Building Local Power

This week, we’re bringing you Building Local Power a little early in light of recent developments with the Sprint and T-Mobile merger. Host Chris Mitchell, interviews two telecommunications experts to get their take on the merger and its potential impact. First Chris talks to Gigi Sohn, a Distinguished Fellow at the Georgetown Law Institute for Technology Law & Policy. Chris also talks with Blair Levin, a Senior Fellow at the Brookings Institute. They discuss:

So, absolutely. I don’t recommend that people tune in and really try to follow this thing super closely. There’s better uses of your time. Following all of ILSR’s work, for instance, would be a better use of people’s time.

In those days, as I’m going to be dating myself, the issues were mostly around trying to promote diverse ownership of media and trying to make sure that broadcasters and cable operators served the public interest. The internet was really only a dream in scientists’ and academics’ eyes. It wasn’t until around 1998, 1999 where the internet started to become a thing. With it, my focus certainly shifted, because I was kind of tired of trying to make top-down command and control media behave, and saw the internet as a way to empower individuals. It does a lot of that. Obviously, there’s some other things we don’t like.

For Media Access Project, I went to the Ford Foundation where I started the funding program that now funds a lot of public interest advocates like me. And then, I started an organization called Public Knowledge, where I worked as the CEO for twelve years. And then, I went off to the FCC for three years to work for Chairman Wheeler. Since then, I’ve been a fellow at Georgetown. Again, a public advocate, but like a public advocate without an organization. I’m just out there, as my own little part of the resistance, trying to make sure that the internet stays open, that competition flourishes, and that people get to speak without gatekeepers getting in the way.

So if you take away Sprint … Okay. If you combine Sprint into T-Mobile, T-Mobile’s incentives change. They go from wanting to beat up on the big guys and compete for the value-conscious consumer with Sprint to wanting to be like the big guys. And in fact, the record at the Federal Communications Commission on this merger … And this merger now has been going on, the proceeding’s been going on for over a year. It’s a very long, drawn-out thing. And I’m happy to talk about the process, because the process at a minimum is weird, and at maximum is just wrong, quite honestly.

I do hear people say, “Well, Europe is a different market than the United States.” If anything, they think it’s smaller. So you would think that three would be okay, right? But even in those smaller markets, the shrinking from four players to three players have resulted in huge price increases. So yeah, we have a lot of evidence in that regard.

Again, even more compelling, the evidence on the record … Which, by the way, the merging companies don’t dispute. So what they say is, “Well, you’re going to get more for your money.” Right? So it’ll be a lower price per gig.

So, what we have here is a situation where unfortunately, for good or for ill, some people are reliant upon mobile for the foreseeable future. Look, I’m with you. I want everybody to be connected to fiber and to have gigabit speeds, but we are so far away from that. Maybe in 10 years, in 20 years we’re having a different conversation about mobile. But in 2019, the conversation we’re having is that I think about a third of poor families or more rely upon mobile broadband to do things like their homework, right? And to look for a job.

It’s not an ideal situation. I did a speed test. I was in Montgomery, Alabama, and I did a speed test on my mobile just for the heck of it. I was getting five megabits per second down and actually six up, which was interesting. I got more up than down. But those speeds are so poor. That’s the state of the market that we have today. It’s that low-income Americans rely on this slow service.

But one other thing I just wanted to ask regarding the potential of the merger. We don’t have time to go into all the details that I know you could talk about. But it does seem like Sprint and T-Mobile, in part because they’re the smaller ones, have historically been a little bit more innovative. And in having that merge, we could lose that.

Again, if Sprint goes away and T-Mobile would become just about as big in customer size. Verizon has about 110 million customers. AT&T a little under 100 million. This combination, depending on whether there are divestitures or not, would be again around 100 million. So all of a sudden, it’s of equal size and power to the other two. Do you think that the incentives are going to be to try to continue to undercut it? No. And it’s really important. So in the soap opera, that is this merger, you see that every time that there’s bad news for the merger, not only do Sprint and T-Mobile stocks go down, but Verizon and AT&T stocks go down. And while Wall Street is not necessarily magical, what it’s saying is that Wall Street believes that this merger is good for AT&T and Verizon because it will lead to greater coordination between the three companies and higher prices. In other words, T-Mobile will no longer be the feisty un-carrier trying to undercut those two companies, but they will work in concert with them.

The second weird thing that happened was that 14 States Attorneys General, including the Attorney General of the District of Columbia, which I live there, so I consider it a state, have sued. So they went ahead of the Department of Justice and they’re suing to block the merger. So that’s weird thing number two. Weird thing number three is that for the past, I’d say three weeks or so, three or four weeks, the Antitrust Division is trying to broker an agreement where they basically create a new, I call it like a Frankenstein monster, a new fourth carrier, right? Rather than block the merger, so we have four carriers already, rather than blocked the merger, and if Sprint wants to get out of the market, it could sell its assets to somebody else, is trying to kind of cobble, boost Mobile here and some Spectrum there, and sort of create this new fourth carrier.

And that’s just unprecedented, at least in this country. Supposedly, they did it in Italy. I’ve heard mixed things about whether it has succeeded or not, but it’s now been, like I said, three weeks, a month now that they’ve been trying to create this Frankenstein monster. It doesn’t seem to be happening, but depending on what report are you listened to, either, a deal is imminent or it’s never happening. So it’s just the whole thing is strange, most particularly the fact that three FCC Commissioners would come out in favor of a merger, when at least two of them have not even seen the decision. So the FTC Chairman has not sent around his decision approving the merger. And so that’s this really, that’s weird. And frankly, I think that’s wrong. I mean that’s highly irregular, but put the state’s lawsuit on top of that, and this Frankenstein process on top of that, and you have an unprecedented situation as far as merger review is concerned.

I’ve been urging making Delrahim to follow his predecessor and push away, as he applies pressure, push away whatever pressure is coming from the White House. Supposedly, there is, it’s not coming from the President, he’s got other things on his mind. And just do the right thing and join the states to block this merger. But we’ll see what happens.

Now, we’re going to get back to our discussion about the Sprint and T-Mobile merger, and we’re going to branch out a little bit, so let me bring Hibba back into it. Hibba, what did you think about the Gigi discussion? Did you have any takeaways from it?

And oddly enough, Gigi Sohn’s group, Public Knowledge, was really essential in making that happen. But I think, even a situation in which we lose this, the question will be how do we move on to the next thing? I think people really have to think about these issues as a longterm fight to build local power to stop monopoly. That means that even if we lose battles, we figure out how to move forward as best we can. Because what’s important is the longer issue of who has power in this country, our communities, or the big centralized businesses, or even centralized political power elsewhere. I think there’s tremendous hope to stop this merger, and I think that one of the things I’m hopeful about is that as we’re fighting these mergers, we are focused on how we can build the bigger movement for stopping monopoly in general.

If there’s an infrastructure plan in 2021, where government wants to try to create Smart infrastructure, that could drive investment. But as to the merger, I think there is a good case to be made that it would accelerate T-Mobile’s investment, and then that would accelerate AT&T and Verizon’s. But a big question mark to me is whether the current negotiations between T-Mobile and Dish result in a deal between the two of them, and then the deal will almost certainly pass scrutiny by the Department of Justice, then it has to get through the litigation with the states. But if all that happens and Dish is investing at the same time, particularly, because Dish will be investing in a brand new network without legacy and networks, that could accelerate investments.

The second thing I would say is Wall Street, and this is one reason I really actually enjoy working with Wall Street investors, is they actually care about real facts. They care about real data, they care about real things, and they’re not heavily influenced by soundbites, because if you make investment on the basis of sound bytes, you are going to lose all your money, and then you won’t have a job. On the other hand, there are people in Washington who always make decisions based on soundbites, and they managed to keep their job. So it’s a very different kind of situation, and I definitely prefer the environment in which there is a premium on actually being accurate.

In the telecom space, people like Craig Moffett have been around a very long time. They know the business. They’re not always hard on the stock picks because that’s about probability, but you can trust their numbers to be more accurate, and certainly they’re much more logical. When I read speeches by policy makers in Washington, I’m constantly finding logical flaws, flaws of data, etc. I don’t find that when I read competitors’ works, which I sometimes get to do.

So I would say if you read any one analyst, you’re probably better off than reading any speech by a government official.

One of the really interesting things that is not being discussed in the Sprint/T-Mobile deal, but I think is an interesting policy point, is there… One of the arguments T-Mobile makes is that Sprint can not survive as a 5G competitor. This is not a failing firm defense, but it’s what we refer to as a flailing firm defense, which is, as the industry moves forward, Sprint won’t be able to move forward. I think it’s an interesting question whether in a world of 5G, whether a lower priced 4G company would put some price constraints on 5G services. I don’t know the answer to that. Intuitively I think it would, but I think that’s what, that requires a lot more economic analysis before I would make an answer, but the question is, from a consumer perspective, if you had a choice of 4G at $40 or 5G at $80, which would you buy? And would that $40 4G service cause 5G prices to be lower?

My point is simply that the money has to come from the sale of services in the future. And by the way, as we’re talking about investment, there could be, the merger could lead to a short term significant investment, but maybe longer term it would slow down investment because if you have three players, traditionally you get less investment than if you have four players, so…

Another thing they talked about is autonomous vehicles. There was no car company that is building a car to be an autonomous vehicle that will depend on 5G. Zero. And the reason is very simple. You can’t build it unless you are 100% certain that by the time the car was on the road, 100% of all roads would have 5G service. That’s never going to happen. Are there some benefits of 5G to autonomous vehicles? Yeah. One of the really interesting things to me about 5G is that the wireless industry shows, and they were making reasonable business judgements, to use the friendliness of the FCC to get a little bit of money from the cities, about three billion dollars, which in the context of a 100 billion, 200 billion, 300 billion dollar capital expenditure for 5G, isn’t that much money. But they have now completely pissed off one of the largest potential buyers of 5G services with our cities. Cities are part one of the few institutions that have tremendous mobility needs, police, fire, trash pickup, etc. and can use 5G in all kinds of ways to improve the way traffic flows and other kinds of services. And instead of working with the cities to make that happen, they got the FCC to essentially do a wealth transfer in which cities have to turn over billions of dollars, a few billion dollars, and the companies don’t have to do anything.

I think this is a huge mistake for lots of different reasons. But one of them is cities should be one of the big drivers of 5G, and we’re not focused on that at all. Instead we’re focused on some things that actually don’t matter.

Currently you can’t sue your phone company if there’s some bad consequence of the service going down for five seconds. But the contracts, and I, like anyone else, I’ve never read the contract, but I’m 100% certain that AT&T and Verizon have something in that, or T-Mobile, have something in it that says they’re not liable. But that’s part of the reasons why it’s highly unlikely that a surgeon will rely on it, or… They’re going to rely on private networks that do make those kind of guarantees as opposed to a best efforts network that simply says well do our best.

It’s also a good reminder that we don’t know exactly what will happen as a result of different mergers. I have opposed many mergers, and they have not all been awful. And frankly, some of these mergers that we’ve seen, like AT&T/Time Warner, I think there’s less of a concern that AT&T will ruin the broadband market, although they’ll try, than that they’ll just destroy HBO as being a wonderful source of video content because of their terrible management. So these things have many different factors, and sometimes we get too focused on one or two of them, and it’s worth remembering that.

But I wanted to force a recommendation in here, even though we don’t always do that. And that’s because I’m very excited about a new report that we just put out about rural broadband. We did this report 18 months ago or so showing where co-ops are offering fiber optic service across the United States. We’ve updated that with the most recent data from the Federal Communications Commission. My colleagues, Katie, Hannah Trostle, and Hannah Bonestroo, did really great work showing how much growth there’s been, and oh boy, I’ll tell you, there’s actually more hope for high quality broadband in rural America than there are in our cities, frankly, where many of us are going to be stuck with the cable monopoly for a long time. So that’s up on our site. The report is called Cooperatives Fiberize Rural America, a Trusted Model for the Internet Era. And that will be something we link to, but also you can just find with a search and make sure you’re looking at the 2019 version.

Like this episode? Please help us reach a wider audience by rating Building Local Power on iTunes or wherever you find your podcasts. And please become a subscriber! If you missed our previous episodes make sure to bookmark our Building Local Power Podcast Homepage.

If you have show ideas or comments, please email us at [email protected]. Also, join the conversation by talking about #BuildingLocalPower on Twitter and Facebook!

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: pxhere

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Host Zach Freed is joined by Kevin Erickson, Director of the Future of Music Coalition. Zach and Kevin talk about the music industry’s role in the growing anti-monopoly movement and Kevin’s work at the intersection of music, community organizing and policy advocacy. They also discuss:

That accessibility piece is important, because our organization has roots in the DIY ethos of the modern independent music movement, and specifically, the punk communities here in DC. Among the early important folks working at the organization were Kristin Thomson and Jenny Toomey who played in a band called Tsunami, ran an independent record label called Simple Machines, and put out a famous zine called The Mechanic’s Guide To Putting Out Records that broke down the logistics of how a record is released: “Here’s how to contact the pressing plant, and here’s how mastering works, and here’s how distribution works here. Here’s how you can get your release physically into independent record shops around the country,” those kinds of practical things.

Probably hundreds of little independent labels put out their first seven-inch record because of that zine, and then later CDs. So we try and apply the same idea to policy, that you can learn as you go. It’s this iterative learning process, that you can share what you learn, and then you also can just sort of step up and claim your space in these policy conversations. Your voice already matters and you don’t need permission from anybody in a position of authority. You don’t need anyone’s approval to claim your voice.

So, after that, I ran an all-ages venue and art space in a small town, while working a music retail job and got to understand more of the mechanics and logistics of what was happening in the industry. Got to do some organizing work, trying to make it easier to start and run those kinds of spaces and make sure that more local communities had access to live music, especially for young people. And from there, got into the policy aspects of it because… starting at the local level. To make a space like that work, you kind of have to make friends with the local fire department, and take the mayor out to lunch. And then recognizing that people are facing the same kinds of policy dynamics in different local communities, that there can be shared strategies and resources, that we’re stronger working together.

And then ultimately I was invited to come out and speak at the Future of Music Coalition Conference and met a bunch of people out here, and not long after, joined up with the team. That was like 2012.

Historically, the industry has been exclusionary to different kinds of voices and different kinds of genres, and based on what the predominant market actors want to elevate. And I think similarly there’s this thread that’s about… that connects diversity of expression to diversity of business models. So there isn’t one business model for how you make a living as a musician. There’s always been lots of different business models, and today there are more than ever. And what’s important in the face of that is to have a range of choices to let communities and individual creators decide what kinds of business models work for them, rather than having one-size-fits-all models imposed from the top.

