of course that if you don’t have a lot of tax liability, you can’t get a tax credit. So the bottom 50% of Americans basically couldn’t take advantage of this tax credit. Nonprofits or schools, community institutions, churches, other houses of worship couldn’t take advantage of this tax credit because they don’t pay taxes. So one of the biggest successes in the Build Back Better legislation is incorporating rules that would change this to be a refundable tax credit number one, which is very important in terms of allowing all of these folks who couldn’t previously participate. But the second one is doing what’s called direct pay, which means that you could actually get the payment without having to wait until April tax time. If I installed the solar in July, I could get the payment from the federal government in the next couple of months, instead of waiting all the way until next year. Which is also really important, especially if paying for a several thousand dollars solar array isn’t something you can just do easily out of pocket so maybe you can get a short-term loan to float you until that payment comes in, for example. So that’s a big deal.
John Farrell:
Another thing that is included in the bill is a huge increase in money for the Rural Energy for America Program, which gives grants to small independent farmers, rural small businesses, rural individuals to do deploy clean energy. There’s so much clean energy resource in rural areas from the sun, from the wind. It’s a great opportunity to continue to tap into that.
John Farrell:
And then there are a number of special programs that specifically target like we mentioned, people who haven’t had access before. So programs in Housing and Urban Development that would support affordable housing units being able to do solar and renewable energy, bonus credits as part of the solar tax credits for projects that are located in low-income communities or that specifically serve low-income individuals. And also some big loan guarantees and grants for trial communities who again often have enormous renewable energy resources on tribal lands, but don’t have the capital needed to make those investments.
John Farrell:
So it’s really exciting to see all of these different components. Broadly across the Biden administration they have what’s called their justice 40 initiative as well, which reflects this idea that at least 40% of the benefits of federal clean energy investment should go to communities that have been historically marginalized. So I’m just very excited because there’s something in there for everybody. There’s extensions of tax credits, there’s loan guarantees, there’s money to support distributed solar rooftop and community solar. And there’s a real focus in making sure that even folks who haven’t been able to get access before will be able to.
Jess Del Fiacco:
Wonderful. Thank you, John. I would love to hear some highlights from Independent Business’ work over the last year. I know you’ve got a few things that happened at the federal level.
Ron Knox:
Yeah, we have. Thanks Jess. And John, it’s really great to hear about the work you guys are doing. I was lucky enough to hear about all that work very recently, and I think it’s just fascinating. And I think it’s really, really excellent and a real change maker. So for the Independent Business Program, I mean I think the focus on the federal level isn’t really a new one for our program, but it certainly was a major focus over the past year. We’ve known and we have been saying for a long time that the enforcement of the laws that regulate monopolies and that corporate concentration at the federal level have been broken in this country for a long time. They’ve been broken by these very specific policy choices that regulators and lawmakers have made and that the judges and courts have upheld over the past 40 years or so.
Ron Knox:
And these are policies that have allowed big, powerful companies to get even bigger. They’ve allowed many industries to consolidate. And that’s all happened at the expense of Independent Businesses, and of workers, and of shoppers, consumers.
Ron Knox:
So over the past year, and honestly over the past two or three years, lawmakers have really started to listen and have really started to understand that this consolidation that’s gone on over the past several decades, half century let’s say has hurt the economy. And that in order to undo some of the bad policies and the bad legal precedents that have created this issue, the laws themselves ultimately need to change. And they need to change in particular to address the rising power of the big tech monopolies like Amazon, and Google, and Facebook, that have ultimately come to control so much of the modern economy. So with that momentum underway, our work has really focused on trying to make some of those changes a reality.
Ron Knox:
And I’ll talk a little bit later about those bills specifically, some of the proposed laws that we’re seeing that we’re really excited about. But I want to add that the recognition of the harms of monopoly power aren’t just happening at the federal level. Although a lot of our work is focused there, right? But over the last year, we’ve seen a crucial new anti-monopoly law introduced in the New York state house. And that has passed out of the Senate there. We advocated for that bill. We testified on its behalf. And now, we’re part of a coalition called New Yorkers for a Fair Economy. That includes labor groups, and small business groups, and others who are all pushing for this bill’s ultimate passage into law. So lots of work on the federal front, but it certainly doesn’t end there.
Ron Knox:
I also want to talk a little bit, just take to the federal picture because it is so important to some of the work that we’re doing, trying to push back against monopoly power and corporate concentration. Some things we’re really excited about are really strong leadership that is now in place at both of our antitrust agencies, right? We have Lina Khan who is now the chair of the Federal Trade Commission. And Jonathan Kanter, who is the head of the Antitrust Division at the Department of Justice. They’re both really deep critics of outsized corporate power. They’re champions of competition. And they’re champions of the kind of competition that would allow Independent Businesses to compete and to thrive in the economy, and that would build worker power and so on. Lina Khan was appointed in the spring. Jonathan Kanter took off as just this fall, but we’re already seeing a lot of progress within those agencies in really refocusing and changing the mission of those agencies so that they work better for the economy and for people.
Ron Knox:
Look, at the FTC, I can talk about I think what is a strong new lawsuit against Facebook. One that was filed by the previous administration, refiled by Lina Khan in this administration. I think it’s much stronger now and really calls out the abuses of Facebook in acquiring Instagram and WhatsApp. We’re seeing blocked mergers. We’re seeing all of these things that you expect to see from an aggressive antitrust enforcer.
Ron Knox:
But the work of the agencies has gone really beyond that, which is really exciting for us. At the FTC, the agency revised its entire mission statement basically, and its long-term plan that really refocused the FTC’s competition protection work from this very narrow view of consumer prices and output to a much broader welfare standard where consumer concerns live alongside those of small companies of workers, of suppliers in the broader economy.
Ron Knox:
We’ve seen big and really significant investigations happen at the agencies. There was just a joint workshop on the intersection between labor, workers rights and antitrust issues. There’s a really sweeping investigation to look at problems in supply chains and whether the power of big retailers has worked to increase prices, reduce supply, and make those supply chain issues worse.
Ron Knox:
The FTC has changed some rules around mergers, really hoping that those changes will stem an unprecedented wave of corporate tie ups. So some real, significant progress there. I think it’s something that as small business owners, as workers and as shoppers in the economy, we can all be excited about. And it’s certainly things that we’re excited about.
Ron Knox:
Real quickly, I want to point out that these issues are the issues that we on the Independent Business team here at ILSR have worked on hard over the last year. We advocated for Lina Khan and Jonathan Kanter to be appointed and to be confirmed by the Senate. That’s obviously happened. We wrote really significant articles about some of the harms that happen when you allow a lot of corporate mergers to take place. We’ve written about the need for an alliance between small businesses and the labor movement. And of course, we’ve released our comprehensive Amazon toll booth report that we hope will enlighten policy makers to how Amazon exploits small businesses in order to grow its power in the economy. So we’re feeling good. It’s been an important year. There’s more to do, but it’s been a good 12 months.
Jess Del Fiacco:
Yeah. It’s so exciting to be such a significant part of what’s an actual sea change across policy.
John Farrell:
Yeah. I would just love to ask speaking of a sea change, I feel like one of the most significant accomplishments in ILSR’s workaround antitrust and monopoly has been this shift in the perception of whose side small businesses on, or kind of where small business lines up. I feel like five or 10 years ago, the only time I heard about small businesses in the context of federal policy was get rid of red tape, make it easier for businesses to act at the state level. Get rid of taxes and regulations. And here instead, I feel like over the last year and what’s amazing is it’s not just a slogan, right? There are many, many small businesses part of the work signing up to testify, signing up to talk about it. Can you explain a little bit, why the shift? What was happening before with small businesses and why are they speaking up so strongly in favor of the anti-monopoly, antitrust action that ILSR has been talking about now?
Ron Knox:
So I’m going to try to be nice about this. Let me say that for a long, long time, many, many years in this country, there was this kind of falsehood that was pushed as a narrative around the economy. Where small businesses became rather than this thing that we really needed to preserve in order to have a vibrant economy, vibrant local communities, local power, local control, all of these kinds of crucial things. They became this kind of vehicle for unfortunately, a lot of conservative talking points and the conservative economic movement in general in this country over the last 50 years. What was actually behind that was this real push for increased bigness in the economy. So all of the deregulation efforts of the late ’70s and ’80s on and on through all of the various presidential administration since then has really created this environment where bigness is not only welcome in the economy, but was thought of as very much a good thing.
Ron Knox:
The problem when that happened was when you’re promoting bigness in the economy, you’re getting away from small scale. You’re getting away from a small scale businesses and small scale economies, and the Independent Businesses that really make up main street and that were the lifeblood of a lot of communities.
Ron Knox:
And I think we’ve just hit this moment. Maybe it started with the Great Recession a decade ago, and it’s certainly become hyper-focused now in the pandemic economy. But I think small business owners hit this moment where you said, “You know what, you’ve been talking a lot about us. But the policies that you’re actually pushing and that you’re actually implementing, they’re not about us. They’re favoring the big guys, and they’re favoring bigness, and they’re favoring concentration. You’re allowing these mergers to happen that concentrate our supply chains, create these bottlenecks. You’re allowing these predatory middlemen operations to run rampant over us, over our businesses.” And I think we’ve just hit this tipping point where small business owners said, “This isn’t true. So now we need new answers. So now we need the truth. And we need a movement that’s really going to focus on us.” Not us as a political talking point, as a chip to push around a poker table. You know what I mean? But us as independent actors in this economy with every right to compete and to succeed as anyone else, no matter what the size. I just think we’ve hit this moment, and it’s been really refreshing to see.
Jess Del Fiacco:
Thank you Ron. And I’m a poor substitute for Brenda, but I will share, the composting team had some exciting progress this year at the federal level as well. So I do want to share a couple of their updates. ILSR is a founding member of the U.S. Composting Infrastructure Coalition. And this coalition really played a pivotal role in the development of the federal COMPOST Act. That’s C-O-M-P-O-S-T Act as an acronym, of course. And that act was introduced this year. And it’s really important because currently, there’s no federal policy that exists that really provides any resources for a national composting movement. There’s just not any existing federal policy on that. So this act would provide quite a bit of funding through 2031, that’s about $200 million for composting projects. And we helped advocate to include small scale projects like on farms, or in communities, or even at the household level to qualify to receive that funding.
Jess Del Fiacco:
So that was certainly a big win. And we’re also just excited to see recognition that composting is important in other pieces of legislation, a Build Back Better bill. And the Infrastructure Act, which happens to have almost 80 million in funding that’s around recycling and composting included in it both acknowledged the importance of composting.
Jess Del Fiacco:
Our dedicated listeners may have heard a recent episode where we talked about our advocacy around recycling at the federal level. You should definitely check that out if you’re curious to learn more about that side of things. That’s with the Recycling Is Infrastructure Too Campaign. So very exciting inclusions of recycling and composting in many pieces of federal policy this year. So with that, I did want to give both of you the opportunity to maybe talk about different wins or progress that you saw, whether it’s also at the federal level or local level, that you wanted to highlight from your programs this year.
Ron Knox:
So look, I think we’ve seen some really significant wins so to speak over the last year. And I’ll start at the federal level, then I’ll talk a little bit about some local initiatives that we’ve had some success with. But I think the main thing are the big tech focused antitrust bills that were introduced first in the house. We had six of those bills introducing the house after some really significant work on our part, but on behalf of the lawmakers or staffs, advocacy groups and so on. Those bills all passed out of House Judiciary Committee, and they are now ready for a vote by the full House of Representatives. So that’s extremely exciting. Two of those bills, kind of the most crucial bills now have companion bills in the Senate. One of those is a bill that would restrict big tech companies from buying out smaller rivals or making other acquisitions that reduced competition. And then the other bill would prevent Amazon, Google, and other big tech companies from self-preferencing. And that just means for example, it’s like Amazon forcing third-party sellers to use Amazon’s own shipping warehousing service in order to earn the Prime badge and to be visible to shoppers on the Amazon site.
Ron Knox:
So those are really exciting bills. All of those bills are bipartisan. They all have a lot of public support. Not just on the Hill, but out in the world as well. ILSR and other advocacy organizations have been working hard to make sure that lawmakers and others on the Hill really understand the harms of the big tech companies. And to really hear the voices of the small businesses that are struggling under the power of the big tech giants.
Ron Knox:
So really to help make that happen, this year, we launched Small Business Rising. It’s a coalition of social that represent more than 150,000 small businesses around the country. We think that Small Business Rising has been crucial to giving a lot of Independent Businesses a voice in the halls of power that they didn’t have before, and where their stories really need to be heard. Again, so that the people who are crafting policy, who are making these extremely crucial economic decisions understand the harms that are actually taking place out on main street. Not in a theoretical way, but in a real tangible, hands-on way, because that’s exactly how these harms really transpire. So we think the bills are really evident that that work is paying off. So we’re excited about that.
Ron Knox:
On the local level, ILSR, the Independent Business team has been pushing back for a long time now against the rapid expansion of dollar stores, these kind of predatory dollar stores that pop up in communities around the country, often in small towns, and in urban areas. Places that lack this kind of economic power to begin with. And they offer essentially worse service, worse products. They push out local Independent Businesses that were already there that maybe offered healthier food for example, more high quality products. And instead they come in, and they’re sponges for the wealth of a community. And they take that wealth, they move it back to corporate headquarters, and they leave these communities far worse off.
Ron Knox:
This year, we’ve seen communities really across the country. Big towns, big cities, smaller places implementing policies that either ban the expansion of dollar stores outright, or that reconsider their zoning to limit the expansion of those dollar stores particularly in communities, Black and brown communities, often in urban areas, poor rural communities where these predatory dollar stores like to set up and their kind of extractive, monopolistic business model can really take hold.
Ron Knox:
This has been crucial work during the pandemic, because we’ve seen dollar stores rapidly, rapidly expand. The fastest growing brick-and-mortar business in America by a long shot. A lot of our behind the scenes advocacy work with local elected officials, local front lines advocacy groups has been really crucial to getting some of those bands put in place. So we are excited about that work too.
Jess Del Fiacco:
Thank you, Ron. And I feel like it’s easy to, you kind of think okay, they’re rapidly expanding. There’s lots of dollar stores. I get it. But how extreme it is is really difficult to see unless you live in those neighborhoods or those towns. I mean in the neighborhood that I live in right now, I don’t see any dollar stores really. I’d have to drive a little ways and then maybe I’d see one. But in my hometown, a small town, literally you’ll see a dollar store across the street from the same dollar store. It’s extreme just how fast they’re expanding and taking advantage of those communities. So thank you for that. John, I don’t know. Anything you want to add here?
John Farrell:
I think when we think about the big wins for the Energy Democracy work, I really think about it in terms of changing the broad perception of what it is that we need to be addressing in the energy economy. There has been obviously driven by environmentalists and by climate advocates this idea that the most important thing we need to focus on in the energy sector is on reducing carbon emissions, and that the means of doing that doesn’t matter. And I think we’ve really turned a corner in terms of people saying, “Actually the means do matter. Because in fact within the means, we might be able to get to our goals faster if we are approaching this from a way that analyzes the power structures in the system.”
John Farrell:
So I think you see that in the 30 Million Solar Homes. I mean, this is one articulation of many different folks who are out there saying, “Actually, if we want to get to our climate and clean energy goals, we need to be thinking about how do we let individuals invest their own money into this. How do we do it in a way that says let’s create as many jobs as possible and allow people who’ve been locked out of the clean energy economy into the clean energy economy?”
John Farrell:
Just one illustration of this is in some conversations about how we incentivize and pay for solar that are happening in California right now in the regulatory space, California has about 1.3 million homes and businesses that have solar installed on them. And folks made the decision to do that for a lot of different reasons, but many of them did it just because it made financial sense to them. So they put their own money at risk to add clean energy to the grid system.
John Farrell:
And in fact, they have done so. We just did some sort of back of the envelope calculation, but somewhere around 35 to $40 billion have been invested collectively by these California customers to put power generation onto the grid system, which is actually equal to about the entire market cap of one of their biggest investor utilities, Pacific Gas and Electric, which most folks might have heard of in the news in the last couple of years because of course of their negligence in causing some of the biggest wildfires in California history.
Jess Del Fiacco:
I feel like we need a buzzer or a sad noise to play whenever you say their name.
John Farrell:
Yeah. And I just think that is the kind of, when I think about the success that we’re having, it is in that kind of transformation. And you can see little bit actually in an editorial that was written by, it was by the editorial board of the San Francisco Chronicle this week. So like I said, there’s this debate going on about solar compensation. And the editors of the Chronicle essentially said, “Before we get into the weeds about how much we pay solar customers, maybe we should be asking the question why is PG&E still running our electricity grid after this?” They’ve gone bankrupt twice in 20 years. They’ve been shown to be negligent, to have diverted money from basic maintenance to shareholder dividends, which is part of what caused the wildfires, was failing to for example trim trees away from the power lines. And yet we still allow them to not only operate, but to operate as a utility corporation, as the sole owner of the electric grid. With no competition, with no option for others to be a part of that business. And I think that that kind of questioning is becoming more widespread, which is really exciting. And we can talk about that a little bit more later too, when you talk about some of the trends broadly that we’re seeing across the country.
Jess Del Fiacco:
Now I’m going to put my composting hat back on, my Brenda hat, and share another update from their team.
John Farrell:
Is a composting hat also compostable?
Jess Del Fiacco:
Sure, it’s like a newspaper hat, you know? So for years, their team, ILSR has been working with Maryland state officials and legislators to move forward on composting, organic materials. And this year they had some really exciting legislative wins. I’ll link all the details in the show notes of this episode, if you want to see the specific laws. Because I don’t think anyone wants to hear me botch any of that language. But there was four laws that were enacted, which will help advance composting in the state of Maryland. And there’s also a new bill that’ll be introduced in January in 2022, which is shockingly just a couple of weeks away now. Which is a bill that we ILSR drafted and we’re going to be leading on. And that would create really major funding for waste aversion and on-farm composting in Maryland. So there’s exciting stuff happening there. Before we cut to our ad break in quotation marks, are there any interesting trends or surprising shifts in conversation that you all saw in your programs this year?
Ron Knox:
I mean yeah, lots. Lots. I mean I think like I said kind of at the top, I think over the last few years, we’ve seen this. We’ve seen this kind of change in the way policy makers and even the way regular folks kind of think about and recognize the problems with corporate bigness. We think of it as monopoly power. I’m not sure your average Joe on the street, that word crosses their mind. It’s not really a part of the American lexicon at the moment. But I think they do look at these massive kind of unavoidable companies in their lives and they have serious concerns about them. And now we’re starting to talk about them. And again, at the policy making level, both at the federal level and on down, we’re starting to see a lot of attention paid and this issue being taken really seriously, and seeing a lot of action around it. And that’s massively different. Maybe not from exactly 12 months ago, but certainly from three, four, or five years ago. It’s an actual sea change.
Ron Knox:
Look, Lina Khan, and Jonathan Kanter, and people like not only them themselves, but what they represent, the philosophy that they represent, and the place that they’re coming to the agencies from, which again is a place of great concern and criticism about the extent to which our economy is controlled by corporate power and by monopoly power. That is so unbelievably different than not only from 12 months ago when we had differently leadership of the agencies under a different administration. But from 10, 20, 30 years ago, where we’ve seen this kind of rotating cast of corporate lawyers coming from big law firms. Promoting corporate power, be at the helm of these agencies, and just not really take the threat of consolidation very seriously at all. So anyway, it’s been a crazy year. It’s been a crazy year, and it’s been very, very different from anything certainly I’ve seen.
John Farrell:
I think Ron’s definitely got his finger on this. And it’s actually something that’s been unexpected to see in the energy side of our economy. 100 years ago, even more than 100 years ago, we essentially a deal with the devil to allow utility companies to be monopolies because we saw it as the most likely way to organize capital in a way that would bring electricity access to everybody. It already failed even back in the 1930s. We had to use the federal government to electrify the rural parts of America with the Rural Electrification Act. But for the rest of us who lived in urban areas, and I suppose I should say who live in urban areas because I wasn’t around back then, living in an urban area. But for the rest of us, it worked fairly well. The price of electricity actually even adjusted for inflation actually went down for almost the first 50 years of the industry. So that monopolization of the industry was successful from the standpoint of providing efficiency and cost reductions for folks.
John Farrell:
But that sort of ran out 50 years ago, and it’s almost taken 50 years for people to really appreciate and to see some transformative policy initiatives take root. But for example, the Center for Biological Diversity is doing an actual antitrust filing against SRP, a big utility in Arizona about their mistreatment of solar customers. So they’re actually using this language of antitrust and anti-monopoly that has been foreign to the utility business, despite having actual formal monopolies. It’s all of a sudden bubbling up. There’s a petition in front of the Federal Energy Regulatory Commission to disallow these utilities to for example charge their captive customers for their lobbying dollars and their participation in trade associations, which almost universally lobby against things that most customers want, like clean energy and rooftop solar. And it looks like the federal regulators are taking that seriously.
John Farrell:
A transformation for me actually this year was in reading an article that was written by Ari Pesco. He’s at Harvard Law, and he wrote this piece called Is the Utility Transmission Syndicate Forever? And for people who are not familiar with the term syndicate, it means the same thing as a cartel or a bunch of monopolists basically. And the idea essentially is that utilities have gamed all of the efforts that the federal government have made over the past 20 years to make transmission line development more competitive. So these are the big power lines that you see along freeways when you drive from city to city across the United States.
John Farrell:
And there’s a lot riding on it in the sense that many people think that our success at fighting climate change, our success at bringing clean energy under the grid relies on transmission development. Which has put them directly at odds frankly, with the Institute for Local Self-Reliance, which has always talked about, “No, we need to do in more investments in local things like rooftop solar, like energy storage, etc.”
John Farrell:
And what’s funny is to realize in reading that piece, we have a common enemy. Those of us who care about clean energy deployment, the monopolists are the problem. Whether it’s wanting to put solar on the rooftop of the ACE Hardware in my neighborhood, or whether you want a transmission line built from windy South Dakota, to Minneapolis, to Chicago. Either one of those things, it’s not about this or either or, big or small. It’s monopolist or not monopolist. And the monopolists frankly have been with that fight for a long time because we haven’t even been willing to recognize that they’re the problem.
John Farrell:
So I’m seeing that change. You’re seeing that in a legislation that passed in Maine. Unfortunately, it was vetoed by their governor. That would’ve done a public takeover of the distribution of transmission utilities there, and would’ve turned them into a consumer owned, but open access network virtually unheard of. An electricity business, a proposed merger of an electric utility in New Mexico was unanimously rejected by the state’s regulatory commission. I mean, there’s basically been unfettered mergers of utility companies since they revoked the law that had prevented it in 2005. A law that by the way, dates back to the 1930s when many of our other antitrust legislation originated.
John Farrell:
So we’re seeing some really encouraging signs that things are being taken seriously around the idea of monopoly and market power. Especially at this moment, we have so many awesome ways that we can generate energy and supply services to our electricity system in a way that’s cleaner, that can employ people who’ve been left behind, that can lower their energy bills. You name it.
Jess Del Fiacco:
Thank you to both of you. I just wanted to switch gears very briefly. Normally, this is when listeners would hear me cut to an ad break where I ask them to support the show by making a donation. But instead of breaking up the conversation, I wanted to make this a little bit more personal and ask you both to talk about the direct impact that donations have on your work. So how do donations make your work possible?
John Farrell:
I have something just teed up from something that Jess actually passed along to me earlier today, which was we’ve done a survey of our Local Energy Rules podcast listeners. And we got this back from someone. “As a city employee. I rely on this podcast more than any other resource for staying apprised of what other cities are doing to encourage local renewable deployment.” So your money, your donation to ILSR helps fund the production of that podcast at the time it takes to go out and find those great stories of what cities are doing to lead on clean energy development, to do our background research, to identify the right person to interview, to record and produce that podcast so that folks across the country can learn from each other about what’s going. Because the truth is not only are these challenging problems we’re trying to solve around our economy, around racial justice, around the climate crisis. But a lot of cities, even if they come up with some good ideas maybe aren’t comfortable being the first ones doing it.
John Farrell:
So they look to these kinds of stories that we produce in order to identify what is it that we can do and who can we learn from so we’re not reinventing the wheel every time do this? And as you can see from that, we are reaching people. The folks that we want to reach, the folks that are helping to lead on this. Staff folks, sustainability staff, staff for city council members across the country are listening to our podcast and relying on that is a way that they can get that information they need. So that’s one way that your donation can help us do the work here at ILSR.
Jess Del Fiacco:
Thanks. Ron.
Ron Knox:
I’m going to try to run a thread through one thing to another thing here. So I mentioned earlier that we started this organization, we helped to found this organization called Small Business Rising. And of course we did it in partnership with lots of great business associations and lots of amazing, hardworking members. But we start this organization. And we’re doing this advocacy work on the hill, in Washington, in the capital, trying to get some of these important, big tech, anti-monopoly laws passed.
Ron Knox:
So there’s a hearing in the House Judiciary Committee about these bills. And Representative David Cicilline from Rhode Island, he’s speaking during this marathon session of the judiciary committee. It had gone on for 36 hours, essentially without stop. And he’s giving his last and best pitch to get these things passed. And he pulls out a list of facts and a list of information paired by the folks at ILSR and in Small Business Rising talking about the ways that big tech monopoly power hurts small business and impacts small businesses.
Ron Knox:
And this is correlation, not causation. But it was his best swing. He was swinging for the fences with this. Because when you start talking about small business, you’re talking about the heart of the economy, and everybody knows that. And eventually, these bills get passed out of committee. And now they’re ready for a full vote by the House of Representatives.
Ron Knox:
Why did that happen? That happened because we had the money, because donors are generous enough to us to allow us to hire extraordinarily talented people. I’m going to name names. Allowed us to hire a small business organizer named Mary Timmel who’s amazing and a policy advocate named Katy Milani who’s amazing. And they’re the ones that put this together that helped to help to organize these small businesses, to do this advocacy work, to get these bills moving, to try to help the hundreds of thousands and millions of small businesses in America get out from under the thumb of big tech monopoly power. It couldn’t happen without donors. It couldn’t happen without you. This is literally the crucial stuff. So anyway, thank you. And let us continue the fight. We want to keep fighting.
Jess Del Fiacco:
Yeah, we’ve accomplished a lot. We couldn’t do it without you. And we are proud to be in community with our listeners and our donors to make change happen. So if you’re able, please consider heading over to archive.ilsr.org/donate to make a contribution. And even if you can’t donate, you can still support us in other ways, like sharing this podcast podcast with a friend or reviewing us on Apple Podcasts, sharing this on social media, talking about is ILSR’s work. It’s all great. So as always, thank you for your support.
Jess Del Fiacco:
John, I’m curious about your perspective since you’ve been at ILSR a little bit longer than Ron and I. If you were to compare this last year to five years ago or 10 years ago, how have you seen our impact as an organization change?
John Farrell:
I think the key element here is that we have always been known for our entire existence among the network of community level and local advocates as this valuable resource for how you can do things more effectively. But where we’ve really upped our game and I think the moment that we’ve been able to seize is this realization that the rules at the top of the system, the federal rules, the state level rules are often rigged against the small guy. That’s really what it comes down to. And when Ron is talking about the anti-monopoly fight, and what I’m talking about that as well, we’re talking about this realization that we have to fight both at the same time. It’s about Building Local Power, and it’s about fighting corporate power. And I think we’ve really managed to successfully articulate to people why we have to care about that broadly. It’s why we’re seeing Congress debate these bills about antitrust and breaking up tech companies. It’s why we’re seeing the rise of anti-monopoly conversations in energy, and in waste, and in broadband. We’ve really managed to I think start to have an influence and help people understand that it’s not just about what we can do locally, but what we also need to do collectively at a higher level to make sure that the playing field is more level for local economies to succeed.
Ron Knox:
I want to add onto that. I think that’s extremely important. I’m going to paraphrase this tweet. It’s literally a tweet. It’s a tweet that I read. So this is not my original idea, but I thought it was so important. And it basically said if you begin from a place of not wanting to destroy economic power, but wanting to disperse economic power equally throughout the economy to everybody, you’re setting yourself up for much more success on a policy level. And that to me is the core of what ILSR does, because that is our philosophy. That’s the reason that’s led to all of this success that we’ve had over the last year and I think the success that we’re going to have in the future. So that’s that. There you go.
Jess Del Fiacco:
Thank you both. I have one final question, which is just look ahead to 2022. It’s almost here. What are you excited about? Whether it’s a project or what you see coming down the pipeline in terms of policy or anything.
John Farrell:
I’ll say that I’m just really excited about in my own specific work within energy, the continued rise of this conversation and the confrontation of monopoly power. I am so excited that we are seeing some recognition of that. A growing coalition of folks that are interested in working on it from that perspective. In some ways, I feel like I’m following in the footsteps of the excellent work from our Independent Business team at bringing that attention to the broader economy and to bring it directly into the electricity sector.
Ron Knox:
Well, thanks John. I appreciate that. I mean look, we’re all in one boat. We’re all rowing in the same direction. Look, I’m excited to see the continuation of all the things that I’ve had a chance to talk about on this show. I feel like the anti-monopoly movement both on a kind of federal policy level and on an everyday level is a snowball rolling down a hill. And I just want this thing to keep rolling until it gains to kind of steam, and size, and power that it needs to make change in the economy that’s going to benefit everybody’s lives. So one year down, but lots more to go. I want to see these bills become law. I want to see the agencies continue their good work. And I want to see these things take effect.
Jess Del Fiacco:
Thank you so much to both of you. That’s it for today.
John Farrell:
Thank you for coordinating us and making sure this happens. I really appreciate it.
Ron Knox:
Yes. Thank you Jess for all of the good work you do. Not only on this, but on everything.
Jess Del Fiacco:
Thank you for tuning into this episode of the Building Local Power podcast from the Institute for Local Self-Reliance. You can find links to everything discussed today by going to archive.ilsr.org and clicking on the show page for this episode. That’s archive.ilsr.org. While you’re there, you can sign up from one of our many newsletters and connect with us on social media. We hope you also take the opportunity to help us out with a gift that helps produce this very podcast and supports the research and resources we make available for free on our website. Finally, we ask that you let us know how we’re doing with the rating or review on Apple Podcasts or wherever you find your podcast. This show is produced by me Jess Del Fiacco, and edited by Drew Birschbach. Our theme music is [inaudible 00:45:28]. For the Institute for Local Self-Reliance, I’m Jess Del Fiacco. And I hope you join us again in two weeks for the next episode of Building Local Power,

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Audio Credit: Funk Interlude by Dysfunction_AL Ft: Fourstones – Scomber (Bonus Track). Copyright 2016 Licensed under a Creative Commons Attribution Noncommercial (3.0) license.
Photo Credit: Institute for Local Self-Reliance
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46 min
December 15, 2021 Building Local Power Highlight: Zephyr Teachout on Building an Antimonopoly Movement
In this miniseries, we return to our most insightful podcast conversations. These five minute episodes highlight critical themes that are still relevant today. Zephyr Teachout and Stacy Mitchell discuss the increased recognition of the intersection between race and antimonopoly. … Read More
5 min
December 09, 2021New Mexico Co-op Dumps Monopoly Supplier to Offer More Solar
On this episode of the Building Local Power podcast, ILSR Co-Director John Farrell speaks with Luis Reyes, General Manager of the Kit Carson Electric Cooperative in New Mexico. John and Luis discuss the many benefits of distributing solar power through the community and Kit Carson’s plan to provide members 100% of their daytime electricity from local solar projects.
Highlights include:
How rural electric co-ops are adapting to new challenges and expectations after serving rural areas for more than 100 years.
Why, due to contracts with coal plants, Generation and Transmission cooperatives (G&Ts) often hold back distribution cooperatives like Kit Carson from generating much of their energy locally.
How Kit Carson connects members to high quality Internet access — and how they rose to the challenge of distance learning by connecting schools and Internet hotspots at no cost.
How co-op members are shaping future renewable energy projects.

