NEWS RELEASE
For Immediate Release:
August 25, 2010
For More Information, Contact:
Tami Zaun, Lake Country Power
(218) 326-7152
tzaun@lakecountrypower.com
Lake Country Power members vote no on rate regulation
Grand Rapids, MN – Lake Country Power received results of its membership vote on rate regulation today (August 25) from the Minnesota Department of Commerce. Co-op members cast 18,358 total ballots, with 11,625 members opposed (more than 63 percent) to MPUC rate regulation, and 6,697 members (nearly 37 percent) in support of the ballot initiative.
The Minnesota Department of Commerce reports that more than 43 percent of Lake Country Power's 42,364 members returned ballots, which began with a petition drive signed by 512 members. The petition was submitted to the Minnesota Department of Commerce in March 2010.
"As we emphasized since the beginning of this initiative, it is the right and privilege of members to vote on an issue such as rate regulation," said Lake Country Power Board President Richard Wallin. "The members have spoken and the Board will continue to direct management to do its best to meet the cooperative's mission to provide members with safe, reliable and affordable electric service and look for innovative ways to get that done."
The Minnesota Department of Commerce supervised the ballot initiative and certified results after the ballot counting was complete. Survey & Ballot Systems of Eden Prairie, MN, was commissioned to coordinate the mailing and counting of ballots.
Lake Country Power, www.lakecountrypower.coop, is a Touchstone Energy® cooperative serving parts of eight counties in northeastern Minnesota. The rural electric cooperative provides services to more than 42,000 members and has offices located in Grand Rapids, Kettle River and Mountain Iron.
Final Report by Survey & Ballot Systems
Final Perspectives on the Co-op-MPUC Issue
By Richard C. Wallin
President, Board of Directors
Lake Country Power
Regardless of the outcome of Lake Country Power's MPUC regulation vote, I am offering a few final perspectives on the issue of rate regulation before the state administers the ballot count beginning on August 17–we will have the final count by the end of August.
As we have stated since the beginning of this initiative, it is the right and privilege of members to vote on an issue such as rate regulation in a cooperative. That vote will determine the path forward for members of Lake Country Power.
If the outcome means the cooperative is rate regulated, Lake Country Power's mission will not change and we will meet the objective set forth by members through the vote. Either way, the Board will continue to direct management to do its best to provide members with safe and reliable electric service and look for innovative and affordable ways to meet that mission.
As we have emphasized since the issue began, the trade-off with additional government jurisdiction and regulation would mean that more than $350,000 a year would be spent on paying lawyers, contracting with power consultants, processing and printing more paper, and paying twice for the same work to be done.
For the Board the ongoing question is where should the cooperative's dollars be spent? Should they be spent on equipment and materials to provide better, more reliable service or will they be spent for more people to push more paper? As a Board we are convinced that member resources are better spent on wires, poles, transformers, substations, right-of-way clearing, meters, trucks, and employees–rather than being spent on state oversight.
Rate regulation would in many ways make the job of Lake Country Power's Board less challenging. For example, all Board decisions on rate increases would carry the stamp of MPUC approval and we could pass off the responsibility for consumer-related decisions on to the PUC shoulders instead of our own.
The final irony is that if rate regulated, MPUC oversight would not address the primary concerns raised by the petitioners--specifically including the terms of the Co-op's power supply contract, which contains regulatory requirements of both the federal government and the cooperative's lenders.
We understand that additional oversight and jurisdiction of the cooperative sounds good, but it is most important that all the facts on the matter are known. We have made a concerted effort through many member meetings and the printed word to present the facts relative to MPUC regulation of an electric cooperative. Our goal over the past few months has been to provide the necessary information for members to make an informed decision.
Members have long told us that rising electric rates are a primary concern. Regardless of the vote outcome, the cost of electricity will not go down. As elected representatives of the members, we know how limited resources are within the co-op.
We are concerned that should state regulation be chosen by the members, it will mean the unwise use of resources that really are needed to meet the most important mission of Lake Country Power: To provide rural residents with safe, reliable, and affordable electric service.