My first encounter with ILSR’s work was when I was living in a small town. And after I’d moved away from that small town, there was a controversy about big box stores coming in and wanting to drop a big, I’m not sure if it was a Walmart or what, in the town that I was living in. And we were thinking about, “Well, what possibilities does that preclude for independent retail, for the indie record store that I used to work at, and the impacts on the communities? And how could markets instead be structured? How could policy choices instead be structured to keep things community-centered?”

When that conversation shifts to music, we have observed consolidation in almost every part of the music industry, and in adjacent industries, and in almost every example that we can think of, that’s had negative implications for musicians themselves, both in terms of their ability to reach audiences on their own terms. And it’s had negative implications for musicians’ ability to earn fair and sustainable levels of compensation, for the working conditions that they’re operating under. And that’s in addition to other kinds of public interest harms and problems that consumers and music listeners, music fans, are facing.

The anti-monopoly piece and the idea that you want to structure markets in ways that maximize real choice and real diversity, it’s always been a thread that’s run through all of our historical work, like looking at digital economies, looking at policies like net neutrality, looking at the ticketing marketplace back when the Ticketmaster/Live Nation merger was under consideration. It’s always been a thread. But I think at this political moment where we have this growing, collective, all-hands-on-deck, national anti-monopoly moment, I think that there’s something really important that the music community can contribute, just because we’ve got so much direct experience with the impacts of ownership consolidation and monopolies in our own industries.

Thanks so much for tuning into this episode of Building Local Power. Now this is the part of the podcast where you usually hear something about a mattress company issuing loans for audiobooks or something like that, but that’s not really how it works here at ILSR. We’re a national organization that supports local economies, which means we don’t accept national advertising. Please consider making a donation to ILSR instead. Not only does your support underwrite this podcast, but it also helps produce all the resources and research we make available for free on our website, like the one we’re discussing today. Please take a minute and go to ILSR.org/donate. Any amount is welcome and sincerely appreciated. That’s ILSR.org/donate. Thank you so much. And now back to the interview.

So moving from the more broad summary level, thought we could spend some time talking about different sectors of the music industry, and to break it down and make it more real for our listeners. In terms of the label sector, how has that space undergone concentration, and what has that meant for musicians?

You’d run into some distribution bottlenecks, and you’d run into challenges getting your record on the shelf in stores, but if their business model that, for example, that was based on moving lots and lots of units and paying out a smaller royalty rate to artists, but if it worked out for that particular artist, if they could make it up in volume, then it’s okay that the royalty rate is smaller. So independent labels in that era were able to say, “Well, we’re going to just spend less on overhead and do a 50-50 profits split. And that way, we’re not required to operate at such a massive scale.” That worked especially well, because they were often offering music that was not targeting mass audiences. Instead of just doing pop hits that had the chance to sell millions or hundreds of thousands of copies of records, you could put out records that would sell 10,000 copies, 20,000 copies, and that would one of many meaningful income sources for the artist if it was happening on a 50-50 profit split.

The word that we use in the industry is “recoup,” so you’d be able to recoup on your investment and make sure that the artists would actually earning royalties earlier. When you have a handful of companies controlling the marketplace and it’s shifting more and more towards centralized digital platforms, the market gets constructed in ways that work well for the biggest stakeholders but might not work as well for the little guys, the smaller entrants in the marketplace. And so we’re stuck with a sort of a one-size business model, at a time when these technological innovations should be diversifying the kinds of business models that are available to artists.

And so they get to set the terms of engagement for the marketplace. And so they’re able to move things more and more the direction of more invasive data practices about audiences. They’re able to use their reach across all of the different markets to create these consolidated datasets. So they are able to know how artists are going to do in different markets, then leverage that data against the few remaining small independent promoters in other markets. And so they have a kind of competitive power that only comes with operating at that big scale.

So even if the little guys are able to start collecting more data, and try and use their data about attendance to calibrate how they put on a show, and what kind of offers they make bands, and how they do the ticket price, because they’re not able to have access to what’s happening in all other markets, they don’t have the advantages of operating at scale.

I don’t want to only single out Ticketmaster here. We think in a lot of cities. We’re lucky in DC that we still have some strong independent promoters, but in a lot of cities, we have an effective duopoly between Ticketmaster/Live Nation and AEG, both in owning the venues themselves, but also on the festival circuit. The festival circuit more and more is an important, important source of revenue for artists, for the kinds of artists who can get those gigs and are playing them, to the extent that it’s fewer and fewer companies owning more and more festivals. There’s less space for risk-taking. There’s less space for actually staying in touch with what’s happening in a local or regional scene, and wanting to elevate those kinds of voices. And so the negative incentives kind of accelerate each other. You get kind of a negative feedback loop.

And that’s just because musicians are a great example of a population that doesn’t have a traditional employment relationship. There are exceptions, like a symphony orchestra player is employed by the symphony, and so they can have a traditional insurance plan or have a union-negotiated insurance plan, or… Recording artists for major labels can have access to a union health plan, which is negotiated by the union as part of those deals. That’s great. But many, many musicians don’t have access to those kinds of things and don’t have access to employer-provided care. So a single-payer approach, a Medicare-For-All approach, would just be infinitely easier and more humane.

Even the process of shopping for a plan, for people who are on the road so much of the year, can just be super-challenging. Finding a plan that covers out-of-network care. If you’re on the road and you have an injury on tour, it’s a big question whether you’re going to be able to find a provider that’s covered when you’re in Cleveland or whatever. Those are unique considerations that this population deals with. I think it’s common for other kinds of gig workers as well, but there’s things that are unique to music and that’s what’s driving us more and more towards the single-payer conversation.

Thank you all for tuning into this episode of Building Local Power from the Institute For Local Self-Reliance. You can find all the links to what we discussed today at ILSR.org and clicking on the show page for this episode. That’s, again, I-L-S-R dot O-R-G. While you’re there, you can sign up for one of our many newsletters and connect with us on social media. Finally, you can help us out with a gift that helps produce this very podcast, gets us great guests like Kevin, and produce original research on the way monopolies are infecting our economy. Once again, please help us out by rating this podcast and sharing it with your friends on iTunes, or wherever you find podcasts. This show is produced by Lisa Gonzales and me, Zach Freed. Our theme music is Funk Interlude by Dysfunction_AL. For the Institute for Local Self-Reliance, I am Zach Freed, and I hope you join us again in two weeks for the next episode of Building Local Power.

Like this episode? Please help us reach a wider audience by rating Building Local Power on iTunes or wherever you find your podcasts. And please become a subscriber! If you missed our previous episodes make sure to bookmark our Building Local Power Podcast Homepage.

If you have show ideas or comments, please email us at [email protected]. Also, join the conversation by talking about #BuildingLocalPower on Twitter and Facebook!

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: Video Hive

Follow the Institute for Local Self-Reliance on Twitter and Facebook and, for monthly updates on our work, sign-up for our ILSR general newsletter.

This week we’re featuring a special episode brought to you by our Local Energy Rules podcast and their Voices of 100% series. Each episode in the series profiles a city that has committed to 100% renewable energy and showcases how city leaders are implementing these renewable energy commitments. In this episode, host John Farrell chats with Jonathan Koehn, the Regional Sustainability Director for Boulder, CO. Jonathan explains how Boulder plans to get 100% renewable energy by 2030. They also discuss:

If you’ve been listening to Building Local Power for a while, you might remember we brought you the story of Georgetown, Texas, and their transition to 100% renewables back in the fall. That was the very first episode in what was initially planned to be a six-part Voices of 100% series. Since then, the series has really taken off and expanded beyond just those six episodes. There really are a lot more than six stories to tell, given that over 100 cities have now committed to 100% renewable energy. So, without further ado, here’s the episode. We hope you enjoy it, and also that you check out the rest of the Voices of 100% series. You can find links on our show page.

What I mean by that is it’s not just about greening the electrons, it’s about understanding that energy is so much broader than just electricity. When we talk about energy, we mean electricity, we mean natural gas or alternatives for heating and industrial processing, and of course petroleum for transportation. When you think about energy, or at least as we think about energy, it represents 99% of our emissions, so when we recognize that in that transition to cleaner resources and cleaner alternatives, it also brings forward all of these amazing opportunities in terms of ingenuity and entrepreneurship and new ways to develop and deploy technology, and really support our low-and-fixed income. It is that great kind of coming together of the Venn diagram of the legs of a sustainability model. We talk about, of course, the economic, social, and environmental, but we also talk about equitably and resilience, so it is a way to kind of bring those pieces together. I know that’s a very long answer, but it is what drives our efforts here in Boulder when it comes to climate and energy.

I just want to ask you because we were chatting before we got online here, before we were recording, about Xcel Energy, so that’s your investor-owned utility company that serves Boulder, and they’ve recently put together a resource plan that pretty much gets them to the level of renewables that five years ago you were talking about a municipal utility could get to. So, does that take away from what you could get by taking this strategy, by looking at having a city-run utility in terms of the 100% goal, but the other goals that the city of Boulder has?

We developed a whole series of goals, one of which is access to renewable energy, but there were other commitments that were made and other goals that related to price stability and looking at high levels of reliability, being able to work with entrepreneurs and our local energy companies to test and model some of their devices and technology, and really shifting the notion of what a utility does, and becoming more of a service provider, rather than the seller of the commodity, which is kilowatt hour. There’s been a lot of talk about the utility of the future, not just here in Boulder, but across the country, as markets shift and as desires shift, and as customers become more literate on choice. So, it’s always been our aim to really figure out how a utility functions in a much different way.

Now, you bring up a really critical point, which is we knew Xcel Energy was going to move in the direction that we’ve always hoped they would move in terms of procuring more clean electricity, more green electrons, and offering that to consumers, but it matters how they do it in terms of ownership structure. As we think about a decentralized model, one which everyone has the ability to have a power plant on their roof, have the ability to over-generate and sell or donate excess power, that whole transactive energy concept, how we start to harmonize the components of electrification of our thermal system, electrification of our transportation system, those are really, really cutting-edge things that we all hear about, and the utility plays a central role in that. We’ve always said, “Where we need to go is, one, that a utility is that facilitator, and it enables those kind of … a new marketplace so to speak.”

So, Xcel is moving in the right direction. The question is are they going to get far enough, are they going to get there fast enough? This last round of bids and the selection of their resources and their last ERP just in the past couple weeks really is exciting. It’s exciting to see that the market has responded, and it is now much … it’s actually cheaper to build new wind and include storage than it is to run existing coal plants in the state of Colorado. That is extraordinary, so what does that mean for our efforts in terms of municipalization? It means that the differential between status quo and what we could do on day one may get a little bit smaller, but our goal is to get to 100% by 2030. That is the goal that our community has committed to, it’s the goal of that our city council has codified, and as I said earlier, when I talk about it matters how we do it, we have a goal for local generation as well.

We are looking to get to 100 megawatts of local generation in the city of Boulder by 2030, so you find that pinch point then between a utility that may be installing and owning large, centralized solar and wind plants in the southeast or southwest corners of the state versus distributed generation on our roof tops that adds resilience, adds those benefits back to consumers directly. So, I think we are seeing that the conversation shifts to not, “Are renewables viable and should that be the direction we go?” but, “How do you do it, and what’s the right ownership structure?”

Are there other complementary measures that the city is taking? Municipalization is kind of the headline thing, right? It’s been going on for seven years. It’s this huge undertaking. There have been a couple of points of big opposition, and I’d like to come back to that. What other things is Boulder doing at the city level, at the local level, to help accelerate toward 100%, other than this conversation about the ownership of the system, although that is, obviously, a very important one?

So, from the things that are kind of central to our competency as local government, looking at energy or efficiency requirements, not only from our commercial sector but for our rental housing. We were the first community to have rental housing efficiency requirements, which is extraordinary. It’s really dramatically improved the quality of our rental housing in Boulder. We have really taken a different approach in thinking about, as a community, that it isn’t about just one city. If one city is 100% renewable, so what? What really matters is how we share and how we export learning and how we work together and lean on one another in terms of communities, and so the big focus area over the past couple of years has been building out our networks of cities, really relying on one another in terms of going to the state legislature, point to the PUC, looking at the federal level to change policy. We created a couple of coalitions, one is called the Colorado Communities for Climate Action or CC4CA. It’s a coalition of now 22 cities across our jurisdictions. It does include some counties across the state of Colorado, that is acutely focused on policy reform related to climate. We don’t shy away from it. We talk about resilience, we talk about climate. We’ve been incredibly effective at working with the governor’s office and working with state legislators to really remove those restrictions that we bumped into. I think that’s one of the challenges that local communities face. You say… In a regulated state like Colorado, our utility, it’s a regulated monopoly and we say, “Well, we’ll do whatever we can do,” and that really kind of boils down to efficiency or on the customer’s side of the meter.

Yet the things that are the biggest levers we can pull, we continue to bump into the either regulation or policy that is restrictive. We often throw up our hands and say, “Well Gosh, there’s nothing we can do.” We have turned that around to say, “No, in fact, this coalition represents one seventh of the population of this state. We now have a seat at the table. We are working with our state leadership to really devise and develop new policy that enables really, really aggressive local action that really transforms the benefits that we’ve seen in the past.” We are also strongly, strongly focused on the electrification of our transit system. We’ve just launched a program in the past couple of months around that we call carbon 365, really looking at how do we as a community and community members think about the transition of a natural gas. What does that look like? How do we do that so we don’t create winners and losers?

We’ve done a bunch of pilot projects to figure out how you bundle some of these services and really make this transformational change. We’ve done full neighborhood transformations around natural gas conversion. Just this past week we were so honored to host the Carbon Neutral Cities Alliance annual meeting. We had 24 cities from around the globe. These are leaders in the world, really thinking about some of the transformational strategies. We are by far the smallest community, but it really speaks volumes to our commitment in this area. We were able to really work collaboratively with those communities to say, “What are the most effective strategies and how do we really pivot away from just offering energy efficiency services to really thinking about the biggest levers we can pull in each community?”

We worked in parallel with our own rental housing association. I would not suggest that it was easy at the beginning, but we are nearing the completion of our compliance period, where we’ve been able to get over 90% of our rental housing compliant with our energy efficiency requirements through SmartRegs. I think the fear at the beginning is that those costs would be really transferred to the renters. We haven’t seen that occur. There’s been some indication that rents in certain areas have increased, but by increasing the literacy of the renters at the same time we’re able to work with the whole system to say, “Oh, what does savings look like and how do you actually transfer the savings to the tenant, not just the cost for the upgrade?” And so, it was a little bit rocky at the beginning, but it really had smoothed out and we have done a number of studies and analysis to show that the benefit has actually been pretty extraordinary in terms of cost saving.

