Left Out in the Coal

From an early age, Rose was taught that if you see a problem, you have a responsibility to do something about it. Now in her 70s and living just seven miles from the Sherco coal-fired power plant, Rose shares her story and secrets with us of how she is applying this lesson — working with the Sierra Club’s “Beyond Coal” campaign and successfully mobilizing hundreds of concerned residents in an effort to shut down the plant, and others in the region.

Tyson Slocum, the director of Public Citizen’s Energy Program, joins the second half of the episode to discuss how private equity firms across the country have been acquiring and sustaining coal plants like the ones Rose is fighting against. He explains how private equity firms operate differently from traditional corporations in financing and transparency, insulating them from public scrutiny and pressure to address climate change and adhere to certain ideals. Tyson provides examples of private equity firms exploiting market design changes to extract value from these plants, leaving long-term liabilities, environmental concerns, and residents’ health behind.

Reggie Rucker: Hello and welcome to Building Local Power. I’m your co-host, Reggie Rucker, and we are back with episode seven of this season where we’re highlighting frontline stories in the fight against monopoly power by talking with people from all over the country who are actively engaging in building more equitable thriving local economies. On our last episode, we talked to a tenant organizer, Jasmine Harris, who is fighting for fairer, affordable, and guaranteed housing in Kentucky. Tara Raghuveer ended the episode by explaining what local, state, and federal government agencies can do to prevent private equity firms from distorting prices in the housing market through their relentless pursuit of profits.
In this episode, we’ll look at what private equity firms are doing to the environmental movement and how these corporate structures are extracting the very last drops of wealth out of a dying coal industry, while leaving the community’s most impacted by continued operation of these coal plants to suffer the consequences and clean up the mess. To get into it, let me pass it to my co-host who’s always a breath of fresh air, Luke Gannon. What’s up, Luke?
Luke Gannon: Gosh. Thank you, Reggie. So, first up today on the show, we have Rose Thelen, who lives in rural Clearwater, Minnesota, about an hour north of Minneapolis. Clearwater is home to just over 2,000 residents and Rose’s home is located seven miles from the Sherco coal-fired power plant. But first, we are going to take you back to the beginning of Rose’s story, starting in Albany, Minnesota. Here’s Rose.
Rose Thelen: I was raised in a small farming community in Central Minnesota, about a thousand people, and had, as I look back, a fairly idyllic, pretty conservative Catholic upbringing. We were all Catholics there. So, I do credit my Catholic upbringing with a sort of a ethical stance towards nature and all living things. Of course, it was a lot of hypocrisy that I wasn’t aware of at the time and later rejected. But yeah. I had a pretty typical upbringing. In some ways, probably a big fish in a small pond. My father was, he owned a grocery store. We all worked there and it was … One of the things I think from my childhood is that my dad and my mother, their position was if you see a problem, you should do something about it. You can’t just sit around and complain about things. Take action.
So, my dad was always busy in the community trying to make it a better place. It was a German community. In fact, my father didn’t speak English until the third grade, nor my mother, and my dad spoke mostly German with the farmers that would come into the store. But you had the run of the neighborhood. It was very safe because every family, I think on my block alone, there were like 50 kids. We had what was considered a small family. There were only four of us. So, most families were eight, 10, 12, 15. My husband’s family was 12 kids.
My dad started his business with $200. Over time, he was successful. He worked all day long every day, six days a week, 12 hours a day, and my mother was a homemaker. If you walked downtown, you’d see a bakery, a grocery store, drug store, a couple churches. If you weren’t Catholic, you probably were invisible. It was really primarily Catholic. The whole community going back hundreds of years had been formed when Father Pierz invited Germans to Central Minnesota to start a Catholic community. It’s also rumored that many people came to the town who had a Jewish heritage, but were coming and they dropped the Jewishness and became Catholics, which is partly rumored in my own family.
I then became a product of the ’60s. I graduated in ’67. I’m almost 75 now, and stayed in Minnesota for a bit. Mostly, I participated in strikes against the University of Minnesota and it was the Vietnam era and the birth of the environmental movement. I remember Silent Spring being a popular book at the time and The Population Explosion. I was involved in protests against the Vietnam War and my boyfriend at the time went to Vietnam and got injured and was sent home and spent a year in Fitzsimmons. So, I would say that was all about the birth of my awareness about many conditions in the country and on the globe that were unfair and were about greed and amassing greater wealth for the haves at the expense of the have nots. Then got married, got divorced, had a child. Here I am.
Luke Gannon: It wasn’t until later in Rose’s life that she became involved in organizing against the Sherco coal plant, now owned by Xcel Energy, an electric utility and natural gas company headquartered in Minneapolis.
Rose Thelen: I moved to where I live now, which is rural Clearwater, and we’re seven miles away from the coal plant. But I still wasn’t aware of it until I saw an article in the paper, the local paper at the time, and that was 2012. I had been aware of Xcel. In fact, I had been on the township board out here and we were fighting Xcel on putting these 345 kV high power lines down 94 going across the state and the country. So, we fought against them coming in. Anyway, but then I was getting extremely worried about climate change and was reading a lot of articles about climate change. Then I remember one day, having put down a magazine and it was about some person who had taken local action and I said, “I got to do something. What’s going on around here?”