• Board Resolution Opposing MPUC Regulation
• Former MPUC Chair Comments & QA Co-op Rate Regulation
• Board Position Statement
• Petitioner's Position Statement
• How additional governmental regulation (PUC) will affect members of LCP
• Member Meeting Schedule
Full Annual Meeting Presentation:
 |  | Full Panel Discussion with Q&A Length: 55:24 Size: 116MB |
Annual Meeting Panel Discussion:
| | LeRoy Koppendrayer Presentation Length: 10:52 Size: 23MB |
| | Marvin Ott Presentation Length: 8:35 Size: 17MB |
| | Rick Lemonds Presentation Length: 13:25 Size: 27MB |
Annual Meeting Panel Q/A:
| | Mr. Koppendrayer, what are your thoughts on the regulatory oversight of cooperatives by the PUC in light of the comments Mr. Ott made? Length: 3:26 Size: 7.2MB |
| | Mr. Ott, what do you think will change at Lake Country Power if they're regulated? Length: 2:19 Size: 4.8MB |
| | Mr. Lemonds, if Lake Country Power is regulated, how will that affect how you conduct your business? Length: 3.3 Size: 3.3MB |
| | Mr. Koppendrayer, from your point of view on the PUC Commission, what do members gain from PUC oversight? Length: 4:19 Size: 8.5MB |
| | Mr. Ott, you sited the cost of PUC regulation at 75 cents per month per member. Do you think that's a good value in terms of having third-party oversight. Length: 4:09 Size: 8.9MB |
Interviews:
| | Interview of LeRoy Koppendrayer Length: 4:36 Size: 25MB |
| | Interview of Tarry Edington Length: 1:53 Size: 10MB |
Board Resolution Opposing MPUC Regulation
Former MPUC Chair Comments & QA Co-op Rate Regulation
Board Position Statement
Dear Lake Country Power Member:
This month Lake Country Power members will receive a special ballot in the mail. The ballot will ask you to vote on whether or not your local member-owned electric cooperative will be subject to additional government review and jurisdiction. Each vote will count, so it is important you are aware and informed before casting your vote.
In a co-op it is the right and privilege for members to vote on an issue like rate regulation. As a board, we encourage you to vote NO on the official ballot when it arrives in your mailbox. We are unanimous in that viewpoint. That means each of us will be voting NO when the ballot arrives.
The vote is the result of a group of members who feel additional regulation by the Minnesota Public Utilities Commission will "lower electric rates." If this were the case, we would have proposed MPUC regulation to members long ago.
Why Pay Twice?
Additional regulation by the MPUC will add to the co-op's annual costs. At a minimum it would average more
than $350,000 per year. We oppose regulation because any work done by the government duplicates work
done by the co-op staff and the directors elected to represent you.
If regulated by the Minnesota Public Utilities Commission, members will pay more in the future:
- For monthly, quarterly and annual paperwork filings with the state;
- For required member mailings and postage relative to reporting on power generation sources and power supplier emission controls; and
- For utility lawyers and power consultants hired to review rates and policies and present rate cases before the commission.
Please see the reverse side of this letter or visit our website at www.lakecountrypower.coop for a full summary of the issue as discussed at the 2010 Lake Country Power Annual Meeting. The meeting featured comments and opinions from former Minnesota Public Utilities Commission Chair Leroy Koppendrayer who said that unlike locally elected directors, members of the MPUC are appointed by the governor and "...are not answerable to members of the co-op."
Ballots will be mailed this month. It is your right to vote. We are hopeful our position on the issue helps you make an informed decision.
Sincerely, Lake Country Power Board of Directors:
Petitioner's Position Statement
Overview of how additional governmental regulation by the Minnesota Public Utilities Commission (PUC) will affect members of Lake Country Power:
1. Will regulation by the PUC lower my electric bill?
No. Regulation by the PUC will not lower electric rates and will not remove the "power cost
riders" from monthly bills.
2. Will regulation by the PUC increase my electric bill?
Yes. Additional regulation will add to the cost of running Lake Country Power, and those
costs will increase members' electric bills. The cost of PUC regulation is anticipated to average
more than $350,000 annually to cover the cost of PUC reporting and compliance requirements.
3. What is the role of the Minnesota PUC?
The mission of the PUC is to maintain a regulatory environment that ensures safe, reliable and
efficient utility services at fair and reasonable rates – not to lower rates.
Your co-op board of directors is answerable to its members; the PUC is not answerable to
members of the co-op.
4. Why is the cost of power increasing?
New generation, legislative mandates, investments in cleaner, greener energy, changes in a marketbased
transmission system, and the depressed economy caused power costs to increase significantly in
recent years. After several increases in the cost of power since late 2008, the price we pay for
power from Great River Energy, our supplier, has largely stabilized.
5. Why are some utilities regulated by the PUC and some are not?
The PUC is designed to regulate investor-owned utilities like Minnesota Power and Xcel Energy
to ensure that profits yield a reasonable rate of return for investors (shareholders) and that electric
rates to their customers are fair.
In electric co-ops across the country, members elect boards of directors to represent them and to
establish a reasonable margin to operate the business safely, reliably and to pay down debt. Lake
Country Power members have a right to vote out board members if they feel they are not doing a
good job. With PUC regulation, LCP members would have no access to the PUC Commissioners.
6. If Lake Country Power is regulated by the PUC, how will things change at the co-op?
Lake Country Power will continue to provide safe, reliable energy. Regulatory requirements will
increase the cost of doing business, and that cost will be passed on to members. Decisions regarding
rates will still be made by the co-op board based on operational expenses, energy costs and debt. Other
than cost, the main difference will be that final approval of rates will not be made by your elected
board, but by an outside government regulator, the PUC, with whom you have no recourse.