I wanted to get into some of these other policy concepts that you were talking about in this coalition work that you’re doing at the state level, you mentioned kind of bumping into restrictive policies, whether that’s the fact that it’s electric utilities are regulated monopolies, gas utilities are regulated monopolies. It’s something that’s true over 30 states. What are some of those things that you’re asking for when you go to state leaders, state legislators that would give the local community more power to address those issues of climate and energy?

We try to balance our ask between those that are specific to regulation, versus those that are more widespread in terms of policy or legislation. Some examples, the state of Colorado, sure we have… Our governor Hickenlooper has signed an executive order related to climate and set some high level goals, but we don’t have an updated inventory. We don’t have an agency within state government that is actually monitoring and measuring progress, so that’s an area that we’ve been focused on pretty heavily. Clean cars standards, of course, zero emission vehicles, making sure that that’s included in our state plan. Looking at the transition as we think about decommissioning coal and natural gas. To my earlier comment, it does matter how it’s done, so we are looking at things like increasing the size limitation on qualified facilities, looking at ways to remove some restrictions on sizing distributed generation in our communities.

So the 120% rule is a perfect example of that, where it was a fine intention when it was developed years ago with regard to access to the incentives by the utility, yet the unintended consequences, now as we think about solar as a tool for longterm affordability, as we think about solar as a tool for energy resilience in our communities, as we think about the integration of storage in our communities, we run into interconnect requirements and sizing limitations. It’s our goal and our aim to go to the code where those restrictions exist and get sponsorship to relax or remove some of those restrictions. Because, I don’t think that the legislature contemplated that it would be affordable and advantageous for community members to start looking at residential storage, neighborhood scale storage and how that gets deployed within a community. Those are some examples of what we’re really focused on in this upcoming session.

Looking at how we work with our local manufacturer… Excuse me, our local distributor of electric vehicles. And trying to answer that question, the role of local government, what should we be focused on? Is this a deployment of charging infrastructure? Is it looking at rebates and incentives to get more vehicles on the road? Is it to really think about the future of charging infrastructure and where that will head? Does it make sense to really focus on level two charging or should we figure out how to get more DC fast charging? How do we look at shared lead opportunities between our governmental agencies looking at autonomous vehicles?

One of the projects that I’m really proud of, we use some of our Department of Energy Ready Grant, which is really focused on reliability and resilience, and using some of those dollars to partner with a local transit authority to help them purchase their solar, to put in some storage. But also, this great forward thinking idea of electrifying their bus system, and then looking at charging those buses with solar, and then looking at some autonomous routes on the CU campus. So there’s this vision of where we want to go and these projects are more than just these one off projects. We’re also looking at a micro grid on the CU campus, but not just because we can do a micro grid, but what’s the purpose. What are we trying to, what problem are we trying to fix, what questions are we trying to answer? So we have this great benefit of having the federal labs here, having the university and its research applications to really say what do we need to do as a community, how do we establish a a real clear understanding of roles and competencies of all of the players. And that’s been a really exciting I think over the past year or so, and it’s been a transition.

Now back to your earlier question, all of this is in parallel with our work around municipalization. We know what we can get to if we don’t municipalize, and how far and fast we can go, and we know if we are not a regulated utility, the role of that electric utility shifts pretty dramatically, and it becomes a much stronger player in all of this transition.

Yet, it does create a good starting place for us to think about new ways to partner with the utility. I remain hugely optimistic and open to the fact that we could still work out some type of deal between the city of Boulder and Xcel Energy. I think that they recognize the benefit and the shift in this utility landscape. When we look at utilities that are really doing great things, Xcel as typically towards the top of the list. But at the end of the day we as a community have been tasked by our community to really figure out how do we get to our goals related to energy, how do we get to 100% renewable electricity, how do we get to 100 megawatts of local generation? And I have not seen the pathway yet with Xcel. But again, I remain hopeful. They are doing what they have been required to do by our public utilities commission. After we finalized our transfer of assets of proceeding at the PUC, we have been working with him pretty closely on the completion of our required contracts to move into the transition that allows us to go into the condemnation action.

I can’t say with any amount of certainty that we will create an electric utility, but what I think is important is that we are able to look back and say it’s been worth it. And right now I can say that the work that we have done, we have learned so much in the past eight years about our energy system, about the needs and desires of our community, about the role that resilience truly plays, and how energy and electricity really fit into our overall objectives to decarbonize our energy supply.

What I would say to that is, whether it’s symbolic or not, I think it sends a very strong signal to the marketplace. I think it sends a strong signal that we as communities are going to stand up straight, and we are going to make our voices heard in terms of where we want to go. And that’s really, really important. As I look across the state of Colorado, we have a handful of communities, some of which you would never expect to establish 100% goals. And it is extraordinary because they are looking at it from the perspective of protecting their customers, protecting their most vulnerable population, looking at the fact that using renewables to stabilize the cost of electricity, to understand the health implications of burning fossil fuels, it is totally shifting the narrative around what communities can and should be doing.

I would also say that it’s disingenuous and patently false to say that no one entity can go 100% renewable. I think the science indicates in getting the grid to 80% would be relatively easy, but that last 20% would be tough. And no one denies the physics. That’s not the issue. The issue is that when a city’s run on 100% renewable energy, that’s an accounting reality, not a physics reality. And I think that’s really exciting. So don’t get hung up on someone claiming, “Well, you’re never going to get to 100%.” Looking five years back, we would never have thought that wind would be at price parity, much less solar, be at price parity. Never in a million years would we thought that storage would be a potential dispatchable resource for utilities. But here we are.

When you think about establishing a target for 2030, much is going to happen between now and 2030, much will happen in the next 30 to 50 years. So I would say to any community that’s contemplating this, be bold, recognize the benefit, and recognize that energy is at the center of this sustainability challenge, and it’s also an indispensable ingredient of our modern economic life.

The last piece is that, bringing it back to the idea of climate, we don’t have to talk about energy and 100% renewable energy as the biggest lever around climate change. We can talk about resilience. Because it’s equally important. But the reality is climate change carries serious consequences for us as humans and for ecosystems. And it’s a crisis that’s going to affect our food, our national security, our water, our ability to live where we choose, and basic human needs, et cetera. And we see it every day when we look at our windows here in Colorado.

It is extraordinary, it is incredibly hopeful when we see communities across this state declare their intention to go to a 100% renewables for whatever reason. So again, it is a movement. It’s a movement that I think we’re going to see continue, and it’s going to greatly expand in the coming years.

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Host John Farrell is joined by David Pomerantz, Executive Director of the Energy and Policy Institute.

David Pomerantz, Executive Director of the Energy and Policy Institute

John and David discuss how electric utility companies have become so powerful and how they use this power to protect their profits rather than the interests of their customers. They also touch on:

I’m a big fan of his work and I’m delighted to ask him to help us understand how utility companies have become so powerful, how they use this power, and what lessons we can learn from David’s work to manage monopolies in the rest of the American economy. David, welcome to Building Local Power.

But I wanted to help people understand a little bit about how the area in which you and I work, focused on energy, is related to but not quite the same as the rest of the economy. So we at ILSR talk a lot about monopoly power across the economy, in banking and social media and internet. You focus on the utility sector, electric and gas utilities generally. Could you explain a little bit about how monopolies in energy are different from ones like in banking or social media?

With electricity it’s different. Everybody has to have electricity, and they really only have one choice, in many parts of the country at least. People only can buy electricity from a single provider that has been granted a monopoly by their state.

Because of that, it’s really important that those monopolies are tightly regulated by the government to make sure that they’re providing electricity at fair prices, to make sure that they’re not doing too much harm to the environment or the climate. Unfortunately, these electric monopolies have over the course of the last century… While they’ve had these monopolies over the energy that they sell, they’ve also built political monopolies.

So in most states the monopoly electric utilities are some of the most powerful political players in that state. They control many of the levers of government almost like puppeteers, and that makes it really hard for them to be effectively regulated in the public interest.

So we know that in the energy business, you know, thanks to this description, that utilities generally have minimal or no competition, and obviously that could be very profitable for them. You sort of alluded to this already in terms of political power. Could you give us an example of how a utility can use that profitability and protection from competition to block competitors, to block other folks from being able to compete in this market?

Those were places where it made sense for utilities to have monopolies, and even at times over the generation of electricity when the grid was being built up in the early 20th century and we were for the first time building these large power plants at scale it made sense to give companies monopolies to do that.

But now we’re in a world in the 21st century where everything is totally different, and now having these companies build these massive power plants with huge risks of cost overruns, which by the way happen to be absolute killers for our climate, that’s not only environmentally problematic, it’s no longer the most cost-effective way to do things, and we have had this amazing technological revolution where customers have a host of new technologies at their fingertips that they can adopt.

The most obvious one is rooftop solar, but there’s also energy efficiency and ways that customers can, you know, control when they use electricity. Unfortunately, these incumbent big electric monopolies, they see all that as a threat. One great example of that is in the sunny state of Arizona, a natural place for rooftop solar and local solar to grow really quickly, and starting about 10 years ago it was growing really quickly, and that became incredibly scary to a company called Arizona Public Service, which is the biggest investor owned monopoly electric utility in Arizona.

APS is one of those companies, like I mentioned before, that has done an incredibly effective job at really buying up the entire political ecosystem of Arizona. The Governor of Arizona, many of the state’s legislators, elements of both parties unfortunately, the Republican and Democratic parties of Arizona, and APS’s direct regulators, the Public Utility Commission in Arizona, are all deeply embedded to the company’s continuing contributions and the various ways that it has exerted influence over the state’s political system.

When this solar threat started to rear its head and scare the executives at APS, a few years ago they took action and they appealed to their regulators in the PUC, called the Arizona Corporation Commission, and asked them to change the way people pay their electricity rates in ways that would make rooftop solar less economic.

It was very contentious, but because of the political dominance that this company enjoys they were able to get that change through, and unfortunately we saw rooftop solar adoption rates really fall off the cliff after those changes happened.

So that’s one of those examples where unfortunately, you know, we have this amazing new technology in distributed solar, it can save people money on their bills, it can help protect the environment and the climate by avoiding the need for these companies to build more polluting gas plants and making it easier for them to shut down coal plants sooner, and as you know, John has done amazing work to document, it can help grow local economies.

But unfortunately, you know, there are these very powerful companies who see that technology as a threat, and so they have done everything they can to stifle that competition to protect their profit margin for their investors on Wall Street.

I was hoping you could explain a little bit there, because there’s a couple things I find interesting. One is you have these large power plants that the utility is looking for subsidies for, but you also have this funny layer of the market was competitive for a while, like the state decided to make the marketplace more competitive, and at first utilities really like that. Then as it actually became a competitive market and profit margins went down, now they seem to be going back and begging for monopoly protection again. Could you just describe a little bit about what’s going in Ohio for folks who might not be familiar?

So that’s really what’s happened in Ohio. There’s a company called First Energy, which has seen unbelievable financial struggles in recent years. They actually spun off part of themself, which filed for Chapter 11 bankruptcy recently. The reason for its economic problems is that they made some big bets on types of power generation, including burning coal in their existing nuclear power plants that turns out are no longer the cheapest way to make electricity, and increasingly it’s not really even close. They’ve been beaten by gas, and more recently are getting crushed, particularly in the midwest, by wind energy.

Then on top of all that, you know, the entire economy, and Ohio is certainly a part of it, is getting more efficient, which means people are using less electricity to do the same things, which is good. It saves homes and businesses money across the economy. But it does mean that some of those existing power plants that companies like First Energy are running start coming under pressure, so that’s what’s happened there.

First Energy is another company with a lot of political power. It has contributed lots of money in the most recent gubernatorial election in Ohio. The CEO of First Energy spent lavishly on the campaign and inauguration of the current Governor of Ohio, who obviously has a lot of say over these matters.

So now what First Energy is trying to do is get itself a bailout. The company is trying to get a law passed in Ohio that would, you know, essentially rob money from Ohioan’s electric bills every month to the tune of hundreds of millions of dollars statewide that would just basically be a direct transfer of wealth from the people of Ohio to First Energy, and nominally that money is to keep a couple of nuclear plants online that are not doing well in the marketplace, but it’s not clear that company actually needs that money.

You could also make the argument that Ohio has chosen more of a market system for how electricity is produced, and if those plants can’t compete, then they should be shut down and replaced with more competitive options. But even if you believe that it makes sense to keep those plants alive, you know, it shouldn’t really be down on the backs of customers. That’s something that First Energy shareholders could take on if they think that they want to keep those assets going.

Then the whole situation gets much worse, because once First Energy kind of, you know, saw that opportunity to use its political influence to keep its plants open in that kind of rent-seeking behavior, there’s basically been a pile on from some of the other incumbent players in the state.

So now this policy, which has passed one House of the Ohio State Legislature, but not the other yet… It’s called HB6 in the Ohio House, it’s been expanded so that it would also bail out a large coal burning facility, which is a major, major polluter for Ohio and really the entire region. And on top of that, to try to sweeten the deal for some legislators who have been trying to get the policies that Ohio does have to encourage renewable energy and energy efficiency, the legislation would also kill those standards.

They’re not the strongest renewable energy or energy efficiency standards in the country and hard right conservatives and the fossil fuel industry has been trying to gut those standards for several years now and failing, but this is probably the most serious threat that they’ve seen. Those standards frankly need to be much higher and stronger. It would be a sin to see them finally wiped out basically because these polluting industries are trying to protect their profits.

It’s really an incredible irony, because you have these people who are… And the companies behind it, they are trying to use an argument against renewable energy and energy efficiency standards that says well, they’re mandates, you know. This has left to the control of the economy and we need more of a free market, and making that free market argument, and then literally at the exact same time out of the other side of their mouth they’re asking for a bailout for polluting nuclear and coal plants which can’t survive in a free market.

So, you know, it’s really a stunning bit of hypocrisy, but it’s one that unfortunately, greased by a whole lot of political contributions and millions of dollars in lobbying, that First Energy has spent over the last few months they have had some traction in this.

So I want to use that to pivot into this next question about how monopoly utilities are using their money to advocate against the interests of their customers. There’s the legislative pieces like in Ohio or in Arizona, the regulatory pieces, but you also have something else that Energy and Policy Institute has been covering recently. It was called UARG. I’m going to let you spell that out and explain it: how utilities and their shareholders were using this group to undercut clean air and water for all Americans.

Maybe I’ll go back to the beginning. The Utility Air Regulatory Group was formed by utilities in the late 1970s with basically one expressed purpose. It was formed after Congress passed the Clean Air Act which is designed to protect American’s health and safety from air pollution. That was a scary thing for utilities who thought it might limit their ability to build the kinds of power plants and other infrastructure that they make a profit on. So to undermine the Clean Air Act and the EPA, which writes rules and public health standards in accordance with the Clean Air Act, utilities formed this group, UARG. For the last four decades, UARG has very quietly existed in the shadows trying to undermine and attack the Clean Air Act and the EPA’s enforcement of the Clean Air Act.

