Saturday, April 4 from 9 to Noon, Hanover

Dear Friends:

I would like to take this opportunity to issue the proverbial special invitation for you to attend a festive event next Saturday morning (April 4) from 9:00 AM to noon at the Richmond Middle School in Hanover.

The Hanover Consumer Cooperative Society is holding a "Cooperative Expo" that is intended to show off what the cooperative movement does for our local economy. The excuse for this free gathering -- which will feature exhibits, food demonstrations, and other sources of informal and festive celebration -- is the Co-op's annual meeting.

I must admit that if you have been a member of the Co-op for more than a few years, thanks to Pavlovian conditioning you automatically lapse into a fugue state whenever you hear the words "annual" and "meeting" in juxtaposition. But those church basement suppers with soporific reports from various co-op functionaries are gone. We're not even doing what we did last year (which was to invite an interesting guest speaker -- a great idea but still one that called on attendees to stop fidgeting and pay attention to the front of the room). This year, party is the paradigm and fun is the function.

Yes, there will be a really, really brief edition of the formal annual meeting at 10:30. But it will be in an adjoining room (so you can skip it altogether if you like), and it will NOT involve any boring reports! (If you would like to read the highly engaging report of the president of the Co-op, along with that of our general manager, as well as a lurid accounting of the financial results for 2008, you can check out the recently published, written annual report of the cooperative.) The major agenda items, in reverse order, are (1) an opportunity for members to ask questions about the co-op (potentially entertaining and informative, because it's always fun to watch decisionmakers struggling to be polite in the face of citizen griping), and (2) the annual Allen & Nan King Award for Community Service.

This year the Co-op is giving the Allen & Nan King award to Dr. Bill Boyle, the pediatrician who founded, leads (and lends his name to) DHMC's Boyle Pediatrics Program. Bill Boyle is an especially beloved figure in our household and, I gather, in that of gazillions of local families to whom he has been of professional service over the years. The Boyle Program has been a major force in transforming pediatric care, both here and everywhere, from authoritarian to family-friendly. It is really, really cool that Bill is getting this award and if you have a connection to him, as I know many recipients of this communication do, please do think about being at the Richmond School at 10:30 next Saturday to honor this kind and good man.

As for everyone else, consider this: Cooperatives are the secret success story of an American economy that is otherwise in crisis thanks to the delusional effects of unfettered greed in the investor-owned sector. More Americans belong to at least one cooperative organization than own shares in publicly traded corporations, either directly or indirectly. Here in the Upper Valley, people don't just buy groceries and gasoline at a cooperative . . . they bank at co-ops (i.e., credit unions), they get hardware from them (Tru-Value), they eat cheese from them (Cabot), they get electricity from them (the New Hampshire Electric Cooperative), they live in them (co-housing communities), and they get their news from them. (Okay . . . I am making that one up -- but a reader-owned, cooperatively organized, web-based newspaper is a fantasy of mine, given the looming extinction of traditional daily newspapers). Most if not all of the area's co-ops will be at Saturday's Expo, along with local food producers and other sources of fun and free stuff.

Six years on the board of the Hanover Consumer Cooperative Society have left me more convinced than ever that co-ops are playing a pivotol role in saving civilization from climate change, economic collapse and everything else that threatens us. But even if you have not drunk as deeply as I have of the cooperative kool-aid, please come to the Expo next Saturday if you're free. It will be a pleasant, community-building event at a time when lots of folks are yearning for such opportunities.

Cheers,

Don

Monsters and Aliens: Attack of the L3C and the ULCA

[from the March 18, 2009 CV Spectator]

As the greed-based economy circles the drain, and as our government struggles to prevent civilization from going with it, we naturally root around for alternatives to the corporations whose leaders brought us to where we are. But two such efforts in Vermont – one already law, a second pending in the Legislature – only manage to dodge the real problem.

Let’s start with fundamentals. There are few greater gifts that the government bestows than a certificate of incorporation, which insulates investors from legal liability for any missteps of the entity they have created. The most they can lose is the amount they’ve invested, even when the corporation kills 8,000 people through a toxic gas release (Union Carbide, Bhopal 1984), triggers rolling blackouts in California (Enron, 2000-2001), or just makes lots of people homeless and/or jobless (big banks, 2008-present).

So, it’s reasonable that we ought to expect something in return when we dole out these certificates. Currently, we expect nothing.

This doesn’t change with the advent of the so-called L3C – a cheeky abbreviation for “low-profit limited liability corporation.” At first glance, it’s a cool idea – get a bunch of investors together who are willing to forego single-minded pursuit of profit and let them incorporate a business that will serve a charitable purpose as defined by section 501(c)(3) of the federal tax code.

As it turns out, though, the L3C is really just designed as a vehicle for big foundations (e.g., the Ford Foundation, the John T. and Catherine C. McArthur Foundation and other names familiar to those who endure those ubiquitous public radio underwriting credits) to make so-called “program-related investments.” After all, why should some foundation donate to National Public Radio the nonprofit when it could simply own National Public Radio the L3C?