“I continue to see the co-ops in the forefront of this new energy world we’re facing, and we’re probably the best equipped to address it. I think that’s positive for the co-op nation.”
“We have to get out of these scare tactics and, and say, the sun doesn’t shine at night, so let’s put some batteries. Or let’s get wind that follows that nighttime profile. And instead of us as co-ops and utilities making excuses why we can’t, we should figure how we can.”

Related Resources
Read ILSR’s updated report on How Cooperatives Are Bridging the Digital Divide.
Listen to our 2018 Local Energy Rules episode featuring Luis Reyes and Warren McKenna of Farmers Electric Cooperative.
Read more about Kit Carson’s clean energy and broadband Internet programs.
Read our 2014 report on rural electric cooperatives: Re-member-ing the Electric Cooperative.
Listen to episode 139 of Local Energy Rules, detailing how a Colorado Law Creates Transparency at Rural Electric Co-ops.
Check out the New Economy Coalition’s Rural Electric Cooperative Toolkit or listen to our Local Energy Rules episode featuring two of its creators.
For concrete examples of how towns and cities can take action toward gaining more control over their clean energy future, explore ILSR’s Community Power Toolkit.
Explore local and state policies and programs that help advance clean energy goals across the country, using ILSR’s interactive Community Power Map.
Transcript
Jess Del Fiacco:
Hello, and welcome to Building Local Power, a podcast dedicated to thought provoking conversations about how we can challenge corporate monopolies and expand the power of people to shape their own future. I’m Jess Del Fiacco, the Host of Building Local Power and Communications Manager here the Institute for Local Self-Reliance. For more than 45 years, ILSR has worked to build thriving, equitable communities where power, wealth, and accountability remain in local hands.
Jess Del Fiacco:
Today you’re going to hear from ILSR Co-director, John Farrell, who is joined by Luis Reyes, who is the general manager of Kit Carson Electric Cooperative in New Mexico. Starting in 2022, Taos, New Mexico and surrounding communities will receive 100% of their daytime electricity from local solar projects. Kit Carson Electric Cooperative, which is the utility that serves that area, is also connecting everyone of its 30,000 members to high speed affordable internet service. You’ll hear John and Luis discuss the advantages of self-reliance in rural communities and how Kit Carson’s progress has been driven by member engagement. With that, onto the show.
John Farrell:
Without further ado, Luis, welcome.
Luis Reyes:
Yeah, thanks John, it’s nice to talk to you again.
John Farrell:
Now, your cooperative has gotten in the news for all sorts of reasons around clean energy, but one of the things I think most people don’t realize is that you’ve really been at the helm at Kit Carson for a long time. I looked up in your bio and I think you’ve been there now for over 25 years. I was just curious to start out by asking you, how have things changed for being a [inaudible 00:01:37] electric cooperative in New Mexico during your tenure? I can imagine that there’s a lot of things in terms of technology and how things are moving that might be different.
Luis Reyes:
Yeah, John, thanks. Yeah, I’ve been fortunate actually, to be here at Kit Carson for over 37 years, and the CEO, General Manager for, it’s going to be almost 29 years. So, one of the things that have changed is member’s expectations. Co-ops have always been pretty democratically controlled, we listen to our members, but what I’ve really seen is members really do not have problem and more of them speaking of what they want from their co-op. So I I’ve see that change.
Luis Reyes:
I’ve seen the change of members that don’t remember being without electricity. When we started, there was still enough kind of the old timers that remembered when the first linemen came to the ranch or farm and got that one light bulb going. A lot of our members don’t remember black and white TV, so much less electricity, it’s always been there.
Luis Reyes:
I think the other thing that has really been unchanged is really the co-op model and really how it’s strengthened going forward doing during this energy transition, during COVID, having local control, having a say in your local energy supply and what you want from your local co-op. I don’t think that’s really going to unchange. In fact, it really is a hallmark of the strength of the co-op model.
Luis Reyes:
So, as you mentioned on technology, we’ve gone from analog meters to smart meters, but I think they’re all positive changes. They’re really all positive changes and I do think I continue to see the co-ops in the forefront of this new energy world we’re facing, and we’re probably the best equipped to address it. I think that’s positive for the co-op nation.
John Farrell:
So when we talked before Luis, what had been really exciting to me in speaking to you was that the cooperative was on track to get a 100% of its daytime electricity from solar by 2022, so that you and working with your members had made a lot of investments, a lot of plans around developing solar. Now this was a few years ago, I’m curious, are you on track to meet that goal? Can you explain a little bit more about what that means? Daytime electricity, obviously solar energy only available during the day, but what share of the co-op’s overall electricity will come from solar? Give us a little context for that and tell us how the plans are coming along.
Luis Reyes:
So John, that’s true, it’s always been a goal of Kit Carson and its members. Really, it started at out as, how do we get more solar than we can get today? Under the old structure that we were under, we could only gain 5% of our energy from renewable resources. That was kind of uniform and common throughout the co-ops that took power from G&Ts across the country. So as you may know, at a certain point, our members wanted more from us so we decided to exit our G&T.
John Farrell:
I’m sorry, let me interrupt really quick just for the listeners who don’t know the term G&T, but it’s a generation and transmission co-op, so it’s the co-op of co-ops that would build the [inaudible 00:04:53]. You might be able to explain it better than I, but just making sure that we do explain it.
Luis Reyes:
Okay, thank you. So yeah, our generation transmission co-op, so it is a co-op of co-ops who are looking for power. A lot of these generation transmission co-ops were formed in the ’50s because no one else wanted to serve electric co-ops and they served us well during that time. But as more renewables came to the forefront, more communities wanted local choice, it was as Kit Carson’s opinion that the generation transmission model, as good as it was, just couldn’t keep up with the changes and the expectations our members had with Kit Carson. To be honest, we weren’t sure if they were able to make that change.
Luis Reyes:
So we decided to exit from our generation transmission co-op, it was what I would call amicable. I mean, it was negotiated and we worked out the issues. We didn’t end up in court and we exited with an exit fee and we had a couple of goals. The first was we wanted more affordable and stable rates. We had just gone through a series of rate increases that we thought were becoming unaffordable. The second is that we wanted our members to choose or our members wanted to choose their power supply or have some options, and one of those options was more solar. So we exited in 2016, we had had several meetings with our members but after the exit in 2016, we established a co-op goal of 100% daytime solar, and that we were going to hit by 2022, which ironically was the same year that we would finish paying off that big exit fee that we negotiated with the generation transmission co-op.
Luis Reyes:
So you fast forward and we’re going to do it through, excuse me, we’re going to do it through a DER. We’re going to distribute it, that may cost a little bit more, but it was a members’ feelings that everyone wanted their solar facility in their community. So that will come to benefit us in the future as things evolve, but that was our model. So fast forward today, we’re going to hit that target. Right now we’re about 63% daytime solar and finishing our last two big solar projects. The last two big projects will come with battery storage so at the end we’ll have enough solar, we’ll have about 41 to 42 megawatts of distributed solar that will match our daytime demand or capacity. We will probably at the end, John, create, generate about 42 to 44% of our energy will come from solar.
Luis Reyes:
Kit Carson is located in the high, in the mountains here, spur off the Rocky Mountains, Sangre De Cristo Mountains. We’re actually a nighttime, winter peak-er, and so we do, because of the cold weather we’re a resort town, a mountain town. We sell a lot of energy at nighttime. Snow making is a big driver in the wintertime for the four ski areas that we serve. So that’s the first step in this transition that would’ve never happened under the old model, and I think that’s important as we are seeing the effects and impacts of climate change, the impacts of us not moving quick enough into this renewable energy world.
Luis Reyes:
So the next step is then, let’s add some storage, and then let’s start address transportation. So besides Kit Carson having… We’ll hit our goal by June of 2022 to hit that a 100% daytime solar. What that really means is when the sun starts to come over that horizon and hits that first solar array on the east side of our system, we start generating electricity. When it sets in the west and we have a raise in the east, the west, the north, the south, and into house, you have solar generation distributed across our territory. We’re generating solar as soon as the sun comes up. It’s like anything, it’s not perfect, we know that there’s cloudy days and there’s rainy days and we know that at the night it doesn’t shine, but we think this is a process and technology will catch up.
Luis Reyes:
The next step is installing batteries. We think battery technology will evolve to long duration. We read and see the research done on hydrogen for base load. So I think as we move into this new world, technology will keep up. Then with the addition of electric vehicles, we’re starting to build out our EV charging infrastructure and looking at ways to have EVs deployed in our territory. I think one of the underlying goals is at access to all. In the old model, outside of the 5%, the only people who really could afford rooftop was those who had some means. I think that is starting to change. You see more community solar projects. Our system, if you’re a member of Kit Carson, you’re going to get solar energy because it’s our primary resource mix. So we want to take that same philosophy for electric vehicles and charging, that just because you may not be financially able or your lower to moderate income doesn’t mean that we can’t give you opportunities to experience EV transportation, whether it’s something you own, whether it’s in the secondary market use cars, or whether it’s enhancing or growing public transportation.
Luis Reyes:
Again, these are things that John, and I say aren’t prime the sky. We actually, if you come to our territory, you can see probably, we’ve probably done 12 different of projects on the solar side. Everything from 100 KW to 15 megawatts. We’re putting in about 15, almost 16 megawatts of storage. So they aren’t small batteries, they’re big enough to take us through peak times if we use batteries for peak or for reliability, if we have to pick up critical circuits during outages. So we really are on this track to be carbon-free. Our goal right now is 2030, as other people shoot the 2040, 2050, we think it’s doable much sooner.
Luis Reyes:
One of the issues when you’re the first adopter is it’s a little too tougher and maybe a little bit more pricey, but we get to experience benefits sooner. So that’s where we’re at. It’s been a great journey and we’ve learned a lot about solar and batteries. We’ve also learned about a lot about our members and their requirements, their needs, and how important it’s to listen to them. So that’s… we’re on phase one of this journey after we’ve left and it’s really been right now, one of the highlights of, I think the… Not just what I’ve done here at the co-op, but the co-op itself. I think nationally, what co-ops can do when they decide to engage their members, listen to their members and then put that plan actually into action.
John Farrell:
Let me ask you a little bit more about you left your generation and transmission co-op tri-state, and are not the only co-op that has done that. You mentioned that it’s because you didn’t feel like the model that they had really was adaptable enough to the interest of your members to accelerated deployment of renewable energy and solar. You also had those cost concerns. Do you think that that will change? Do you think that the generation and transmission co-ops, having seen your co-op Kit Carson or Delta-Montrose in Colorado or other places, will start to shift and give more flexibility to their local co-ops to generate more of their own energy to offload some of the expensive resources like the coal power that they’ve had for many, many years, or do you see other co-ops needing to follow in your footsteps, in terms of looking to exit and to go on their own? Just because there are so many co-ops, I mean, they serve one in seven customers across the country gets their electricity from a rural electric cooperative, but there’s really only a handful like Kit Carson or the Kauai Island Electric Cooperative, or Delta-Montrose that have really set off on the course that you’ve set.
Luis Reyes:
Yeah, so I do think we have to be real careful on when we go forward because there are some co-ops that still feel that the current generation and transmission model works for them. I mean, if we’re really talking about flexibility, and there’s some co-ops that still think that the generation and transformation co-ops is the best way to aggregate power, then I think they have to do what they need to for their members.
Luis Reyes:
I do though see a growing sense of a lot of co-op members through a lot of co-ops I talk to that do want change because their members are, as I mentioned, we’re not unique in having a younger demographic. We have a lot of folks moving in from California and New York so you have this transformation of urban folks moving into rural areas because they like the lifestyle and the quality of life, but they still want the amenities and they want clean air and clean water.
Luis Reyes:
So I do think that if the G&Ts are going to survive they’re going to have to adapt. I don’t think it should be the other way around, that the distribution co-op has to adapt. I think we as distribution co-ops created the G&Ts. The G&TS were a product of the distributing co-op’s desire to have their own power supply. So I think if generation and transmission co-ops don’t adapt, then you’re going to have more co-ops wanting exit. I think they’re going to want to exit not because the manager does or the board, it’s because the members want flexibility just as you mentioned, people want choice. What we’ve experienced here is, people want to believe that the renewable energy they’re getting is local. So for someone to say, you’re getting renewable energy but it’s from 500 miles away. It sounds good but is it really ever getting here to my home? With Kit Carson, you can drive a couple of miles away and you can see the solar array that you just follow the lines, that goes right to my house. So I do think they have to adapt and if they don’t, I do think distribution co-ops have an obligation to exit, to fulfill their members’ expectations and requirements. John, that’s why we’re formed, for the members. This tail wagging the dog that’s occurred, where the generation and transmission co-op is dictating to the distribution co-op what’s good for us, that doesn’t work anymore.
Luis Reyes:
I think the other issue is the generation and transmission co-ops policy makers have to make it affordable for distribution co-ops to exit. There can be this outlandish fees exit. I understand and we actually had a key poll. Kit Carson’s exit should not cause any distribution co-op to subsidize this. So I think that’s important because I don’t want anyone to subsidize this as if we decide to move a different direction. When you follow what’s happening, when you have [inaudible 00:16:37] cases and millions of dollars going to lawyers to help so a distribution co-op wants to leave to meet its member’s expectations. I just think that’s wrong. I think the G&Ts in this case are just wrong to… Because at the end of the day, it’s the rate payer, it’s the member who pays the legal bill. So I don’t think that’s right. I think there has to be flexibility, it has to go back to how we were formed, the democratic process.
Luis Reyes:
I think if we don’t allow distribution co-ops to really explore what’s out there, rural areas will continue to get further and further behind when it comes to energy, whether… Because right now the policy, at least in the Western states is to close coal mines and a lot of coal mines are being closed. So if people don’t have choice from their co-op or their G&T, they’re going to do it, a lot of people, they’re going to start putting solar on their home. They’re going to start putting batteries on their home and make that choice that not every member has. That right now, that’s still cost prohibitive for a lot of members. So again, my hope is that the generation and transmission would create a model going forward that allows those who want to stay, to stay, and those who want to exit, exit affordably and without a lot of litigation and move on to what we were created was, to deliver services to rural Americans.
Jess Del Fiacco:
We’ll continue on with this conversation after a very short break. Thanks for listening to our show, if you’re enjoying this conversation between ILSR’s John Farrell and Kit Carson’s Luis Reyes, I hope you consider heading over to archive.ilsr.org/donate to help support our work. Your donations make this show possible, and if you want to hear more stories like this, you should check out another one of our podcasts called Local Energy Rules, that’s where you can hear John interviewing folks from across the country who are implementing local, renewable energy solutions in their own communities. Thanks, and now, back to the show.
John Farrell:
I’d love for you to talk a little bit more if you’re willing, about the solar and the fact that it’s local. You mentioned before that members are interested in being able to see the connection between the solar that’s being built in their house, that in the projects that you’ve been building in Kit Carson territory are close by. People can drive out and see them and see them and see the wires that connect that solar array to their home. Could you talk a little bit, you mentioned that it might have cost a little bit more than say, doing one centralized solar array or doing that through a G&T for example. What were some of the things that members were interested in? Are there economic benefits that aren’t on the utility bill necessarily that you can account for? Are there things like resiliency or reliability benefits again, that don’t necessarily show up on the bill that were things you were thinking about in building solar out in that way?
Luis Reyes:
Yeah, so John, first, I think it’s reliability and resiliency. I mean, we could, if you can control your own power supply, and again, these are building blocks. So 44% of our energy’s local, so during the daytime if there’s a system issue, we can control that. We can continue to deliver energy. Since we live in the mountains, we’re really concerned about fires and forest fires, and having power lines run through there and having to shut down power so that firefighters can fight that. With the way we’re designing our system, we can actually shut down the lines and still have power because of solar and batteries to at least take care of critical infrastructure during those times. So it starts to bring in resiliency, helps us attack these emergencies that come to us.
Luis Reyes:
Economic development, one of the things that we decided is that we were going to build these locally with local contractors. So we got the local developers in a room, asked them if they could partner together to build it. Four came into the room, three left as partners. So for the past six years, we’ve had local people building our arrays, which helps the economy, keeps people working, but we have also been able… these companies now are able to export their skills to other parts of the southwest. So it’s created an economic development. John, you hear a lot from policymakers, even from power suppliers saying, “Well, they’re temporary short term jobs.” Well, they may be but if you work six months here and six months there and six months, then all of a sudden you work two years at four different jobs, but it’s the same skillset. That’s no different than someone building a house. Once you build a house, you have to move on to the next house and the next house. So construction has always been temporary, permanent. So it’s brought that economic development aspect.
Luis Reyes:
It’s brought us kind of a marketing tool, if we live in the Rockies and our tourism is based around clean air, clean water, making sure we have sufficient snow to ski. What better energy supply than to have solar energy supplying energy to ski areas and to schools and to businesses? So there is a lot of fact and a lot of benefits in building distributed solar. Because of our grid, if I lost a solar array, let’s say on the east side, I can serve it from the west side through our transmission lines. So it does give me now some redundancy you with the solar facilities, and also allows us the ability to [inaudible 00:22:29]. We in essence are creating a micro grid that if we have to we can isolate ourselves from the main grid at times that we may have to.
Luis Reyes:
I think with COVID, it’s hard to say nothing ever as bad is going to happen, because that really showed us that we’re pretty vulnerable to things that we aren’t prepared for or don’t think will ever happen to us. I think we have to think that same way when it comes to operating a utility now. You could have a fire that you didn’t have before, and how are you going to handle that? You could lose a power plant, and how are you going to handle that? Those things happened. So yeah, I think it’s just not getting clean energy and it’s not getting clean energy that’s affordable, it’s all these other benefits that the community gains that everything from a resiliency to economic development and everything in between.
Luis Reyes:
I think the other thing is creating a model set other co-ops can look at and take from it the lessons learned. There’s some things that, yeah, we probably wouldn’t do that the same way, Kit Carson, but there’s a lot of things we do because we’ve been successful in deploying this. John, today we have about 29 unincorporated communities, so they’re not a municipality, just little communities. We have over half them today, and I’m looking outside, it’s a sunny day. We already have half of our system already at 100% daytime. That’s schools and that’s churches and that’s a post office and that’s a health clinic. It works, I think that’s… it works, the members are satisfied with that energy. The lights aren’t dimmer, there’s not a reliability issue, it works fine. We have it in the north part where we have a lot of irrigation. That solar today is pumping water on the crops. So it’s almost become the rule, not the exception. It’s almost, if you don’t have solar on your house, then I would… When we first started this, my fellow co-ops basically said, “We were, we weren’t the coal kids, because who does solar? Just Kit Carson and a few hippies.” You fast forward to 2022, if you’re not doing solar, you’re not the cool kids anymore because it has become a very valuable, low cost, reliable resource.
John Farrell:
That transition actually brings to mind one question I just wanted to ask. One of the goals that you had in exiting your G&T was to be able to do this local solar. It was also in response to affordability issues, you were worried about the rate increases that were coming for your members. I know that you have this exit fee that you’re going to be paying off next year. Has it already been more affordable than had you remained members of Tri-state and what does that look like going forward, especially once you’ve paid off that fee?
Luis Reyes:
So, John, that’s a great question because that’s something that’s always misinterpreted. Our cost of power today is cheaper than it was when we left Tri-state, so solar costs are down. It is my understanding that after we left… Here’s an amazing little tidbit. When we left in 2016, that was a major event for Tri-state and for Kit Carson, and really for the co-op world. We paid in an exit fee, that was to keep them whole, and we actually had come out of a rate case. Since then though, Tri-state has not had any rate increases up to 2022. In fact, my understanding is had a rate decrease, slight rate decrease. Again, I suspect that with the exit of Kit Carson and the exit of Delta-Montrose, and the potential discussions of other co-ops wanting flexibility, price stability, and the threat that other co-ops would exit if Tri-state did not continue to raise their rates, because we didn’t get any big loads that would stabilize that out. There was not a fundamental change in how Tri-state was operating their system.
Luis Reyes:
It’s what I said, I think they finally heard what the members wanted that was no more rate increases or we were just going to leave, and we wanted more renewables, or we were just going to leave. So I think they actually became a victim of, if you don’t listen to your members, then the members will decide and dictate what’s going to happen. So this is a good case of where I think Tri-state had to be responsible or forced to be responsive to its members. For Kit Carson again, we haven’t raised our rates, our cost of power from Guzman Energy is lower than it was with Tri-state. We’ll pay the exit when we pay the exit fee, that will be done basically forever so our members will see a decrease.
Luis Reyes:
I think the one area that we really are focusing now is on transmission because when you look at the whole energy picture and you want to move renewable energy, let’s say solar east and wind west, you need a transmission system to do that, but if the transmission providers are too expensive, then we’re back in that same dilemma of not being able to have access to renewable energy because now the transmission system is too expensive. That’s why I think our DER model weathers that, because we’ll have to take our non renewables from a transmission, but more and more, we’ll generate more of our system resources here locally so that we can weather that, mitigate those costs. But we’re actually in a really good position going forward, both on having a lot more renewal resources available to us going forward and also rate stability, without jeopardizing reliability.
Luis Reyes:
There’s a lot of talk from lawmakers and utility companies that going to renewable, it’s going to be unreliable. We’ve been… It’s been really, it’s been very reliable. It’s talking out of both sides of your mouth when you say it’s unreliable to go to renewable while you’re building 100 megawatt solar facility somewhere. It is reliable, it just, I think we have to get out of these scare tactics and say solar doesn’t shine at night, so let’s put some batteries, or let’s get wind that follows that nighttime profile. Instead of us as co-ops and utilities making excuses why we can’t, we should figure how we can. I think once we get past that hurdle, then I think you’ll see even a faster adoption of renewable energy, once we decide we can’t fool our members anymore by putting these obstacles in front of them, because our members are pretty sophisticated, they’re pretty smart, they formed a co-op. I mean, they formed our entity, they have us… Yeah, so I think we’re in a great position, everything that we thought we were going to get out of this exit we’ve accomplished.
Luis Reyes:
I do think and again, I’m scouring all the websites, but I think in June of 2022, we’ll probably be the first, at least on the continental United States, to hit 100% daytime solar. Our energy’s coming from resources that are local. It’s pretty cool to be one of the first ones to be able to accomplish that. We’re a small to midsize cooperative, we have 30,000 members serving three counties, and if we can do that, certainly the bigger co-ops and bigger utilities can do it.
John Farrell:
I agree, I love that story and I love the fact that the leaders in solar, we at one point were talking about Farmer’s Electric Cooperative with Warren McKenna. You and I spoke with them, and then I was talking to folks around Decora, Iowa, they have an energy district there that’s done a lot of investing and helping folks do energy efficiency in solar. I think they said at one point that in their county they had more solar per capita than any other place in the country, and it has just been really remarkable to realize that people think that it’s urban areas and places with progressive policy that are leading. I just think it’s such a great way to flip that around and to tell people, no actually, it’s these rural communities that have the democratic ownership of their systems, that have this interest in self-reliance that are really demonstrating to us what is possible and taking advantage of that flexibility that they have.
John Farrell:
Speaking of that, I’d love to ask you a little bit, I know that we’ve talked a lot about the clean energy work that you’ve done, but you’ve also done some investments in internet service, something that’s been common among a lot of rural electric cooperatives as well. I have a colleague here at ILSR who directs a program that looks at community broadband networks and he loves to surprise people by telling them that the internet service they get in the city they live in is probably slower and more expensive than most of North Dakota, where co-ops have made huge investments in that. So I’m really interested to hear what Kit Carson has been doing around broadband, and if you can explain a little bit about how you’re able to do that in a way that a lot of other utilities can’t be so nimble.
Luis Reyes:
Yeah, so John, that has been, along with solar, one of probably… and especially during COVID, one of the shining stars of the region, is we started a broadband company, 2,000 fixed wireless, just because our members didn’t have any other choice. around 2015, at about 2008, we started to put fiber between substations so that we could communicate and really start to create a smart grid. So we really wanted to modernize our grid, be able to utilize smart meters, control substations, all the stuff that utilities should be doing.
Luis Reyes:
Then we were able to get a large grant and in 2015, so today we have about almost 3,000 miles of fiber optic that goes past every single customer or member we have. We offer gig services, we offer as fast as any competitor in the region, we currently have about almost 11,000 subscribers. During COVID, we connected schools, did hotspots, started programs, basically did connect rural school districts and the students at no call cost, just so they could get on. It really has dovetailed real nicely with the renewable energy world because we have a lot of people moving in from, like you mentioned, urban areas, because of COVID they could work anywhere as long as they had a connection. So people moving here would like to work in the morning and hike in the evening, or ski in the morning and do some outdoor recreation in the evening, but they had to get connection.
Luis Reyes:
So it really helped our schools, we had a lot more schools, students connected or going to school because we had a connection. You could tell when you’re on a Zoom, if you’re on Kit Carson or someone else, because you didn’t have to turn off your video because you didn’t have enough bandwidth. So we had more people working, living here, even if temporary, because they could work in Austin or Dallas or Phoenix or Denver, but they had a better connection here. Then the quality of life, I mean, you’re talking a population of Taos of 5,000 versus a population of Austin over a million. During these trying times, the smaller populations made it easier to navigate this COVID world and we’re trying to create a model. We’re actually trying to create a model for the north central part of the state that we can connect rural communities. You said, we have probably faster speeds in neighborhoods than they do in Denver, Colorado, certainly faster than Albuquerque, and it’s affordable.
Luis Reyes:
I mean we, because of the call model and our basic or first principle is service, not profit. So we were giving fast broadband speeds to students for $25. So they could get 50 megabits up, 50 megabits down, for $25. So that two, three or four kids and someone on Netflix at the same time, so their world wasn’t that much more disrupted because they had to take turns on Zoom or those type of things that you’ve heard about. It’s really then helped on our electric because now we have about 90% of our system is smart grid. We collect it and then we can almost in real time get data back to the co-op to help us, whether it’s on outages, low voltage issues. Now, those technical issues that a utility historically needs someone to call in to say there’s a problem, we almost know instantaneously because we have the meter connected to the fiber connected back to our dispatch center. I mean it’s actually our fastest growing business, is broadband. We get requests from even places out of state, you just query on vast broadband and Kit Carson internet comes up. We just serve this territory but it’s really been a great service to the community.
Luis Reyes:
Because John, I think a lot of how we do business today is going to stay, I think a lot of businesses are going to allow their employees to work from home if they have a good connection. That’s extremely important in rural areas because now they won’t lose their jobs, if they can get a connection, they can keep them. They can still work and still be the primary caregiver for their kids or elderly parents that are more prevalent in rural areas than urban areas. Where, because we do have extended families, there’s their families live in one whole community and will take care of each other. So I think the other benefits that people don’t think of are those types of things, of having that connection. It’s helped with, besides distance learning, medicine. Now the clinics are wired so people don’t have to travel all the way into Taos or Albuquerque for a doctor’s appointment. You can do it verse video first because your connection is very good. Then if you have some issues that a doctor needs to see, then you come into the office. So it saves both time and money and peace of mind because you can do it instantaneously. So there’s a lot of other benefits that this broadband has boughten.
Luis Reyes:
I think broadband’s going to become a utility, just like electric. People are not going to tolerate not being without it. In fact, I probably get more broadband calls, if there’s an outage, then I get electric calls. Even though they know you need electricity for broadband, some people just haven’t connected those dots yet and that’s okay. I think it’s helped us on our exit because when it’s given us more time, since we have to take care of our own power supply, not being part of a GT really takes a lot of energy. I think I got probably three to five more days of work than having to deal with power supply issues and the politics around power supply, that I really cannot pay attention to members and their needs such as a broadband and how to expand those services.
John Farrell:
I’d love to just wrap up by asking you about how you think other cooperatives can follow in your footsteps, and what barriers do you think they might have to overcome? Obviously, having an example is one of the most important things and you have that, in terms of both the way that you’ve done local, solar, and broadband. What advice do you have for general managers of other co-ops or members of other co-ops that hear about what Kit Carson has done?
Luis Reyes:
Well, I think it’s really member engagement and I think breaking down the old model of when you deal with members and give them 10 reasons why we can’t do what you just asked us to do. I think that’s foundationally, that’s the key, if you visit with your members and you understand what their issues are, really understand, not just hear it, to go to a meeting and says a bunch of members want this. Then develop solutions where it’s interactive with the member, if it doesn’t work, they’ll understand why, because they’ve been part of the process. It’s when we don’t engage them that I think we have problems because then they think that we’re hiding something or we don’t want to do more work on their behalf. I think, John, once you figure that out and don’t put excuses of why you can’t do that, then everything else falls in place, but if you don’t have a good communication tool with your members, a good rapport, then what generally happens is the members are going to decide to do what they want without you. So I think that’s a key because it may be staying with the G&T when it comes to power supply. So it may be the reverse where you have members saying, “Hey, let’s see what Kit Carson’s doing.” After you have a good discussion with your members, they may say, “We want to stay. Maybe we’re not ready for that yet.”
Luis Reyes:
So that’s what I mean by not put obstacles, because the first thing we do is right away is think that they want to leave. Some may not want to leave. They just want to have a good dialogue to make sure that you’re doing… me as a manager is doing what’s in their best interest, really not what’s in my best interest. I think you do that, then anything else you guys want to do, anything from energy efficiency to solar, then becomes actually pretty easy because you have the support of the community and if things don’t go well, you have a big support system that you just go back and says, “Okay, this really didn’t work that way. Let’s retool in, let’s do it this other way.” I think that’s key, it’s pretty simple. That’s what we did, we just talked to our members a lot, we listened to them probably more than talking. Right now they’re saying we’re not moving our solar fast enough. We’ve moved, I think, pretty fast in five years, but it’s good to have those type of problems when they says you’re not putting out broadband fast enough at least, or you’re not putting out solar fast enough. We like what you’re doing, but you’re not doing it fast. Those are good problems to have.
John Farrell:
For sure. Well Luis, thank you so much for taking the time to talk with me. I just find the story of what Kit Carson is doing so inspiring, in terms of really living up to the cooperative model, as you say, and being engaged with your members. A really important lesson I think, for folks who are in the co-op world about how they can do what their members want, whether or not that’s, as you say, exactly what you guys are up to or something else. So thank you again, for taking the time, I really appreciate it.
Luis Reyes:
You’re welcome, John, always nice to talk to you.
Jess Del Fiacco:
Thank you for tuning into this episode of the Building Local Power podcast from the Institute for Local Self-Reliance. You can find links to everything discussed today by going to archive.ilsr.org and clicking on the show page for this episode. That’s I-L-S-R.org. While you’re there, you can sign up for one of our many newsletters and connect with us on social media. We hope you’ll also take the opportunity to help us out with a gift that helps produce this very podcast and supports the research and resources we make available for free on our website. Finally, we ask that you let us know how we’re doing with a rating or review on Apple podcasts or wherever you find your podcasts. This show is produced by me, Jess Del Fiacco, and edited by Drew [inaudible 00:42:30]. Our theme music is Funk Interlude by Dysfunction Al. For the Institute for Local Self-Reliance, I’m Jess Del Fiacco, and I hope you’ll join us again in two weeks for the next episode of Building Local Power.