Some of the kinds of things they do includes mainly litigation, so they sue the EPA constantly. Whenever you hear about the EPA getting sued for things like President Obama’s Clean Power Plan or other public health and safety rules including from past Republican presidents as well as Democratic presidents, usually the plaintiffs in those lawsuits is the Utility Air Regulatory Group. What makes this really nasty and part of what the Energy and Policy Institute what we focused on in trying to expose is not only do these companies pay the lawyers who constitute UARG to file lawsuits that result in the public being less safe and healthy, but they’re actually doing that with our money.

I’ll give an example. One of the rules that Utility Air Regulatory Group has tried to kill is commonly known as the Mercury Rule. It basically exists to keep mercury that’s admitted when we burn coal out of our water and the fish we eat and our air. The reason that’s important is mercury is a really powerful neurotoxin. It gets into kids’ blood and into their brains and affects their ability for their brains to develop appropriately. That’s really widely accepted, and nobody disputes that.

But that’s not good enough for utilities who wanted to keep burning coal throughout the last several decades. So they sued to try to stop and weaken that rule from taking place. The money that they used to do that was actually a couple of cents at a time coming out of your electric bills every month. You would think that since these companies are paying the UARG lawyers to protect their shareholder profits that their shareholders at least would have to pay for that. In a world where, unfortunately, we don’t have a lot of control over how companies are able to spend their money to influence politics, there might not be a lot we can do to stop that, but in fact it’s even worse than that.

These monopoly utilities very quietly when they go to their regulators at the state level and they ask for all the money they need to operate their utility, so that’s supposed to be for things like trimming trees next to power lines so we don’t have outages, building infrastructure, paying linemen to walk the power lines and do maintenance and keep us safe, when they want to recoup those costs, they have to go to regulators to get permission to do that in a rate case. Well, what utilities would do is in the fine prints of those rate cases, they would slip in all the money they were paying the lawyers at the Utility Air Regulatory Group, which means that for many electric utility customers around the country, every time they pay their bill every month for the last four decades potentially, a few cents out of that bill was going to pay lawyers to sue the EPA to attack rules that are designed to keep us safe. So utilities, they’re trying to make us less healthy, and they’re using our money to do it.

Unfortunately, there’s not a lot that the average person can do about it. It’s very difficult and expensive to intervene in one of those rate cases. You usually need a lawyer to do it. That’s the only way that we can challenge that. John, it goes back to your original point about the problems with having these monopoly electric utilities. If Facebook or Google is suing to stop clean air rules or Walmart is, at least you have the choice to go take your business somewhere else, but we don’t have that choice with electricity if we have a monopoly utility.

Hey, do you think you’d be a great guest on Building Local Power? Are you dying to tell Chris Mitchell what he could do better? Wanted to share some love? Email us at [email protected]. You can also send your love with a small donation. If you listen to other podcasts, you might hear about a mattress company or a meal delivery service. The Institute for Local Self-Reliance is a national organization that supports local economies, so we don’t accept national advertising. Instead, please consider making a donation to ILSR. Not only does your support underwrite this podcast, but it also helps us produce all of the resources from reports to podcasts to interactive maps we make available for free on our website. Please take a minute to go to archive.ilsr.org/donate. Any amount is welcome and sincerely appreciated. That’s archive.ilsr.org/donate. We also value your reviews on Stitcher, iTunes, or wherever you get your podcasts. Thank you so much. Now, let’s get back to our conversation with David about shining a light on the dark behaviors of monopoly utility companies.

Okay, were back. David, let’s talk a little bit about what Energy and Policy Institute does to help Americans understand monopoly power. How do you find out all this stuff about UARG or whatever these secretive groups that utilities are a part of or the way that they are spending their money or our money to undercut this stuff? How does Energy and Policy Institute understand this?

Even though the regulators that are supposed to make sure they are not gouging customers and hurting the environment don’t always get everything right, in the process they do require utilities to put a whole lot of stuff on paper. One of the things we do is come through that and try to find examples of where utilities are hurting people, hurting their customers, hurting the environment, and just try to translate that for people.

A lot of this stuff is pretty wonky. It can be pretty technical. We are not technical experts the way that… I think, John, you are a great resource on a lot of this stuff, and there are many others out there. But we have tried to carve out a role for us to explain what utilities are doing and then look for the proof. So we’re looking in the regulatory filings. We’re doing a lot of things that regular people could do if they have an interest in doing it. That includes looking at how utilities spend money in political campaigns. We’re looking at how they lobby, which there’s often a paper trail of. So we’re trying to use every kind of public source of information that we can to document utility’s behavior and then just explain it to people hopefully in a way that makes sense.

When people start to pay attention to what they’re doing to their political influence, to their agenda, which has been anti-energy democracy, anti-distributed solar, and in most cases, although I should say, this is starting to change for a few utilities that are moving in a different direction, their agenda has been pro-fossil fuel. So, the more people pay attention to that, and make it into an issue for their leaders, and their politicians, and sometimes for the regulators themselves directly, the harder it becomes for utilities to do what they’re doing under cover of darkness, and the greater chances that people will get regulation in the public interest. For these public utility commissions, I think kind of the first thing we need to do is put the public back into the public utility commission.

Thankfully, even in the few months we’ve seen some real progress there, and some commissions that are starting to do a better job holding utilities accountable in the public interest.

In this most recent election cycle in 2018, there was so much scandal around APS’s influence, that for the first time in the last three elections, APS actually sat that election cycle out, they didn’t spend money on the candidates that people assumed were their preferred candidates. I think the reason they did that is because, there had been so much scandal, and their reputation had become so toxic, that republicans, and democrats kind of didn’t want to be associated with a monopoly utility anymore. In the wake of that election, several of the regulators on the Arizona Corporation Commission, including people from both parties, republican and a democrat have really tried to bring some more accountability into play. So, I don’t agree with everything that those commissioners have done, but they have tried to force APS to account for its political activity over the years.

They’re trying to crack down on how APS is spending its rate payers money on politics. They are starting to explore ways where they can challenge a lot of things that APS has done in recent years that are really bad for customers. Including trying to build gas lamps that customers don’t need. I think some of the commissioners are taking a look at issues around rooftop solar, and interest in doing that. Other commissioners are interested in looking at how they could bring more competition into Arizona. That’s a place where unfortunately APS still does have a lot of political power, but there have been changes afoot, and part of that is because a lot of people have taken action, and organized, and made these issues more political.

Another example is in South Carolina. Where one of the utilities unfortunately spent billions, and billions of their customers dollars basically to build a very expensive hole in the ground. They were trying to build a nuclear power plant. That spiraled completely out of control. It’s something they never should have built in the first place. They actually had to abandon the project even after they’d spent multiple billions of dollars. In the fall out of that scandal. There were new public utility commissioners who have been appointed, and elected. They are looking at the monopoly utilities in South Carolina with a much more critical eye.

In the case of another utility, Duke Energy, that was asking for a really obscene rate hike on customers. They were asking to increase the fixed part of customer’s bills dramatically in a way that was higher than almost any other utilities around the country have done. In response, that public utility commission, first of all they said no to many of those asks. They also actually cut Duke Energy’s CEO’s salary significantly, at least the amount of it that was paid by South Carolina rate payers in a way to send a signal to that company that, some of the things they’ve been doing in the past to try to take advantage of their customers, we’re not going to work anymore under this new public utility commission. So, we have seen a number of utility regulators around the country in the last few months who are really taking a more critical approach, and really … like I said before, trying to put the public interest back into the public utility commissions.

I don’t think that’s always true though at the state level. So, these public utility commissions, they’re pretty sleepy. They meet all the time, the public does not always show up, and call me naive, but I actually think if people are engaged in that process, what we’ve seen in recent months and years is that, you can make a big difference there. I have a couple pieces of advice. The first is, just find out the basics about the public utility commission in your state. Where is it? Who serves on it? How are they appointed? Then look for ways that you can get involved. You know? This is can be hard stuff, and somewhat technical. I think it’s probably not the easiest thing in the world as one person to just get engaged in, but there are tons of groups.

There are consumer advocacy groups, there are citizen utility boards, there are many environmental groups that have ways of engaging in that public utility commission process. They can tell you when there’s hearings you can show up to, to testify. They can offer some guidance about how you can make a difference there. I’ll give one more plug about a very specific idea that we’ve seen really take off in the last year or so. John, you talked before about Dominion Energy in Virginia. That’s one place here we’ve seen one of the amazing responses to Dominion’s political power, has been a movement to ask people running for office in Virginia to sign a pledge that they would not accept campaign contributions from monopoly utilities. I mean there are a lot of people who feel like our campaign finance system is generally broken, and politicians probably shouldn’t be taking money from any corporation, and I’m sympathetic to that view.

Monopoly electric utility is a great place to start. They’re monopolies, like I said before, they’re companies that people have no choice but to patronize. They have unbelievable political power right now, and they have really high stakes in terms of, they’re very heavily regulated, and it’s really important to them to hold office. So, it’s the perfect place to start, to try to get money out of politics. We’ve seen unbelievable success with that effort. Virginia is a great example where, over a dozen of the freshmen legislatures who were elected in 2017, in November 2017 in Virginia signed a pledge that they would not accept any money from monopoly electric utilities, and more including several incumbents have signed that pledge since them. And we’re not at the point in Virginia where there’s assumed pressure as soon as anybody announces they are running for any office in the state, that they’re going to be asked, and will need to have a pretty good answer for whether they are going to take campaign contributions from monopoly eclectic utilities. That’s an effort that I think can happen, and work in any part of the country. It’s completely not partisan.

I think people who are democrats, republicans, and anywhere in between those, all would probably agree that these monopoly companies should not be allowed to buy our politicians. So, that’d be one specific idea that we’ve been very encouraged to see catch on, and I would encourage folks to check out.

Like this episode? Please help us reach a wider audience by rating Building Local Power on iTunes or wherever you find your podcasts. And please become a subscriber! If you missed our previous episodes make sure to bookmark our Building Local Power Podcast Homepage.

If you have show ideas or comments, please email us at [email protected]. Also, join the conversation by talking about #BuildingLocalPower on Twitter and Facebook!

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: Pixabay

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This week, we’re bringing you a bonus episode from one of our friends and favorite podcasters Laura Flanders. On the Laura Flanders Show the people who say it can’t be done take a back seat to the people who are doing it. This episode is titled “Who’s Economy Is it? Ours.” In this special report, experts talk about the new conversations regarding economic democracy that are happening between labor unions and community members in NYC.

Like this episode? Please help us reach a wider audience by rating Building Local Power on iTunes or wherever you find your podcasts. And please become a subscriber! If you missed our previous episodes make sure to bookmark our Building Local Power Podcast Homepage.

If you have show ideas or comments, please email us at [email protected]. Also, join the conversation by talking about #BuildingLocalPower on Twitter and Facebook!

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

Follow the Institute for Local Self-Reliance on Twitter and Facebook and, for monthly updates on our work, sign-up for our ILSR general newsletter.

This week we’re rebroadcasting an episode of our Community Broadband Bits podcast that details our recent report on San Francisco’s innovative efforts to close the digital divide in public housing. Host Chris Mitchell is joined by former ILSR intern and report co-author, Hannah Rank, to discuss how this model can be used as a blueprint by other cities. You’ll also hear commentary from Chris and Lisa Gonzalez, Senior Researcher at ILSR, as they chime in to clarify some details of the report. The trio also cover:

You look at it from the point of view of the customer. You’re living in an apartment building, perhaps. You have a wire that runs from the wall that goes to your router, well from the wall, it may go to the roof and there’s wireless transmitters on the roof. And that’ll bounce around maybe one or two places in San Francisco and then hop on a fiber optic cable to an exchange in San Francisco, and then it will go to the rest of the Internet, wherever it’s headed off to most likely.

And so that’s different from many of us have a wired ISP, a cable company, or a fiber optic company. And our access is not … It doesn’t touch a wire wireless network at all. In this case, they use both wires and wireless. And so they have fiber optics, they’ve got wireless, they sort of do whatever it takes to get their signal around. And they do it very well.

Welcome to the show, Hannah.

One of them that I think is really important is in 2018, I feel crazy saying this, we still have people building buildings. I mean we’re not even just low income housing but all kinds of buildings without proper wiring. That blows my mind. You don’t spend as much time fretting about things like this but was that surprising to you?

But yeah, so they were undergoing major remodels and that included rewiring of all the units. And so during that process, before Monkey Brains and other ISPs or the Department of Technology of the city of San Francisco got involved. They were wiring for category 5e, which is a type of Ethernet wire that supports …

I mean we’re talking about, I think definitely a gig, possibly 10 gigs under the right circumstances over short distances of like well under a hundred meters. That’s the issue that we’re talking about is that they have one of these cables to each unit. And they were planning on using it just for the phone. And then Monkey Brains came in and said, “Hey, if you use the right attachment, termination point in the wall, we can have a jack that will allow you to use both a phone cord and 100 megabits of internet access.” If they used it entirely for internet access, they could do a gig or they could use it only for phone. But because Monkey Brains intervened when they did, they were able to make sure every unit could get a hundred megabits and have phone service as well.

If you wanted to go crazy you could have conduit and then you could make it more complicated. But at a minimum you want to make sure that each unit has, I would say, at least two of these cables running to it. One for phone, one for high capacity internet access. And fundamentally you may want to have multiple cords if you want to do … Leave yourself room for expansion in the future. But I think too many places just think, “Well Comcast will run their cords or AT&T will run their cords, and that’s the problem solved.” And that’s actually problem created.

So if we step back for a second, I mean these were areas of the city that have been significantly rehabilitated under a specific program that you wanted to tell us a little bit about. And I think it’s relevant for making sure that other cities that are looking at these opportunities get it right the first time.

But section eight housing basically is … Well, section eight is actually a voucher where individuals who are low income that need rental assistance can apply and get that funding to basically reduce their costs to just, I think it’s about 30% of their income. In San Francisco, there’s a minimum amount that they have to pay for rent, which is, I believe, $25.

That’s what your case study is really going to talk about, is that when these properties are being redeveloped, you can get the wiring internally right. You can make it easy for an ISP, a for-profit ISP, or a nonprofit ISP, to come in, offer good services that will work for them. Now in this case, Monkeybrains also had the benefit of a program from the California Public Utilities Commission, what we often called CPC. Specifically a program within there called the California Event Services Fund, which people and often referred to as CASF.