The L3C has nevertheless been touted as a potential solution to the journalism crisis in which venerable newspapers are either going bankrupt (e.g., the Chicago Tribune) or just folding altogether (the Rocky Mountain News). If the New York Times were an L3C, the Sulzberger Family could stop trying to please outside investors and just run the paper through a family foundation. It is, I suppose, better than having no newspaper at all.

Meanwhile, the Vermont House has passed and sent to the Senate the Uniform Limited Cooperative Association Act (ULCA). State laws with the word “uniform” in their titles trace their genesis to the National Conference of Commissioners on Uniform State Laws, a quasi-official organization with the often laudable purpose of aligning the statutes of our 50 sovereign states. Middlebury attorney Peter Langrock, a member of the commission, chaired the committee that originally drafted the ULCA. Naturally, he’d like to see his home state adopt the bill.

If the Senate agrees, my advice is to delete only one word from the measure: cooperative.
The ULCA’s purpose is to let co-ops have outside investors as long as the actual members of the co-op remain in control. Proponents contend that co-ops need non-member investors because they have trouble raising capital under their current structure. It is a problem with which I am personally familiar as a board member at both the Hanover Consumer Cooperative Society and the Cooperative Fund of New England.

What makes a co-op a co-op is its democratic character: Each member gets one vote, regardless of how much money she has invested. And, at a consumer co-op, each member gets a share of the surplus based on the amount of goods purchased – again, regardless of how much she invests. An ULCA does away with this core principle, just to attract money, and is thus not properly described as a cooperative.

Everybody talks about socially conscious investing. Those who are serious about it should forget L3Cs and ULCAs and strike a blow for democratizing the economy by forming and joining cooperatives. A co-op is only kind of entity that is completely at liberty to harness the entrepreneurial spirit for the benefit of local citizens rather than faraway shareholders. Like grocery stores, credit unions and electric utilities, national newspapers and other vital but struggling businesses could thrive as democratically run, customer-owned entities. Cooperation is the perfect “thank you” for the gift of limited liability that every corporate entity enjoys.

News Co-op in Canada!

I just came across www.mediacoop.ca -- which appears to be attempting to build something very much like the reader-owned, democratically run, cooperatively organized, web-based news organization that I contend is the solution to the current media crisis in which newspaper after newspaper is dying on the vine.

Big Yogurt Takes on Big Coal

It's time folks in the Upper Valley started thinking about what's going ondown there at the other end of Interstate 89.

Yes, they¹re debating some important questions at the State House, but that's not what this column is about. Rather, the issue is the plume you can glimpse, straight ahead of you in the distance, as you approach Concord from the north.

Beneath that plume is Merrimack Station in Bow, where Public Service Companyof New Hampshire (PSNH) cranks out 433 megawatts of electricity by burning coal. The central place that coal occupies in contributing to climate change, thus threatening the continued existence of civilization as we know it, is a familiar fact ­ but around here we tend to think of coal as someone else' sproblem. Wrong!Add to Merrimack Station the coal power PSNH produces at Schiller Station in Portsmouth and you get to 533 megawatts of climate change.

This is by far the biggest source of utility-owned electricity in either NewHampshire or Vermont, now that we have sold off the local nuclear power plants to independent producers.

Three years ago, PSNH announced steps to achieve significant reductions inthe amount of highly toxic mercury that Merrimack Station emits. The utilitycommitted to installing new scrubbers that would reduce mercury emissions by 80 percent. But PSNH harbors bad memories of its 1988 bankruptcy, caused by its investment in the Seabrook nuclear power plant. Thus it did not want to invest in the scrubbers without some assurances. ­ So it persuaded theLegislature to pass a bill endorsing the project.

Since then, two big things have happened: The price of the scrubber project has nearly doubled ­ from $250 million to,as of last July, $457 million. And global warming is now ­ -- pun intended ­ -- a front-burner issue, leading many to start wondering whether New Hampshire should continue to depend on coal for electricity.

The sticker shock set in last summer, just as I was leaving my job as general counsel of the New Hampshire Public Utilities Commission to become associate director of the Institute for Energy and the Environment at Vermont Law School. I helped the PUC decide to open an investigation, not into the scrubber project itself but into whether the agency even had the authority to review the project. The PUC ultimately said it lacked such authority ­ -- a decision in which I played no part ­-- and the question is now on appeal to the New Hampshire Supreme Court.