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43 min
December 01, 2021 Building Local Power Highlight: David Dayen Talks America’s Monopoly Problem
In this miniseries, we return to our most insightful podcast conversations. These five minute episodes highlight critical themes that are still relevant today. … Read More
5 min
November 25, 2021Local Farms Key to Healthy and Resilient Food Systems
On this episode of Building Local Power, ILSR’s Linda Bilsens Brolis and Sophia Hosain speak with Emma Jagoz, owner of Moon Valley Farm in Maryland. They discuss the benefits of local family farms to food system resilience, food accessibility, and having more nutritious and delicious food.
Highlights include:
What motivated Emma to get into farming, and her long-term mission to improve soil health and the biodiversity of farms.
How Moon Valley Farm uses compost to build healthy soils.
How the pandemic impacted farm operations and increased the public’s interest in local food.
Challenges small farmers face such as land access, labor, and the lack of sustainable agriculture training programs.
The importance of farming year-round and partnering with other farmers to build a sustainable and robust food system.
Regenerative agriculture practices are rooted in Indigenous knowledge and practices. Read ILSR’s land acknowledgement here.
“I wanted to shorten the chain between myself, my neighbors, and their food. Because it just connects the farmer and the consumers so directly. And I can communicate with my customers exactly what’s in season, exactly how to prepare it. It just felt so magical.”
“I think COVID brought to light a lot of different issues, especially with the food supply and what is considered essential. Our community members were able to access food through our farm via home delivery, and also pick-up locations with some new COVID safe practices throughout the whole time — from when COVID began in March in 2020 to today.”

Related Resources
Posters: Compost Impacts More Than You Think
Hierarchy to Reduce Food Waste & Grow Community
ILSR’s On-Farm Composting & Compost Use Webinar Series
Journey to Soil Health… with Emma Jagoz, Moon Valley Farm
Transcript
Jess Del Fiacco:
Hello, and welcome to Building Local Power, a podcast dedicated to thought provoking conversations about how we can challenge corporate monopolies, and expand the power of people to shape their own future. I’m Jess Del Fiacco, the host of Building Local Power and communications manager here at the Institute for Local Self-Reliance. For more than 45 years, ILSR has worked to build thriving, equitable communities where power, wealth, and accountability remain in local hands.
Jess Del Fiacco:
On today’s episode. You’re going to hear from my colleagues Sophia Hussein, and Linda Bilsens Brolis, as well as a farmer named Emma Jagoz. They’re going to discuss the role of composting in farming and in our food system. But before we get to that main conversation though, Sophia and I are going to briefly set the table for you guys. So I’m here with Sophia Hussein. Hey Sophia, welcome.
Sophia Hosain:
Hi everyone.
Jess Del Fiacco:
But a few minutes, our listeners are going to hear from Emma about her farm, which is called Moon Valley Farm, and her journey that she took to feed her family and feed her community. So Sophia, could you just give us a bird’s eye view of the role of composting in a sustainable food system?
Sophia Hosain:
Absolutely! I think it’s really fitting that we’re publishing this episode around Thanksgiving. A day when many of us are thinking about food, abundance, and gratitude even more so than usual. So in this interview, we talk with Emma from Moon Valley Farm, about how she’s created a resilient farm ecosystem by harnessing biodiversity, partnering with other farmers and by using compost. And I think it’s important to note that as our population grows, so does the importance of supporting local food systems.
Sophia Hosain:
By avoiding those long shipping distances, like bringing food over from California. We’re able to cut the carbon footprint of what we eat, and build local food system resiliency by keeping those resources in our own local economy. And before we dive in, I do want to take a moment to acknowledge that it is indigenous communities who really spearheaded the regenerative agricultural movement. We see their synergy with natural systems permeate throughout their culture. Whether it be in their agricultural practices or in their zero waste cuisine.
Jess Del Fiacco:
I think that’s a really important point. I know for me personally, I really appreciate celebrating gratitude, and cooking food, and being with family during this time of year. But Thanksgiving is also a day for reflection on the systems that we’re choosing to participate in and to perpetuate. Certainly, I want to recognize any glib of retelling of the colonizers Thanksgiving fantasy is perpetuating the rasher of indigenous communities, their experiences, and the harm done to them.
Jess Del Fiacco:
And then bringing this back to today’s topic. I’m thinking about how the decisions that I’m making in my kitchen are tied to the people who grew, and transported, and sold me this food, and the land itself that produced it. So certainly it’s just a time to think about how all those systems are working around me, and how I participate in them. So and this is a great conversation for today. Thank you so much, Sophia. Without further ado, let’s get onto this conversation.
Sophia Hosain:
Hi guys.
Emma Jagoz:
Hey, Sophia.
Sophia Hosain:
Emma, start us off. Tell us a little bit about Moon Valley, and how you found yourself farming full time?
Emma Jagoz:
All right. Moon Valley Farm is a 25 acre year round specialty veg and herb farm, located in Frederick County in Maryland. We grow for a CSA program, and for restaurants in Baltimore, Frederick, and Washington DC. I am a first generation farmer, a mother of two, and the owner of the farm. I started Moon Valley in 2012, because I wanted to share the vegetables that I was growing for my two little babes with people that lived in my neighborhood. And I started with a 12 person CSA then. And that has grown into over a 500 member CSA now. And yeah, we just really love growing veggies.
Linda Bilsens B…:
And we were just talking about how impressive it is that you were able to start this business as your babies were growing up. How old were they when you started?
Emma Jagoz:
They were both under two.
Linda Bilsens B…:
Amazing! I don’t know how you did that. It’s impressive. I know COVID in particular underscored weaknesses in our food system. And I’m curious how you view your farm as promoting a more sustainable and resilient food system.
Emma Jagoz:
That’s a great question. I think COVID brought to light a lot of different issues, especially with the food supply and what is considered essential. Our community members were able to access food through our farm via home delivery, and also pick up locations with some new COVID safe practices throughout the whole time, that from when COVID began in March in 2020 to today. We have been delivering food to our community every week since. So I do believe that COVID showed some new people that supporting local farms could be a really great idea since the food chain disruptions, and the safety of accessing grocery stores. And the ways that we traditionally accessed food were not safe for everybody in every circumstance. So we did see a boost of individuals and customers interested in purchasing direct from farmers as a result of COVID.
Linda Bilsens B…:
At Moon Valley you guys are a certified organic farm. Right?
Emma Jagoz:
We are in the second year of being transitionally organic. So we’re considered transitionally organic right now. Because in late 2019, we purchased a farm that was in conventional practices. And are transitioning that to certified organic practices. And we will be certified again in July 2022. However, before we purchased this new property, we were certified organic in Baltimore county.
Sophia Hosain:
And the reason why I’m asking this, because I know that you guys use a lot of sustainable growing techniques on your farm. And one of those in particular is composting. And I wanted to talk to you a little bit about how in your effort to create a sustainable food system, you’re able to close the loop with composting on your farm, and how that also adds to your soil and your nutrient management process.
Emma Jagoz:
Yeah, an organic farm is complicated. And a lot of our practices are dependent on one another and different processes working. So when we started farming, we were on… and by we, it was really just me at that point. But we were growing on no more than a quarter acre. And even though it was all with my body and a pitch fork, I was able to produce enough compost to add to that quarter acre plot. As the farm has grown throughout the years, the compost needs have changed. And so the farm has never been in really the same place to easily answer your question. But right now we’re on a 25 acre property. We went from a quarter acre to a half acre, to one acre, to two acres, to five, to 10, to 15, and now 25. And all of those scales have had different requirements. And I’ve had to change the techniques throughout.
Emma Jagoz:
When I was farming 10 acres and had a few staff members, but I was leasing different properties, and farming on sites that were 15, 20, 25 minutes apart from one another. The logistical impact of making my own compost was too much to manage. So I couldn’t produce enough compost and haul it, transport it, and spread it on all of the different sites with enough efficiency to have that make sense. So I started supplementing the compost that I was able to make with purchased compost in order to still prioritize that organic matter boost and the other benefits that adding compost to soils offers. In addition to adding compost, we add organic matter in our soils by the use of cover crops. And some of the other organic practices that we employ on our farm are crop rotation, crop timing, cover cropping, adding insect strips, practices like that as well. That create the full picture of an organic farm.
Linda Bilsens B…:
That’s awesome! I mean, part of the reason why I was so excited to talk to you is because of ILSR’s involvement in the million acre challenge. Which is a collaborative effort to promote regenerative agricultural soil health practices on 1 million acres in Maryland by 2030. And you were certainly one of the farms that we’re excited to be engaging with through that. And I view you as a great model for many reasons. I think all farmers are superheroes, but any farmer that can do it while raising two small children is extra impressive. And so it was really great to hear you list the other soil health practices that you’re integrating compost application with. And I’m wondering, this may be a hard question. But can you tie any observable benefits of compost applications specifically, to what you’ve seen in your fields? I know that’s really hard to do when you bundle so many practices together.
Emma Jagoz:
Yeah. When I was farming in Baltimore County, we had really clay heavy soils. And I saw that the soils that we were adding more compost to had better drainage than those that didn’t have those compost additions. So they were able to dry out a lot faster in the case of heavy rain events. We were able to get in those fields sooner. Now here on my farm, loam is the primary part of our soil. So we have much better drainage than a clay, heavy soil. And when we add compost we get better water retention. Now, I also see that certain crops really thrive with heavy compost additions, including cucumbers and broccoli. They just really like organic heavy soil. And they really like the rich nutrients offered with organic matter like compost.
Emma Jagoz:
Before I started the farm, when I was a gardener. I created this compost pile like any regular backyard gardener, just in a circular bin off to the side. And I was so wowed by the compost creation, like how my food scraps, and garden waste, and shredded leaves had turned into this rich, dark, sweet smelling soil. And I was so impacted, and excited. And just so tickled with the magic that come compost is that I knew I had to make it a part of my operation. I would’ve never foreseen where the operation has gone at that point, but I am fundamentally passionate compost. And I think that more people should experience the magic that is compost creation.
Linda Bilsens B…:
We definitely agree with you. Super cool! Just listening to you talk about all the iterations that you’ve seen your farm through, and just getting things done. And how resilient of a business you’ve created, it’s really impressive. And I’m wondering if you have any advice for other farms out there. What are some keys in your mind to creating a resilient farming business?
Emma Jagoz:
I’ve thought about this a lot, because farming is a very risky business to get into. And even though I have perhaps a higher risk tolerance than some. I still need to mitigate that risk in order to confidently hire a dozen people, and offer the promise of future CSA to hundreds of members. So I have created a farm that is resilient on five main levels. One is with crop diversity, we’re growing dozens and dozens of different kinds of crops. So that if we are to sustain a crop failure, we are still okay. You never know when you’re going to have a crop failure. It happens most years, that one thing just doesn’t go as planned. Whether it’s the failure of the farmer, or the potting soil, or a rain event, or an early or late frost, or a lack of arena. And you just never know what’s going to happen. So crop diversity is really important.
Emma Jagoz:
Another really important factor for resilience for us is having high tunnels, that helps to mitigate some of those risks directly. Where we can control the amount of rain or water that the crops get. And it offers a few degrees of protection for frost. Another is that we grow a lot of perennial herbs. Perennial herbs are a fantastic crop to have on your farm. And I always have something to offer my customers in the form of perennial herbs. And I would extend that to perennial crops in general, as well. So fruit crops or anything like that. But since I’ve just moved in into this new farm, we don’t have seven Euro asparagus patch, or fruit tree. But we will.
Emma Jagoz:
And storage crops is another way to have resilience. Once we have a crop like Kohlrabi, cabbage, carrots, beets, winter squash, sweet potatoes, potatoes, onions, garlic. It can really help buffer a CSA share, or the amount of risk that we’re taking with any climate change events that are going on, or any crop losses that might happen in the future. So we have focused on a lot of storage crops, not only to extend our season into 50 weeks out of the year. We are doing a year round CSA now. And we’ve been selling to chefs year round for six years. So storage crops are a big part of that.
Emma Jagoz:
But they do offer resilience at all times of year. We just started really playing with spring storage crops as well. To offer carrots, beets, kohlrabi, cabbage throughout the summer as well. And the fifth piece of my resilient farm business plan, is to have farm partners. So other farmers that we work with that grow some of the same crops, or sometimes totally different crop then we’re able to grow. So that if we were to sustain a crop failure that would be devastating to the farm, we can lean on our community members to still offer that to our customers.
Jess Del Fiacco:
You’ll hear more from Sophia, Linda, and Emma after a very short break. Thanks for listening to our show. If you’re enjoying this conversation, I hope you’ll consider heading over to archive.ilsr.org/donate. I know we’re getting towards the end of the year, and you’re going to be hearing a lot of these asks from every nonprofit you’re a fan of. But your support really is a game changer for us. And I hope you’ll consider helping support our work. We really couldn’t do what we do without your help. So visit archive.ilsr.org/donate to make a contribution today. Any amount is sincerely appreciated. Thanks. And now back to the show.
Sophia Hosain:
It’s so inspiring hearing about how much thoughtfulness you’ve put into every aspect of farming, like from just caring for the land to making sure you’re not creating waste that you can’t take care of, to farming cooperatively with neighbor and working together to bring food to your community. And I’m curious, was this always your vision? Going into farming in what ways were you hoping to affect the food system? And what were the problems that you were trying to solve through growing food?
Emma Jagoz:
I saw one of the main problems that people face, people especially mothers like myself. I was really facing the problem where I wanted to know where my food came from. I wanted to know exactly what I was putting in my body and in my children’s bodies. And it’s really difficult to know that in the grocery store. You don’t really know where it came from. You don’t really know what farming practices were employed. And it’s really hard to trust how long ago it got harvested, exactly what inputs went into it. So I wanted to shorten the chain between myself, and my neighbors, and their food. Because it just connects the farmer and the consumers so directly. And I can communicate with my customers exactly what’s in season, exactly how to prepare it. It just felt so magical. So I really wanted to problem solve food accessibility to people.
Emma Jagoz:
And I know that a big problem that we have here in the Mid-Atlantic, is that a whole lot of the food that you see at the grocery store is from the West Coast. And as an environmentalist, this didn’t feel right to me. And as a lifelong Marylander, I know that the season here is long enough to grow all of the food we need here. So I don’t understand why we are shipping all of the food across the country. That doesn’t make any sense environmentally, and it doesn’t make any sense nutritionally. As a gardener I knew that the moment that I pick the tomato, that’s when it should be eaten. It’s best if you eat it in the field. It’s great if you take it in the kitchen that day, and have a tomato sandwich right there. And when you pick it green, it just doesn’t taste as good as when you pick it ripe off of the plant.
Emma Jagoz:
Humans have evolved to equate what tastes better with what is more nutrient dense. So flavor actually indicates nutrient density. And I realized that the things that I grew in my garden tasted better. And I knew that there was more to that. So I really wanted to problem solve that for my customers and offer these questions. And as the farm has evolved from that first point. I realized that a lot of farms around me, myself included were offering about a 20 week CSA program. And so I was able to get for these five months out of the year, four or five months out of the year, my problem solved. I was able to know my farmer and get this nutrient intense food. But what was I supposed to do the rest of the months out of the year? And that became a new passion of mine.
Emma Jagoz:
I saw that there are farmers in Maine like Elliot Coleman, and farmers in Quebec that are farming year round. And I was wondering why are we all taking a break down here in Maryland? We’re so much warmer than they are. Even with a high tunnel, we can really extend the season very well. And we can grow a lot of storage crops, and they last a really a long time. And besides that, we also can grow things like mushrooms year round, that really add a great part to our diet. And most of us really, at least before I started farming, I really didn’t pay that much attention to local mushrooms. I didn’t really think about that. But now that we’ve partnered with king Mushrooms from Barclay, Maryland. We are giving our customers access to gourmet mushrooms, 52 weeks out of the year. And that’s adding a really nutritious part of your diet that is really meaningful. It’s really healthy and it’s fully local.
Emma Jagoz:
So I realized that if I wanted to change the food system, meaningfully, in not only offering customers food that they can trust, but food that they trust year round. And not only that, but food that was grown in this region. So it tastes like food that’s in this region. So then when you go to the Mid-Atlantic, it has a flavor. It’s not just Taco Bell and McDonald’s then Apple Bees, it tastes like Pawpaws, and it tastes like Maryland tomatoes, and it tastes like Maryland sweet potatoes stuff that you just… there’s subtle flavors based on our soils, and based on our weather that you can’t get anywhere else. Because it is regional, and it is seasonal, and it is direct from the farmers who are passionate. And so that’s what I’m offering now.
Linda Bilsens B…:
That’s a lot that you are offering. That’s impressive. I don’t know how many times I’ve said that word in this interview. But I’m curious if we wanted more folks to be able to farm the way that you do. What are the biggest challenges that you are facing or that you feel like a really, truly resilient food system in Maryland? What’s keeping them achieving that? I know that’s a really big question.
Emma Jagoz:
Resources, land access, and labor are definitely the three biggest. Resources, yeah, as a first generation and farmer, I didn’t have money when I started to farm. I didn’t have a robust career, I was coming from. I was in my early 20s, and I didn’t even have a big savings account. I bootstrapped the farm from free stuff on Craigslist that I up cycled into things that I could use. It would’ve been much easier to start with money or the other resources.
Emma Jagoz:
I was pretty confident to be self-taught in that I found some farmers who had written books. There’s tons of books on how to farm, and there’s tons of resources available on the internet on how to farm. So I was pretty confident in taking those combined with my gardening knowledge to get started. However, there are really limited number of sustainable Ag university programs, classes, courses, and there should, and could be more of those. That would really help people get started, and acquire the knowledge that they needed to use as a farmer before getting started.
Emma Jagoz:
Access to land is huge. Land is extremely expensive, especially if you’re trying to get high quality land near a market, that has enough wealth to sustain your operation. That is definitely big. When I first started the farm, I was on borrowed land, and I spent the eight years bartering for the use of land in order to avoid paying for it, at first. While I built my customer base knowledge, and infrastructure, and acquired equipment along the way. But that took time. If you had money and knowledge and resources up front, you would save yourself those eight years of slowly bootstrapping. And would be able to start a profitable business much sooner.
Emma Jagoz:
And labor is a huge issue. And I think more education on how farming can be a career that you can make a living on. And that’s good for your family, and not too hard on your body. All of those things would be really helpful to know. I think there is a lot of misinformation out there about farming not being a viable career option for many people. And that deters a lot of good people from pursuing a career in agriculture. Those are the three main obstacles that I see.
Sophia Hosain:
I’m going to repeat myself again too. But it’s just so inspiring hearing how much you’ve grown in such a short period of time, and how much you’ve been able to achieve. And, yeah, if we haven’t said it yet, but congratulations on buying your farm earlier, right at the beginning of COVID. I know that was crazy. And also really fortunate timing in a lot of ways for you to consolidate on one piece of land after farming on neighbors land, and across town, and trying piece it all together for a really long time. So, yeah, big kudos, always driving inspiration from your work. And, yeah, what’s next? What do you see next for Moon Valley? And what do you see next for yourself as a grower and a cultivator?
Emma Jagoz:
Thank you so much. Buying land was major, and I really didn’t know that I could do it until I did it. It was a game changer in so many ways for our efficiency and my quality of life. So I was really happy, and I still am grateful every for that opportunity to farm on this property. In the future, we plan to continue growing our infrastructure out to build resilience for our farm. Including investing in more high tunnels, greenhouses, and coolers space to restore those storage crops. So that we can have a bigger diversity, and a bigger store of storage crops throughout all of the seasons, like I mentioned, even in the summer. That’s definitely one thing. We’re going to continue growing the health of our soils. As we mentioned, the soils that I inherited were farmed conventionally, and we’re high-end phosphorus. Our is still high-end phosphorus.
Emma Jagoz:
And I am on a long term mission to improve the soil health every year that we farm here. And not only improve the soil health, but the biodiversity of this farm we’re putting in trees, wind breaks. Like I mentioned, we have an apiary and we’re putting in some permanent wild flower areas to help support the apiary. And we have a bunch of projects in the works that will improve the biodiversity of the farm on many levels. So I’m really excited for that. Oh, we also just started selling to the local school system as a new customer here. And my whole team is really, really excited this week, we are selling to two elementary schools in our community and feeding over a 1000 kids. So we were really excited for that as well.
Linda Bilsens B…:
What lucky kids, and what a lucky community to have you providing nourishing food for them. I am so grateful for your time, and for your inspiration. And I am definitely a fan girl. I follow you guys on Instagram.
Emma Jagoz:
Thank you.
Linda Bilsens B…:
So it was a great pleasure to get a chance to talk with you and catch up with you.
Emma Jagoz:
Pleasure was mine.
Sophia Hosain:
Thanks everyone.
Jess Del Fiacco:
Thank for tuning into this episode of the Building Local Power Podcast from the Institute for Local Self-Reliance. You can find links to everything discussed today by going to archive.ilsr.org and clicking on the show page for this episode. That’s archive.ilsr.org. While you’re there, you can sign up for one of our many newsletters, and connect with us on social media. We hope you’ll also take the opportunity to help us out with a gift that helps produce this very podcast, and supports the research and resources we make available for free on our website. Finally, we ask that you let you us know how we’re doing with a rating or review on Apple Podcasts or wherever you find your podcasts. The show is produced by me, Jess Del Fiacco. And edited by Drew [Bergecork 00:30:14]. Our theme music is Funky Doloude by Dysfunctional. Now for the Institute for Local Self-Reliance, I’m Jess Del Fiacco. And I hope to join us again in two weeks for the next episode of Building Local Power.

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Audio Credit: Funk Interlude by Dysfunction_AL Ft: Fourstones – Scomber (Bonus Track). Copyright 2016 Licensed under a Creative Commons Attribution Noncommercial (3.0) license.
Photo Credit: Brenda Platt (both photos)
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31 min
November 11, 2021Communities Seize the Opportunity to Invest in Local Broadband
On this episode of the Building Local Power podcast, host Jess Del Fiacco is joined by two members of ILSR’s Community Broadband Networks initiative: Sean Gonsalves and Emma Gautier. They discuss new research the team has been working on, including tracking how communities are spending federal infrastructure money on broadband projects and explaining why shopping for a new Internet service is such a frustrating process.
Highlights of their conversation include:
Why and how ILSR decided to create a “Big List” of local broadband projects supported by American Rescue Plan funding — which now includes more than 100 communities!
How states compare when it comes to spending on community broadband projects.
Interesting local election results related to broadband issues in New Jersey, Maine, and elsewhere.
ILSR’s new report that grades Internet Service Providers’ (ISPs) transparency — or lack thereof — around the Internet service packages they offer.
“This problem, providers not being transparent, might kind of seem like something that’s annoying or inconvenient, but it’s actually a really big problem beyond that because we know, especially in the context of the pandemic, that broadband is a very important thing to a household. So a household or a person’s ability to make informed decisions about what kind of service they’re going to subscribe to is really important.”
“When a community network is built and operated and maintained by the people in your community, that in and of itself brings a level of accountability that is unmatched. You’re bumping into those people in the grocery store. Your kids play sports together… And one of the things that is tough to quantify, but I hear anecdotally all the time in talking to folks in various communities, is the difference between before they had a municipal network and they had to rely on the monopoly provider, and then after they got one is the difference in the customer service experience. And that is hard to quantify, but it’s something that’s huge for people.”