It’s kind of like putting pieces of the puzzle together for financing. Also, you have to have a city that’s looking to renovate and update its public housing, which as we’ve seen everywhere, is kind of the case where it needs a lot of updating in a lot of major cities. It’s not like it wouldn’t be able to be possible. Yeah, just finding those pieces of financing to get it going.

Hey Lisa, can we jump in again?

When Monkeybrains was first connecting Hunter’s Point East and West, I believe both of them, perhaps it was just half of it, but the point is that they wanted to bring it online very quickly. They threw some wireless on the roof, and they were able to just connect it to the rest of the Monkeybrains network. Over a over the next year, I think, San Francisco brought its municipal fiber network to connect Hunter’s Point. Now, Hunter’s Point is connected entirely by fiber, but the wireless allowed them to move quickly, and it’s still offered a super high capacity network.

I’ve looked at some of the network logs, and you can see the traffic, and their wireless network can handle it just fine. Now again, to make sure people are understanding this, you may have in an apartment building you may have a wireless router, and people have their devices, a laptop, a tablet, whatever, on that. From there, it goes to the router, and it probably runs on the copper wire, which is Cat5e, to the building, a basement, a telco closet might be near the roof. There, it’ll either jump on fiber to go across San Francisco’s municipal network to the main data center in San Francisco, or it may travel wirelessly for some part of the way, and then get on a fiber network to go to that data center.

The way the data moves in this case is actually kind of irrelevant to the user, because they get a high capacity approach. It gives Monkeybrains flexibility to be able to build a network quickly, and have it be resilient.

Some people that are far away from the access point, it’s not going to be as good. On the other hand, you also have like, maybe you have some teenagers that are like screwing around, and they’re thinking, yeah if we do this thing technologically, we could sort of spy on some of the neighbors. Right. That is the sort of thing that when each home is individually connected, you have more privacy and protection. Now, if you’re a sophisticated person on a shared Wifi, you could still be very protected. I think there’s just less room for error, and there’s a much higher quality when each person, each household has their own connection. Rather than having to share a connection with others on their floor.

These are mostly one time investments, so they can provide service on an ongoing basis at a very low cost. If you get the one time investments right. Whereas, I think too many public housing facilities settle for having Wifi in the hallways, which doesn’t deliver a good service to everyone. It’s certainly not an even service. I think there’s security concerns about it. Although, there are practices that could remedy a number of those. The challenge fundamentally is that I believe we should be striving to have Internet access to everyone in their home that is not interfered with by their neighbors. That’s something that I believe Monkeybrains is really getting right.

Let’s just briefly talk about this a little bit. The services, depending on the wiring of the home, they’re getting 100 megabits or a gigabit. Right?

Hannah Rank:

Hannah Rank:

Hannah Rank:

Hannah Rank:

Hannah Rank:

Another, a piece of that that actually is, we discussed in the report quite a bit that’s important, is that Monkey Brains takes questions and problems, technical support questions from residents of these buildings in the same way that they do their other customers. A piece of it that we were very clear on in the report is that the Community Tech Network, a local nonprofit group, and actually some other nonprofits as well, have all helped to help educate people, get devices in their hands, make sure that they have the literacy to know how to use these devices well, and also help answer their technical support questions that may not be related to the network, so that Monkey Brains is not constantly fielding calls from someone who says, my browser is not working because of a user error that they’re having. One of the challenges-

If you have a device that you know how to use and you like using it, that’s half the battle. But also just feeling safe and comfortable on the internet, knowing that it can be a great tool to connect with your friends and family and also a tool to participate in the economy. Whether it’s even just going on a job board and finding a job to starting a small business. There’s lots of shades to that. But all of those make you feel like a participant in one of the most powerful forms of connection, the internet.

When you think about how expensive it can be to have a wireless internet plan, I’m sorry, an internet plan rather. And to have a smartphone service, the pairing of those two can be prohibitive for people. So they just choose, you know, I need to call people, I need text people, I’ll just use my internet on my phone and try to work with that. But if anyone’s tried to edit a paper or look something more in depth up online, it’s just, on a smart phone, very hard to do. So it’s much better to have a device where you can have all the options for using the internet.

But those one time costs you might think of as, one, wiring the individual unit, and that should be, I mean, well under $100 per unit to do, particularly when the walls are up and everything else. I mean, well under $100 to get all that wiring to each unit to Cat 5 wires or a fiber too. At that point when the walls are open, it’s really cheap to put a lot of things in it. Running conduit would be nice. In some cases it may be impractical. And then typically just for people to see conceptually you want to run each unit to a closet on that floor maybe, or down to a basement, a room. You just want to make it very easy for someone to come in and just by going to one or two rooms in your building, be able to connect home any unit anywhere basically.

That’s one of the onetime costs. And then the other which is more significant would be getting high quality internet access to the building, either through a fiber network that could be very costly if the city does not already have one nearby. Or you can use a what Monkey Brains uses in many cases in its business, which is a high capacity fixed wireless link, where you might be looking at on the order of $3,000 per radio I think to do that. I’m not as good yet at remembering if it’s per pair or per radio. But those are one time costs that that, again, if you can just take care of them and not have any debt associated with them, then your operating costs are very low to be able to deliver high quality Internet access, whether from a nonprofit or from a for profit company to those units.

Again, then your largest cost is going to be your help desk is what we call it, but if you have a digital inclusion program, which is something that you probably really need anyway for other benefits, and they can really help take some of the pressure off of the ISP, then at a relatively low charge you could have a very good ISP taking care of a lot of that rather than doing it yourself. Certainly no problem doing it yourself in many cases. But in my experience people would rather have a specialized company doing that anyway.

Monkey Brains is showing that this can all work, and you’re explaining to the world how, how that works.

There’s a lot of credit to the city of San Francisco for making this happen. There’s a lot of credit for Monkey Brains, and for people working in the nonprofit for community tech network and stuff like that.

Like this episode? Please help us reach a wider audience by rating Building Local Power on iTunes or wherever you find your podcasts. And please become a subscriber! If you missed our previous episodes make sure to bookmark our Building Local Power Podcast Homepage.

If you have show ideas or comments, please email us at [email protected]. Also, join the conversation by talking about #BuildingLocalPower on Twitter and Facebook!

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: Wikimedia Commons

Follow the Institute for Local Self-Reliance on Twitter and Facebook and, for monthly updates on our work, sign-up for our ILSR general newsletter.

Host Chris Mitchell is joined by ILSR co-directors Stacy Mitchell and John Farrell as well as ILSR co-founder David Morris to discuss the 2020 election and policy platforms that focus on anti-concentration. They also touch on:

So she’s put out at least three big pieces that I’ve caught. One is around big tech. She’s also got a big piece around agriculture and what’s happening to farmers and the whole food system. Then lastly, she has a corporate tax reform proposal that I think you could safely read as being about rolling back corporate power.

The other component of it is that she’s calling for a rollback of recent mergers, so essentially saying that there has been this period where these companies have been allowed to, say, Facebook buy Instagram and that those acquisitions were a mistake and we actually need to reverse those. I think what’s interesting as part of this proposal and I think is a way that Elizabeth Warren stands out not only in terms of having put a lot of meat on the bones of ideas. I mean you’ve got other people running out there who are saying “Oh, yeah. Big tech is a problem or I’m concerned about concentration,” but mostly with some exceptions, they’re not going any further than that into specifics. She’s put real specifics out there.

She’s also, I think interestingly, talked a lot about the role of agencies, like federal agencies in carrying this out. So I think has a sense of the fac that the presidency is not just about proposing legislation, but there’s a lot of power within the administration and how do you use that in order to tackle the question of big tech.

So it is telling that this has become a big issue, that there are several candidates who are picking up that this is one, but when you contrast that with this issue of electability that a lot of people are focused on, you have the candidate that most people are thinking of when they think of the word electability squarely in opposition to good policy around mergers and concentration.

And it doesn’t seem to me that there’s as much focus on that, really, across the whole discussion about this race. I mean, Bernie Sanders is another person who’s been talking about concentration, particular in the agricultural section lately. He just gave a huge speech in Iowa all around breaking up farm monopolies and really talking about how to restore rural America and I think coming from Vermont has a very strong sense of what that means, like what’s going on with dairy farmers right now and kind of being on the losing end of things. So, there is this part of the race that is policy focused and people who are out there, I think, articulating a certain vision that was really absent for the Democratic Party for a long time and so that’s kind of good news.

But I do worry about someone like Biden who comes in and says, “Well, it’s not really about any of these things. I’m just electable and everything was fine before and Trump’s an anomaly,” and all of that and I just think that that’s just not true.

Like, right now, you have to go through John Deere, it’s a whole racket and she’s also got some reforms to something called The Check off Program, which is something that a lot of growers and people who raise meat have to pay into these funds that are ostensibly for marketing but are really used by large processors for their own ends. And so, she’s calling for reform to that. So I think there again, you see some mix of anti-trust things but also kind of recognizing that there are other tools at play that can be useful. And that’s also evident in her corporate tax reform proposal and what struck me about that is kind of interesting is that she talks explicitly about part of the purpose of it is to level the playing field. So, she is pointing to data that shows that the very largest companies pay lower affective federal tax rates than small businesses do.

And a lot of it is because of loopholes. We have examples like Amazon last year earned $10 billion in profits and paid zero federal taxes. I mean, you can go out and walk down your main street and I challenge you to find a single retailer who didn’t pay something substantially higher than that. So, her tax reform proposal is kind of build around that idea of how do we have actually a level playing field?

But in fact, if you’ve dealt with wealth rather than income, that argument can be flipped.

And that was a political movement in and of itself so the idea that we don’t have a wealth tax shouldn’t stop us from thinking about, its possibilities and its potential.

So, it was what opened the door to really a technological development that today is challenging the very centralized model, as John Farell has pointed out innumerable times.

We’re going to jump right back into it and David, you had mentioned something about one of the candidates who is not getting a lot of attention that you thought was important and this is something that actually Hilary Clinton decided not to run after giving it very seriously consideration in 2016, the idea of guaranteed income and I’m curious how you can tie that into local self reliance.

At the same time, allowing that people will have jobs and that labor income is extremely important. So, universal basic income concept is now being adopted and it’s being adopted by a lot of different sides and it’s a complex subject, because one side essential wants to say, “Let’s take all the welfare programs, consolidate them and then give them equally to people around the country.” But the more I think, a sophisticated and well constructed argument is that much of the wealth that’s generated in a society is generated because of what the public sector has done, what government has done, et cetera. And this idea goes back to the very beginning of the United States and the Republic and to Thomas Paine and Thomas Paine wrote a book, extremely popular book called Agrarian Justice and he put forth the concept of a citizen’s dividend.

And the argument was that the value of land, the increase in the value of land, comes from two different things. One is the labor that people put into the land and that should be yours, that’s your income, that’s your genius, that’s your sweat. But the other is because of what the public sector does and at that time it was rural. So, roads for example, regulations related to delivery systems and today we’re talking about parks, we’re talking about piping systems, broad band extension. And so, the argument is then a part of that and this is what Thomas Paine said,

10% of that should actually be taken from, because that’s essentially rent and should, it’s unjust acquisition of wealth that should go to the public and then to be distributed in dividends to every man, woman, and child in the United States. And the amount of money that he was going to distribute is almost exactly the same amount of money in current dollars as the amount of money that Andrew Wang, who is a democratic presidential candidate, wants to distribute. Now there’s a problem with with Wang in that what he wants to do is raise the money from a 10% value added tax, and we can talk about a 10% sales tax at some other time, but many other people are saying what we should do is have a financial transactions tax. We should tax the increased value that comes from copyrights, from patents. That is the things that we did as a society as a whole that increased the value to an individual. A portion of that should go to the community as a whole.

But I don’t believe that we’re going to have a shortage of work if we actually have the kind of economy that we should have. I think we’ve always had technological change and there have been these periods in time where technologies have come along and wiped out entire sectors. I think what is different right now is that you have a handful of companies that really have a stranglehold. Because what happened in the past is that there was a sort of flush of new innovation, new ideas that led to new industries and new kinds of jobs, and we’ve really seen a collapse in that pipeline.

And what worries me about the whole UBI discussion is it becomes sort of a way of letting, big tech in particular, but large companies kind of off the hook and not recognizing that problem. And I also think as a matter of policy, deciding that a large share of the population is essentially useless is a really … I think that’s an incredibly dysfunctional idea. And I also don’t think it’s true. I think there’s an incredible amount of work that needs to be done. I mean we had Sarita Gupta on this podcast back I think last year sometime, I can’t remember. Talking about the care economy and sort of the whole tremendous amount of need there is for people as they get older and for kids, childcare and the like, which is going unaddressed. So I think there’s a lot of work and I think the idea of saying there is no work and that people are useless is a problematic idea.

And now we can see in the retail sector and in the personal care sector, the beginning the substitution in that sector. So I do think that one can talk about the dynamics of history in a different way, but the important point is that no one that I’ve read, actually is talking about a universal basic income as your only income. But with the studies that have been done, the pilot studies that have been done in Canada and in Finland and the like, indicates that even if you get a $10,000 a year, $8,000 a year, that amount of money changes the way you work, the way you think of yourself, and the options. Not only if you happen to be very low income, but also if you happen to be above that age and income levels. And that’s what they think is mostly important on this.

A few other episodes then addressed a concentration in the agricultural sector, which has been mentioned by a few of the candidates, including Warren. John Ikerd, episode 32, Joe Maxwell and episode 33, and then in episode 65 Leah Douglas. All three of those podcasts for Building Local Power we talk about the way in which concentration the agricultural sector is making it difficult to make a living as a family farmer.

Like this episode? Please help us reach a wider audience by rating Building Local Power on iTunes or wherever you find your podcasts. And please become a subscriber! If you missed our previous episodes make sure to bookmark our Building Local Power Podcast Homepage.

If you have show ideas or comments, please email us at [email protected]. Also, join the conversation by talking about #BuildingLocalPower on Twitter and Facebook!

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: Flickr via Penn State

Follow the Institute for Local Self-Reliance on Twitter and Facebook and, for monthly updates on our work, sign-up for our ILSR general newsletter.

In celebration of ILSR’s birthday, hosts Stacy Mitchell and Hibba Meraay talk with co-founder David Morris about ILSR’s journey over the past 45 years. They reflect on the Institute’s growth given changing political, economic and technological contexts. They also discuss:

So, I thought that was interesting to hear about as well and just thinking about how much cities have changed over this period and this relationship between engaging and working on policy issues at the local level and then how that influences and the dynamic with state and national politics, as well. So, I hope everyone enjoys this episode. Without any further ado, here’s Hibba and I talking with David Morris.

David, welcome back to Building Local Power.