Pursuing that appeal ­ and making the case that, despite their earlier go-ahead, the Legislature should take a second look at the Merrimack Station scrubber project, ­ is an interesting coalition of electricity-using businesses, led by Stonyfield Farm yogurt CEO Gary Hirshberg. Among other things, Hirshberg and his allies have commissioned a report by Kenneth Colburn, the respected former head of the air bureau at the New Hampshire Department of Environmental Services. According to Colburn, the scrubber project essentially guarantees that NewHampshire will continue to use coal power for the next couple of decades as PSNH takes advantage of the language in the statute entitling it to recover the cost of the project from customers. But after looking at all costs ­ including the likely addition of a national carbon tax or a so-called "cap and trade" program that would function like a carbon tax,­ the pricetag for New Hampshire utility customers will range from $1.3 billion to $2.9 billion, according to Colburn. Hirshberg and his allies say that is too much.

Count me among PSNH's fans. The Company does an excellent job of providing relatively low-cost electricity to its customers. It has been unfairly thwarted by the Legislature in its desire to build renewable generation facilities in Coos County and elsewhere on the dubious ground that we should leave this challenge to independent electricity providers who take the financial risk themselves rather than impose it on their customers. (It's an enticing theory, but so far nobody is building anything and privatizing those risks means higher prices.)

It is odd that New Hampshire policymakers, so skeptical of PSNH in other contexts, seem so acquiescent in allowing this scrubber project to go forward. PSNH is relatively invisible in the Upper Valley, with few local customers. But if you care about global warming, this is a story worth following.

[From the March 5, 2009 edition of the CV Spectator, with a different headline.]

Too Hot for the Newspaper!

[The column below was rejected by the editor of the otherwise-excellent newspaper for which I recently started writing a column. He said the subject was a "third rail" in his organization. As you read, picture yourself with an old-fashioned pile of newsprint in your lap.]

You are holding a dinosaur in your hands.

With apologies to the owners of the [publication], whose business acumen and beneficence are the reasons you are able to read these words, newspapers as we know them will cease to exist well within the lifetime of nearly all of us. In the past four months alone, three venerable dailies – the Los Angeles Times, its co-owned Chicago Tribune and the unrelated Minneapolis Star Tribune, have all sought bankruptcy protection. A fourth -- the Rocky Mountain News in Denver -- just folded outright. Even the New York Times has had to turn to Mexico’s richest man, a telephone and media mogul, for a $250 million loan – at an astonishingly high interest rate of 14 percent.

If anything, the situation is even more dire here in northern New England. From Portland, where the out-of-state owners are busy trying to offload a pared down Press Herald for a fraction of what they paid for it, to Burlington, where the Gannett chain has long since reduced the Free Press to a state of bland mediocrity, cutbacks and caution are the norm. And let’s not even talk about the Union Leader in Manchester, where the ghost of William Loeb perpetuates a relentlessly antediluvian agenda.

There are, of course, exceptions. The Rutland Herald received a well-deserved Pulitzer in 2001. The Concord Monitor and its sibling daily in Lebanon are thorough and lively. But they rely heavily on young reporters who tend to move on after a few years, leaving a lack of institutional memory in their wake that makes it challenging for the papers to hold newsmakers accountable over the long term.

That great regional backstop, the northern New England bureau of Associated Press, grows ever smaller and more stressed. “This is not the AP you worked for,” mused a former colleague recently, alluding to my 1981-86 tenure with AP in New York, Washington and Portland. In these parts, AP lost much of its luster in 2006 by firing Montpelier correspondent Christopher Graff after 28 years for running a column by Senator Patrick Leahy about the Bush Administration’s hostility to the federal Freedom of Information Act.

Time Magazine recently published a cover story arguing that the Internet is killing off the nation’s newspapers, calling for a system of article-by-article “micropayment” (similar to buying songs on iTunes) to create a reliable revenue stream. Others advocate government support for newspapers.

The latter suggestion is utterly screwball, given that newspapers are supposed to investigate government rather than live off it. Micropayment? Helpful, possibly, in the same way that renting deck chairs by the minute would have made business sense for the owners of the Titanic on April 15, 1912.

Given that newspapers (or something very much like them, delivered via the Internet) are crucial elements of democracy and community, what is needed is more fundamental reform. It is time for the readers to own the organizations that provide news to them.

Scarce citrus fruit drove a bunch of Dartmouth faculty families to start a buying club in 1936. Today that buying club is the thriving, $70 million-a-year Hanover Consumer Cooperative Society. You don’t have to serve on the board of the Co-op (as I do) to know how well the consumer cooperative model works in providing people with goods they need without exploiting them. The incentives and accountabilities align perfectly.

In our region today, journalism is where citrus fruit was in 1936. The good, fresh product is harder and harder to obtain. The only vibrant newspapers around here, from the Spectator to the Monitor to the Herald, are family-owned. We know, because we watched it happen in Portland (and could soon see it happen with the Sulzberger family at the Times in New York), that family owners typically decide to cash out eventually. When it happens in our region, a reader-owned consumer cooperative is the right entity to step up and take these storied news franchises into the future.

Given that this is an untried approach that would call on consumers not just to subscribe and to read but also to invest and to lead, the challenge is formidable and success is not inevitable. But journalism is a vital commodity and the market is failing us. No more newspaper? I’d rather die of scurvy.