Related Resources
Transcript
Jess Del Fiacco:
Hello, and welcome to Building Local Power, a podcast dedicated to thought provoking conversations about how we can challenge corporate monopolies and expand the power of people to shape their own future. I’m Jess Del Fiacco, the host of Building Local Power and communications manager here at The Institute for Local Self Reliance. For more than 45 years, ILSR has worked to build thriving, equitable communities where power, wealth, and accountability remain in local hands.
Jess Del Fiacco:
Hello, everybody. Today I am joined by two of my colleagues, both from ILSR’s community broadband initiative. We’ve got Sean Gonsalves, you’ve heard on the show before, he’s a reporter and editor with the team, as well as a newbie to Building Local Power, it’s Emma Gotye, and she is on the community broadband team. Welcome to the show, guys.
Sean Gonsalves:
Top of the morning. How are you doing?
Emma Gautier :
Good to be here. Thanks, Jess.
Jess Del Fiacco:
Yeah. As you all might expect, we’re going to be talking about community broadband today. And per usual, there’s a lot going on. We’re going to talk about how communities are using new federal funding. We’re also going to take a look at a new scorecard we’ve put together that grades different internet service providers based on how transparent they are about the services that they offer. But we’re going to start with a question for Sean, which is something the whole team’s been working on, but I know you’ve done a lot of work on this specifically. Looking at what communities are doing with American Rescue Plan funding to invest that in community broadband projects. Basically first, why’d you guys decide to track this information?
Sean Gonsalves:
Yeah, no. That’s a great question. I mean, we’re tracking it because the American Rescue Plan funding is really an unprecedented massive federal investment being made available. And a considerable portion of the funds can be used in communities that are not rural. And also, the rules for how the money can be spent are pretty good in terms of investing in municipal networks and community driven solutions. So we thought it was important to track this large chunk of money that’s being made available to, in some instances, directly to counties and municipalities, but also as in the form of block grants to the states. And particularly because the rules in some of how that funding can be spent, there’s different pots of money, so there’s this $350 billion pot that can be spent on infrastructure related to sewer, or water, or broadband.
Sean Gonsalves:
Best we can tell, the bulk of that money is not going to broadband, but there is a specific pot of money called The Capital Projects Fund, $10 billion that can be spent on broadband. And the rules as to how you can spend that are pretty cool because there’s a lot of flexibility there in terms of how state and local governments can decide how to spend the money. So for example, the rules give applicants the authority to decide what is deemed affordable, reliable, and un=served in their respective communities. Prior to this, those things were pretty rigidly defined. In this instance, with these rules, the program expands the definition of un-served to take into account whether, for example, internet service in a region is affordable. That’s a big issue with accessibility.
Sean Gonsalves:
There’s the issue of: Is the infrastructure in place and therefore, is it accessible? But even if it is, if it’s not affordable, it’s not accessible. So the rules take into consideration that and allow communities to essentially define what un-served means if a particular locale is found to be, a service exists, but it’s not affordable by and large. That can be taken as a factor as to what’s considered to be un-served.
Sean Gonsalves:
And then also, there’s a new emphasis on funding scalable fiber projects, elevating investment in historically disadvantaged communities, and things of that nature, prioritizing investment in infrastructure that’s owned by local communities, or nonprofits, or cooperatives. So there’s a lot of good stuff in these new rules. And frankly, it’s real new territory in terms of how it was with past federal policy around funding and supporting expanding broadband access, which has historically been directed pretty much towards rural America. So in this pot of money, there’s a lot more communities have access to this money to do some interesting and creative things with.
Jess Del Fiacco:
Right, so fewer restrictions, a lot more communities doing things. And the form that these projects are taking is much more diverse too. Right? It’s not all fiber to the home networks.
Sean Gonsalves:
Well, it certainly doesn’t have to be. But I would expect that most of these projects will probably be fiber to the home projects. And that’s generally because the capacity is essentially limitless in terms of future needs, bandwidth, speeds, fiber can handle it all. It’s the most reliable technology out there in terms of internet connectivity. Although high capacity wireless networks certainly may be the answer for certain communities and the pathway that certain communities may want to take. So federal policy tends to try to be what they call technology neutral. But they also are recognizing what pretty much everyone in the space knows, which is fiber to the home is the gold standard in terms of reliable internet connectivity.
Jess Del Fiacco:
So I realize I’ve said a bunch of communities quite a few times. You’re like, “Quite a few of them.” Can you give us a sense of, is it 10 communities? Is it 200 communities? How many projects are on this big list that you guys are tracking?
Sean Gonsalves:
Right, right, right. We call it the big list. And so we’re tracking individual community project. And right now, that list has 132 community led projects on it, as well as about 17 states have announced significant grant programs for new infrastructure projects. So most of those 132 communities are in those states, although there’s some outliers as well, but it’s 132. So it’s quite a bit of activity going on.
Jess Del Fiacco:
Yeah. Speaking of states, I know that’s a whole nother factor. You guys have analyzed how states are spending this money. Could you talk about what different states are doing differently and who’s kind of setting the standard for how we would like to see them spend this money?
Sean Gonsalves:
Right. Well, prior to this, the federal government would give out investments. Well, there was the RDOF funding that happened, which was this big reverse auction. Had a lot of problems. And our position was that the closer this money and these investments are made to the local community, the better. And that’s because local communities actually have the best sense of where there’s real connectivity challenges of where coverage really exists and how good it is or not. And so this is sort of like the halfway house. The money is going, instead of this reverse auction that the FCC runs, let’s send the money to the states, which is closer to the local community, so that’s an improvement.
Sean Gonsalves:
And as we expected, every state is kind of doing their own thing, so it’s like … What’s that phrase? Laboratory … What do they say? Laboratories of democracy, each state. Right? And so it’s sort of like that. It’s like laboratories of broadband-ification. Each state is kind of doing their own thing. And of the 17 states that have allocated a portion of their rescue plan funds for broadband deployment and programs, it totals about $7.6 billion across the states, although California makes up about half that amount. In fact, in California, the governor and state lawmakers agreed to invest $3.25 billion to build statewide open access middle mile network. Open access means we’re going to build the infrastructure and then we’re going to invite private internet service providers to use that to deliver retail internet service to households and businesses.
Sean Gonsalves:
They’ve also put another $522 million of their rescue plan funds to support last mile projects for communities. That’s going to be doled out by the State Public Utilities Commission. So California’s doing a lot in making massive investments. Arkansas is another interesting state. Now Arkansas was a state that had preemption laws that really it very difficult for municipalities to build municipal broadband networks. So earlier this year, the state legislature unanimously removed those barriers, and so now there’s all kinds of excitement and buzz around many communities. And so the Arkansas legislative council has approved $120 million of rescue plan funds so far. They may approve more. And that’s going to 34 shovel ready projects in the state. And there’s another $27 million that they’ve provisionally approved for 12 other projects, assuming they pass a technical review. So they’re doing some really cool stuff in Maine, a state that is very friendly to community driven solutions, and they’ve created this Connect Maine Authority, which is the lead agency that’s tasked with reaching the state’s goal of connecting pretty much everybody in the state to high speed internet service by 2025.
Sean Gonsalves:
Now unlike in other states, that kind of limit or outright ban local communities from building their own networks, Maine’s broadband action plan puts, and they call it community driven broadband projects, it’s right at the forefront of their plans. Maryland, we have to mention Maryland because Maryland is another state that’s really putting a lot of money into this. They’re putting $300 million of their rescue plan funds. The bulk of that is, $97 million is going for the deployment of physical infrastructure. They’ve earmarked $45 million specifically for municipal broadband grants, so that makes Maryland a state that is investing more money in municipal broadband than any other state in the nation, so Maryland is doing some really cool things.
Sean Gonsalves:
And in Vermont, again, another state that’s well poised to take advantage of this money because in Vermont, they’ve got these communication union districts, which are essentially these public entities. It allows for two or more towns to come together to form a telecommunication utility, essentially. So there’s nine of those in the state of Vermont that covers pretty much the entirety of the state. There’s a handful of scattered towns that have either not joined one or haven’t formed one of their own. So they’re well poised to move forward. And then Washington, the state of Washington that is, like Arkansas, they had a preemption law on the books there in Washington. Public entities could build open access infrastructure, but they couldn’t provide retail service. Well, they got rid of that barrier in Washington.
Sean Gonsalves:
And so again, it sort of released the floodgates, and so that state has allocated $260 million of its rescue plan funds. And now that means the public utility districts there, some of whom have already built fiber to the home infrastructure, are now going to be able to get into the retail side of things, and so there’s a lot of activity in the state of Washington as well. So generally speaking, those are kind of the highlights of the states that we consider to be out front as it relates to being real supportive and putting their money where their mouth is in terms of supporting community broadband networks, as opposed to just shoveling millions or billions of dollars to the incumbent providers that have happily taken subsidies in the past and don’t ever quite seem to connect everybody with that money. Sometimes they just pocket it.
Jess Del Fiacco:
You might not have an answer to this question, or maybe you do. But curious if you can explain. I mean, why does Maine get it? Why are they saying, “Go. Communities, here you go. You should be leading the way on this effort”? Whereas, other states are still very reliant on those incumbent providers, like the big guys, to solve this problem. Is it political influence? Is it just a status quo thing?
Sean Gonsalves:
It’s a great question. And I’m not going to pretend to have on the ground inside intel on this, although they do have some great community broadband leaders in that state, Peggy Schaffer, the Connect Maine Authority is terrific. But I think part of what drives that is the reality of the fact that Maine is one of the most rural states in the country. And in rural areas, it’s not very enticing for private providers to provide robust telecommunication infrastructure because the short-term return on investment just really isn’t there in rural communities. And so I think what’s probably driving it is the reality of when you live in a mostly rural state, and you’re not attracting big players to the market, you’re kind of in a situation where if we’re going to have it, we’re going to have to build it ourselves. I think that’s probably one of the driving reasons behind why Maine is friendly to community broadband.
Jess Del Fiacco:
Thanks for that. I think that makes sense. So related, I was wondering if there was any states you can point to that have been kind of bringing up the rear.
Sean Gonsalves:
I hate to bring up the state because it’s definitely one of the most beautiful states in the nation. My brother lives there with his family. I would love to vacation there and lay on the beaches. But Hawaii, as it relates to American Rescue Plan funds, it’s a sad situation. We gave them a dishonorable mention in the story we had on this because basically, they decided to only spend $5 million of our their rescue plan funds on broadband expansion. But the real reason why we singled out Hawaii was because in order to access that paltry allocation, it could only be awarded to what they call a nongovernmental entity, which is code for they’re leaving it up to the dominant monopoly providers to just solve their connectivity challenges. And as we write and talk about pretty relentlessly, those incumbent providers don’t have a good track record when it comes to ensuring universal access to broadband.
Sean Gonsalves:
But in fairness, it’s not really their job to make sure everyone’s connected. I mean, we don’t look to Sears and be like, “How come everybody doesn’t have a refrigerator?” You know what I mean? So in fairness to the incumbent providers, it’s not really their job per se. However, if you’re going to rely on incumbent providers and the goal is for everyone, or if you’re recognizing that everyone should have access, I mean, if you use electricity as an analogy, it would be almost like saying, “Yeah, electricity’s important. And most homes can light up all of their appliances. But we’re cool with there being a chunk of homes that only have a light bulb. And we’re going to call them being served, as having electricity.”
Jess Del Fiacco:
And we’re going to actively shut the door on the other solutions that like, “Well, yeah. They’re there. But we’re not going to try those.”
Sean Gonsalves:
Right. And it’s not because Hawaii’s way out there. I mean, Hawaii itself, the islands of Hawaii are relatively well connected in terms of infrastructure. But again, as in any state, there are large pockets of people who can’t access that, and largely around affordability and so forth. But nevertheless, Hawaii gets that dubious distinction. It’s probably the only dubious distinction that we can think of about Hawaii, but it’s true.
Jess Del Fiacco:
I think they’ll probably still let us visit, Sean.
Sean Gonsalves:
I hope so.
Jess Del Fiacco:
So next question, and Emma, I’d be curious if you have anything to answer to this one as well. But if we just did some magical thinking, if we imagined a world without the pandemic, and the last two years were whatever normal may have looked like without that, and somehow local entities still got this bucket of funding to use on infrastructure, do you think we still would’ve seen as much investment in broadband? Or do you think the level of investment we’re seeing in communities on broadband solutions is because of the experience of the pandemic?
Sean Gonsalves:
I love your magical thinking, and I wish it were true that we could’ve lived in a world without a pandemic these past few years. And I’d like to think that at least a handful of states, if there had not been a pandemic, would’ve done some interesting things with the American Rescue Plan money. But I think the truth is that the pandemic really is the motivating factor. And I think it’s because it exposed the digital divide in such a way that it made everyone realize that high speed internet connectivity is essential to participate in modern society. And I think the pandemic … That had been the case prior to the pandemic, but I think the pandemic, because of remote work and distance learning and telehealth opportunities or not being able to access healthcare in certain ways, I think it made everybody realize. Oh, my goodness, the internet or internet connectivity is a utility at this point.
Sean Gonsalves:
It may not be as important as water or electricity, but it’s close. And one other thing, I mean, when you’re a town or a city, and all of a sudden you have thousands of kids that are forced to go to school remotely, and they don’t have home internet connection, that’s a problem in that community.
Jess Del Fiacco:
Yeah. The pressure is on. You can’t ignore that.
Sean Gonsalves:
The pressure is on. We have to figure this out yesterday. And then if you’re a business that can’t operate, or if you’re a business that can operate with a remote workforce, you need reliable connectivity. And if you’re a community and your economic development is something that’s really important, and you’re seeing businesses move elsewhere because the internet sucks in that area, that’s a problem. And then there’s the telehealth piece. So I think that all of those things kind of came together, and the pandemic just exacerbated what had already existed and made it clear to everyone that this is something that we need to have universal access to broadband if we’re going to be serious about equity even rhetorically, even sort of nominally. If people are going to participate in modern society, whether that’s looking for jobs, or participating in the economy, or civic functions, or entertainment functions, you need a high speed internet connection.
Emma Gautier :
Yeah. I would definitely agree with that. I joined the institute a few months ago, and I wasn’t working on visual equity in broadband specifically before that, so my entire experience in this issue area is in the context of the pandemic. And obviously, the urgency and importance of good connectivity was really apparent to a lot of people working in this area before the pandemic. But I think my own experience is also pretty representative of a lot of people who are interested in equity in general, and this pandemic has shown the importance of good connectivity. And now I see it totally as a utility and something that’s really key to equity. And that’s why I’m here working on this, because I see it as super central. And I think that’s probably representative of the way a lot of people have kind of shifted their mindset in the context of the pandemic.
Jess Del Fiacco:
Right, solving the digital divide, bridging the digital divide, however you want to phrase that went from being maybe a less prioritized aspect of pursuing equity in cities and became suddenly the thing that everything else … The thing that was needed for everything else to happen.
Sean Gonsalves:
Right. It went from this aspirational vision to an ASAP goal almost overnight.
Jess Del Fiacco:
So that brings me to my next question, actually, which is: What happened on November 2nd? Did we see this show up in any particular way in local elections? What was up with the broadband were people voting on?
Sean Gonsalves:
We did. We did. We actually saw in a number of different states, there were some local elections that had broadband on the ballot, so to speak, or broadband related things on the ballot in terms of candidates and their positions. In Colorado, there were three communities that opted out of the state law that they have I Colorado that bans local governments from establishing municipal broadband service. But fortunately, that law does allow for local communities to opt out. They have to have a referendum vote. And so three communities did that on election day in Colorado, Windsor, Milliken, and Mesa County. In Windsor, they’re looking at pursuing a public private partnership. And Milliken and Mesa, they’re not quite exactly sure what they’re going to do, but they want to have that freedom. And so those three communities have reclaimed local internet choice in those communities.
Sean Gonsalves:
And then in Maine, some interesting things happened. In Bangor, you had a city counselor who her central plank was we need to bring municipal broadband to Bangor. We’re seeing it pop up in these small towns in Maine. There’s no reason why we shouldn’t have it here in Bangor. And that’s message resonated. She won reelection easily. But then in two communities, community broadband kind of took a hit. But an interesting lesson comes out of one of those. So in Hampden and in China, not the country, but there’s a small town in Maine called China. And in both of those communities, there was a proposal on the ballot to fund municipal broadband network. And voters in both of those communities, in China and in Hampden, rejected those proposals. In Hampden, it was resoundingly rejected. But something kind of ominous happened that actually I think is a good lesson for other communities to keep in mind.
Sean Gonsalves:
So two things happened, one was that the two dominant incumbent internet service providers in that town promised to expand their network in town. Now they promised, they didn’t sign anything. They didn’t unveil plans. They just said, “Hey, we’re going to do this.” The other thing that happened is that there is this conservative leaning think tank, and I put think tank in air quotes because really, I think of some of these groups as fronts for industry. But there’s a conservative leaning think tank out of Portland, Maine, that funded a big opposition campaign. And these kind of opposition campaigns are fairly typical in communities that are thinking about that because as you can imagine, if you’re the dominant monopoly provider, you don’t want competition. So you have these kind of campaigns, and so it was sort of the typical bogeyman. It’s a waste of taxpayer dollars, unity networks don’t work. Just nevermind the hundreds that exist all over the country.
Sean Gonsalves:
But here’s the thing. These well funded opposition campaigns, and by the way, this one in Hampden happened mostly through Facebook, of course, and incredibly, the town did zilch to counter that campaign. And so it really underscores the importance for community broadband advocates if they’re in the process of engaging local leaders on moving forward with the project and engaging folks in the community. It’s a reminder of the importance of a robust public education campaign on behalf of community broadband networks. That cannot be overlooked because if you overlook it, you leave that room open for these opposition campaigns to come in and really scare folks and make folks think that it’s just going to be some giant boondoggle.
Jess Del Fiacco:
Right. Yeah. And even if those are groundless claims more or less, if that’s all you hear is scary stuff and multiple voices telling you that, that’s probably what you’re going to bring into the voting booth with you. Right?
Sean Gonsalves:
That’s right, that’s right. Yeah. So I just wanted to highlight that. But there’s some other election stuff that happened. Right, Emma?
Emma Gautier :
Yeah. I mean, another place we saw some interesting results was Edison Township in New Jersey. And Edison just elected Sam Joshi as mayor. And Joshi’s campaign, essential part of Joshi’s campaign was a pledge for municipal broadband. And the reasons he gave for centering municipal broadband are things that we’re pretty familiar with on the community broadband network’s team, like Joshi understands municipal broadband is something that’s going to do things like increase property values and that kind of thing, and just sees it as a really valuable community investment. So it’s hopeful to see things happening in communities like that too.
Sean Gonsalves:
And we’ll see if he delivers. I mean, the thing of it, Edison Township is the fifth largest municipality in the state. About 100,000 people live there, so it’s a big community.
Jess Del Fiacco:
Right. Very cool. Glad to hear the good news and the lessons learned, very important to know as well. We’ll continue with this conversation after a very short break. Thanks for listening to our show. If you’re enjoying my conversation with Sean and Emma, I hope you consider heading over to archive.ilsr.org/donate. I know we’re getting towards the end of the year and you’re going to be hearing a lot of these asks in other podcasts and your email inbox, and every nonprofit website you visit, and your mailbox. But your support really is a game changer for us here at ILSR. We couldn’t do what we do with the research that you’ve heard about today, you make all of that possible. Please visit archive.ilsr.org/donate to make a contribution today. Any amount is sincerely appreciated. With that, we can go back to the show.
Jess Del Fiacco:
So I want to switch gears a little bit to ask some questions to Emma about the new scorecard you’ve put together. And I’m guessing most of our listeners have experienced the delight of shopping for a new internet service, perhaps going on Comcast’s website, or Century Link, and trying to figure out what it is they are trying to sell you. I mean, even now, I have had the same internet service for almost four years, and finding out if I wanted to find out what my upload speed is, which I’ve tried to do before, it’s layers and layers of searching in the website to figure out what I pay them for. So clearly, it’s not great. Do you want to talk about why that lack of transparency has gotten so bad, especially from the big companies?
Emma Gautier :
Yeah, definitely. I’ll start by backing up a little bit. So the internet transparency rule is something that was passed by the FCC in 2015. And it as part of the open internet order. And basically what it did was just require providers to give their potential subscribers information about the services they might be getting, so pretty basic. Right? The rule was designed to give customers the information they needed to make decisions. And the thing about the rule is it was intended to be something that was very empowering for customers. And it requires providers to disclose things like speed, pricing, any fees that customers might be paying, among other important information that’s key to decision making.
Emma Gautier :
And the rule mandates that this information that providers need to publish this information either on a website that’s publicly accessible, or on portal, the FCC internet transparency disclosures portal, which is searchable to the public. So there’s that, but what becomes pretty clear either when you’re trying to purchase internet, or you’re trying to collect data like I was, or as you mentioned, you’re just trying to figure out what the service that you already pay for is about, it becomes pretty clear that the transparency rule just isn’t enforced in any real way. So that’s why there’s so many information gaps, it’s because providers aren’t facing real consequences for failing to provide information. And we also know that the furthest that the FCC has really gone to reprimand providers that are violating the transparency rule is sending them a series of noncompliance notices, which is just like a warning letter. And that’s a big reason.
Sean Gonsalves:
A furrowed eyebrow and a strongly worded letter.
Jess Del Fiacco:
I imagine them going into the junk folder on some CEO’s email inbox, super effective.
Emma Gautier :
Exactly, yeah. So that’s a big reason that there’s such major information gaps. But what we find in this report is that actually isn’t the only problem beyond just not being enforced, the transparency rule as it is designed, we argue in this report leaves room for providers to mislead customers by making information either hard to find or hard to understand. So in other words, there are providers that will technically comply with the disclosure requirements, but don’t really uphold the spirit of the rule, so to speak, and the spirit of the rule being to empower customers with information.
Emma Gautier :
So what we’re seeing is a bunch of fine print statements, as I’m sure many of us are familiar with. And these find print statements are really designed by the providers to satisfy the disclosure requirements rather than empower customers with the information they need to make decisions, which we know the rule was designed to do. So again, what we find is just, one, the transparency rule isn’t really being enforced. But two, there’s that other problem of accessibility. That information might be out there, it’s just not accessible to people.
Jess Del Fiacco:
So are there any specific consequences of this lack of transparency besides just general frustration on the consumer’s part, trying to figure out what they’re buying?
Emma Gautier :
Yeah. This problem, providers not being transparent might kind of seem like something that’s annoying or inconvenient, but it’s actually a really big problem beyond that because we know especially in the context of the pandemic that broadband is a very important thing to a household. So a household or a person’s ability to make informed decisions about what kind of service they’re going to subscribe to is really important. And things like knowing what you’re going to get, knowing how much you’re going to pay for it, knowing if there are going to be huge fees that are going to come up, either in installation or monthly fees, that’s important to selecting the service, but it’s also really important to budgeting for the service. Information obviously is just really important to budgeting. And because we know affordability is a huge barrier for a lot of people, we just have to pay attention to this kind of stuff, making sure people have the information they need to budget. And obviously, information isn’t the only thing that’s going to help with the problem of affordability and access, but it is an important part.
Jess Del Fiacco:
Can you talk a little bit about how you approached this report, kind of what you looked at for different providers, and then how different types of internet service providers, and by that I mean, could be one of the big cable companies like Comcast, or it could be a municipal network that your own town owns, how do those different types of providers compare to each other?
Emma Gautier :
Overall, what we’ve found in collecting data for this scorecard was that municipal and cooperatively run networks score the highest, while private fiber and cable providers scored kind of somewhere in the middle. And then private fixed wireless providers scored pretty low. And but there were a couple specific things that we were able to draw from that data. And the first, which seems pretty obvious, is that smaller, more locally run networks score higher than large providers. And these large providers are in many cases not based in the communities that they’re serving. And we believe that’s related, that’s a big deal. Right?
Emma Gautier :
So we talk all the time at the Institute for Local Self Reliance about the importance of decision making happening close to the people who are being affected by those decisions. We talk about just the importance of local accountability and that kind of thing. And we find that local providers are more accountable to their customers, so they’re more transparent with them. They’re closer to the people that they’re serving. And what this report really does is it just adds evidence to the claim that government policy should encourage networks that are locally accountable. And the second conclusion that we kind of drew was while there are providers that completely omit information from their websites, there are also others that do publish information. It’s just really hard to access. And obviously, this is something that I touched on before when I was explaining the transparency rule.
Emma Gautier :
So what we did for this report was design the scorecard in a way that shows both providers that omit information and providers that provide poor quality information because we believe that there’s a difference there. And it’s important to kind of make that distinction when we’re trying to solve the transparency issue. So taking upload speeds, for example, which is the speed at which you can upload something to the internet. If a provider did not list upload speeds anywhere online, that provider received a zero. If its upload speeds were super clear and easy to find, they received a two. But if upload speeds were buried somewhere in the fine print, they received a one. So you can see on the scorecard the difference between good information, poor quality information, and missing information. And we found that cable providers in particular had a lot of poor quality information.
Emma Gautier :
And what this tells us is that cable providers care about complying with the transparency rule. But they don’t necessarily care about providing potential customers with the information they need in a way that’s actually accessible to them and easy for them to understand. So what we need in terms of policy is something that addresses the accessibility problem, not just the omission problem, omission of information.
Jess Del Fiacco:
So we’ve already got the transparency law on the books though. So do we need to just enforce that? Is there specific policy additions that we need? Or is that still kind of up in the air?
Emma Gautier :
Yeah. So what we point to in the report is something called the broadband nutrition label, which was proposed by New America’s Open Technology Institute a few years back. And New America has also been doing some really great work on the transparency problem, so I encourage everyone to check out their work. But the label is based on the nutrition label that you see on the back of packaged food in grocery stores. And it’s designed to make it basically a lot easier for customers to make decisions about internet service.
Emma Gautier :
So what it does is it requires providers to disclose things like speed and price. A lot of what we see in the transparency rule, it also requires providers to make disclosures about what the price will be before the promotional period ends, so the promotional price and the price after that promotional period ends, which is really important because a lot of providers say, “Hey, look. This is the price,” just to get someone in the door. And six months later, it’ll be a much higher price. And that’s kind of another example of something that’s pretty hard to budget for, like I mentioned.
Emma Gautier :
So because it’s a very standardized format, it doesn’t leave room really for fine print and that kind of thing. It’s also something that is very accessible. The standardized format makes it a lot more accessible than the information laws that currently exist across a bunch of providers’ websites. And the broadband nutrition label is actually something that is currently written into the infrastructure bill, which is formally known as the Infrastructure Investments and Job Act, which is currently held up in the House, so this is a timely conversation. And we hope it passes soon. We hope it contains the broadband nutrition label because we believe that it’s a policy solution, it’s a simple policy solution to addressing this problem of accessibility and just making internet market much easier to navigate.
Emma Gautier :
And what I’ll say too is just the fact is that information is part of what makes a market function properly. And we just don’t have good information in the broadband market right now. And a lack of transparency also means that entrepreneurs don’t have the information they need to make decisions about whether to enter the market, or whether to make adjustments in their own offerings. And entrepreneurship is such an important part of competition and the development of the broadband market.
Jess Del Fiacco:
You’re talking specifically internet service providers.
Emma Gautier :
Yeah.
Jess Del Fiacco:
Entrepreneurs who are getting into that business. Okay. Just wanted to make sure you didn’t mean someone opening a coffee shop.
Emma Gautier :
Right, yeah. Entrepreneurship.
Sean Gonsalves:
Well, they need to know if they can get an affordable … Coffee shops need to know if they-
Jess Del Fiacco:
Yeah. That’s true. That’s true.
Sean Gonsalves:
Affordable connections that offer free wifi, that’s an important draw for their customers. They need to know those things.
Emma Gautier :
True, yeah. We know that just entrepreneurship is really important to the broadband market specifically. And I think that information gaps are likely to stifle innovation happening in the broadband market. And that just has the potential to harm the market, which is not at all what we want to see. But what our policy recommendations really come down to is just making sure people have the information they need to make decisions. That’s what it’s really about, so we hope that all works out in Congress.
Jess Del Fiacco:
Yeah. Don’t we all? I’ve had a lot of conversations that land on that note lately. So I just want to remind listeners that they will be able to find both that report that you’ve been talking about, Emma, as well as our big list of community broadband projects and Sean’s research linked in the show notes for this episode. So you can go check that out on our website. But I wanted to bring it back to Sean for a minute before we wrap up. Is there anything, any thoughts that you wanted to share about the scorecard or otherwise?
Sean Gonsalves:
No. I mean, there’s a lot of moving pieces. There’s a lot of activity. There’s a lot of politics though that’s involved, particularly on the federal level and that whole [inaudible 00:38:31] making process. But it’s exciting and it’s encouraging to see more and more communities looking at taking this challenge on themselves and realizing after a long time, you know what, if we’re going to really get what we want, we’re going to have to build it ourselves. And I say this all the time, but it’s so obvious that it’s painfully obvious, but if it exists, it’s possible. And there’s hundreds of communities that have either already built municipal broadband networks, some that are extremely successful, some of the fastest ISPs in the country are municipal networks.
Sean Gonsalves:
And to that local accountability piece, that’s the other thing that’s so key. And sometimes it’s hard to quantify. But I think people can understand that when a community network is built and operated and maintained by the people in your community, that in and of itself brings a level of accountability that is unmatched. You’re bumping into those people in the grocery store. Your kids play sports together. So there’s that level of accountability. And one of the things that is tough to quantify, but I hear anecdotally all the time in talking to folks in various communities, is the difference between before they had a municipal network and they had to rely on the monopoly provider, and then after they got one is the difference in the customer service experience. And that is hard to quantify, but it’s something that’s huge for people.
Sean Gonsalves:
It means a lot for folks to not call a help desk in a foreign country and be on hold for two hours, and then be given an appointment two or three weeks down the line between the hours of 9:00 and 5:00. It’s a huge difference, and to be able to call somebody, they answer the phone, they’re a local person. And your problem is fixed relatively quickly. Those kind of things matter a lot to people and I hear it all the time. And there’s just so … We can obviously go on for days and days talking about this, but it’s actually a lot going on in this space, and there is a widespread movement across the country, kind of flies under the radar, but of communities who have said, “You know what, we can do this, and we’re going to do this.” And thankfully, the federal government is not adjusting policies to help make that happen and invest some real dollars and support behind those efforts.
Jess Del Fiacco:
Wow, I think you just gave us a very good note to end on, Sean. Thank you for that. Thank you for joining me and thank you, Emma. This was really great. Appreciate having you guys on.
Sean Gonsalves:
Thank you.
Emma Gautier :
Thank you.
Jess Del Fiacco:
Actually, before we let you go, Emma and I do have a very brief update to share with you.
Emma Gautier :
Yeah, so since this episode of the podcast was recorded, Congress actually passed the $1.2 trillion Infrastructure Investment and Jobs Act, which contains the broadband nutrition label. And we’re really excited to see that this passed. We hope to see it enforced, and we’ll have more information on this in the report itself.
Jess Del Fiacco:
As we mentioned before, that report is linked in the show notes for this episode, and you can find it on our website. All right, thanks, all. Thank you for tuning into this episode of The Building Local Power Podcast from The Institute for Local Self Reliance. You can find links to everything discussed today by going to archive.ilsr.org and clicking on the show page for this episode. That’s archive.ilsr.org. While you’re there, you can sign up for one of our many newsletters and connect with us on social media. We hope you’ll also take the opportunity to help us out with a gift that helps produce this very podcast and supports the research and resources we make available for free on our website.
Jess Del Fiacco:
Finally, we ask that you let us know how we’re doing with a rating or review on Apple Podcasts, or wherever you listen to your podcasts. The show is produced by me, Jess Del Fiacco, and edited by Drew Birschbach. Our theme music is Funk Interlude by Dysfunctional. For The Institute for Local Self Reliance, I’m Jess Del Fiacco, and I hope you join us again in two weeks for the next episode of Building Local Power.