In 1964, the people in the District of Columbia got the right to vote for president. In ’68, they got the right to vote for the school board, and in ’72, if memory serves me right, they got to vote for the mayor and the city council, so it was a city that was beginning to regain, if you will, its autonomy and its authority, and that was the environment in which the institute was born, and, of course, it was thinking of becoming a city state in the sense that it was a city that was treated like a state from the federal government perspective.

So, that was one very important, if you will, part of the environment into which we were born. A second part was my own experience in Chile when Salvador Allende was elected democratically in 1970. He led a minority government that wouldn’t pass any legislation, but was making a structural revolution for the common good in a profound way, and I grew up in New York City where we had a population of about 8M people, and Chile, at that time, had a population of about 8M people, and it had fewer engineers graduating from its universities than the city colleges of New York, and, of course, had a gross national product that was less than the city budget of New York and was going about determining its own future as much as it could.

And, when I came back from my visit, my stay in Chile, I found that New York City was declaring itself bankrupt and giving up its authority to three bankers, which it did for a number of years, and realized that there was a conceptual problem here, that, essentially, I had lived in this country that had far fewer resources than New York City to hap into, but they felt that they could make, especially in the face of sort of global embargoes led by the United States and the like, a true structural revolution, democratic revolution, and New York City was in despair. So, you know, that sort of combination of political events, if you will, spurred us to stead up the Institute for Local Self-Reliance and to focus on cities.

Can you talk a little bit about how ILSR has evolved, since, going from a neighborhood organization in DC to being a national organization, and then also having to think about the ways that some of the models in DC could work elsewhere, but also different levels of government and how that came into play in terms of the organization’s thinking?

One was the framework itself, and the framework, which I’ll get into in a second, we applied widely, we applied to all sectors of the economy. And then, the institute created initiatives, and the initiatives themselves were, “Drill deeper down into a part of the economy,” like, for example, broadband. Although, we didn’t start broadband until maybe 30 years later but we started solid waste immediately. We started energy immediately in the early 1970s, and so we had those two perspectives, and the framework was essentially a framework that said … cities have an internal market. They often have enough people that they have an expertise. They have an administrative capability, and in many states, they also have significant authority that they can, in fact, develop the rules.

Admittedly, they are constrained by the state governments, but they can develop rules that channel scientific expertise and human genius and investment capital in certain directions, and we posited a kind of framework of this as the ABCs of self-reliance, which is that we promoted an authority, especially at the local level, the authority to in fact make new rules, and the responsibility to make those rules in a way that honored and cared for the weak and the disabled, the elderly and the poor and the next generation, and that they would develop a competency that is a capability, if you will, a capacity internal to the city, not only an intellectual and a skill-based capacity, but actually a capacity to extract wealth from inside the city. And, that’s a framework that we’ve applied throughout our entire history.

The entire … and, it was a small staff of the institute would get together every day and we would bag our sprouts, and then sell them to the local restaurants and to local stores. And, we essentially tried to do that in a way that would allow the institute to, in fact, work in the marketplace, while, at the same time, making us interact with the community at large. But, at the same time that we were doing that. We issued, Bill Batko, our staff person at that time issued a report. I think it probably was the first report on a municipal bank, and it was a nuts and bolts how a municipal bank might be created in the District of Columbia to serve most the low income and moderate income community and workers within the District of Columbia.

And so, those types of things, sort of theory and practice, if you will, policy at the same time as hands-on really has characterized the institute through 45 years. Some of the better examples in the early years were in solid waste. We chose solid waste as one of our initiatives because it’s a sector of the economy over which cities have almost complete authority, and so you didn’t have to convince the city to deal with its garbage. It knew it had to deal with its garbage, and we thought of garbage not as garbage but as materials, and quite valuable materials which could be not only collected and sorted, but also remanufactured for value-added.

And, Neil Seldman rode the sanitation trucks with the sanitation workers at 5:00 in the morning to get a handle on what that meant and was using the little homemade scale a the landfill in Newark in the middle of the summer to weigh the different components of the garbage to get a handle on how much was paper and the like. This was before the federal government and the state local governments were doing that, but at the same time, he and we were working with activists around the country, and we were saying to them, “You can recycle at high levels and it can be part of your local economy,” and, at the time, because of the energy crisis, the larger environmental community, the organized environmental community and many people in the governments were supporting of burning garbage to generate energy, and waste to energy systems.

And, the problem with the waste to energy system is they’re very large, and if you build one of those, you actually don’t have any capacity any longer to do recycling, so, Neil would go in city after city and say, “Look, this is what we want to do long-term. We want to recycle, we want to create scrap-based manufacturing. We want to create a sort of indigenous manufacturing and collection capacity, but in the meantime, we have to fight these incinerators because if they’re built, we foreclose any other development path, and so for the first 10 to 15 years of institute’s work, we were primarily fighting incinerators, and by the late 1980s … I think 1987 was the time where more incinerators were canceled than were proposed, and by 1987, the institute had also published our reports, our case studies that indicated that you could actually recycle half of your recycling stream, at least at that time, which was revolutionary because most people thought you couldn’t recycle more than 10%. So, we’re not talking about something that’s narrow. We don’t talk about something that’s parochial. We’re not talking about self sufficiency. No nation is self-sufficient. That wouldn’t make sense. We’re talking about an interdependence and a cooperative relationship among cities where they in fact trade, but it’s a different type of trade that we have now in the world.

You were working on trying to persuade and enable these independent business associations to act politically in a way that could challenge the Walmarts and now the Amazons of the world so that they would in fact create a zoning code locally that would prevent a big box retail store from coming in and then, later on, more recently, they would work at the state legislatures to stop Amazon from having a tax exemption for selling the same products as they sell that they are taxed on.

The Broadband Initiative is the same thing where Chris is essentially working with cities, working technical assistance, hands on, working with entrepreneurs, working with technical people and experts, in cities around the country, and more recently with rural cooperatives, to enable their work in setting up their own fiber infrastructure, treating telecommunications networks as part of the essential public infrastructure, and at the same time has created two national organizations.

Their role is to essentially fight state preemption and federal preemption that in fact stop cities from having, or strip cities of the authority to create these publicly owned networks and then as well as creating a daily news service to report on, develops, as well as creating reports, technical reports, that can be used by people around the country when the private sector says, “Cities can’t own their own networks. They’re all going to go broke, and we’re terrific.” You have empirical chapter and verse data to refute that. We work at a number of different levels, but at the same time, I don’t think of it as being chaotic in its work. It’s sort of mutually reinforcing both internal to initiatives, and increasingly within, between initiatives, as well.

That was just an inkling, just a glimmering, if you will, and the other thing about cities in 1974 is that for most environmentalists, cities were a blot, if you will. Cities were something that consumed far more resources than their carrying capacity, than the land they occupied, and many people believed that one needed to go back to the land or needed to go to much smaller cities and villages if we were going to move towards sustainability.

Now, if you move, fast-forward, you move to a time where the federal government is giving less and less money to cities. You’re also talking about a time now where the federal government is hostile to the exercise of authority at just about any level and in fact is now thwarting and trying to overturn any initiatives for the common good so that now, unlike in 1974, most of the innovative, creative, active people in the country are working at the local level or working at the state level, because that’s the place that space is still available, and they’re working in an opposition to the federal government to delay and disable, if you will, those initiative. It’s completely the opposite of what was occurring in 1974, and we’re thankful that we’ve had 45 years of experience, and that can be useful for that.

The other thing is that the decentralized dynamic of technology, which was just a glimmer in 1974, you had mainframe computers in 1974. You didn’t have laptop, let alone an internet, and now, you’re talking about the internet, of course, being something which has its positives and its negatives, but on the positive side, it can enable a communication, and increasingly, one translated into your own language among peoples in the world and among peoples within a community, and it allows transparency for governance, and it allows people who produce products, especially products that are information products, to sell directly and bypass the middle people in that process, and solar cells are now competitive.

They were competitive with nuclear plants six or seven years ago, but they’re now competitive with coal and natural gas plants, and you now have several million homes which produce enough electricity from their rooftops to provide all of their electricity year-round. Now, they don’t produce it at the specific time that they need to do it, so you’re beginning to talk about storage, and they sell, and they export electricity, they import electricity from the grid system, but nevertheless, you’re now, it’s now mainstream to talk about the possibilities of decentralized technologies like desktop manufacturing tech that weren’t really even thought of in 1974, but it’s the dynamic of the decentralized technology that we promoted and we adopted early on.

There were examples of it, but we thought that technology from the 19th century to the late 20th century was centralizing. When you shifted from wood to steel, when you shifted from wind power to fossil fuels, when you shifted from batch manufacturing to mass manufacturing, inevitably you shifted from small to large, and now the technology is centrifugal. It is now potentially decentralizing. I think that that’s extremely important in terms of the changed context in which we work.

If you’re a fan of this show, then I think you’ll really like this other podcast I’ve been listening to. It’s called Capitalisn’t. It’s about the ways that capitalism is and is often not working in our society. They cover everything from whether Facebook is a monopoly to how to fix global inequality. It’s a show that really explains what’s gone wrong with capitalism and what we can do about it. It’s hosted by two economists, Luigi Zingales of the University of Chicago, and Kate Waldock at Georgetown University. It’s entertaining, smart, funny. I highly recommend it, so check it out. Capitalisn’t, wherever you get your podcasts.

All right, we’re back. David, before the break, you were talking about how technology in some ways today, with the internet, is enabling decentralization. There are also some, of course, very troubling ways in which we now have a handful of companies that essentially control the internet and have become gatekeepers, Google, Amazon, Facebook, in ways that I think you could say, not dissimilar to some of the technologies you named in the past where you had folks who took hold of the railroads and used them to push a particular agenda that benefited the concentration of wealth, and I think you similarly see that today. I also want to kind of come back to this issue of cities in the context of this question, because on the one hand, there is a lot of authority that cities have, but it’s hard to see how we solve some of the biggest challenges that we face, for example, around the market power of a company like Amazon from a city level. I’m curious how your thinking on kind of levels of government has changed and how you reflect on that and ILSR’s work.

All right, we’re back. David, before the break, you were talking about how technology in some ways today, with the internet, is enabling decentralization. There are also some, of course, very troubling ways in which we now have a handful of companies that essentially control the internet and have become gatekeepers, Google, Amazon, Facebook, in ways that I think you could say, not dissimilar to some of the technologies you named in the past where you had folks who took hold of the railroads and used them to push a particular agenda that benefited the concentration of wealth, and I think you similarly see that today. I also want to kind of come back to this issue of cities in the context of this question, because on the one hand, there is a lot of authority that cities have, but it’s hard to see how we solve some of the biggest challenges that we face, for example, around the market power of a company like Amazon from a city level. I’m curious how your thinking on kind of levels of government has changed and how you reflect on that and ILSR’s work.

States do have antitrust laws, and they can, in fact, make inroads into dealing with these issues, but one thing that you can do at the local level, and I think it’s true about all the issues of the day, is to educate people, is to have a debate with people, is to… The thing about local politics as opposed to national politics is that local politics is retail, and you go door to door. I mean, it doesn’t cost that much money to either run for office or to have a campaign, if you will. It doesn’t mean it’s going to be successful, but you don’t have to raise $100 million to buy ads on national networks, so it enables things. That doesn’t mean that it’s going to be easy at all.

As I said, internet is potentially decentralizing. It was set up to be decentralizing. It was set up to operate after a nuclear war, but at the same time, it is centralizing in its control of information. What we see there is not only the Facebooks and the Amazons, but China, for example, a authoritarian government that’s becoming increasingly a totalitarian government because of the ability of face recognition, because of the ability of tapping into social media, that is collecting information on every individual citizen. Those are the types of things that one has to deal with, and I think that dealing with that is probably going to be the hardest issue that we’ve had to date, but once again, there are things that can be done at the local level to show people the value of privacy and the value of an ecosystem which is an ecosystem which is not a monopolistic system and a monoculture, if you will. That’s where I see the role being for cities.

You have, in the health sector, which I know Amazon has just gotten into, ACA, the Obamacare program, had a provision in it where, after 10 years, states could ask for innovation waivers. It’s been 10 years, and the idea was that, by many people anyway, was that the innovation waivers would enable a single payer or a public option health system, and that the federal government would allow funds to be used to make that happen.

Well, unfortunately what happened was Donald Trump, and so you now have a federal government that will deny any waiver that enables a public option, that is, enables the public to have control or any more control over the health system, while at the same time, they will approve waivers that require work requirements for Medicaid and the like. There is a neverending dance, or battle if you will, or exchange between higher levels of government and lower levels of government, but I do think that the issue of subsidiarity, which you know, we’ve been promoting, which is you know, allow the local government to do what it does if it’s not hurting anyone, you know broadly, and the federal government and state government can intervene to protect minority rights within those cities, but otherwise should stay out of the way. I think that that educational campaign is extremely important because that’s what will provide fertile ground for the kinds of sort of antitrust, pro privacy legislation that I think you are that you’re working on and I think many people are working on.

You know, things that could actually structurally shift Walmart’s power, and kind of open up the way for a true reinvigoration invigoration of local economies. So I think part of what something that we’ve learned as an organization is what is the dynamic between those two things, in a way working at the national level only, I don’t think achieve something. But I also think working at the local level leaves something behind too.

And once again, in terms of the changed context between 1974 and 2019 is that, you know, when we started the idea, I mean the, the slogan states’ rights was a racial slogan. I mean it was a slogan that said that the, you know, state should have the right to deny people the right to vote and discriminate against people. That’s what state’s rights meant. And I think that now, you know, that slogan is probably still pejorative because of its legacy, but the idea that the state should have more authority to exercise for the common good is one that is I think, increasingly discussed and increasingly put into practice. Whether it’s minimum wage or required parental leave or what have you. So the, if you will, the progressive or the liberal or the community that has previously very much opposed states authority, exercise of authority, because it’s been discriminatory, you know, are now looking to the states to provide the authority that cities don’t have to deal with the larger issues.

In Spain right now there are secessionist movements. Catalonia is one, the Bass province is another and so forth. There are secessionist movements at the regional level, but more recently there are groups that have gained power in cities, larger cities like Barcelona and Madrid. And they are talking about the need to have confederations of cities within Spain, and not to essentially talk about a region uncoupling from a nation state. And that would allow for you know, a more democratic structure and also a more cooperative structure. And one of the good things about modern technologies is that you, you can in fact have discussions, you know, between cities that are stored and you can also have a competition between cities that is not the same as a competition in the private sector.

I think for example you know, the competition of sports teams from city to city is a much more welcome competition than the kinds of things that, in terms of the dog eat dog of the marketplace. So a confederation would be the structure of the future. I would also see that people would be capable of surviving if there were a cutoff of some sort of basic source for at least a certain period of time. There was a biologist whose name I forget, but he was talking about that self reliance is not self sufficiency but it is the potential for self sufficiency, short term self sufficiency in certain situations. And so you know that in terms of resiliency in the face of a hurricane or a tornado or a flood or you know, a larger corporation deciding that they don’t like what you’re doing.

