Lights Out

In all her years working to help keep low-income Minnesotans from having their power cut off, Pam Marshall had heard plenty of complaints about utility companies. Still, she was taken aback by the horror stories residents of northwest Minnesota's Red Lake Indian Reservation were telling her about Beltrami Electric Cooperative.

Customers who'd been unable to pay their bills were having their electrical service disconnected entirely. Some were charged as much as $250 to get service reconnected. Others weren't allowed to negotiate payment schedules in order to get caught up. And still others were being told that in order to establish an account, they first had to pay previous tenants' delinquent bills.

"In ten years I have never witnessed what feels like an utter disregard for the health and safety of people," says Marshall, who serves as executive director of the Energy CENTS Coalition, a St. Paul nonprofit that promotes affordable utility service for low-income Minnesotans. "There are plenty of things that are unfair and unjust, but not so many of these things have the dire consequences of playing with people's ability to heat their homes in Minnesota."

Last summer Marshall tried to negotiate with the company's board of directors on behalf of Red Lake residents, but to no avail. So in January she filed a complaint with the Minnesota Public Utilities Commission, alleging that Beltrami Electric Cooperative had engaged in unfair and illegal practices. To bolster her complaint, Marshall assembled a stack of 18 affidavits from Red Lake customers recounting their woes.

According to Marshall's complaint, two-thirds of the households on Red Lake use electricity as their primary heating source, at an average annual cost of $1,400. Two-thirds of Red Lake households earn less than half the state's median income, and receive energy-assistance grants. Even more striking, two-thirds of those grant recipients have an annual income of $10,000 or less--in other words, those households spend at least 14 percent of their income on electric bills. (By comparison, households that earn the state's median income spend only 2 to 3 percent of their earnings on all of their energy costs combined.)

Up on the reservation, Mamie Rossbach has seen how damaging the problems with Beltrami Electric can be for people who are already struggling to make ends meet. Rossbach is the energy assistance director for the Red Lake Community Action Program, which helps provide public grant money to residents who need help paying their utility bills. Normally, she explains, when a low-income resident runs into trouble paying the electric bill, a program like hers will simply call the utility company and state the dollar amount of the customer's energy-assistance grant. But Beltrami Electric, she says, requires multiple phone calls and written guarantees from Red Lake, adding unnecessary layers of bureaucracy to the process.

Over the winter of 2000-2001, 25 Red Lake households had their electrical service disconnected entirely, Rossbach says. The state subsequently tightened up its so-called cold-weather rule, making it harder for cooperatives to shut off residents' power during the cold winter months. (The cold-weather rule states that from October 15 through April 15, residential service to low-income homes can't be disconnected if it affects the main heat source, as long as the customer makes a reasonable effort to make regular payments.)

This winter Beltrami Electric installed "service limiters"--mechanisms that allow electricity to flow for only a half-hour at a time. Rossbach says the cooperative told her the limiters don't violate the cold-weather rule because they don't cut off the power completely. But the result is the same, she argues: "It's the same effect. There's no heat in the house. The furnace is not working long enough to heat up the house, so you're still in an unsafe environment."

As member-owned entities, cooperatives aren't subject to the same level of government scrutiny as public utilities such as Xcel Energy. But at a March 28 hearing before the Public Utilities Commission, Marshall contended that the state laws governing service standards do apply to cooperatives. The commission agreed, and ordered an investigation into Marshall's complaint. The commissioners also decreed that as a good-faith measure, Beltrami Electric must remove its service limiters until the end of the cold-weather period.

Marshall hopes the investigators will go beyond her clients' specific complaints and delve into issues of discrimination. She points to a 1982 case in which the Minnesota Supreme Court upheld a PUC finding that Beltrami Electric had discriminated against mobile-home residents on Red Lake by charging them higher connection fees than they charged people in conventional homes. Her current complaint, Marshall argues, indicates that discrimination remains a problem.

Harold LeVander Jr., an attorney with the Twin Cities firm Felhaber, Larson, Fenlon and Vogt, was retained by Beltrami Electric to handle the matters before the PUC. LeVander says the cooperative is looking into the specific problems raised at the March 28 hearing, but he says Beltrami Electric's procedures abide by the laws for cooperatives and don't discriminate against Red Lake customers. About 1,700 of Beltrami Electric's 17,000 member-customers live on the Red Lake reservation.

"We have a set of standard service rules," LeVander explains. "Beltrami Electric is prepared to prove that it applies those service rules in a completely nondiscriminatory manner across the region. There may be more customers at Red Lake that are not in compliance with Beltrami Electric's rules, but that's not a finding of discriminatory application of the rules. It's not just on the reservation where people may not be in compliance."

On the topic of service limiters, LeVander claims the cooperative has only nine of the devices in use throughout its territory and that not all of them are on Red Lake. Mamie Rossbach, however, counters that this past winter ten limiters popped up on Red Lake alone.

Whatever the outcome of the state's investigation, Pam Marshall hopes the process will lead to changes that will benefit both the Red Lake customers and the cooperative. That might include energy-conservation measures on the reservation and some sort of affordability program that could help Red Lake customers more easily make their payments while also lowering the cooperative's collection costs.

"We hope there will be statewide recognition on the part of other rural electric co-ops that they are not insulated from public oversight, since they are involved in an essential public service," Marshall says. "And for the folks on reservations, that they can take these guys on and win."

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