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43 min
October 28, 2021Reshaping Appalachia’s Coal-Centric Economy with Bottom Up Solutions
In this episode of Building Local Power, host Jess Del Fiacco and Director of ILSR’s Community Composting initiative Brenda Platt are joined by Jacob Hannah, Conservation Director at Coalfield Development. Coalfield Development works across many sectors — solar energy, agriculture, manufacturing, deconstruction, reuse, and more — as it pursues its mission of rebuilding the Appalachian economy.
Highlights of their discussion include:
The requirements of a just economic transition for the region.
Coalfield Development’s impact on the region — hundreds of new jobs, dozens of new businesses — and the diverse economic enterprises they are supporting.
The important role of partnerships and community engagement in their work.
Why replacing the coal-centric economy with diverse, community-led solutions is key to sustainable success in the region.
“A lot of times there’s a false narrative that for a just transition, everything that was a brown economy has to be replaced by a green energy economy. And that’s not always the case. There’s never going to be one silver bullet that replaces all of what coal used to be. And so that’s what we’re trying to make sure that we iterate in the diversity of our options right now, whether it’s agriculture, woodworking, entrepreneurship, solar, manufacturing, we want to have a large toolbox of opportunities for folks in the region. And so that just transition for us looks very different from, let’s say, the European model where it’s a very top-down approach, where the government owns the coal mine and say, phases it out.”

Related Resources
How The ReUse Corridor is Creating Wealth From Waste in Appalachia
Transcript
Jess Del Fiacco:
Hello, and welcome to Building Local Power, a podcast dedicated to thought provoking conversations about how we can challenge corporate monopolies and expand the power of people to shape their own future. I’m Jess Del Fiacco, the host of Building Local Power and communications manager here at the Institute for Local Self-Reliance. For more than 45 years, ILSR has worked to build thriving, equitable communities where power, wealth, and accountability remain in local hands. Today, I’m joined by my colleague, Brenda Platt who directs ILSR’s Community Composting Initiative. And we’re going to be talking about zero waste moving away from a coal focused economy and local economic development with Jacob Hannah. Who’s the conservation director at Coalfield Development, organization that is rebuilding the Appalachian economy from the ground up. So welcome to the show, Jacob and Brenda.
Brenda Platt:
Hello.
Jacob Hannah:
Thanks for having me.
Jess Del Fiacco:
And I think to get us started, Jacob, could you just give us a very brief overview of what Coalfield Development is and what’s the meaning behind the name?
Jacob Hannah:
Sure. So Coalfield Development is a nonprofit organization here in West Virginia. We cover about five counties and the name is a clue to not only the region, but the focus this region has historically been very, not only dependent, but productive for coal generation and coal consumption. So essentially it was a mono economy built around serving that one industry. So all the towns were built around the coal mines, all the roads and trains and infrastructure built to serve this economy. And so now that that industry has gone into decline. We have this massive power vacuum in it’s place. And so how do we address that in a way that is a just transition to new and diverse economies that doesn’t leave people behind like what we’re seeing right now with the opioid epidemic, massive rates of unemployment, lots of folks leaving the state and lots of health issues as well.
Jacob Hannah:
So how can we tackle those factors by offering folks some re-skilling opportunities, new economic employment opportunities, training, education, and also of course, diversified portfolio of different opportunities for folks to choose from. We are a nonprofit, but we house the largest solar installer in the state right now, there are big corporates which is a really sort of a newer model to the region. We do large scale rural and urban agriculture, and we would do a lot of recycling and upcycling, building deconstruction and remodeling and a whole plethora of other activities as well. And of course we want to try and figure out how to integrate that with actual mine land remediation as well.
Jacob Hannah:
So again, we realized quickly that we can’t just tackle one element of this issue with just re-skilling someone and giving them a job. There’s a whole litany of components that we want to try and help support. And that’s where the training comes in, where the workforce development comes in. And we even offer a lot of life skills as financial literacy, interpersonal communications, et cetera. So it’s really a holistic approach to figuring out how we can rebuild communities that help rebuild people that help rebuild new economic opportunities. So people, planet and profits all mixed together.
Brenda Platt:
Awesome. We’re going to talk a lot more about Coalfield Development and what the organization is doing, but Jacob, I want to ask you about your own personal arc. Now you grew up in Appalachia, right?
Jacob Hannah:
I did, yes.
Brenda Platt:
How did you get into this field?
Jacob Hannah:
Well, my dad was a coal miner and his dad worked in the coal mines as well. And I was born and raised in a coal town. They call it the Billion Dollar Coal Fields in Williamson, West Virginia. And so coal is very much a part of the culture and the economy. It’s what puts bread on the table for a lot of folks, including my family at one point in time. But then the coal mines shut down and we had a lot of issues with water in our region getting clean water and then forest fires happened as well. So it’s sort of a one, two, three knockout punch for a lot of folks in our region. And so we had to leave the area like a lot of people did and it sort of feels like almost a sense of betrayal in a way, because it’s like you’re leaving with a bucket of water hypothetically, and you know your neighbor’s house is on fire and you can’t really help put out their fire because you’re trying to go help put out your own.
Jacob Hannah:
And so I’ve always wanted to come back and try and figure out how I can help make life less painful and just more opportunistic and thriving and resilient in Appalachia. And so pursued a couple of different education opportunities as the first in my family to go to college and got my degree in business because I thought, “Okay, if there’s a lack of jobs, maybe I need to study business,” but a lot of people have tried that in the region and a lot of businesses have sprung up and failed. And so I got an opportunity to study sustainability management as well.
Jacob Hannah:
And so looking at how business doesn’t have to be just for profit with one bottom line, but can focus on people, planet and profit, all integrated in together. And that in and of itself helps businesses thrive and survive, and also helps give back to the communities and the economy and more than just one way. So now I’m back here in my home region and we’re doing a lot of fun and exciting things that I never thought would be possible in a place that usually is on the bottom list of every indicator of quality of life. So we’re really excited to be part of the alternative narrative for how Appalachia can look in the 21st century.
Brenda Platt:
Yeah. And you talked about the just transition, is there more to say about the just transition for Appalachia.
Jacob Hannah:
Sure. So a just transition is a term that’s floating around a lot right now, and different regions have different ways of defining it, but ultimately it’s an understanding that for us, our definition is the first fruits of a new economy should foremost benefit and prop up the people left behind by the last economy. So if there is a coal region that’s based out in coal, those coal miners and those coal families have done their due diligence and provided the energy that was needed to build our skyscrapers and powers through the world wars. Then we need to honor that legacy and help those folks have a stable transition into a new occupation before we start bringing in outside skill, labor, or new jobs for other folks who are looking for those opportunities. So that’s where a lot of the re-skilling focuses on. So retraining those folks who may have been truck drivers for coal, and now they’re moving materials that can be upcycled and recycled or folks who are mechanics operators. They’re now operating some of our machinery for processing.
Jacob Hannah:
So really trying to figure out what fits where with whom. And I think a lot of times there’s a false narrative that for a just transition, everything that was a brown economy has to be replaced by a green energy economy. And that’s not always the case. That’s never going to be one silver bullet that replaces all of what coal used to be. And so that’s what we’re trying to make sure that we iterate in the diversity of our options right now, whether it’s agriculture, woodworking, entrepreneurship, solar, manufacturing, we want to have a large toolbox of opportunities for folks in the region. And so that a just transition for us, looks very different from let’s say the European model where it’s a very top-down approach where the government owns the coal mine and say, phase it out. And then it phases out the infrastructure, for instance, if nothing else.
Jacob Hannah:
And then by the time it gets to the people at the bottom, it’s been five, 10 years of processing and they’ve sort of been moved out. They’ve sort of been displaced by all the change that’s already happened. And so we flipped that model. We start with the people at the bottom first that helped bring about the change and the models and the drivers that result to that ultimate transition for the region. And so that really creates a holistic, healthy community of practice and also brings in a lot of buy-in from the local workforce as well, to where they don’t feel displaced too. So that is in our definition a just transition.
Brenda Platt:
Yeah. And what you’re doing along those lines as your incubating these social enterprises and you’re doing this hiring unemployed people, doing the on the job workforce development training, tell us about that workforce development and how you’re incubating those social enterprises from the bottom up.
Jacob Hannah:
Sure thing, right now our workforce development model looks like three different components. So let’s say this is a one work week that you’re looking at for a typical trainee within our organization, 33 hours at that week, they are on the job learning a trade and getting paid for that trade at a living wage. So whether they’re coming in from an opioid recovery program or incarceration, or just facing different barriers to employment, where you want to take in the folks who are having a hard time getting a leg up in Appalachia. And so 33 hours a week, you’re doing that. You’re learning your trade and getting paid to learn it. And that could be doing woodworking, that could be doing remodeling, solar installation, agriculture, whatever it may be. That’s what your model looks like there. So 33 hours doing that six hours a week, they are in the classroom pursuing a higher education degree with our financial assistance.
Jacob Hannah:
And so that could be anything of their choosing for about two and a half years that were in their associate’s degree. And then three hours a week, they are learning life skills, financial literacy, communication, how to open a bank account, how to apply for food stamp assistance, whatever it may be. We want to try and help solve those little challenges that just pop up everyday in life that could prohibit someone from being able to choose. “Do I stay home and take care of my sick kid, or do I go to work and try and get a paycheck to support them down the road?” That’s a tough decision parents should have to make, so we want to try and help arm our folks with those resources and skillsets to be able to tackle these challenges. So that’s what that full workforce model looks like.
Jacob Hannah:
And then of course, we work very closely with communities and organizations, businesses, and nonprofits to host these region wide communications on what does your community need? What is it lacking and how can we help provide a social enterprise to satisfy those needs? And so it would look different anywhere that you go. If you go down into Mingo County, West Virginia, the growing economy there is tourism. And so maybe we can help provide some of the gaps there between folks coming in who want a place to stay. And folks who want to expand that economies, maybe we can be the middleman that helps build some infrastructure to capture those dollars coming in and re-skill some folks in tourism or maybe it looks like agriculture on a former strip mine. There’s a lot that we do there with repurposing former moonscape strip mines into orchards and rotational grazing opportunities that help refertilize that soil, and then have a crop growing on top of it or a livestock growing on top of that goes into the local markets.
Jacob Hannah:
So really it’s just a matter of listening to the community on what they want, what they need, and then trying to figure out how we fit into that picture as well. So the necessary cartilage between the funding sources and the folks who really need those leavers on the ground to be activated.
Brenda Platt:
Yeah, there was one of the stories I think I heard you share about revitalizing a dilapidated property. I don’t know it’s the same area we were just talking about, but into a coffee house with the local development authority in there, and that apartments on top, that just seems like a perfect example of what you’re talking about to meet some communities need.
Jacob Hannah:
Absolutely. We try and do it for a blend. Because again, it goes back to that one bullet, isn’t going to be the perfect shot to get us through. It’s going to be a mix. And so usually if we do take on a dilapidated property, like down at maintained one or [Wayne 00:11:34] that you’re talking about right now, it would usually be commercial on the bottom floor where there’s a lot of foot traffic, it would be residential above and then maybe some sort of mix in the back of the building. So the commercial for that example was coffee shop in the bottom apartments on the top and then economic development office in the back as well.
Jacob Hannah:
And so that looks similar as a model that could be replicated in these smaller cold communities that need to sort of a simple incubation satellite station, maybe not the full nine yards of a multimillion dollar investment yet because it’s might be a smaller community at three or four or 500 people, but maybe it’s just something small enough to start off first to get some ideas started to growing. And so obviously all those things connect back to our main hubs here in Huntington, West Virginia, where we have a large factory that was scheduled to be demolished. And now it houses a lot of businesses and new ideas and incubation centers and black box theaters. It has the largest non-profit solar installation on the top of the roof as well. So that’s a great sort of living, learning lab of how ideas can thrive in that area where folks can get inspiration and learn about the funding that’s available.
Brenda Platt:
I love the idea that Coalfield’s working on that. You’re not replacing the monopoly coal economy with a monopoly other economy, it’s this distributed democratizing the business sector. And you’ve incubated 40 new businesses. Can you talk about some of those that distributed diverse because now you’re helping to build and demonstrate the potential for?
Jacob Hannah:
Yeah. I mean, it looks very similar to what I was describing before where maybe it’s not, we build a new business in every community, but maybe someone in the community already has an idea and it’s struggling to thrive because it’s only able to reach a certain population and maybe we can reach some of those outside dollars from outside of Appalachia, because a lot of times businesses within Appalachia, they’re only able to access the dollars that are inside Appalachia and that’s never going to lead to large growth. It’s never going to lead to self sustainability because folks in Appalachia may not have the buying power to support something like a local bakery or a local shop that’s that works on woodworking. So how do we use our network of partnerships, our broadcasting mechanisms, our ways to reach outside into other regions, to show the storytelling of folks who are reskilled and repurposing opportunities and materials to build new valuable scarce items.
Jacob Hannah:
Like some of the woodworking that we’re doing, is wood that is inside of buildings that is no longer in the market anymore, like Wormy Chestnut. And so that’s very valuable when it would normally be in a landfill and says being upcycling into nice, distressed looking wood, that a lot of hipster bars in New York love to buy and integrate into their buildings. And so how do we connect them to those buying power dollars outside of the region? And so those are the businesses that we want to support. And then oftentimes we develop our own businesses. We incubate new ones. One of them is a partnership to focus on how do we repurpose an abandoned strip mine and also satisfy the need of the lack of fresh fish in the region?
Jacob Hannah:
And so we’re a landlocked state. A lot of our rivers are really heavily polluted and we’re trying to clean this up, but in the meantime, can we have a place to get fresh fish? And so we remediated abandoned strip mine, this called the Blue Acre Aquaponics facility. And we built an actual facility on top of it that incubates actual fish within the water and those fish when they deprecated, it feeds the lettuce growing on top of the water. And that lettuce filters out the water as well at the same time. So it’s a symbiotic relationship there. And so now all the stores and the restaurants here are able to have access to very fresh, close, local food systems and folks that are able to have jobs that aren’t going to go anywhere anytime soon as well. And that’s a former abandoned mine land that was normally a liability to the community and now is an asset again. So those are just some examples of how those stories work out.
Brenda Platt:
Yeah. One of the other things that I love is that for some of the businesses you’ve incubated, this idea of one person’s waste is another person’s treasure. And one of the businesses is T-shirt making and some of the textile waste is going to a mushroom grower. Did I get that?
Jacob Hannah:
Yeah. So the idea is, I mean, it started with what I was mentioning before. There’s a lot of dilapidation in Appalachia. You have a lot of buildings that are falling down. And so what we do is upcycle those buildings, if it’s too far gone, we upcycle the wood. And so we’ve been trying to apply that same line of thinking is if we can upcycle wood, what else can we up cycle? What else can we see that would normally be categorized as trash or waste or useless and find the value in it in a way maybe we don’t have a way to extract it, but maybe another partner’s looking for it or maybe another organization has an idea for it. And so there are mushroom farmers at Wayne County that are using shredded textiles as the necessary fibers for mushroom farming, or these textiles couldn’t be sold anywhere because they’re too far degraded that so they can use those fibers.
Jacob Hannah:
There’s another opportunity that we use as well that shreds plastic bottles and plastics, and puts them through a four-step process to where they become very smooth textiles. Like the one I’m wearing right now, T-shirt textiles. So that’s what’s within our building right now in Huntington. Similarly there’s organizations with our partnerships in Ohio and Kentucky that are looking for plastics that they melt down and put into 3D printers. And they’re making pottery plants out of plastics and making cup holders and placers, even the bands that go across for face masks for COVID. And so it’s amazing, just the ingenuity that’s in the region that is hungry for the opportunity to unleash their ideas and their creativity towards making entirely new business models that didn’t exist before in the area. And these business models are tackling things that would normally be floating down the Ohio River, floating down some water area where there isn’t a cycling, there isn’t processing like where I grew up at if something was trash you had to take it in your backyard and burn it.
Jacob Hannah:
And now first of all we’re able to divert that and empower those folks that you don’t have to pay to come to drop off these materials. You don’t have to sign up for a program where you’re a member, just come and bring it here. We’ll take it, we’ll drop it off. And we’ll take care of electronics. We’ll take your wooden pallets, whether your rubber tires, your plastics, whatever it may be your textiles. And we will contact our members who are in this region and see, “Oh, organization X is looking for this and organization Y is already got a truck in route to here. So let’s tie these things together. Let’s make it all work for each other to where it costs a lot less for you to run your business. It costs a lot less for you to recycle, and it cost a lot less for you to deliver something because there’s already logistics systems in place.”
Jacob Hannah:
So how can we democratize the idea of recycling and upcycling in a region that has been completely divested in and forgotten about? And for just traditional recycling, there is no traditional recycling systems in our region. So how can we step up to the plate? And I’ll only attack that issue environmentally, but economically and socially as well, to where the Ohio River is the drinking water source for all of Huntington, West Virginia. That’s 55,000 people. So how can we keep it clean and also create value in a region that has limited economic opportunities? And so it really fits together all those pieces in a very harmonious way.
Brenda Platt:
Yeah, that is local self-reliance in action.
Jess Del Fiacco:
We’ll be right back after a really short break. Thanks for listening to our show. If you’re enjoying my conversation with Brenda and Jacob, I hope you’ll consider heading over to archive.ilsr.org/donate to help support us. Your donation makes this podcast and all the work we do here at ILSR possible visit archive.ilsr.org/donate to make a contribution today. Any amount is sincerely appreciated. And if you can’t donate right now, another way you can help us out is by leaving a rating or review on Apple Podcasts or wherever you happen to listen to our show, it really does make a difference. Thanks for listening. Now, back to the show.
Brenda Platt:
Over the years, I’ve done a number of studies on the jobs by burning waste, land filling waste, and then comparing that to recycling and reuse. So for every 10,000 tons flowing into landfill, it’s one job. That same 10,000 tons going into a recycling sorting facility, just sorting the materials is 10 times more jobs, but when it’s repair and reuse, it’s like 200 times the number of jobs. So we’re talking about highly skilled labor. And everything that you’re really doing, and because I happen to work on and focus on composting, I have to ask you about composting.
Brenda Platt:
And you talked about reclaiming mining land. And I understand that Marshall University, which is in West Virginia is probably the first commercial scale composting operation starting in the state and Coalfield might’ve had some role in that. And that’s the compost. I think the plan is to use it to reclaim some of this land that needs to be remediated. Can you just talk about what’s going on with the composting and before you start, I think there’s a connection to the wood waste that some of the wood waste is actually being composted with the food scraps from the university.
Jacob Hannah:
Yeah. So even within our efforts to transform waste products like wood into value added products like furniture, they’re still byproducts of waste. So sawdust, sawdust is still by-product of that waste rescue process. And so how do we even look at that second level element of that rescue initiative and find the value in even sawdust? And so through what we’re calling the ReUse Corridor or this collection of organizations that are all communicating with each other.
Jacob Hannah:
One of our partners is a Marshall University, Amy White is their sustainability director there she’s been fantastic to work with. And she was looking at, “Okay, we produce a massive amount of food waste on our campus, and we pay a third-party contractor to take all that food waste to a landfill. And it costs an incredible amount of money. And it just ends up in that net negative for the region because it’s just food waste and food waste is a massive contributor to pollution, to the water systems and just the quality of the environment there. So how can we divert that in a way that limits the cost for us as a university, but also creates a benefit or a product for the region?”
Jacob Hannah:
And so our sawdust plus their food waste creates a really nice blend of a compost that is high grade quality and a verifiable to the region. And before we were ever even able to pursue that, we realized that there is state laws against selling large-scale compost in the State of West Virginia. And so that’s the beauty of these local level grassroots initiatives is that we’re able to test out these ideas that influence these larger systems, whether they be laws or infrastructure or bills or funding. And so this project was able to convince those legislators to rewrite that bill to where now it is legal to integrate those large scale composting facilities within the West Virginia system here.
Jacob Hannah:
And so now this is the largest, this is the first commercial scale composting facility, and that compost is going to be bagged and sold to local consumers in the region. But as you mentioned before as well, we want to start integrating that into some of these moonscape properties of abandoned strip mines and bring back a top soil layer that is actually fertile again for these strip mines to where they can actually start to grow crops again, grow local flora again, and actually have something that can contribute back to the community as well. And we want to do it in a way that’s responsible too, because if you’re careful, it can just have runoff and create algae blooms in the local watershed. So we’re trying to be very patient into our homework on this and make it in a way that isn’t just rushing through something because it’s exciting, but do it in a way that has all of our homework done behind it.
Jacob Hannah:
So that’s a really exciting opportunity for us to be able to make all those things work together. And we’re working through the Amur program and a couple other programs to try and replicate that model on a larger scale. And the beauty of that is ever since that installation at Marshall, we’ve probably got 15 or 16 other higher ed institutions reaching out to us about, “Hey, how did this start? How do I make this happen at my university, at my college?” Organizations way outside of West Virginia, all over the region, just curious about how this sprung up out of just a couple of people working together to make waste reduced and to increase economic opportunities and improve the environment. And also the folks who are going to be working in this composting facility are going to be re-skilled folks who are again facing barriers to employment. So you can’t really argue with that as a model. It’s something that anyone can get behind, no matter what their political leanings or their commercial backgrounds. It makes sense for everyone.
Jess Del Fiacco:
I was going to say, I definitely want to talk more about the ReUse Corridor in a minute, but I want to make sure that we talk a little bit more about partnerships. What different kinds of partners do you have on different projects? How do those connections get established? And what does that unlock for communities?
Jacob Hannah:
Yeah. Partnerships are the key to all of this honestly. Our organization Coalfield Development, we’re robust and we’re able to tackle a lot of issues, but there are just components of what is needed in the region that we simply do not have the facilities or infrastructure to tackle. And so something like the reuse port or something like the initiatives that you see now today are only because we’ve been able to have those communications and relationships with other first, it starts off pretty simple, nonprofit A is talking to nonprofit B it’s a very homogenous at first. Where you understand that you have similar viewpoints, similar missions to improve the region as a nonprofit. And then those operations start to benefit local businesses.
Jacob Hannah:
And so local businesses start looking at, “Hey, okay, you’re hosting free collection events for cardboard crop-off. I’m the business for-profit that brings them a lot of cardboard because I ship in a lot of materials for my operations, and I pay way too much money to get this dumpster bin dropped off at my business to capture this material, and then it just goes to a landfill. I don’t want to do them, or I don’t want to pay the cost for that. And I don’t want to contribute to landfill. So how can I work with you nonprofit A and B to where I can just drop off my cardboard at your organization and benefit your operations with cardboard, and then benefit my operations from the reduction in the cost for recycling?”
Jacob Hannah:
And so that starts to build and build and build to where you’ve got this network of organizations that understand, “Okay, this isn’t just a feel good kind of value system. This is something that makes sense for my bottom line. This is something that makes sense for the workforce. I’m needing more employees and I’m having trouble finding employees that are ready to enter the workforce. So this program sounds really exciting because it’s re-skilling people and it’s getting them ready for the workforce. I want to work with you guys.” And so that expands broader and broader to these economic development authorities and these local governments in these city councils. And then that expands even more to these larger institutions like universities and schools that have the controlled audiences and controlled elements to where they can participate on mass as well.
Jacob Hannah:
And so it really builds and builds organically. At least what we’ve seen here in our operations. And those partnerships are crucial too, because you can show this has regional scale, and then that regional scale can help work together. Like what we’ve done here recently, and help joint applied for large funding initiatives. We were actually able just now to leverage a $2 million Appalachian Regional Commission grant for the ReUse Corridor, because we have been able to show that inter-state regional collaboration for this operation to really grow and thrive. So partnerships are absolutely crucial and key, but it can start very simply in a way that you would least expect it to take off, but don’t underestimate the person to person and business to business conversations that eventually manifest in something like this.
Brenda Platt:
Yeah. Congratulations on that $2 million grant.
Jacob Hannah:
Thank you.
Brenda Platt:
And you’ve also got funding from the federal government, from the U.S. Department of Ag, is that right?
Jacob Hannah:
Yeah, there’s a lot of innovative funding resources out there. I think that’s where the partnerships are great, but it’s really valuable to have a nonprofit to pursue those grant opportunities. And so USDA has rural focused recycling grant opportunities and in composting grant opportunities that we were able to leverage and pursue. As I mentioned before, the Appalachian Regional Commission, that’s a federal branch of the government that they provide a lot of funding for rural communities as well. But then also there’s just completely random funding opportunities like the world famous rock climber, Alex, Honnold he heard about what we’re doing with trying to help with a just transition, and wanted to provide funding to bring in solar in Appalachia that helps folks get re-skilled and learning about solar. And so that helped fund the largest non-profit solar installation in the state that we have right now. And so there’s a myriad of funding opportunities. It just takes really the dedicated group of people to sit down and identify what are we well-positioned to capitalize this and capture?
Brenda Platt:
How about how much money would you like, what is needed? If you had a magic wand?
Jacob Hannah:
Oh, goodness. Well, here’s one thing I like to point to actually, because I think a lot of folks there is a false dichotomy between seeing that, okay, Appalachia doesn’t have a lot of investment, so therefore they need a lot of investment, but I always like to point people back to the 1960s, when the war on poverty was declared in Appalachia. The war on poverty was declared in the poorest counties in America. And those counties are still the poorest counties today. And so that tells you that not only just investment fixes things, it’s not enough, very much so at least from a top-down approach. It’s not connected to the people at the grassroots level. And so we would love funding all day long for our operations, but I think it takes buy-in, it takes education and training and vision for folks to have an identity of, “Okay, this is what we want as a community,” and every community going to look different.
Jacob Hannah:
And that in my opinion is much more valuable than a blank check because that’s sustainable, that’s cyclical, and it’s not going to phase out after two years when the grant runs out or funding runs out. So I think it takes a really good blend between that funding and the people on the ground level. Coalfield, we’ve been able to leverage just in the past 10 years about the almost $40 million that wouldn’t have been attracted to the region before. And we’ve been able to bring that in, and then that’s not including our partners in Ohio and Kentucky. And so we’re able to bring in those dollars, but those dollars are able to stay and generate more dollars because of the work we put in with the models and the partnerships and the operation. So I think if that trajectory continues, we’ll see a lot of resiliency in the area.
Brenda Platt:
Yeah. I think the point is there’s tremendous untapped potential to grow this model. And so if you’re listening and you have money or connections, this is a group to support. Needs new investment, could be doing so much more than the 40 new businesses already created. Right?
Jacob Hannah:
Absolutely.
Brenda Platt:
One of the things I love about what you’re doing is you’re not just focusing on the bad or the negative of coal, which can be as we know, hyper politicized. But you’re really focusing on the good that most folks can rally behind. Who’s not for healthy soils or workforce training and new businesses and keeping things local and we vitalizing dilapidated properties, et cetera. But how with the hyper politicized nature of politics now, and particularly with the unique power that Senator Manchin has in your state, how do you navigate that? How are you navigating that?
Jacob Hannah:
It’s tricky. Politics has had a very messy history in Appalachia and West Virginia in particular. Historically we were a blue state for a long time because this is where the unionization of labor began because of the poor treatment of coal miners from the coal companies, they were able to fight for their better rights, because a mule was more valued than a man at that time in the coal mines. And so through a lot of conflict and conversations and in years of fighting for better opportunities that develop this sense of a collectivism to where individuals were able to fight for their wellbeing. And that created, I think, a predominantly blue political climate for a long time. And then we started to see the downturn of the global economy.
Jacob Hannah:
And so that was in part from the mechanization of labor, diversified energy, portfolio was starting to arise in the region. But then also there’s tighter legislation on the emissions of coal and trying to phase out coal. And so I think that started to pivot the politics in the region to where folks are trying to tightly hold on to coal because there’s nothing replacing it. There’s nothing taking the place of those jobs that are being lost. And so I think that started to pivot the economics and the politics in the region. And now, that promise of holding onto coal from sort of some of the red state narratives is starting to fade away as well, because folks are saying, “Coal is not coming back.” Whether it be whatever reason that you want to state, it’s just not coming back.
Jacob Hannah:
So how do we put aside sort of the abandonment of one party and the false princesses of another, and just sort of look at our own selves and try and figure out, okay, we’re not going to be rescued. In fact, we’ve already been forgotten about, so how do we pull ourselves up out of this mess and make something that means, means something to us at the grassroots level? And that’s how fulfilled started. It’s just one person that was born here in the Huntington area of West Virginia, and decided that they were tired of seeing the things happen here, and that grew to more and more and more local people. So it’s Appalachians trying to help Appalachians out. And so obviously we’re all separated from politics. A lot of our funding comes from governments. So how do we navigate that?
Jacob Hannah:
We don’t want to bend with every wind that blows in the area because that’s how extraction happens. And so we’re well positioned to be able to be a great common denominator for any political party, because everyone can agree that jobs is a good thing. Whether that jobs comes from solar, or it comes from economic remodeling of buildings, no one really cares about how it’s done. They just want jobs for the area that doesn’t have jobs. And so that’s been a great unifier for us, for the politics in the area. I think what we’re trying to do is prove that these newer markets are sustainable and are well-suited for Appalachia. And that’s what we’ve been trying to improve and has succeeded with our solar installation before our organization really came into the picture. There was no solar market in West Virginia, and the solar that we’re working with started in the back of an old, empty ice cream truck.
Jacob Hannah:
That was just a partner with the vision. And they said, “Hey, we like what you do, you like what we do, let’s work together and build the solar economy.” And now it’s the largest solar installer in the state with almost thousands of installations, residential, commercial, and otherwise in the region with a large getting unionized electrician workforce for that solar installation. So it checks all the boxes and shows that it’s a model that can be replicable in Appalachia. So we’re not necessarily lobbying for certain infrastructure or legislation to pass. We’re trying to show that if the policy deciders to leaders can see that we’re doing works, then that’s the best way we can prove for someone to invest in infrastructure, invest in new green jobs in the area, because we’re showing that on a small scale, this is fantastic and replicable and is needed in all these other counties, aside from ours.
Jacob Hannah:
So that’s how we fit really within the political scope is just proving these concepts are suited for Appalachia and are suited for people who have been sort of left behind that it can be done and it should be done. So that’s the best way that I can put that probably how we interface with politics.
Brenda Platt:
Yeah, no, that’s good. And I think that the history of the ReUse Corridor, which is now just taking that example is a regional effort, but it started as a local network. And prove the concept. And then it grows and spreads and gets replicated elsewhere. And you’re doing all these businesses and enterprises, and it’s like you said, people are contacting you from all these other cities and communities, “Let’s do this here.” So it seems to be working really well. And we really look forward to following this trajectory and growth of impact in terms of investment dollars, jobs, new businesses, and all of that good stuff. Do you have replication tips for other either communities Appalachia or elsewhere about this model of bottom up local economic development?
Jacob Hannah:
Yeah, I do. And I want to tie it in with some of the point you just made too, as well. Even the ReUse Corridor with recycling and upcycling, even that was politicized when we started it. I think there’s such a, just a hyper tension around certain topics to recycle is normally to be associated with something more environmental or something more, “Liberal.” And so what we’re trying to do and what we’ve done since the beginning of this is not tie this to any party or policy, but tie it back to our Appalachian roots. Recycling has been something that’s happened way back when, because folks didn’t have the funds or the opportunities to go out and buy something new. When something broke down, they either fixed it or upcycled it into something new. If something broke, they would try and repair it or build something new out of it or trade it for something else that they could then use in its place. That innovation and ingenuity net Appalachian stick [tuitiveness 00:38:36] is what we’re trying to celebrate and tie this back into this isn’t political, it’s practical.
Jacob Hannah:
And this is what are our grandparents’ generations knew and were very, very skilled at. And so how do we reintegrate those values and those skillsets and to something like reuse or upcycling, or even solar to where these haulers or these communities back in more cut off areas of Appalachia can have resiliency through solar if trees are falling down left to right, and mudslides are happening and cutting off the electricity, they’re still able to stay energized and resilient because they’ve invested in this energy or the because they’ve invested in this infrastructure. So I think first of all is find what the narrative is for your region and lead with that, because that’s the values that everyone’s going to agree on. If you can agree that coal was really great for our area and it built everything that we know and appreciate.
Jacob Hannah:
So let’s try and integrate that into the platform for launching the new things that we want to see come to fruition. I mean, our name Coalfield Development are solar installer, solar holler, hollers to name for the tight valley between the Appalachian Mountains. And the logo is a man with a pickax and mining the sun. And so tied in with the values and the way that makes sense to the people here in a way that resonates with our pride in the heritage of the region. And then grow from there, had those conversations. And I would say for replication, find the lowest hanging fruits first, whether it’s with the ReUse Corridor, where there’s something like Coalfield Development, the things that can be tackled easily are the things that build momentum. For us, there’s a massive issue with recycling in the area, but we’re not going to try and levy the state government to invest in a $5 million recycling facility. That’s probably never going to happen. That’s the last thing on anyone’s priorities list.
Jacob Hannah:
But if we start small with one community and host a collection event, that we can move those materials to someone who is looking for those materials, that’s a win. And if you get everyone on a win, that’s a high, that’s something that is a story. The news articles want to pick it up. People want to come out and volunteer. And then that shows that it’s a model of success and replication. And then those replications happened here and here and here. And before you know, you got a $2 million grant from the federal government, and that grant is building out infrastructure for shredders and recyclers and storage facilities. And then that is going to obviously encourage and promote government involvement to where they’re repairing roads to recycling facilities, they’re investing in infrastructure. And that brings them to the table as well.
Jacob Hannah:
So start small, start local, and don’t underestimate those one-to-one connections and conversations and really tied into the values of your community and the values of your region, because otherwise it’s going to feel foreign and unnatural and no one wants be beat over the head about something that they’re not doing. I think that’s what’s happened for a long time in Appalachia. Folks have really pointed the magnifying glass that, “This region is contributing to pollution, it’s contributing to joblessness, contributing to all these negative factors.” And no one wants to just be told that they’re not doing good enough. So how can we help provide the opportunities for those people to be involved in doing good? Everyone wants to do good and wants to have a good quality of life. So let’s provide them with those opportunities and that’ll get any person on board.
Brenda Platt:
Jacob. I mean, I think you’re absolutely right. The inspirational storytelling and the narrative is so important and you’re doing it. So I am so inspired by your work. And yeah, this conversation was so great to talk to you. I think we could just talk all day. I want to wrap up with… We usually ask for those of you who listen to this podcast regularly of what your favorite book is, but I’m going rogue today. I want to ask you what your local favorite independent business is?
Jacob Hannah:
Oh my goodness gracious. That’s a tough one.
Brenda Platt:
So many to choose from, right?
Jacob Hannah:
I know, there’s so many doing so many different things that I think are so important. Let me think for a second on that.
Jess Del Fiacco:
You could give us a top, two or three, and if you can’t narrow it down to one, we’ll allow that.
Jacob Hannah:
I think I’m really excited about an organization that I haven’t been able to interface with much, they’re not really part of our operations, but I’ve been talking to them a little bit throughout in Richwood, West Virginia. And there are a rural community that doesn’t have access to broadband internet. And broadband is a big topic for the region because when you get broadband, you can get access to outside markets and you can market what you do. People can work from home. COVID has really brought a lot of people from urban areas to Appalachia because they want to just get out and have a better quality of life. And they can work from home if they have broadband. And so this small town, they are their own broadband installer. They’ve developed a non-profit to bring about broadband in the area. I think they’re called Richwood Scientific.
Jacob Hannah:
And it’s just a really beautiful model of… Like a lot of the questions that’s talked about now, a community sees something that they’re lacking and they’re saying, “I’m not waiting on some mythical savior to come in and bring it, I’m going to bring it myself.” And so they’ve done that. They’ve brought in broadband internet for the community and their region. I think that’s just something that’s beautiful. And it hasn’t really happened yet in Appalachia where someone has just started it on their own. That’s something that’s very technical, very data oriented, high skill, level oriented. And it just, I don’t know, it just shoves it in the face of the stereotype that people in Appalachia or down in the mouth, ignorant, don’t know what to do for themselves. And this is a very highly skilled technical complex system that is giving this community high broadband internet. So I think there’s just a beautiful engineered of story that can be replicated as well.
Brenda Platt:
We agree. We have a community broadband initiative. And they’re probably on our map, right Jess?
Jess Del Fiacco:
I bet they are. Yeah.
Brenda Platt:
Yeah. Great example.
Jess Del Fiacco:
The work you’re doing is incredible, Jacob. It was so great to hear about it today. So many good stories that I feel like we barely even got to get into, as Brenda said, we could talk all day, but thank you so much for joining us. Thank you, Brenda, for leading this conversation and thanks everybody for listening.
Brenda Platt:
My pleasure.
Jacob Hannah:
Thanks for having me.
Jess Del Fiacco:
Thank for tuning into this episode of the Building Local Power Podcast from the Institute for Local Self-Reliance. You can find links to everything discussed today by going to archive.ilsr.org and click on the show page for this episode. That’s archive.ilsr.org. While you’re there, you can sign up for one of our newsletters and connect with us on social media, we hope you also take the opportunity to help us out with a gift that helps produce this very podcast and supports the research and resources we make available for free on our website. Finally, we ask what you let us know how we’re doing with a rating or review on Apple Podcasts or wherever you find your podcasts. This show is produced by me, Jess Del Fiacco and edited by Drew Birschbach. Our theme music is Funk Interlude by Dysfunctional. For the Institute for Local Self-Reliance, I am Jess Del Fiacco, and I hope you join us again in two weeks for the next episode of Building Local Power.