And so you know, that would also be something that would be built into the future. But I don’t envision a future where there’ll be no strife and where everybody will love one another and you know, things will be at peace and the environment will be protected completely. And you know, so I’m not Pollyanna-ish about that. And the institute, you know, works often at the nitty gritty levels, at the day to day levels and when we look out, we often look out to ten years because, you know, for us, if you can achieve something significant, you know, in ten years, the rest in some ways takes care of itself. If you were talking about 50 years, your kids aren’t going to be around or they’ll be so old that they won’t be around to see what happens in 50 years, whether it was a success or a failure.

Featured Image: Co-founders David Morris and Neil Seldman pose with David’s partner Harriet Barlow.

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Host John Farrell talks with Marcel Castro Sitiriche, co-director of CoHemis at the University of Puerto Rico Mayaguez, about the challenges Puerto Rico faces in building a clean and resilient energy system. They also discuss:

Welcome Marcel.

Now, there are other reasons why it took much longer than other places. For example, then before Hurricane Maria, PREPA was already diminished by austerity measures. So there were less things in stock to replace poles and materials and also there was less personnel working with PREPA compared to 20 years ago when George’s impact of. Another important thing was Maria was very strong. When it got to Florida it was not as strong as when it hit Puerto Rico and just looking at the average wind speed in the impact lab. Estimated throughout the whole Puerto Rico land area, only five storms were more intense than Maria and they were all in the Pacific Ocean.

That is from the 1950s until now. So when we look at that is very strong hurricane. Also the devastation due to tree falling and landslides. There were thousands of landslides across Puerto Rico but particularly in the center of the island where recovery at first took longer to get and restoration took a month, almost a year. In addition to that we had a slow start. Government didn’t call for aid for more than a month. It took six weeks for the government to call on aid assistance and that hampered the recovery efforts in the beginning.

The official version is that the private companies could jump in without matching or putting some money up front from the Puerto Rico government side but there might be other issues involved. For example the idea to make Prepa private and I think everybody was aware that whoever restored your power is going to have a great impact on your mentality on your perception of who helped you recover power. Is it a public power utility in the U.S. or is it a private utility. And I think that played a role in that decision.

But I’m speculating about that. But it’s possible. The other thing is that we are a remote island so the super crews could not drive from other states to help Puerto Rico so they had to come by boat and that takes longer and it’s more expensive. So that’s another thing that limited the quick responses sometimes that the states get. And finally the rough terrain, the mountain areas are really hard to get because the Prepa workers were less so the people coming from places like Florida, they don’t have experience with this mountain terrain that you can find and that is something that also played a major role in what I call is the longest blackout ever in the world.

I had never heard of a power outage that lasted 329 days.

But you’ve created a pretty interesting document looking at the problem by focusing on the hours of lost electricity. So you just mentioned it was the longest blackout every. Tell me a little bit more about what you’ve been trying to track in terms of how this blackout impacted and then how that’s been allowing you to focus on approaching this solving this problem in a different way.

But also you can compare that with maybe a smaller like amount of people or customers losing power but for extended periods of time. So when we look at the customer’s hours of lost electricity service which I call choles, to make it short. Hurricane Maria was already above 1 million 200 choles on October 2018. And by April, the Rudding Group reported that it was already the second largest blackout in the world. Only Typhoon Hayan in the Philippines had more than 6000 choles but to keep in mind that the Philippines has a population of 100 million people as compared to the less than 4 million people in Puerto Rico.

So then I started looking at how this can be used to make better decisions and also now how to best distribute the recovery funds that we hope at some point get to the people that need it the most. And that brings some interesting numbers. For example, I divided the groups of customers in Puerto Rico in three and the last 200,000 customers that represented 14% of the total of the customer of Prepa contributed about a third of the total choles which are about 3,000.

In my estimate I have a conservative estimate of 3,000 but other estimates but it more like 3,000 400 million choles. I have about 3,000 million and so it is a lot. I estimated 928,000 million choles for only those 200,000 customers that spent more than five months without electricity. Now, when we think of what should we do and how much it will cost to fix that vulnerability we should keep in mind that when Hurricane George the estimated total number of customer’s hours of lost electricity services about 1,000 million. So it’s very close for the whole Hurricane George that devastated Puerto Rico in 1998 is very close to the last 200,000 families that the last one that recovered power after Hurricane Maria.

And to put that in context with other events. With Sandy there were 775 million choles. With Jugo in 1989 that’s the first one I remember. Puerto Rico it was about 700 million choles and with Katrina for example it was 681 million choles. So when we put that in context I think the numbers are really mind blowing and we need to really think how to best invest and cover the vulnerability of these last 200,000 families but also all Puerto Rico.

And also in the southeast of Puerto Rico. For example in Yoacoa where the hurricane came in. And I was thinking about that when I was thinking about that when I look at the percentage of restoration throughout the recovery process, the restoration process and the southeastern coast of Puerto Rico, which was beautiful. There is a nice road to go there because you can drive at a high altitude. Very close to the ocean, which also makes it difficult because that means that there is the corner of the island that receives very strong winds or stronger than the rest of the island and at the same time they are mainly a mountain rural areas.

So you have those factors combined with having mountain areas with stronger winds than the rest of the island. And based on that what I’d like to see prioritize these family because there are many plans of 100% renewable in 2050 but I want to focus on more on what we can do in one to two years when we cover these vulnerability with technology that already exist.

This is important because it could give us a window into the future what would be needed in other places in the United States afterward. We have two specific issues to address that are particular of Puerto Rico and that is the vulnerability to hurricanes and also the high cost of electricity from the grid. Now, there are projections. For example, HOMER Energy and Rocky Mountain Institute did a work on grid defection, the economics of grid defection and they predicted that in a couple of decades, there are many cities that are going to be challenged or the utility model is going to be challenged in those cities by decreasing price of solar with storage.

Now, that already happened in Hawaii and is happening now in Puerto Rico. If we do things right in Puerto Rico, it could serve as a model for other cities to follow, especially when solar with batteries become a real challenge to the grid.

We don’t need to make it all cutthroat competition. We should try to collaborate and make the transition to what makes more sense for the customers and for the families.

And unfortunately largely rebuilt in the same structure that it was before as you mentioned, the centralized system that leaves it fairly vulnerable to hurricanes. What are the funds that are still expected for Puerto Rico and when are they expected to come that would allow investment in a new version of the grid that would be more resilient and reliable?

Now, there are an additional … It’s almost two billion, 1.9 billion on … That is also CDBG funds, I should say. This is CDBG funds that comes from HUD. There is a future amendment to the action plan. We already have two amendments and those $436 million are in that.

So the next 1.9 billion is in a future amendment and that 1.9 billion is supposed to go for the electric grid but not for PREPA. So, that is less defined. It’s just they were just mentioned that. So I’m thinking it could be energy co-ops or also private organizations.

I hope that a lot of that money is used to put power on the rooftops of houses and small business because when we’re talking about $2 billion that is something you can cover 200,000 houses with small systems and some business as well.

Beyond that, there are also maybe about 20 billion from FEMA that is expected to go to PREPA. That one is more uncertain because I haven’t seen any action plan for that, so I’m not aware of what’s gonna be done with those money.

There are a lot of talking about mini grids, which I don’t think is the best investment because it doesn’t address the vulnerability of the distribution system at the lowest level. Also, natural gas infrastructure which, again, I think those things should be considered once you cover the vulnerability at the household level, the business that need it and then also at community level. And then you consider other options.

That’s what I read in the different plans. But there’s uncertainty of how much is really gonna come and also when are they gonna come. I’m worried that we’re not that many months away from the peak of the 2019 hurricane season and I worry about those 200,000 families that need to be taken care of some way or the other.

Thank you so much for listening to this episode of Building Local Power with Marcel Castro Sitiriche, Co-Director of CoHemis at the University of Puerto Rico Mayaguez. Hey, do you think you’d be a great guest on Building Local Power? Dying to tell Chris Mitchell what he could do better? Want to just share some love? Email us at [email protected].

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Please take a minute and go to archive.ilsr.org/donate. Any amount is welcomed and sincerely appreciated. That’s archive.ilsr.org/donate. We also value your reviews on Stitcher, iTunes or wherever you get your podcasts. Thank you so much. Now lets hear about the impact of Puerto Rico’s colonial past on its present efforts to build an energy system for everyone.

So I wanna take a minute to just give folks a little bit of background about why this is such a challenge. Not Justin terms of the structure of the grid and the geography of the country that make it difficult to build a resilient energy system.

But also that, and you alluded to this, you mentioned this a little bit earlier about PREPA being under an austerity plan that has many fewer employees and resources than it had, for example, 20 years ago with Hurricane Georges.

And I think one thing I want to make sure listeners understand is that part of the utilities problems come from the island’s colonial past. So something I talked about briefly at the Black Start Conference and others have also discussed as well.

So, for example, the island’s last federally appointed governor set a president of giving free electricity to cities and to city owned properties. Something that costs each PREPA customer over $100 per year, money that could otherwise be invested in infrastructure or in micro grids or solar.

So it sound that in some ways that PREPA has also … You not only have this some sort of legacy decisions that are the result of Puerto Rico having this unique status as a US territory but not a state and decisions that are being made.

You have the federal PROMESA law that we have a financial oversight board that is even though it doesn’t have any representatives from Puerto Rico it makes decisions about the financial health of the island.

So, we have that background. I’m just curious, you mentioned PREPA’s going to hopefully get some resources from FEMA going forward. There’s also, as you mentioned, I think a lot of home that there’ll be investments made that are not controlled by PREPA.

What do you think PREPA could do if it was going to spend that money well to support a cleaner and more affordable energy system?

That I would say represent the problems of our colonial present because we still-

When we say PREPA should do this or PREPA should do that are we talking about the worker of PREPA, are we talking about those that are demonstrators of PREPA? Or we’re talking about the governments that appoints the governing board and always change laws to take control of that government board of PREPA and the high level executive that the government appoints?

Or are we talking about the people that should in theory control the public power company that is PREPA? That is not an easy issue to solve. But, the main problem has been that the way PREPA has been controlled is in favor of the political party that is in power.

For example, I remember talking to our colleagues here at the university and the power area, why the rate has not been increased? Something like maybe 20 years ago three cents per kilowatt hour and the only reason is for political reasons.

If you increase the rates, you lose the election so you don’t increase the rate. Actually you … There are instances even when the rate was reduced with a loan one month before the election in, I think that was 2012.

So that has been a problem with PREPA because if those that made decisions on PREPA are thinking of winning the election then you are not gonna revise the incentive, for example, for municipalities because the leaders in the municipal governments do have a political power and can change the outcome of the election.

And we might do only what seems best in the short term in four periods and not what is needed in the long term. This is not exclusive of PREPA. About more than a year ago PREPA went with the government and with the fiscal oversight and management board to Judge Taylor Swain to request an approval for a loan of $1 billion.

It was not approved but they did approve 300 million because they were gonna run out of fuel. They didn’t have credit to do it. Now this is monopoly and question how can you make a monopoly bankrupt. But the same thing could be said of the board when they go to ask for loan instead of raising the price.

They did not want to raise the cost per kilowatt hour because, and I’m assuming this, it would create a backlash for the privatization process that they wanted to push. Also didn’t act as a business that has a monopoly and they wouldn’t get a loan for this.

The main problem with PREPA management has been looking at short term four year periods. And the only problem is that the same people that create this problem, which is the decision maker now they want to privatize PREPA. So instead of solving the issue that they created they privatize without giving any reason to or study to believe that the rates are gonna come down.

So we are promised that the rates are gonna come down and that’s what politicians have been doing, not raising the rates that should have come up 20 years ago and would not a 9 billion debt. But, it’s now what should be done now? What can PREPA do?

PREPA need to do some things that might not be very popular like increasing the cost per kilowatt hour, but it should be done in a sensible way. What are we getting for that? Are we getting a more resilient grid or this increase or are we not getting an increase because we’re gonna get funds in any other way to improve the system?

Can PREPA provide the solar systems that people need in the mountain? Is PREPA the best organization to provide this kind of sort of resources or should it be done by another entity? The ultimate thing is what is the best thing for the people.

I would not say that I am defending PREPA. What we need to focus is what is the best for the people, not the best for PREPA or PREPA workers but also what’s not best for the private interests that are looking to private PREPA.

This is similar to the university, for example. Some people say we need to reduce the government spending or government investment in the university to tackle the privatization in the university. But, I don’t see that, that has been a problem in other places.

In other places the governor changes from one political party to another. As far as I know, the president of the university do not change. But that does happen here.

So we need to find a way to tackle the issues of political takeover of public institutions without the need to privatize them because then too many things are get involved. We need to privatize. Let’s privatize but let’s do it for the right reasons and the studies that prove that is the best for the people.

I had a couple thoughts here. One is just sort of a comment which is interesting to hear so much focus on the rates, the electric rates in Puerto Rico. And yet, in a lot of other places in the United States the discussion around energy cost is around bills and a recognition that customers pay a bill, a total bill, they don’t pay a rate per se.

And it’s sort of hard to split that apart. But, a good example is that electric rates.

For example in the Northeastern United States or in Minnesota for example might be higher than in the Southeastern United States like Georgia or Florida but our average electric bills are actually quite a bit lower and that’s because there are many more efficiency measures and investments that are made by utilities. Usually pushed by state policy in those states and I think that’s an interesting potential approach here for Prepa and for the future of … to the degree to which people continue to be served by a single utility, a focus on, okay, well how do we help lower the amount that people pay in total even if we have to raise rates in order to fully fund the utility company.

So there is that. I also wanted to talk about as well though, so there have been some kind of policy reform efforts and there are two that I’m interested in getting your thoughts on. One is this energy reform law 1121 that some folks are called the Puerto Rican Green New Deal. It includes a provision for 100% renewable energy and I think you alluded to this earlier but that it’s out several decades in the future.

So I’m curious, number one about how that law might help now in the short term with this issues of resiliency and clean energy and then the second one is that in the last five years the islands’ government has established an energy bureau charged with overseeing Prepa and it seems in this conversation about making sure the utilities accountable, that is perhaps the most successful thing already that has already done things to help hold the utility accountable and most recently released some ruled for micro grids, which are small grids that can be run by a community that can either operate independently or they can operate in connection with the larger grid and it seems to me that both this new law and these regulations from the energy bureau that is overseeing the utility could offer some near term opportunities.

And I’m curious what your perspective is on this.