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Audio Credit: Funk Interlude by Dysfunction_AL Ft: Fourstones – Scomber (Bonus Track). Copyright 2016 Licensed under a Creative Commons Attribution Noncommercial (3.0) license.
Photo Credits: Jacob Hannah, Coalfield Development
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46 min
October 14, 2021Can More Competition Fix an Outdated Energy System?
In this episode of Building Local Power, ILSR Co-Director John Farrell is joined by Chris Villarreal, President of Plugged In Strategies and an Associate Fellow with the R Street Institute. Their discussion focuses on monopoly power in the energy sector, and how lack of competition impacts consumers and stands in the way of progress.
Highlights of their conversation include:
What’s behind growing interest in public takeovers of electric utilities.
Why electricity markets were originally designed as monopolies and why that structure doesn’t fit the way energy use and production has evolved.
How utilities use their monopoly power to shape regulation and limit competition.
Rethinking utilities and the energy distribution system in order to incentivize competition.

“What I’m hopeful for, and what we’re seeing, is that with the growth of distributed resources like rooftop solar, community, solar and the like, is that consumers, you and I, have more options now available to us if we so choose. We don’t need to rely 100% on the utility to provide us electricity. We have abilities now to put solar on our roof or participate in a community solar garden project, which introduces competition, which is good because now it should be imparting cost pressure onto the company.”
“Just because it’s public doesn’t mean it’s going to be run well. Just because it’s private doesn’t mean it’s going to be run poorly. It really all is in the rules.”

Related Resources
How Big Utilities Are Impeding Clean Energy, and What We Can Do About It
Is Energy Still a “Natural Monopoly”?
Spreading Like Wildfire: An Interest in Making Electric Power Public
The Role of Antitrust Law in Creating Energy Justice
Why Utilities in Minnesota and Other States Need to Plan for More Competition
Transcript
Jess Del Fiacco:
Hello and welcome to Building Local Power, a podcast dedicated to thought-provoking conversations about how we can challenge corporate monopolies and expand the power of people to shape their own future. I’m Jess Del Fiacco, the host of Building Local Power and communications manager here at the Institute for Local Self-Reliance. For more than 45 years, ILSR has worked to build thriving equitable communities where power, wealth and accountability remain in local hands. This week, I’m actually handing things over to ILSR codirector, John Farrell. He also directs our energy program here at ILSR. And he’s going to be joined by Chris Villarreal, who is the president of Plugged In Strategies and a fellow with the R Street Institute.
Jess Del Fiacco:
They’re going to discuss the structure of the energy market which is a sector you’ll hear John refer to as a hidden in plain sight monopoly in a few minutes. With that, I’m going to let you go on to the show.
John Farrell:
Welcome to another edition of Building Local Power, a podcast hosted by the Institute for Local Self-Reliance. I’m John Farrell, the director of the Energy Democracy Initiative and one of ILSR’s two codirectors. And today, I’m really excited to be joined by Chris Villarreal. He’s the president of Plugged In Strategies. He’s a fellow with the R Street Institute, a think tank that promotes free markets and limited effective government. He’s got experience at two different state public utilities commissions, so he knows a great deal about what we’re going to talk about which is the market structure and the market sector, the electricity market.
John Farrell:
If you follow him on Twitter in addition to excellent information about energy, you will also find out that he is a Baylor University grad, a Kansas City Chiefs fan and many other things. Chris, thanks so much for joining me on Building Local Power.
Chris Villarreal:
Thanks, John, for having me.
John Farrell:
So I feel like I need to start off with knowing that our audience cares about issues, about monopoly and concentration by just saying that the electricity sector is almost like this hidden in plain sight monopoly, that we have lots of conversation in our society today, both sides of the alphabet. Facebook’s a monopoly, especially when they have this big outage. We’ve got Amazon dominating digital commerce, but we have electric utilities who are monopolies as a result of public policy. We made them into monopolies. And in a lot of cases, people are unhappy with the kinds of service they’re getting from these monopolies.
John Farrell:
So I guess I want to start off with something I think is interesting and that we have a, “Let’s swap monopolies,” campaign being run by a number of folks, whether it’s Bernie Sanders who’s been advocating for a public takeover of power generation to accelerate renewable energy. He’s talking about doing that at the federal level. You’ve got cities like Boulder, Colorado or Chicago, Illinois who have been talking about trying to take over the electric utility. There’s just been this general upswing of interest in public ownership. And I’m curious, what do you think is motivating communities to consider a public takeover? And do you think that public ownership really is going to solve the issues that they’re having with the utilities that they’re complaining about?
Chris Villarreal:
Well, thanks, John. That’s an easy question to start with. So I think some of the drivers around the public taking over electric monopoly, investor-owned utility monopolies is the perception that the public can do it “better” than the investor utilities. I think what it really comes down to, of course, is that end of the day, investing utilities have a profit interest, whereas public interest utilities probably don’t have a profit interest. So if only you remove the interest of shareholders to seek profit, then utility would be run a lot more efficiently and effectively and meet the needs of the people that it’s serving.
Chris Villarreal:
I don’t think, of course, it’s that simple. I think if we look at existing municipal utilities around the country, so we can start with SMUD which serves the city of Sacramento in California, there is relatively progressive goals that that SMUD seeks to serve, but at the same time, they have relatively high rate and pretty difficult policies if you want to put solar on your roof. So it’s not as easy as if we got rid of the profit motivation that this utility now will just automatically turn around and serve its consumers, that easily still has costs it has to recover. And if you are consuming fewer electrons from the utility, regardless of whether it’s a muni or not, there’s still costs that remain undiscovered.
Chris Villarreal:
And so the utility still has an interest in recovering its cost to serve. A, perhaps maybe not exact, parallel is several years ago, so I grew up in California and I moved to Minnesota from California. And California regularly goes through droughts, as it was doing this year. So I was living there and we went through another one of the droughts and one of the water companies that serves the Bay Area are municipal water companies. And so we went through a drought and there was a strong call for conservation which is all really good. We need to conserve our water because if we don’t conserve water, we’re going to run out of water and that’s not good for anybody. So we all conserve water.
Chris Villarreal:
And at the end of the year, the water company then, which is owned by the city instituted like 100% rate increase. And everyone’s like, “What are you talking about? We did our job. We conserved our water. Why are bills going up?” Well, people did such a good job of serving the water that the utility didn’t recover its costs because it does cost money to operate the system. And by not consuming that product, in this case water, utility under collected this cost to pay for the operation of its system, so I had to increase cost the next year in order to recover that uncollected revenue.
Chris Villarreal:
So even in a public situation, there is still a need for that utility to recover its costs, which means it still wants people to consume its product, even when we might be trying to conserve it.
John Farrell:
So it’s not so simple to just change ownership and I think that’s something I’m really grateful for you bringing that perspective to this conversation because there is that perception that if we move to public ownership, it is going to be a panacea for the issues that folks have and the debates that we’re having about accelerating clean energy. So let’s talk a little bit about the structure that we have in the market. So we’ve got this tension between ownership structures and there are, as we know, over 2,000 utilities across the country that are already municipal utilities.
John Farrell:
Most urban areas are served by investor-owned utilities, as you mentioned. They are private companies. They have shareholders. And then you’ve got a mix in rural areas of these rural electric cooperatives that were a result of both local organizing and stood up by the federal government during the New Deal Era. So one of the things I think is fascinating about the electricity business is that Americans tend to expect that most things they buy are from competitive markets, although some of ILSR’s research shows that’s often less true than we think. Why are we in a situation with electricity markets where we are debating who should own but still debating around this frame of having monopoly ownership of the electricity system.
Chris Villarreal:
I’ll try not to get it too dry of the history, though my degree is in history. Sometime long ago when we first started to build electricity systems, it was determined that getting the capital to build a power plant was expensive. And then it was expensive to get the capital to build the transmission system, to get the electrons from generating facility to the consumer. And then it’s expensive to build distribution to make sure that everyone has access to electricity, has a line to their house. So it’s all really extensive. And the early days, a lot of it was just very small generation, very close to consumption to serve electricity. So it was largely the urban areas because that’s where you had economies of scale, because you had more consumers in the urban areas than you have the rural area, so those costs to recover that infrastructure could be collected a lot more quickly, getting more consumers to buy electrons from.
Chris Villarreal:
Then the technical innovations, they were able to move generators farther away from urban centers and build more power plants and build more transmission lines and build more distribution lines, but it’s all really, really expensive to build. And in order to ensure that, the entity fronting the cost to build all that had a reasonable expectation to recover all those costs, it was decided to grant them a franchise, which means that they are allowed to sell their products, electricity, within a certain geographical footprint with the expectation that they’ll be able to recover their costs. And that worked pretty well because like the power plants are built, are expensive to build, transmission is expensive to build, distribution is expensive to build, everything associated with the operations of the electricity system is expensive to build.
Chris Villarreal:
So that’s for the better part of 90 years or so that’s how things worked. Then as technological innovation continued to grow, we have 1978 in the passage of the Public Utilities Regulatory Policies Act which provided incentives now for other types of generation, solar, wind, biomass, what have you, things other than coal and gas and nuclear. What that ended up doing is it allows new entrants to come into the market, think people who are not the utility. So now you have some competition trying to show up into the industry. And utilities, whether they’re investor or they’re not are monopolies and monopolies act how the monopolies are going to act, which is it’s their territory and they think it’s their right to serve their territory under this longstanding practice of them being granted exclusive rights to serve electricity in this region.
Chris Villarreal:
What this runs up against, however, is the equally important economic principle of cost pressure. And competition is a way in which you encourage pressure upon the cost to serve. So you’re right, we can go to different grocery stores to get products that are being procured from different places or perhaps the same places, depending on what type of product they’re getting. And we fly different airlines because we like one or the other, service is better than the other, price is better than the other. So we have a lot more competition in that world because the capital costs can be spread across more people than traditionally electric market scale.
Chris Villarreal:
But with the rise of competition in generation first, then under transmission, under FERC Order 1000, new entrants then come in and compete, which if they can do the same service at the same lower price, then that’s good. That lowers costs for everybody without degradation of service. So we have the electric utilities, which for the most part have not been pressured in the same way that other industries have to compete because of our past work of rules between the federal government, the state government, local governments have really been insulated from competition for a long time, except for 13 or so states that allow retail choice.
Chris Villarreal:
But what I’m hopeful for and what we’re seeing is that with the growth of distributed resources like rooftop solar, community, solar and the like, is that consumers, you and I, have more options now available to us if we so choose. We don’t need to rely 100% on the utility to provide us electricity. We have abilities now to put solar on our roof or participate in a community solar garden project, which introduces competition, which is good because now it should be imparting cost pressure onto the company.
John Farrell:
So a lot of people will draw a comparison for example to the telephone industry, right? So similarly, there was a high cost of capital to build out a phone network to customers. And we had similarly monopoly service for landline phone technology which for our younger listeners was when there was a wire to your house and you had a phone on the wall and all it did was make phone calls. And obviously, cellphones really changed things a lot, because all of a sudden, there was something that was competitive and didn’t rely on that network. And in some cases is similar to what’s going on in the electricity business, but the difference, of course, being that the technologies you were talking about like rooftop solar, community solar, energy storage, these things are all plugging into that same grid.
John Farrell:
So it’s something we actually talk about a lot at the Institute for Local Self-Reliance, that self-reliance does not mean self-sufficiency. We’re not talking about cutting ourselves off from other folks. We’re talking about having the capability to operate on your own, but really preferring to remain interconnected with other people. When we talk about the opportunities for some of these technologies to get into the market, to connect to the grid, we’re often not seeing it implemented quickly or at all on the electricity business. And it’s there’s definitely a lot of variation in different states, California or New York versus Minnesota or Missouri.
John Farrell:
Who’s at fault there? You mentioned that utilities weren’t necessarily prepared for competition. One would think that there’s an opportunity for them to get into this market, to sell people what they want, why don’t they do that, for example? And then if they’re not willing to do it, what makes it so hard for those competitors who have those different choices to get into the market and to offer them to consumers?
Chris Villarreal:
Right. The fun thing about looking at the phones, let’s say the phone companies is that we had one phone company that serves the entire country. The only person who can get the phone from was the phone company as well. But if we look back even beyond that, what the phone company was there to compete against was telegraph, right? We have the telegraph, which was the monopoly. AT&T was original telegraph company. They were the monopoly. And then in come the phone company as a competitor to telegraph. And now no one uses telegraph. The phone company was a monopoly. They got broken up and then we had wireless.
Chris Villarreal:
So wireless was a new way to communicate that we didn’t need the wire, but we still need a communication network. So the way that we have our electricity market structure now is we have, for investor utilities, they’re regulated by the state TUCs and what that enables is that utility, to recover their capital costs plus a greater return through a capital rate base, which encourages the utilities to act in certain ways, that for the most part of the history of electricity service was beneficial. It allows everyone to have access to electricity at a reasonable cost, relatively low cost, all things considered. And that’s the way it’s been done.
Chris Villarreal:
And what is going on now is that as new competitors come in, providing not just generation service but can provide energy management solutions to consumers through demand response or energy efficiency or offer other technological solutions that help consumers save money in their bill or provide service back to the system, the way that the electric utility has operative system is now at risk because that was all stuff they used to do. And they are no longer the only one capable of doing. So who is at fault, it’s hard to say because this is a structure we put in place for good reason, a long time ago and it’s probably about time for that structure to evolve in response to technological concerns.
Chris Villarreal:
That all being said, it’s my opinion that the electric network that is the poles and wires across the system, while historically had been used for the delivery of electrons from power plants to consumers, that network is incredibly powerful network that has a tremendous amount of untapped benefits because if we were allowed, you and I, as consumers to engage with one another through that network, we can expand the power and value of that network beyond just the simple delivery of electrons. There’s a whole bunch of new things that we could do where you and I could sell to each other electrons or megawatts or whatever terminology you want to use, where you and I can engage in exchange between us to create mutually beneficial solutions where I have excess electricity and you need like electricity and I can offer to you at a price which may be lower than what is otherwise available to you from the utility. So why wouldn’t you want to engage in commerce with me because my excess electricity is going to go to waste otherwise.
Chris Villarreal:
And so what we’re grappling with now is a system that was designed for a certain type of efficiency, now standing in the way of new types of efficiencies that can be collected or realized, if the economic motivations of that utility was different. So I wouldn’t say anyone’s actually to blame. I think utilities have an interest in maintaining the status quo and being that provider. I think the regulatory structure is structured in such a way that regulators do not have as much authority as they perhaps they should to really address how the utilities should evolve. The legislators who want to get elected and utilities have a lot of money to give to officials to ensure that laws are developed and passed away that protects the utilities in ways that may not be as beneficial to you and I compared to the utility itself.
John Farrell:
So I’m just thinking about this challenge that we have. What I find so fascinating is that we have a marketplace that all of a sudden is much more competitive. And I feel like there’s probably a million different examples out there of how this would work and none of them are quite sufficient to describe how the electricity system is different, but you could take for example something like classified ads used to just be in the newspaper, right? And then thanks to the internet, Craigslist allows us to post ads to one another. We don’t have to use the newspaper anymore in order to do that. So we can fundamentally change how that system works.
John Farrell:
Obviously, the newspaper’s interest was in maintaining that communication medium, but they couldn’t because the internet was out of their hands. And I think what’s so interesting here as you talk about you and I want to be able to transact, right? Maybe I have energy storage that you want to be able to buy, backup power for me as a neighbor and you have solar and I want to be able to store your solar energy on my property in the batteries that I own. Well, the utility still owns this network. And like you said, they’re regulated, so they don’t own it and can’t manage it entirely the way they want. They’re subject to regulation.
John Farrell:
And then of course, the legislature can influence how that regulation works. But we’re held back in a way in the sense that the technologies are allowing us to have a lot more choices all of a sudden. It’s like the shopping options are there. People can go out and find things. The utility and the regulators still have a great deal of power over how the system works and those rules don’t always allow us to move as quickly as we might like or to do the things that we might like. So right now, living in Minnesota, if we were neighbors, I have no way that I could actually be buying solar energy from you in an approved way.
John Farrell:
Maybe we have some sort of Bitcoin, blockchain, under the table transaction going on that is very clever, but it wouldn’t be something that we could do through that system. Let’s touch on a couple of things here. The first thing I’m thinking about is a tweet I saw from you yesterday about the rule of regulators and you had a really interesting mention about reading The Omnivore’s Dilemma. So I’d like you to share about that because I think it’s interesting in terms of thinking about the role of regulation over this sector. And then let’s try to get back into and talking about what we think could be done a little differently. So can you share what that tweet was that you had about reading Michael Pollan’s Omnivore’s Dilemma and how it opened your mind to a different way of thinking about how we regulate big industries?
Chris Villarreal:
Sure. Omnivore’s Dilemma, you’ll see the list of what are the five books that changed your life the most. And then in mind, Omnivore’s Dilemma is one of those top two books in my list that changed my life the most. There’s a couple of sections in the book, Michael Pollan in Omnivore’s Dilemma, is Michael Paul is a writer in Berkeley, who tries to follow five different meals that he’s having, and from growing, slaughtering to consuming and what’s the pathway to the food cycle from getting from point A to point B to the dinner table to his plate. And one of the examples, [inaudible 00:20:30], but I’ll focus on this one, one of the things samples he gives is talking about organics and how organic definitions came about because there was, again historically, small farms that did things on their own that then sold at farmer’s markets.
Chris Villarreal:
Some of them are organics. Others probably use pesticides, but the point being that you would go to farmer’s markets that you had some relationship with the market. And then over time, the large industrial food companies came in and saw that the term organic had a meaning among the public, that if he saw the word organic, then that meant something. It meant that that food was better grown, that that was better for you. And in an effort to ensure that the word organic meant the same thing, you needed rules. You needed regulation to determine what does the word organic mean and how things were grown, how things were processed, what needs to be done to ensure that this food was actually organic.
Chris Villarreal:
So that resulted in regulations being written by the regulator, the federal regulator. Now, industrial farms, who have a lot of money, have a lot of availability to go and spend money to lobby legislators and regulators on how to define terms. The small farmer’s market farmer is just having his family growing radishes or beets or growing beef or what have you. They’re busy 24/7 running the farm and they don’t have the ability to go and participate in proceedings for the Food and Drug Administration or the USDA. So as a result, the companies that have the money and the time and the influence are the ones who then write the regulation. And they’re able to write the regulation in a way that benefits them because they have the money and the ability to meet the regulations.
Chris Villarreal:
So now in order to get organic, you have to go through a certification process. And now you have a small farmer who isn’t making a lot of money generally over the course of the year, in order to be organic now has to jump through a whole series of hoops that were designed by the large food companies who were participating in the development of the rule because they have the money capability to do that, which then means that most of organics, at least for some period of time, we’re all largely done by large food companies, not necessarily by the small market that you are most likely to buy from.
Chris Villarreal:
So whether you’re growing lettuce, it means you have to do a bunch of stuff. Although other example I’ve always remembered from the book dealt with raising beef, right? If you want to have organic beef, it has to have a certain food, and it has to be processed in a certain way. And that required refrigeration and big equipment to dealing with how you process the animal. And again, if you are raising 100 heads of beef and you have to have a refrigerated system, that at a certain specification level you don’t have the money to invest in that, but the large food companies have the money to invest in it.
Chris Villarreal:
So reading that story and just seeing how large companies are able to manipulate regulation in a way to protect themselves from competition, especially from new and smaller interests, really opened my eyes as to how that works also in the electricity world, or the world that you and I are talking about, because utilities are really big. They have a lot of money. Most of those rebates because we all like the service they provide like electricity. Whether they provide it well enough is a different question, but they have the influence at the regulatory level to participate in all the proceedings that are open for any state commission.
Chris Villarreal:
Compared to smaller companies like solar companies or storage companies or anyone who wants to get into the marketplace, they have far less resources available to them. They have to pick and choose the things they want to participate in, whereas utilities, they’re allowed to proceed in all of the proceedings. So all the proceedings that have rules they are participants in and then they’re able to develop the rules and policies the way that benefits them because commissions can only act upon things that are the record and showing up and participating in proceedings is how you influence the proceeding. And they’re able to participate in all the proceedings and craft rules and policies to ways that benefit them and not necessarily the benefit of the new entrants, new opportunities and new services.
Jess Del Fiacco:
Sorry to interrupt John and Chris’ conversation, but I’ve got to do my job and remind you that we couldn’t bring you interviews like this if it weren’t for your support. If you’re a fan of the show, I hope you’ll consider heading over to archive.ilsr.org and making a contribution today. Any amount is sincerely appreciated. With that, I’ll hand you back over to John Farrell and Chris Villarreal.
John Farrell:
So you’re pretty intimately familiar with a few ways that utilities can exert their monopoly power to stave off competitive pressures. We’ve talked about a couple already. There’s the fact that as captive customers to the utility, they tend to have money available that they can use to influence the legislative process, whether by donating to candidates or having lobbyists. As you just mentioned, with the Public Utilities Commission, decisions are made by based on who can show up and participate in the proceedings. Utilities have the resources to participate in everything that goes on there. In fact, they’re often compelled to participate, so they can use the money that we have to hire their regulatory analysts and folks that will show up to do that.
John Farrell:
There’s also some, I think, more hidden things, one of which I’ll talk about in a minute about plugging into the grid with those rooftop solar systems, but [inaudible 00:26:08] chance to elevate something that you talk about on Twitter, among Energy Twitter. And hopefully, we can bring it down to a level where most other folks can understand it, but it’s abbreviated ROFR or right of first refusal and I think it’s important for people to understand because it can help explain in part why things like recent events like hurricane Ida left so many folks in Louisiana without power for so long, that there’s some connection here between how the rules are written and how utilities behave then and the fact that we actually then suffer more significant impacts from power outages or in terms of the cost of our energy.
John Farrell:
So can you explain ROFR and I’m asking this as someone who’s in this industry, looking for a way that I can more simply explain to people how this works and why it’s a problem.
Chris Villarreal:
I will do my best. ROFR is example of things that our industry suffers a lot from which is acronyms. So ROFR is a legal term. It stands for right of first refusal. And what that largely means is that there’s a need to build a new transmission system and transmission line. And because utility is already the incumbent who serves that reason, they have a right of first refusal to build that new line, regardless of the costs. What that means is that up here in the Xcel territory, if there’s identified a need to build a new transmission line that is inside the region or across the region, whatever applies to the service of Xcel, any new transmission line, Xcel has exclusive ability to determine that they are the ones that are allowed to build it before anybody else could come in and build it.
Chris Villarreal:
Now the challenge with that is, I mentioned earlier, FERC Order 1000 declared largely transmission construction is a competitive service and require the removal of right of first refusal language that we’re existing in our RTO tariffs. So the RTO that serves our region, the Midwest, Midcontinent intensive moderator previously had right of first refusal laws in their tariffs. FERC said, “You have to get rid of those. Those are anticompetitive. They are protecting a monopoly and Order 1000 says we need competition because it’s our competitive resource, so we want new entrants to come in to compete against the utilities to the construction of the transmission as we need new transmission in our area because there’s a lot of wind.”
Chris Villarreal:
So shortly after Order 1000 was passed, some utility got passed very quickly thereafter in the Minnesota State Legislature, a bill taking the ROFR language that was previously declared, impact competitive and put into the Minnesota State Statute, so now the utilities in Minnesota all have right of first refusal protection for new transmission projects across the state.
John Farrell:
Let me just cut in real quick here to summarize for people who aren’t necessarily familiar with all these terms here. So previously, decades ago, if there’s a transmission line being built, the utility that’s the monopoly gets to build it. They’re making all the decisions. For issues, this Order 1000, the Federal Energy Regulatory Commission, so the federal regulator says, “Actually power transmission, those big trends, high voltage lines you see in your highways, that’s competitive now. Everybody should be able to participate.” And they said, “In these places across the country where we have organized markets, wholesale energy markets, you have to remove those rules that were preventing people from bringing in competitive powerline construction.”
John Farrell:
And right after that happened, the utility went running to the legislature at least in Minnesota and in some other states and said, “We want to get that power back to blackout competition,” and they got it. So it’s a law on the books now that despite the federal regulator’s efforts, they still are retaining this right of first refusal.
Chris Villarreal:
Yes and I guess that’s seven states who all have right of first refusal language in their state laws, largely the Midwest. So Minnesota, North Dakota, South Dakota, Iowa and Texas all have right of first refusal laws on the books in their states. Now what that means then is because of this right of first refusal language that’s in state statute now, it becomes incredibly difficult for competition to take hold in these states for the construction of new transmission lines. In fact, it exacerbates regional planning difficulties because if you had a combative developer who wanted to build a line from North Dakota through Minnesota through Wisconsin down to Illinois, because North Dakota and Minnesota have right of first refusal laws, each one of those individual utility territories they go through, each individual utility could say, “No, we have a right of first refusal to building a transmission line.”
Chris Villarreal:
So what ends up happening then and we saw this in the CapX2020 project is rather than have one long line being built, we had multiple utilizing little lines being built from service territory to services territory to service territory in order to protect their right of first refusal responsibility. And so, as it applies now to what happened in Louisiana, Entergy also has right of first refusal language in their Texas territory. And what that means is that new transmission is very difficult to build unless it’s being built by the utility.
Chris Villarreal:
So utility down there, Entergy, has operated in such a way to limit the amount of transmission that can be built, limit the amount of new generations that can be built and limited entrants to any new competitive provider, be it building a new generation or building new transmission and then would able to do so in such a way to basically continue to underbuild a system in a way that made their system a lot more fragile in response to weather events like we have with Hurricane Ida where they didn’t enough generation and they didn’t have enough transmission.
Chris Villarreal:
And so they had areas of New Orleans that were out of power for weeks, over months, because they didn’t have enough infrastructure to get the power back onto those areas because they have been chronically underbuilding our system in a way that at one level was designed solely to keep out competition. And because their focus was so much on keeping out competition, they then didn’t actually build up the system they needed to to respond to system emergencies and weather events.
John Farrell:
I remember seeing one analysis of it, talking about as well that one way that they dealt with this issue of competition was that the threshold for the competitive market is above a certain voltage. So if you build a very high-powered transmission line which can move a lot of electricity, it would be subject to competitive rules. But if it was under a certain threshold, it wouldn’t be. So they built lots of lower power lines, which were not as effective at keeping the system reliable as the higher power ones might have been in terms of the amount of capacity they had in order to avoid that competitive pressure.
John Farrell:
And actually it reminds me, speaking of monopolies of, I think, it was Amazon that has their delivery vans that they were buying and there are federal commercial trucking regulations that apply to trucks above a certain size. And so Amazon deliberately undersized their delivery vehicles to fall right under that threshold of regulation. Perfectly legal obviously, but yet, it ends up being this perverse outcome where customers can potentially be underserved. Maybe in the case of Amazon, those vehicles are less safe to operate because they’re still very large, but they fall right into that threshold. In the case of the transmission here with Louisiana, you had lots of customers in New Orleans out of power for a lot longer than they needed to be because Entergy was interested in protecting its monopoly more than serving its customers effectively.
John Farrell:
I want to pivot and talk about another way that this impacts us, especially because it’s around this issue of choice, individual consumer choice. So we talked earlier about you and I could have solar on our rooftop. We could have batteries in our garage. We have the opportunity to participate in the market. We’re in the middle of processing a survey that we did of solar developers across the country, asking them about barriers that they might face in helping customers do rooftop and community solar. So [inaudible 00:34:35] we’ve been processing results of a survey that we’ve been doing of solar developers about the barriers they face in helping customers do rooftop and community solar, so two of these crucial technologies that allow people to choose to rely less on the utility. I’m just curious, I’m going to phrase it this way, what do you imagine that we might find in terms of barriers that are described around plugging those systems into the grid?
Chris Villarreal:
I suspect that the biggest barrier will be things associated with interconnection. And interconnection is the process by which those rooftop solar panels can be plugged in to the system safely, into the system. Now, we want to all be done safely, right? We need it to be safely and reliably implemented, but because utility owns the wires, they have perhaps an interest in minimizing or limiting or making it challenging for new things to plug into that system. So interconnection becomes a really important effort to allow rooftop solar or community solar for that matter to successfully intersect with the system.
Chris Villarreal:
Utilities raise a whole slew of barriers into that marketplace that makes it challenging for systems to interconnect, especially larger systems. They’ll raise things like technical constraints or it’s not available, capacity of that area to put new solar in, which then delays the development of those projects and increases the costs. Now ways to address that would be to make more information about the system available to the public or at least developers, but developers knew where are areas across this territory that would have a greater likelihood of successfully interconnecting. But that transparency means that the public has more information about the distribution system, and again, the better part of 100 years, no one has asked the utility to talk about that.
Chris Villarreal:
It’s always been, “Utility, your job is to keep the lights on and maintain the distribution system. You do what you need to do and we will largely give you cost recovery.” But now when we have competition and new entrants coming into for the last realm of distribution, monopoly serviced the distribution system, there is quite an effort underway by the utility to minimize how much information they have to make available to the public because this is the last area that has been there for a long time. And by providing more information to the public, they’re introducing new parties to provide service that historically they’ve been the only one to provide. [inaudible 00:37:24] the first one is going to be the biggest one you’re going to hear about.
John Farrell:
More than 75% of our survey respondents said that it’s their number one issue in terms of what the problem is and it is. I think it’s important to help explain too. So when we talk about this monopoly challenge or the grid ownership challenge that’s going on in the utility sector, you mentioned earlier, it doesn’t even matter what kind of utility, what ownership structure we have, right? The utilities are trying to recover their cost of service. And as other entrants come into the market, they are, of course, looking for some market share. They’re going to take some of the revenue that that utility would have.
John Farrell:
It’s a particular problem for investor-owned utilities, of course, because they have shareholders and they’re determined to make sure that they’re bringing a benefit to their shareholders as they’re legally obligated to do. And the rules of the system really encouraged them to act in this way as well too. I think that’s the other thing that I find most helpful to explain to people is that it’s not that utilities are necessarily bad actors, although they certainly don’t act in good faith from time to time, as you and I have both seen, but they’re rewarded for doing this in the sense that the incentives that they often have, because of the way that they can make money in the case of an investor and utility, are to keep out competition.
John Farrell:
Can you talk a little bit more about that? And I guess maybe what would be helpful here is, are there other industries that we can learn from as we think about how to confront that challenge, where maybe where competition did end up flourishing to the benefit of everybody because we changed the rules, changed the incentives? Is there a good example out there of how we could do this differently?
Chris Villarreal:
So I have to think about the last one, but you’re right. The rules that we have in place today encourage the utilities to act the way they act. There are other options that are being discussed across the country, something like performance-based ratemaking where you take a portion of their revenue requirement or what they’re allowed to recover through rates and make that subject to performance. So if they perform in certain ways, the way they’re designed that they not only get that money, but they also get an incentive on top of that, their revenue plus some incentives. The flipside is that if they perform worse, then they might have a penalty on top of that earning that money.
John Farrell:
And that would be for things like more clean energy or more energy efficiency, outcomes that we want to see from our electricity system.
Chris Villarreal:
Right, energy efficiency has pretty much been in place for decades now. That’s the type of performance-based incentive that we’ve been using. To me, the way to keep this going forward is to really rethink the way that the distribution system and the utility itself earns money. And that is by thinking about it more than network where they become a network operator rather than just the provider of electricity. Because as we get more and more solar on the system, as more electric vehicles go out of the system, as we basically just get more services and resources that are going to show up at the end of the system, [inaudible 00:40:38] places of work, what have you, the value of the grid of a network is going to expand.
Chris Villarreal:
And that means their opportunity to recover costs rather than on a per kilowatt hour basis that we’re paying our bill today, you could see access fees, which I suspect you have your feelings about access fees, but there are other ways that the utility could recover their costs other than through kilowatt hour usage. So if we think about … “This is always a bad analogy, but I think it’s useful, our cell phones, right? So our cell phone is on a certain network, mine is on Verizon network. So I go to a Verizon store and I buy a phone, but the phone is not a Verizon phone, right? It’s Motorola or you buy Apple. And then Apple and Motorola. So Apple has their system and mine’s an Android phone, on the Google system.
Chris Villarreal:
So even though it’s using the network of Verizon, as my provider, I’m also accessing the network that the services that that Android is providing me. So now I pay my one-month fee to Verizon and then I get my phone and then anything else I want to do with my phone, I pay basically to Android or to somebody else. So now I’m leveraging the power of the network, the wireless network to do a whole bunch of other things that sit on top of it. And that’s one way that I can conceive of the electricity system evolving is by turning it into a network where you and I or whoever can engage [inaudible 00:42:12] by offering balancing.
Chris Villarreal:
We can balance our systems against each other, right? Which would be a benefit to the system because it increases the efficiency of the system. It would increase the network value because now we have more and more people connecting to the system. And I discussed it that way because the option, the alternative is we don’t need this network. Why do we need electric utility? We can do it all ourselves, so let’s just create a bunch of islanded microgrids that aren’t connected to anybody else. And I think that is not an economically efficient way to think about the system because now you have a bunch of islands that are operating to each other, so we’re losing the value of a network.
Chris Villarreal:
So it’s great that if your neighborhood is able to island and respond to emergency, that’s not the issue, the issue is physically disconnecting from each other so that if we are physically disconnecting, I’m in [inaudible 00:43:07] and you’re in Minneapolis, if I can’t have an interconnection with you, John, then I can’t sell you my product and you can’t buy mine to create a more efficient optimized system. Because we have power to network, you and I are able to talk over this medium. We’re able to talk over the internet and thinking about the utilities of the network and how do we transition, manage it to conceptualize new earnings opportunities, if one, they get out of the way of innovation, and two, figure out ways to leverage the innovation that private actors or you and I are willing to pay for, that could unleash a lot more value out of the system at a lower cost, as we’re now able to leverage and make the system more efficient.
Chris Villarreal:
Because we are going to need greater amounts of flexibility and anything that you or I or any anyone who’s listening can do on their own system or at their location, you have value that probably is not being captured. And if only we had the ability to capture that value organically and societally, I think that’s where we get a lot more value out of systems. I think that’s where a future for the electricity system could go.
John Farrell:
So this brings me in mind of a question, which I imagine is a big one for what I anticipate will be the last question I ask you here, Chris, but it gets at this network value thing, because I’m thinking about this sort of two different ways right now. There’s two examples of networks. I’m thinking of that highlight different routes we could go here. One would be the network of roads we have. So I find it useful sometimes to explain to people like the road network is largely a public network. It’s paid for through taxes and through user fees and it essentially has open access, right? And package delivery is what I always like to use as an example, right? There’s FedEx, there’s ups, there’s DHL, there’s the Postal Service. They’re all out there using this network.
John Farrell:
There’s rules, there’s speed limits, there’s signage, there’s stop signs, there’s all sorts of things about how you use the network. There’s rules for vehicles and their size and weight and all that kind of stuff, but everybody can use that and transact in whatever way they want. And I think what’s interesting is that … And that’s a public network, right? So it is generally nondiscriminatory, although the way we pay for it may not be perfectly equal between all the different users because of the structure of the mix between user fees and taxes. And then in contrast, we have, and this is obviously something that we’re litigating in public space right now, is Amazon’s commerce network where it’s a private network. But small businesses, large businesses feel compelled to sell their products on Amazon to participate in their market.
John Farrell:
And Amazon has taken advantage of that to sometimes set rules that are discriminatory, that say, “Well, if you want to use our network, you need to put your stuff in our warehouses. You need to use our shipping services, etcetera. And so they’re raising their rents and you talked about access fees earlier. What makes me nervous about the idea of keeping this as a private network is that it could allow the utility to continue to extract monopoly rents on participants in the same way that they’ve been making it difficult to get into the market now by keeping information to themselves, but it’s not a given, right?
John Farrell:
Just because it’s public doesn’t mean it’s going to be run well. Just because it’s private doesn’t mean it’s going to be run poorly. It really all is in the rules. I guess what I’m curious about is if you had a choice, how would you do it or how would you solve that? What are the elements that are crucial to us thinking about like, “How do we create that network that has the best opportunity to capture all that uncaptured value from customers and that prevents big players from taking advantage of everybody else”?
Chris Villarreal:
I think that really has been the question that this industry has been trying to address price since the first connection was connected to a house is, “How do we best regulate the system, especially now going forward with increasing amounts of new insurance as a home loan?” And it’s a question that I’ve been thinking about a lot. One way to help address, of course, is through regulation, which is why we have regulators to do all this stuff, which is also imperfect because … Unless it’s owned by the government, like roads arguably are, and everyone has access to it and the federal government and state government, local governments all issue the rules as to how we use it.
Chris Villarreal:
And then you have the private network, as you pointed out, Amazon where there’s little regulation on how it’s worked. What that middle ground, middle ground probably is regulation, but I think it’s important to note that we have regulation and regulation provides a really valuable opportunity for the public to participate in ways on how that network can operate. But they need to be able to enforce that open access, that equitable open access so that everyone who wants to have access that system is able to access it equitably and fairly. And I think that’s really the challenge going forward is how do you ensure that equitable and fair access to the network so that the owner of the network is not extracting rents beyond what they should be and that they are not favoring affiliates or other preferred actors over their network?
Chris Villarreal:
I think that’s really the challenge for regulation, is to balance that. One thing I want to make clear from what I say on Twitter is that when I talk about the market, and if we only had better market access, I don’t mean to equate market with no regulation. I think that’s a misnomer. So how does the role of the regulator as it applies to overseeing electric system evolve along with it? And I think that might be the bigger challenge, is ensuring that the pace of regulation changes in such a way that these network effects and network benefits are enabled and are not just simply repackaged from old ways of regulating, putting the old ways of regulating on top of new systems.
Chris Villarreal:
And how we address that I think is going to be the bigger challenge and how do we get utilities to evolve with it because utilities will evolve. [inaudible 00:49:22] interest to evolve. But whether the regulator evolves along with it to ensure fair and equitable [inaudible 00:49:30] access to these systems, I think that’s going to be a bigger challenge and that’s where groups need to come together to ensure that the regulators that get appointed to these positions understand the transition and are prepared to evolve along with it. I was going to add that their perverse incentive is all over the place, especially in tax code, right?
Chris Villarreal:
So two examples. One, my mom was a 411 operator for Pacific Bell, and her keyboard was not a QWERTY keyboard, it’s the ABC keyboard. The QWERTY keyboard got paid, was categorized as a secretary at a certain pay rate and Pacific Bell doesn’t want to pay all their 411 operators at a secretary rate, so they created a new keyboard that could categorize them as a different worker class. The second example, a decade ago, so I was reading an article about delivery trucks. The majority of delivery trucks like the big Mercedes van delivery trucks, at least 10 years ago, because of the way tariffs are written, they actually came to US as passenger vans because passenger vans were taxed at a lower rate than the delivery trucks.
Chris Villarreal:
So the companies would buy all these passenger vans, [inaudible 00:50:42] in the United States, they got off the boat there, they were taxed, they pay the tariff and they’re driven like a mile to the next place and all of the seats are ripped out and turned into delivery trucks. Because Mercedes was building all these big white vans, they are all passenger vans in the Europe, but in the US, they are great delivery trucks. But because passenger vans were taxed at a lower rate, they all came there and it was worth the effort to just remove all the seats and turn them into delivery trucks. The perverse incentives are all over the place and how you feel about that, I guess, depends on the issue that you’re interested in.
John Farrell:
It’s a good reminder though, I think no matter what our good intentions are from a legislative or regulatory perspective, it’s hard to avoid doing that sometimes because people are going to innovate and be creative. And they’re going to notice that variance in tax rate or they’re going to notice that qualification regarding keyboards and they’re going to mess with it if there’s an incentive to do that. Hard for me to imagine that the productivity impact of sticking someone on an ABC keyboard [inaudible 00:51:47] QWERTY keyboard was worth it, but that’s hilarious.
Chris Villarreal:
There’s a whole roomful of foreign operators all on ABC keyboards.
John Farrell:
Even though they made those. My goodness, I just want to thank you a lot for taking the time to chat with me about utility platforms and regulation and ROFR. I’m hopeful that we can put that little segment about ROFR all over the internet, so people understand what’s going on with that. That’s really interesting to delve into all these little hidden corners of this missing monopoly conversation and to think about how we can, with the right regulators, as you say, restructure this market to work it a little bit better for everybody. So thanks again for joining me for this conversation.
Chris Villarreal:
Anytime, John. Really appreciate it.
Jess Del Fiacco:
Thank you for tuning in to this episode of The Building Local Power Podcast from the Institute for Local Self-Reliance. You can find links to everything discussed today by going to archive.ilsr.org and clicking on the show page for this episode. That’s archive.ilsr.org. While you’re there, you can also sign up from one of our newsletters and connect with us on social media. We hope you’ll also take the opportunity to help us out with a gift that helps produce this very podcast and supports the research we make available for free on our website.
Jess Del Fiacco:
Finally, we ask that you let us know how we’re doing with a rating or review on Apple podcasts or wherever you find your podcasts. This show is produced by me, Jess Del Fiacco and edited by Drew Birschbach. Our theme music is Funk Interlude by Dysfunction_AL. For the Institute for Local Self-Reliance, I’m Jess Del Fiacco and I hope to join us again in two weeks for the next episode of Building Local Power.

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54 min
September 30, 2021Chuck Marohn Explains What’s Wrong With America’s Roads
On this episode of Building Local Power, host Jess Del Fiacco and ILSR Co-Director Stacy Mitchell interview Chuck Marohn, President of Strong Towns. Chuck is also the author of the new book Confessions of a Recovering Engineer: Transportation for a Strong Town, which explores what conventional transportation planning is costing our communities.
Highlights of the conversation include:
How Chuck’s background in engineering and planning informed the book.
How conventional transportation planning values disregard the complexity of human behavior and end up negatively impacting safety, economic growth, and community.
How flawed transportation policy allowed big box retailers and chains to take over communities and why good street design could revive Main Street.
Streets, roads, and “stroads” — and the key design decisions that can help communities flourish.
The small steps city leaders can take to start rethinking transportation policy.

“The idea of roads and streets is really to put the focus back on what are we trying to accomplish with our transportation system. On a road we’re trying to move people quickly between two places. On a street, we’re trying to create wealth. We’re trying to create a place. We’re trying to create someplace that people want to be, a productive place where we can live, have economics, have commerce, have entertainment, have high quality of life. A street is not conducive to fast throughput and a road is not conducive to development to things that slow things down.”
“Congestion is actually our greatest ally if we want to build great places, if we want to build local economies, it will actually drive the outcomes we want to see. And so the best places in America, the places that have I think the best economics, the best local small business options, are all places where you have overwhelming levels of congestion combined with… a more flexible development framework where people can actually then respond to these local needs by building stuff, to serve their neighbors.”

Learn more about Confessions of a Recovering Engineer and check out free resources here.