And that is something that should be part of the energy public policy. Also, this bill leaves the door open for a large investment in natural gas infrastructure, let’s say a transition to 200% solar and that is also worrisome because we might not do the best investments if we go too much into building new gas infrastructure which we’re really trying to go 100% solar in a few decades where this infrastructure might last another 50-60 years. And also while there have been more talk about utility scale, solar and utility scale storage.

I don’t see enough prioritization of rooftop solar. That also gets reflected in the IRP by Prepa that includes a good amount of utility solar systems but not the rooftop solar and again this is where we need to start. We need to start with the rooftops. I call it the bottom up grid approach. We need to build a new power grid from the bottom starting in the rooftops of the houses and business and industry and then look at what we can do at community level, for example for houses maybe there’s some community centers that should be empowered with this kind of systems on a community level so we could build micro grids that reinforce what already exists in maybe many houses.

But maybe not all of them can have a solar system for infrastructure problems or shading or things like that and a micro grid can help with that. And if you go up the bottom up grid maybe by the time you get to mini grids if you already have a strong system then the mini grids might not make economic sense. The kind of investment needed if you already have so many rooftop systems and also micro grids. One problem with this approach is the big companies that install big systems. Major projects like one billion and a half generator.

If they want to do make money with solar rooftops then you need to have hundreds of thousands of small projects. And that’s not as good for this kind of big companies. However, it is good for small companies in Puerto Rico that do this kind of installations. So I see it as a win-win. But it could create a problem with those interests. About the micro grids in development in the island and there is a new rules and now I believe that the interconnection rules there is a draft released last month. So it’s under review. So that’s moving forward and I think that’s great.

These are the steps in the right direction and we need to enable communities to be able to establish micro grids and find different ways to establish micro grids. However, I think that’s not the place to start. We’re going to start with the rooftops that exist now and that can be done now without further regulations or rules and we need to find a way that as we add rooftop solar in thousands, in hundreds of thousands of houses that those resources could be used when we build the micro grid at that level.

And perhaps one of the things that I want to research the next couple of years is how to use the solar rooftops with batteries as a precursor of the micro grid and not make it a competition, well this community have solar rooftop and this one has micro grids. No, how can we massively deploy solar rooftop systems with batteries and then connect them in the micro grid way to make the system more robust because at the end what we want to do is keep the lights on and from then on we are talking about getting to the future of a consumer trans-active energy, peer-to-peer energy that could be tested in Puerto Rico if we had this massive level of distributed level of capacity for generation or for storage.

So again, this could be an opportunity to cover a vulnerability that is very much needed in the areas of Puerto Rico to leap frog and go to the next grid or the next energy system that we should have in other places. But here because of the abundancy of solar, the high cost of power from the grid and the vulnerability to hurricanes could help do the transition faster. And also considering that we have an aging infrastructure, the fleet generation fleet of Prepa is about 30 years older than in the U.S.

So something I say is that it’s like we’re driving a Toyota Corolla from the 1980s. This is our fleet but if we are going to go through a transition that is going to make obsolete all the roads and now all the cars are going to fly. For us to stop driving the little car from the 80s, we’re not going to be losing as much as if we have a brand new Chevy that which might be the new natural gas infrastructure.

So I think we are in a good position because we have aging infrastructure to make the transition faster and more direct to renewables.

Thank you so much for sharing your vision of how Puerto Rico can recover from Maria and invest in the local communities and rooftop solar. Really appreciate you taking the time.

We’re talking about the benefit of people. And I think that’s something that we can agree on and that would have focus on the people aspect of energy. 200,000 families that need action in Congress and the government and so we can unite with that and perhaps if we unite for those 200,000 families then we can unite for many other things that … and that would be great. That is my vision to working for a better future.

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Host Chris Mitchell is joined by ILSR Co-Directors Stacy Mitchell and John Farrell for a conversation on various anti-competitive corporate actions and state policies that might have slipped under your radar. Topics discussed include:

We’re going to talk about all that stuff with me, Chris Mitchell, who runs the broadband program at the Institute for Local Self-Reliance, and we’ve got Stacy Mitchell from the Portland office.

The merger went through. The government did, actually, interestingly, oppose it, but it was ultimately approved by a judge. That final decision, I think, came down just a few weeks ago.

I think that was maybe three years ago. This is the second time that they’re raising prices on this product. Frankly, now that they’re going to get their hands on HBO, we’re very worried about the ability of them to deny high-quality content to others that may be fighting them in the marketplace. If I was a company marketing a channel line-up, I wouldn’t be able to put HBO in it perhaps. AT&T would say, “We’ve got all the same channels that Chris does, but we also have HBO”

I think something … I don’t know if you’ve been following this, Stacy. I know some of the people that you follow have been talking about it, but in some ways I think it’s a race as to whether or not AT&T’s terrible management destroys HBO fast enough that it’s not actually an advantage in the market anymore because it’s not producing content people feel they must have.

I guess I just keep getting confused hearing about these mergers that companies continue to talk about size as some sort of an advantage for consumers when it’s really only competition that generates the incentive for businesses to lower prices.

I get the impression that a number of people are discomforted by the empirical results that don’t fit at all with the models that they generate. I think they leave the FTC, the DOJ, which is the Federal Trade Commission, the Department of Justice, rather than trying to stick around and fight for better models, but I don’t have a real sense of what’s happening. I think it’s really easy to be cynical, and particularly when we know that the Trump Administration put its finger on the scale and said to the Department of Justice, “You must fight this. We need to stop this merger.”

Stacy, one of the things that we conjectured about last year was whether or not the Trump Administration, Department of Justice was fighting this merger for good reasons or for corrupt ones. We may not know, but the answer is either only corrupt ones or both corrupt and really because they believed it was a threat to the marketplace.

I think this discussion about the empirical evidence of what happens after these mergers is really important. There’s a guy, John Kwoka, who is an economist at Northeastern University, who’s actually gone back and done these detailed retrospective analyses of past mergers, what did happen? He’s found just repeatedly that the predictions that antitrust authorities made about what would happen in the future didn’t come to pass. Instead of prices going down, prices went up, and there were other anti-competitive effects.

Richard Nixon was a huge fan of this, making sure that the broadcasters didn’t own the programs in the ’70s. This is not just some modern day left versus right kind of thing. It’s, once again, the powerful against everyone, and in a number of people who are just getting a lot of money to cynically promote the interest of big tech and pretend that it’s a conservative position against a more liberal position, which is of opposing the mergers.

The second one is that competition is eroding them because people who have the choice in California because the government has created more competition, are choosing to move away from PG&E. The lesson there really is when folks have a choice, good things happen in the market, which means a big stuffy, stodgy utility company goes into bankruptcy. The challenge is going to be able to figure out what do you do with the grid system that it owns that still delivers energy for everybody, including the competitors? That’s where this piece that I wrote talks about this is the opportunity to have the grid as a commons.

As you mentioned before about owning the pipes versus owning the content, the electricity system for 100 years has had monopoly ownership where the owner has been the owner of both. We’re at a time … a unique time in history in the technology of the electricity system with things like rooftop solar, where we can move away from that. Check out the piece for Green Tech Media I wrote on it. But I would like to talk about a different issue that’s going on with utilities that we need to address.

It’s hugely important. It’s been driving by the resurgence of the climate movement by communities realizing that renewable energy is cheap and affordable and a great opportunity to both do something good for the environment and for the economy.

The movement, the climate movement that has provided the political will in New Mexico and states like Minnesota or Illinois where bills like this have been considered or passed in recent years has really been focused on this broad opportunity to democratize the wealth in the energy system. You saw that in marches in New York City and across the country on climate. You hear that from climate activists across the United States and in other countries. The problem is that these bills are unfortunately going in a completely different direction

Then the second thing that’s happening in this bill and in other bills — there’s one in Minnesota, for example, that’s under consideration — is that when they shut down the fossil fuel power plants in order to comply with the law, the utility now has the right of first refusal to own all of the replacement power. So whereas all of this excitement has been building in the climate movement among clean energy advocates for a couple of decades now around the opportunity to have diverse and distributed ownership of renewable energy resources, to have lots of rooftop solar and community-based solar and wind projects owned by farmers, what this bill essentially says is that’s all done. The utility monopoly we’ve had for 100 years that didn’t really make sense in an era where we don’t need a monopoly anymore is going to be cemented in law for another 30 years and throughout the entire transition to clean energy.

So there’s all these different ways in which clean energy can create jobs in particular places that we would get to choose if the utility is not the one owning it. So it’s really just about that core American value of choice and competition and markets as well as this opportunity to fundamentally change the fact that the people who have borne the greatest brunt of our energy system until now are those who have to live by the dirty power plants that the utility has owned and that the utility has generally not had to compensate for the health effects, for the environmental impacts, et cetera. What we’re saying unfortunately is rather than take an opportunity that we have to say to those folks “You have been trashed on for decades and we have a chance to fix that by allowing you a slice of this new clean energy economy, we’re just going to continue to dump on you by taking all of the wind and solar resources that are in your area and send all the profits to Wall Street.”

You can also support our work with a donation. That’s essential to keeping us in good spirits and having good equipment to record podcasts and do research. So if you want to make a donation, you can go to archive.ilsr.org/donate. We do thank everyone for supporting us. Lastly, be sure to leave a review. We haven’t had as many reviews lately as we’d like, and if you have a chance to leave a review on iTunes in particular, that’d be terrific. Now, we’re going to come back to the show, and we are going to jump into a story from Stacy that doesn’t deal with Amazon immediately. Then we’ll talk about Amazon afterwards.

I’m a person who usually carries cash around. In fact, I actually have the credit card that I use the most from my local bank. I’m very conscious of using that if I’m going to pay my credit card for a local merchant because of how the fees that the credit card companies charge can really harm local merchants’ profit margins, but I understand there’s a whole other issue with something called cashless retail. It seems to be springing up in Philadelphia if I’m right.

Most of the argument in favor of these policies has been focused on the fact that not everyone has credit cards, that there’s a large segment of the population that’s un-banked or under-banked and doesn’t have access to those forms of payment. That means there’s sort of increasingly these places that they are locked out of, but at ILSR, we have also begun to raise this other issue about cashless retail which is that it gives a handful of really large banks and the credit card companies, Visa and MasterCard, the ability to just skim a lot of money from the economy without providing much in return.

So at the moment, we have sort of cities stepping in because they recognize the needs of low income customers who don’t have credit cards, and are sort of in the trenches with this issue. And meanwhile, as I think we see with a lot of issues, we have this need at the federal level that’s going unaddressed, sort of forcing cities to scrambles in ways that kind of limit what their options are.

But that said, I think we’re done not talking about Amazon. And I’m curious-

So, I think there’s a lot of people who still need to learn more deeply about what’s going on here. I think, Stacy, you have a couple of interesting things that are illustrating some of the harms that we fear will get worse, and the nature of Amazon’s predatory tactics.

So I mean, again, as we’ve talked about on this show, one of the big problems with Amazon and with monopoly in general is that these companies start to set the rules for us instead of the other way around, start to run government for their own ends.

I think the other thing that has been really striking in the news the last couple of weeks is sort of examples of how much Amazon sets the rules for the market, the quote, “market,” ’cause it’s really not a market anymore if a private actor decides who gets to play and who doesn’t and on what terms. So, one of the ways that this has shown up is Amazon recently did this big purge of companies off of its vendor seller system. So, companies that had been selling Amazon products, a lot of manufacturers and brands, suddenly overnight kind of got these letters that by the way we’re not reordering, and if you want to sell to us, you need to go move to this other platform. You need to use the third party seller platform, or you need to register for this other thing. Hugely disruptive to these businesses who rely on Amazon in many cases for more than half of their online sales because that’s how dominant the company is. In some cases, more, even.

And suddenly, they were completely scrambled and everything was thrown up in the air. And it’s sort of unclear exactly what Amazon’s motivations are in doing this or what the outcomes will be for different companies that are dependent on it. But just as an illustration of its power was pretty, pretty remarkable.

And the way you’re describing this, it actually seems to me that one of the dangers here isn’t necessarily Amazon intentionally behaving in a predatory way, it’s more that the people who are making these decisions, they don’t really have much incentive to worry about the repercussions. And they might just be in a meeting and saying, “Oh, let’s try this thing out,” and not realizing that thousands of businesses have their bottom lines changed by that.

It’s almost like when you give a toddler the reins of power. I’m less interested in the motivations for what they do than the consequences that I’m deeply worried about.

And when you have a company that starts making those rules, you’re no longer really operating in a kind of democratic fashion, and that’s just fundamentally problematic. But I would say as a kind of long time Amazon watcher, a lot of these things do, as we watch them play out, are intentional. They do in effect build Amazon’s market power or give it more leverage over suppliers. Or there is a science behind what it is that they’re doing.

But if Amazon has blocked that, you know, you essentially have Amazon saying, “We’re gonna keep raising our fees, and we’re gonna block you from taking advantage of lower priced platforms to offer customers a lower cost somewhere else.”

So, Senator Blumenthal raised a question about that in a letter, and ultimately Amazon has nixed the policy.

And so actually, in that vein, the recommendation I have comes from one of the best follows that I know on Twitter, which is a guy named John F. Farrell, who always seems to have just a few more followers than I do. John, you actually just tweeted out this story that I was just amazed by from Idaho Press. Boise has the largest geothermal system in the country, here’s how it works.

And it’s about this district heating system in Boise, and it’s fascinating. It dramatically lowers the cost of heating for buildings in the downtown, and the only thing I could think about as I was reading that was how I sometimes get a reaction from people, like cities building their own broadband networks? Cities can’t do important things, they can’t do complicated things. Cities are just incompetent. And this is just a reminder of all the things that cities do, often under the radar, that people don’t even appreciate, that work so well and are just kind of hidden from sight. So, we’ll have a link to this in the notes, but it’s also a reminder that cities actually do really great things, and they don’t often get appreciation for it.

If you like this podcast, please consider sharing it with your friends and leaving us a rating on iTunes, or wherever you get your podcasts. This show is edited by me, Lisa Gonzalez, and I also produce the show along with Hibba Meraay and Zach Freed. Our theme music is Funk Interlude by Dysfunction_Al. Please join us again in two weeks for the next episode of Building Local Power from the Institute for Local Self Reliance.

Like this episode? Please help us reach a wider audience by rating Building Local Power on iTunes or wherever you find your podcasts. And please become a subscriber! If you missed our previous episodes make sure to bookmark our Building Local Power Podcast Homepage.

If you have show ideas or comments, please email us at [email protected]. Also, join the conversation by talking about #BuildingLocalPower on Twitter and Facebook!

Photo Credit: Medium

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

Follow the Institute for Local Self-Reliance on Twitter and Facebook and, for monthly updates on our work, sign-up for our ILSR general newsletter.