Related Resources
Transcript
Jess Del Fiacco:
Hello, and welcome to Building Local Power. A podcast dedicated to thought provoking conversations about how we can challenge corporate monopolies and expand the power of people to shape their own future. I’m [Jess 00:00:18] Del Fiacco, the host of Building Local Power and communications manager here at the Institute for Local Self-Reliance.
Jess Del Fiacco:
For more than 45 years, ILSR has worked to build thriving, equitable communities where power, wealth, and accountability remain in local hands. And welcome to today’s show. I’m here with my colleague, Stacy Mitchell, who is one of ILSR co-directors. And we are joined by Chuck Mahron, who is the president of Small Towns. Small Towns is an organization that is rethinking how we build our communities. And Chuck is the author of a new book called Confessions of a Recovering Engineer:Transportation for a Strong Town. Chuck, welcome to the show. We’re very happy to have you.
Chuck Marohn:
Hey, thank you. It’s really nice to be here. I love the work that you all do and it’s exciting to be able to chat.
Stacy:
We’re such big fans of Strong Towns too. So it’s awesome to have you.
Chuck Marohn:
Yeah. Thank you. I know we have so much in common and so much overlap and I really appreciated like everything that you guys have put out since I’ve become aware of the work you’re doing. So yeah, this might be a love Fest for a while, but that’s fine. That’s fine. We can mutually admire each other.
Jess Del Fiacco:
So to get us started, I just wanted to ask, and if you got a little bit about your background, I mean, you were trained as a transportation engineer and this book is essentially your confession, you are criticizing your critique of the whole profession. What’s that all about?
Chuck Marohn:
Yeah, well, it’s like a cheaper than therapy, right? No, yeah, my undergraduate degree is in civil engineering and transportation is a sub-part of that. I certainly did some transportation engineering in addition to all the other kind of municipal level engineering that I did in order to get my license. You have to work for four years as an engineer in training, and then you can take a test and get your license. And I went through that whole process. I had the opportunity to go back to graduate school after having received my license and worked for a time as a civil engineer.
Chuck Marohn:
And I went back and got a planning degree, and I think it’s this strange combination. I only know a few others in the country that have an engineer and a planning degree. They seem to people on the outside there should be a lot more because they’re both building cities, but one is a very right brain activity and one’s a very left brain activity.
Chuck Marohn:
And they really not only are very different pursuits, but intellectually they just confront and deal with a very different set of questions with a much different set of priors. So I think having both of those experiences and both of that background has made me a little strange and not really fit into either very well. Like I said, this book and Strong Towns really is cheaper than therapy for me, it’s a way that I’ve been able to work through a lot of conflicting thoughts and ideas, but it also has given me, I think, a perspective that has allowed me to be able to question some of the priors of the engineering profession and really reach some understandings that my colleagues don’t get an opportunity to wrestle with the way that I’ve been afforded the luxury to.
Stacy:
What are some of those priors? I mean, what are some of the things that the profession holds is like bedrock assumptions and principles that you think they ought to question?
Chuck Marohn:
The two that I focus on the most and the two that I think are the most impactful is just this dedication to the speed of traffic and the volume of traffic as being a key to mobility and mobility than being a key to economic growth and success and prosperity. I try to understand how we got here by looking at my own home region. I live in Brainerd, Minnesota. It’s a couple hours North of Minneapolis, St. Paul. And if I talk to my dad who’s turned 70 this year, he said that when he was young, it would have taken them six hours to drive down to Minneapolis, Saint Paul.
Chuck Marohn:
My grandfather grew up during the great depression. He would not have driven down to Minneapolis, Saint Paul. He would have taken a train or he would have gotten on a Steamboat maybe in the summer, or what have you, and kind of down the Mississippi river, it would have been a very long trip for him.
Chuck Marohn:
This would not have been very quick at all. I like to go see the Minnesota Twins. I take a lot of plane trips. It’s like two and a quarter, two and a half hours for me to get to Minneapolis. You look at that transformation and engineer’s brought us that. The whole highway building era about connecting places that were very distant from each other, shrinking our world, allowing us to trade goods and services and ideas back and forth was absolutely revolutionary.
Chuck Marohn:
And I think a lot of the insights that came out of doing that are really important. There was a direct correlation between the speed and the volume that we could move traffic at. And that overall prosperity. The problem is that playbook doesn’t work. It doesn’t work at the neighborhood level. So for me to get to Minneapolis, two hours quicker is revolutionary, for me to get to the Big Box Store on the edge of town 30 seconds quicker is nothing, but it comes at this enormous cost.
Chuck Marohn:
The other place that it has stopped working is that the idea that I can get from Brainerd to Minneapolis in two hours and 15 minutes, but then we go and add a third lane and a fourth lane and a fifth lane at the cost of billions of dollars so that I can get there in two hours and 12 minutes or two hours and 10 again, vastly diminishing returns. So I think what has happened is that the engineering profession learn these lessons very early. If we can move people quickly across great distance and move a lot of people, we could do a lot of good, but there’s that understanding it’s not applying anymore. And we’ve not learned that we’ve not moved on and adapted to a new reality.
Jess Del Fiacco:
Something you write in the book pretty early on about pedestrians saying that the pedestrians experience is at best an afterthought and at worst a nuisance to planning and street design, which kind of really struck me. And I was wondering if you could talk a little bit about that, about the pedestrian experience, and then some of the, you say that like reducing speed limits, for example, isn’t necessarily a way to improve road safety, but what are ways that we can change?
Chuck Marohn:
Yeah. So Jess, I’m going to do something and this is not to correct you in a sense, but to kind of push back a little bit, because I’m pretty sure that I did not use the word pedestrian because I’m very intentional about when I use the word pedestrian. I always talk about people as people or humans. Pedestrian is almost a term I’m not going to say a degrading term, but it’s an engineering term used to put people in their place, in the hierarchy of transportation importance. We have cars, we have transit of some type buses, train. And then we have bikers and pedestrians, which are a different version of a transportation device. And I kind of feel like it’s an antiseptic way of viewing, what is a human, what is you and me? What is a person?
Chuck Marohn:
And I think I’m very intentional about divorcing and using the language to divorce this antiseptic notion to try to actually get as close to what we’re talking about. We’re talking about real people. I do think that a lot of times to get at your question, engineers are comfortable with trade-offs that treat humans as pedestrians.
Chuck Marohn:
And they’ll say, “Okay, we have the priority here on this street is moving vehicles. And we will also then accommodate pedestrians in this way I use as a device in the book, this tragic crash that occurred on State Street in Springfield.” And if you take the standard engineering analysis, what happened is the mom with these two young children failed to walk, basically a football field in the rain down to a light late at night, wait for their turn to cross, then cross and then walk a football field back up in the rain in the cold December night and to get to their parked vehicle.
Chuck Marohn:
Instead they chose a shorter route, a more logical route and wound up with one of them dead as a result. I think the traditional engineering analysis of this would say that the mom made a mistake. The mom should have followed the rules as a pedestrian and done what our theoretical mapping on the sheets that a pedestrian should do in this instance. But the reality is that Destiny Gonzales and her mom Sagaria were not pedestrians. They were humans and they made human choices within human habitat that are very logical, very easy to predict because we could see all kinds of other people making the same choice, given the same set of circumstances.
Chuck Marohn:
I think that a big part of making things safe for people is engineers recognizing that humans are complex and they do weird things and they do strange things and they do things that are not always predictable and that’s okay, but it should change our design from being more… as if we’re dealing with automatons and kind of more respectful of the fact that humanity is messy.
Stacy:
I think this in some ways goes back to what you were saying about your transportation engineers made these big improvements in terms of speed, but never really rethought that as the only goal. And there’s this part of the book that I found to be really kind of like just an aha moment for me, where you talk about this notion of the hierarchy of roads.
Stacy:
So we have highways and that with big arterials, and I forget how it works all the way down to sort of the neighborhood street level and the impression, and maybe I misunderstand how it works, but the idea is that we want to maximize the ability of people to transport through that network up through the biggest and we want to keep growing the size of each of those pieces in that hierarchy to maximize throughput, maximize cart throughput in particular and speeds and so on.
Stacy:
And you say that that is a completely the wrong thing. We should not have a hierarchy of roads instead of we should have two things. We should either have a road or a street and everything should be one or the other. And I found this fascinating. Can you talk about that?
Chuck Marohn:
Yeah, I think it’s the most like deeply subversive insight in the book because it really is designed to change our entire way of framing things. I kind of joke in the book, but it’s not really a joke. I kind of joke that engineers look at the system the way a parent looks at a child. We start with an infant and then we go to a toddler and then an adolescent, and you’re kind of cheering every step of the way. And an engineer’s start with a small street or a small intersection in the hopes that someday we’ll get enough traffic and enough stuff going on so we can grow it to the next level and to the next level and to the next level. And there’s some like victory achieved when you’ve been able to nurture a street all the way from mere local status all the way up to arterial so you’ve accomplished something great.
Chuck Marohn:
Yeah. The reality is that the hierarchical system makes no sense from an engineering standpoint, every engineer takes Hydrology 101 and learns about how a watershed works and how when water empties into a Brook in a stream and then into a small river. And then they come together to form major tributaries that when you get all this like rain throughout the watershed, if it’s persistent enough or if it’s intense enough, you will get a flood at the tributary. And so we grasp this and we learn how to hold water back and retain water and allow water to soak in at the source so that we don’t get these huge, expensive floods in our hydrology system.
Chuck Marohn:
We finished hydrology one, and then we walk up the hallway to Traffic 101, and they teach us how to design hierarchical networks, where local streets pour into collector streets, pour into arterials and then major arterials.
Chuck Marohn:
And then they’re like, “Oh my Gosh, how did we get this flood?” Well, I have no idea. Let’s widen out the major arterial. Let’s widen all this stuff out as if the lessons of holding things back and helping them absorb at the source is somehow elusive to us. We call these systems efficient. And the only way they’re really efficient is they’re efficient in our ability to construct them over and over.
Chuck Marohn:
And I feel like that is the deep insight here of the engineering profession is that in the 1950s and 1960s, what we asked engineers to do was to transform an entire continent very quickly and to rapidly build out an automobile system. And the prime objective of that system was to repeat itself over and over and over again. And so what you get from engineers is you get standards, you get typical approaches, you get standard plates of here’s, how you build an intersection. Here’s how you put in a traffic signal. Here’s how you build a street.
Chuck Marohn:
And that worked really well for building something out. That type of approach does not work well for maturing something in place. And so if your response to the flood of traffic congestion that is created by this hierarchical road network, I mean, you literally like manufacturer a flood every day in every city. If your cure to that in the 1950s and sixties is to add more capacity, maybe you can get away with that for a while. Maybe that works for awhile, but at some point, and I would debate whether it worked ever, but at some point it very clearly stops working.
Chuck Marohn:
And the feedback loops that you get don’t respond in the way that they responded when this was a young system. You wind up having to, as they did on State Street Springfield gut your downtown, make it less of a place you want to be, make it less of a productive place, make it less of a successful place in order so that can move through it very quickly to get to the downtown.
Chuck Marohn:
Like it’s a nonsense way of thinking. And so the idea of roads and streets is really to put the focus back on what are we trying to accomplish with our transportation system. On a road we’re trying to move people quickly between two places. On a street, we’re trying to create wealth. We’re trying to create a place, We’re trying to create someplace that people want to be a productive place where we can live, have economics, have commerce, have entertainment, have high quality of life. A street is not conducive to fast throughput and a road is not conducive to development to things that slow things down. And so for a public official making decisions to me, it’s a very easy one to start the equation to start the conversation.
Chuck Marohn:
Are we trying to build a place here or are we trying to move cars quickly? It’s not a matter of doing both. It’s really a matter of choosing one or the other. And if you choose one or the other, the direction then becomes very clear and very simple. Here’s how we do this successfully. And like I said, I think that’s the most subversive part of the whole thing, because it takes what engineers have wrapped into this big technical process of evaluating street hierarchical networks and makes it just a very simple, common sense decision that any elected official in any group of citizens getting together can answer for themselves. Are we trying to build a place or are we trying to get between two places, that should dictate exactly how we approach this transportation investment?
Stacy:
So you say we have a lot of doing in between this notion of [stroads 00:16:33]?
Chuck Marohn:
Yeah.
Stacy:
Yeah. So, I guess, I want to get at the implications of the road street framework. So if we did that, if there was a brand new state that suddenly appeared on the horizon and was being created from the ground up and people building that state either did roads, or they did streets and not the, in between, how would that place be different from what we all experience right now?
Chuck Marohn:
Well, in a myriad of ways. And it’s hard to imagine that because I spent a lot of my time thinking about how we retrofit our current system, but let’s go down that route for a second, because I think the first thing is that you want people to be able to travel great distances at speed. The idea that I can get from my house to Minneapolis, St. Paul in two hours and 15 minutes is a huge benefit, to me it’s a huge benefit to everyone here. It’s a huge benefit to Minneapolis. That exchange across great distances really important.
Chuck Marohn:
And so I think in an ideal sense, you would have the system that was envisioned by Eisenhower originally by the planners developing the early interstates, which is that the interstates would go around cities and cities would be a place of commerce, a place of economy, a place for people.
Chuck Marohn:
And that would be a framework of streets that would create that place. It could mature over time and become more and more intense, what have you, but it would be a discreet place, but the highways themselves, or the major transportation routes themselves would go between places. It would not eliminate the idea of a suburb, but it would eliminate the idea of an auto suburb or a commuter suburb, commuter patterns. And I think that’s kind of the worst manifestation of what we’ve done. There’s a sense that suburbs are bad. And I really don’t think suburbs are bad. Cities have always had suburbs. They’ve always had suburban development, but suburban development was like the new place out on the edge. It was the kind of incremental place that when it fully matured would be a real neighborhood, just like the stuff further up the street.
Chuck Marohn:
You were essentially copying the urban pattern out incrementally and allowing it to mature. What we did in the 1950s and this whole Strode idea, the idea that we can have streets and roads kind of in the same framework, I have our cake and eat it too, was based on this premise that people should live on the edge of cities in places that were purely residential or purely like one format and have this hierarchical road network deliver them in then to the center core of the city, as part of these large federal transportation investments.
Chuck Marohn:
That is an approach that bankrupts our cities. It creates enormous liabilities for infrastructure, for transportation. It forces upon families and businesses, a huge anti in terms of financial costs, not just to enter into that system, but then to sustain that system over time, suburban auto oriented, suburban development commuter lifestyle patterns are financially really high burn ways to live. So this is a huge ongoing burden. And then it accelerates, I think this is the part that really intersects with the work that you guys do.
Chuck Marohn:
It accelerates a winner take all style of economy. So instead of having kind of an advantage for neighborhood level businesses in neighborhoods that are connected and part of a larger region, what you do is you create massive advantages for the one regional entity that can get everyone to drive to them. And you made it a huge competitive disadvantage for the neighborhood. If we started out with just roads and streets as two alternatives, I don’t think we would have any of that.
Chuck Marohn:
We would not have commuter suburbs and we would not have the whole kind of auto oriented lifestyle that would go with it. We would still have cars, and we would use cars, I think within a street road framework to get far distances very quickly, or to make modest local trips. But we’d also locally, lots of trips we could do walking, lots of trips we could do biking, lots of options and alternatives for deploying transit really well. And we’d have much different cities.
Stacy:
Maybe Sam Walton’s errors would be running a small five and dime and [Bento Arkansas 00:21:05] instead of a behemoth that has reordered our whole economy to its own ends.
Chuck Marohn:
Well, it’s funny because I think that you would still, I mean, I point out, and I know you, and I’ve talked about this. We always had like the Sears catalog and the Montgomery Ward’s catalog. I lived in a small town and I remember as a kid, I would order all my school clothes. And all my friends did too, from the JC Penny’s Catalog, because you had to drive a long ways to go to a shopping mall.
Chuck Marohn:
So there were many Clothiers here, but not a lot in the kids niche. And so we’d all show up to school with the same clothes on the first day because we all ordered from the same catalog.
Chuck Marohn:
You would have had globalization and you would have had like efficiencies of scale and you would have had all the things that we kind of point to in a theoretical economic a Ricardo kind of framework of this is a way of doing trade internationally.
Chuck Marohn:
But what you wouldn’t have is the neighborhood destruction of it. You could still have neighborhood stores and neighborhood restaurants and neighborhood retailers, and they would be competitive with this other system. I’ve been fortunate enough to travel a lot. And one of the fascinating things that you find is that the larger and more urbanized a city gets, I think the assumption of a lot of people is that the more corporate it becomes and the reality is it’s the opposite.
Chuck Marohn:
I sit here in my little hometown and we have Applebee’s, we have Taco Bell, we have McDonald’s, we have Arby’s. We have every Big Box Store. I go to Minneapolis and I can go to any neighborhood and find neighborhood groceries, neighborhood restaurants, all that kind of fine grain that doesn’t exist here. And the reason it exists there and not here is not because of scale it’s because of friction. It takes a lot more effort to get in your car and drive around and get to those places than it does here. I live eight miles from the Applebee’s. It will take me eight minutes to get there. If I lived eight miles from an Applebee’s in the heart of Minneapolis, it would take me 45 minutes to get there half an hour to get there. And that friction is the opposite of what engineers are trying to create.
Chuck Marohn:
I mean, the theory of their system is that mobility creates economic good. That’s true over great distance, but over short distance, it’s the opposite. It creates consolidation. It doesn’t create thick, wealthy, prosperous neighbors.
Jess Del Fiacco:
We’re going to continue with this conversation after a short break. Thanks for listening to our show. If you’re enjoying my conversation with Chuck and Stacy, I hope you consider heading over to archive.ilsr.org/donate to help support our work. Your donation directly supports this podcast, as well as all of work we do here at ILSR. You can visit archive.ilsr.org/donate to make a contribution today. Any amount is sincerely appreciated. Thanks for listening. Now, back to the show.
Jess Del Fiacco:
Just talk a little bit more about that and maybe if you could share some specific examples of places you’ve seen, who are either currently grappling with these challenges or have successfully reimagined transportation whether it’s on small scale neighborhood or citywide successfully?
Chuck Marohn:
It’s a good question. It’s hard to answer in any comprehensive way. I was in Manhattan like five or six years ago, and this is the first time I saw this and I maybe will out myself as a real small town hick, but I grew up on a farm. We had cows, we had pigs, we had chickens, I ate farm fresh vegetables all year round. We had stuff from the farm in fact, I’ll say this, and this will maybe make some of your listeners roll their eyes, but it was a big treat for us to go to McDonald’s because it was like, we never did anything like that. It was like a big, oh my Gosh, we’re going to go eat at McDonald’s. Wow, good. We don’t have to have steak and pork chops again because that was like literally our food. Since I’ve been an adult I’ve not lived on the farm and I’ve adopted the American lifestyle, particularly American lifestyle in a small town, which is very different.
Chuck Marohn:
So I’m in Manhattan with some friends and we go to a restaurant just like there’s dozens of these in every neighborhood we just went to one. And all the food on the menu was locally grown. I never would’ve dreamed this. And I started to look at the menu, went through and I started to talk and I did some research on this and they were truly getting all of their stuff from within 60 miles of Manhattan, they had contracted with farmers and stuff and all this, it was bizarre to me because I literally lived two miles from the farm I grew up on. My parents still live there. I know lots of farmers. I know lots of people. I don’t eat any locally grown food and it’s not that there’s not tons of locally grown food here, there’s tons of locally grown food.
Chuck Marohn:
It’s just all corporate done and it’s all shipped out and it’s all processed somewhere else and it all gets shipped around the globe. It doesn’t actually like end up here except in this very roundabout way. I look at that in New York and I look at what it took to make that come about. And I think some of us might say, well, it’s more affluent people and it’s market preferences and it’s, those things. But the reality is that we have shaped my city to make it really easy for McDonald’s and by extension all these other franchises and what have you to drive a big, huge semi right in front of my house, down the neighborhood street, back up an alley dock to the McDonald’s store, unload their pallet of things and then drive on 20 miles to the next McDonald’s and do that over and over and over again.
Chuck Marohn:
And we’ve made it like so hyper efficient for them to do that, that they can sell an egg McMuffin for cheaper than the local diner can create a similar locally produced thing for us. When I look at that transaction, what I see is that we, my city has spent an inordinate sum of money, a vast sum of money widening out our streets, making them friendly for semi-truck tractors to drive through, making it very easy for the traffic to move quickly through. And we’ve done this in a way that makes it difficult for me to walk to the local diner. That’s four blocks away, that makes it really, really easy for McDonald’s to have a top down corporate strategy where they can bring the efficient semis in all over, get to the farm, pick up the eggs from 20 different farmers, bring them to a central place, have them process then and shipped out on a pallet so like can get your egg McMuffin free made, and just got it heated up at the store. We’ve wired our system that way.
Chuck Marohn:
And so Manhattan becomes like an example just because of the size and the friction of transportation there. I mean, I’ve been on buses in Manhattan where you just get off and walk, you get out of your Uber and walk because it’s way faster to walk than to sit in traffic there. And what that’s done is it’s changed what economically is possible and what economically makes sense in a way where in most of the rest of the country, you just don’t have. I read a whole chapter in there about traffic congestion. And again, I think this is a subversive take, but to me it’s the most radical and it’s the most impactful. And if people grasp it, it changes everything.
Chuck Marohn:
The idea that congestion is not our greatest enemy. Congestion is actually our greatest ally if we want to build great places, if we want to build local economies, it will actually drive the outcomes we want to see. And so the best places in America, the places that have I think the best economics, the best local small business options are all places where you have overwhelming levels of congestion combined with in a sense like a flexible, or a more flexible development framework where people can actually then respond to these local needs by building stuff, to serve their neighbors. That you see in places like San Francisco and neighborhoods in Chicago. You see it in some very poor places some of the neighborhoods of Memphis, Tennessee, where I’m going to be in Treeport next week, you can see some of this in places like that in small bits of the community. But as a broad experience, we don’t have this in throughout most of North America and we could very easily.
Stacy:
Well on that note, if you were, as you often do talking to community leaders if you had a set of city officials who were one over by the book, what would be the things that they should start doing? What should they, I love this idea by the way of congestion and friction being things that we should want, I think that’s a really great framework. So how should cities think about implementing that and other kinds of principles?
Chuck Marohn:
I feel like there’s two things philosophically that local leaders specifically can do. I think the first one is to force a discipline on yourself that rejects framing all of your local problems as transportation problems. There’s the old saying, why did you Rob the bank? Because that’s where the money is. Why do we frame every problem we have in terms of transportation? Because that’s where the money is.
Chuck Marohn:
That’s where you can get federal money. That’s where you can get state money. That’s where these huge pots of capital flow down to local governments. And so what tends to happen is regardless of what the problem is, I mean, there was a story last week about governor who got COVID relief funds and they’re going to use it to widen lanes because that will help people get to the hospital easier. Some stupid thing that made no sense, but it made sense to them.
Chuck Marohn:
In the framework, I’ve seen so many places where they’re like we have a public health epidemic here. We have an obesity epidemic. Well, what do we need to do? Well let’s find a transportation problem that will solve this. Let’s go build some recreational trails because why? Because there’s money for recreational trail. We want to get small businesses. What should we do for small businesses? Well, let’s do a street scape project because we can get federal money to put in decorative lights and wider sidewalks.
Chuck Marohn:
I’m not suggesting that recreational trails and decorative lights are bad things, but it’s not the right to your problem. We tend to look at every problem as a transportation problem because we have money for transportation. And I think if we broadened our pallet and we said, let’s look at this problem more holistically, we would come up with a lot better solutions than just transportation. Along those lines, the second thing that I would recommend to any local official is this four step approach that we’ve developed to making public investments as kind of the way to approach what is a priority project for our community.
Chuck Marohn:
And that four step approach is very simple. I mean the first step is to go out and observe with humility, where people in the community struggle to make use of what has already been built. Where are people having a difficult time crossing the street? Where are people having a difficult time getting to where they want to go? Where are people primarily outside of an automobile, having a hard time using the city as we’ve built it today? If you start with that humble observing, the second step then is to ask a question, what is the smallest thing we can do right now with the stuff we have on hand to make that struggle a little bit easier for people?
Chuck Marohn:
And what’s the thing we can do with paint and straw bales and cones to make whatever this problem we’re seeing, we are observing to make that a little bit easier. The third step then is to waste no time, just go out and do it, like don’t form committees and study it for years. Just go do it. And then the fourth step is to repeat that process over and over. And it’s this, I think as public officials, we can get stuck sometimes because if you look at State Street in Springfield, the city council like all knows, this is a problem. Everybody in the community knows this crossing is a problem.
Chuck Marohn:
There have been multiple people hit, killed injured at this spot. Everybody knows it’s a problem. But when you get to talking about what to do about it, all of a sudden the solution becomes a big transportation one. It’s got years of bureaucracy, years of like grinding standards and you enter the whole paradigm of engineering and reality and in the process, more people die. If you went out there with cones and straw pills and paint and said, let’s try some stuff to make this a little bit easier. We know this is an urgent problem let’s try to figure out what could work. You could very rapidly come up with a series of interventions and solutions that over time you could improve upon and make better. That would actually deal with that.
Chuck Marohn:
And you could do that, not just on State Street, but throughout every neighborhood in the community on a very low budget, start to make things better. And the fascinating thing is once you do that, this miracle happens, which is people start to react. So that marginal person, I don’t mean marginal as like unworthy, but the person who would normally walk, but has been marginalized has been put to the side and they don’t walk because they feel it’s too dangerous. When you make that little improvement, maybe that’s the person who now starts to walk and then you discover more issues in the system and you start to build on it and what you do is you slide over that threshold and so more and more people start to bike walk.
Chuck Marohn:
And the thing about safety is that if you want to build a safe biking and walking system, what you need is more people, you need a culture of biking and walking. You need more people out doing it. So this whole thing creates feedback loops that build on themselves. If we can just discipline ourselves to take those modest steps based on where people struggle and allow those to direct us and guide us as opposed to with the big transportation project, we think we can go out and get a grant for, or a developer money or Wall Street money to do.
Stacy:
You also say we should get rid of the routine traffic stop that that’s not the solution to safety and as we’ve all seen is actually a tool of racial oppression and often leads to violence. Talk about that. I mean, I think a lot of cities would find that hard advice to follow.
Chuck Marohn:
Yeah. Yeah. I don’t think there’s anything I’ve written that has gotten me more angry feedback than the series of articles I’ve written on that and I’m going to be interested to see how people react to it within the context of the book. In and of itself, the idea seems crazy and the routine traffic stop. Why would we do that? And every time that it comes up, I get a list of people who send me news articles that in a routine traffic stop, they found this drug king pen from whatever or they discovered this person who was molesting children.
Chuck Marohn:
There’s always some story that people say, well, if we didn’t do the routine traffic stop, we would not have found Timothy McVey or something like that as if there was no other mechanism we would ever have caught the Oklahoma City bomber. Where I start from this is not with a lens on racial injustice per se. I get there and I think I’ve grown to really understand and appreciate the impact, even though as a 40 year old white guy, it’s not the thing that I directly feel, but I start with a recognition that traffic laws are arbitrarily enforced and not really have any relation to actual traffic safety. When you get on a highway and I’m going to admit something, you two don’t have to admit this, but when I get on a highway on most highways in this country, particularly where I live, where there’s no traffic. I mean, when I get driving in the Minneapolis St. Paul airport, I don’t run into any cars for the first 45 minutes of my trip.
Chuck Marohn:
I mean, literally if, if I leave the house at 5:00 in the morning to get to an airplane in the morning, there’s nobody. You could literally go as fast as you wanted to. There is no, the highways are wide, they’re straight, the curves are very gentle and sloping. I could go 100 miles an hour and have no danger at all in terms of myself, what prevents me from doing that is the speed limit. And so when I get on the highway, if the speed limit is 65, I will set my cruise control to 73 so slightly over the speed limit. But at a degree, I know I’m not going to get pulled over for and then I will drive and I tend to drive the speed of everybody else because everybody else pretty much does this.
Chuck Marohn:
If you actually study yourself and your own behavior, you will find that as a driver, you routinely violate technical rules of driving. Whether it is accelerating through a yellow light, not coming to a complete, absolute stop arresting all forward progress at a stop sign, whether it is like accelerating too quickly or encroaching too closely on the edge, you will have many, many technical violations of the law that you experience every single day. You can do these in your brain because you and I know that going 73 on a interstate highway, when there’s nobody else around is a pretty like victimless crime, right? Like I don’t even think I’m harming myself, let alone everybody else.
Chuck Marohn:
There’s nobody else around me. The same thing with most infractions that people would do on a normal basis. We rationalize these to ourselves because we implicitly know that’s not, if you’re driving and you don’t have a current license tabs, you’re not taking anybody’s life into danger, you’re maybe violating something of the state, but you’re not doing anything that is going to harm anybody physically. If you go through the list of things that Philando Castile was pulled over for, and he’s the one who was shot in Falcon Heights, Minnesota, my home state back in 2015, 2016, somewhere in that timeframe. He had been pulled over something like 42 times.
Chuck Marohn:
And if you go through the list of things that he’s pulled over for, they’re things that all of us like routinely do all the time, but he was targeted and pulled over. Some people would say he was targeted because of his race. And I think that there’s likely a very strong correlation there, but it’s also very likely that he was just polar because he was in neighborhoods that were poor with the police targeting these poor neighborhoods. What we tend to see is that police spend inordinate amount of time in poorer neighborhoods than they do pulling over the soccer mom who doesn’t fully stop at the stop sign or the affluent doctor driving in who accelerates through the yellow light.
Chuck Mahron:
My insight or my premise, or I think the thing that I’ve come to grips with is that if we evenly distributed policing and equally distributed police tactics, we would pull over people all the time. I used to do speed studies for the DOT and you would just sit there and every person going by was speeding, every single one. If the police wanted to, they can pull anybody they want over at any time because traffic laws do not directly correlate with driver behavior. What I suggest and I think this would be like the healthiest thing we can do is to treat most, almost all infractions.
Chuck Marohn:
Everything that would be a non-urgent, non-life threatening type of infraction, the same way we treat parking tickets. I would automate it. I would snap a picture of their license plate. I would take a little video of them doing the infraction or whatever. If you’re driving without tabs, I would take a picture of your license and you would get a ticket in the mail. That’s the way that I would treat it because it’s the interaction with the police officer that is dangerous for the person in the car.
Chuck Marohn:
It’s also really, really dangerous for the police officer and it doesn’t do anything to improve traffic safety. What I would do instead is I would look at these infractions and say, where are people driving through red lights? Where are people taking illegal turns on red? Where are they not coming to a complete stop? Where are they operating in excess of the speed limit? And I would send my street design department out there and say, I want you to design the street so these kind of things aren’t happening. Because on almost every instance, it’s not an enforcement issue, it’s a design issue. And so if we can start to address these systematic problems through design, what we can end up with is actually a safer system.
Chuck Marohn:
It’s interesting because quite a few people in the last couple weeks, since the book has come out, have sent me stuff about wearing a tie because I note in the book that when I did consulting work in the early 2000s, in the late 1990s, I would be in a lot of these small towns that would have speed traps out on the edge. And if I was driving home from a meeting and I had a tie on, I would not get a speeding ticket. It didn’t matter like they would not give me a ticket.
Chuck Marohn:
And it’s because they were fishing for drunk drivers and they were fishing for irresponsible people or what, however you want to categorize. I was not their target fish, right? Like they were fishing for people by pulling people over, I was not what they were looking for. I didn’t write this in the book, but I played in bands. I played drums and up until my kids were born, I played music like for two or three weekends a month. And you’d be driving home from those gigs at 1:30 in the morning and I don’t drink so I was never drunk like I never had a problem, but I would get tickets all the time, I mean, I would get tickets then. Same exact thing, same exact circumstance, but I’m wearing like a musician’s clothes as opposed to a professional tie and collared shirt.
Chuck Marohn:
I recognize that that is not necessarily like police behavior as much as it is human behavior. Like we are wired, our brains are messed up and that we’re looking for something and when we find it, we reel it in and when we don’t, we let it go. And I think that if we want to overcome that, we can pretend that what we should do is like indoctrinate cops to think differently about things and maybe in some world that will work. I actually think we just need to redesign our system so that we don’t have these high stakes interactions.
Jess Del Fiacco:
I feel like that’s what, I mean, this whole conversation has been about, essentially that humans are going to behave in the way that they’re going to behave and we should build systems that work with that instead of fighting against it, right?
Chuck Marohn:
Yeah. And engineers know that too. I mean, I have a whole chapter on forgiving design. Engineers recognize that humans do certain things and that we can design systems, we can design our highways to forgive of the mistakes that they make. For some reason that knowledge was lost when we got into cities. And we can clearly see that when you widen out streets and put in clear zones and remove the trees, people drive fast. Why you would do that in a neighborhood street where you don’t want people to drive fast. To me is just professional malpractice. It’s exclusively utilizing the knowledge and insights you have in a way that is intellectually dishonest.
Jess Del Fiacco:
Well, thank you so much for this conversation. It has been fantastic. Encourage all of our listeners to check out your book, which again is called Confessions of a Recovering Engineer. We will have it linked in the show notes for this episode on our website. Stacy, thanks for being here and Chuck, thank you so much for joining us.
Chuck Marohn:
Thank you. If people go to the website, confessions.engineer, not only we have the book there, but we put a bunch of supplemental material. So there’s intersections we reference and videos we reference in the book and they’re all there. So you can go and get all of that stuff even if you don’t buy the book, it will probably be helpful for you.
Jess Del Fiacco:
Great.
Stacy:
That’s great. Thanks so much, Chuck. It’s always a pleasure to have you on the show and really appreciate all the good work that Strong Towns does.
Jess Del Fiacco:
Thank you. Likewise, I’m a deep fan and admirer, so it’s wonderful to get to chat with you guys. Thank you.
Jess Del Fiacco:
Thank you for tuning into this episode, the Building Local power Podcast from the Institute for Local Self-Reliance, you can find links to everything discussed today by going to archive.ilsr.org and click on the show page for this episode, that’s archive.ilsr.org. While you’re there, you can sign up for one of our newsletters connect with on social media. You can also take the opportunity to help us out with a gift that helps produce this very podcast and supports the research and resources we make available for free on our website.
Jess Del Fiacco:
Finally, we’d ask that you let us know how we’re doing with a rating or review and Apple Podcasts or wherever you find your podcasts. This show is produced by me, Jess Del Fiacco and edited by Drew Birschbach. Our theme music is Funk Interlude] by Dysfunction_Al. For the Institute for Local Self-Reliance, I’m Jess Del Fiacco. And I hope you join us again in two weeks for the next episode of Building Local Power.

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

About Building Local Power

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Building Local Power brings you thought-provoking stories and new ideas for breaking the hold of corporate monopolies and expanding the power of communities to chart their own futures. We deliver insights from trailblazing lawmakers, scholars, business leaders, and advocates. Plus, conversations with in-house experts at the Institute for Local Self-Reliance help reveal the patterns and policies that shape our economy and communities. These stories and conversations help map solutions that distribute power to everyday people.