Then I picked up the local paper and there it was, something about Xcel Energy trying to get the life of their coal plants extended. So, I was like, “Okay. There it is. That’s what I can do.” So, I got a bunch of people, friends together, but I found out that there was this Beyond Coal campaign that the Sierra Club was mounting, which was working with wherever there were problematic coal plants across the country to organize. Well, I knew at the time, based on the article in the paper, but got involved with organizing within the area to get people interested in providing comment about wanting to require the Xcel Sherco plant to take a look at whether they should be upgrading their plant and trying to accommodate or account for all the emissions that were coming out of there or whether they should retire them. So, that was in 2013 and 2014 that that started. So, we got very busy. We had lots of petition drives and did a lot at … St. Cloud is not too far from us. Worked with the students there. Went and spoke to public health officials and city councils.
Luke Gannon: Rose was one of the first people to start organizing locally against the coal plant. She quickly realized the impact of organizing at the local level, as well as the challenges she faced.
Rose Thelen: Kind of became the poster girl for the local response to it because one of the things that I was a hedge against, this whole notion that it was the Eastern elites that were concerned about it. So, I was the local face saying “No, and here’s 500 other people who are submitting comments.” So, that was probably the importance of having the local connection. When I started to organize, I got a lot of pushback from elected officials. We’re in a very, very conservative area here and there was a lot of effort on the part of our local state representative and senator to support the continued operation of the coal plants.
In fact, my legislator named me in a letter to the editor and when I went to an open house that he had, I said, “It’s pretty unusual for a legislator to diss a constituent.” I said, “I am a constituent of yours and I represent a number of people and fast approaching a majority of people who are concerned about this.” He was a constant thorn and in fact, continues to be, and now there’s a big backlash called Save our Sherco.
Luke Gannon: Although Rose and her fellow activists faced criticism from some local officials and coal supporters, they succeeded in shutting down Unit 1 by 2026 and Unit 2 by 2023.
Rose Thelen: They’re shutting down Sherco 1 and 2. So, we prevailed on that. I can’t take complete credit for that, obviously. It was a perfect storm of the price of coal really was a lot. It was going to be a lot more expensive for Sherco to continue to operate the coal plant than it was to switch. I think one of the biggest changes for me is that Xcel Industries realized that the train had left the station, let’s say, and it was going to be cheaper and more economical. It was probably a business decision to get on board with switching to renewables. Recently, we just were able to stop them from replacing the coal plant with a gas plant. So, that was another effort that was great.
Luke Gannon: In essence, the leadership of Rose in the coalition of community organizers won. They were able to successfully shut down two units, and the third unit is scheduled to shut down in 2030, in large part due to their efforts. But it wasn’t easy. Only after the work of educators, community forums, petition drives, meetings with city council members, public health officials, union reps and Xcel officials, protests, and just about every activism tool under the moon were they able to get through. Rose explains how one of their best tools was factual information. No one could refute the science.
Rose Thelen: That’s where the science comes in. It’s speaks for itself. You can’t look outside your window and go, “Okay. There’s no problem here,” when you see the mass of climate disruption that’s occurring. People love fishing around here and they love their lakes, and one teaspoon a mercury can pollute a 20 acre lake, and this coal plant was belching out hundreds of pounds of mercury a year. When you look at the health considerations, just getting that word out, I think, made a difference. Now, we got another challenge currently because we don’t have a St. Cloud Daily Times anymore. We don’t have a paper.
Luke Gannon: The evaporation of press outlets made it difficult for groups like Rose’s to raise awareness across the city. But with all of their organizing effort, their work eventually paid off. We asked Rose how she envisions her community when the coal plant finally shuts down.
Rose Thelen: Just hope that that will clean up the air and that we’ll be able to remediate the damage that’s been done thus far to the environment. I think we’re fairly unhealthy out here. We live out in the country, but you talk to teachers in the schools in Becker and they’re telling you, “Look, there’s so many kids with asthma.” They just can’t believe it wouldn’t have something to do with the coal. I am currently of a at risk population and I have and was involved in a couple lawsuits by the Sierra Club talking about the impact of the various sulfur dioxides against the EPA and I have a heart condition, and that is one of the associated impacts of the coal plants.
So, I’d like to see a whole sea change in an understanding of how important our climate is and our planet and all living things. It’s one of the selling points out here, I think, is that people like the rural nature of the landscape out here and one of the ways of preserving that is, of course, to address the global climate crisis that we’re in. Think sometimes people worry that they got to know everything, but you don’t have to be a genius to take action, that there are geniuses out there and they can feed you some of the lines if you just have a passion for doing what’s right and trying to undo some of the damage that corporatization has done and the endless, I don’t know, greed that propels corporations to continue to imperil the planet in order to increase their profits. It’s just something we all need to be standing up and hollering about wherever we can.
Luke Gannon: What a great note to end on. Being passionate and showing up is enough to make change. Thank you so much, Rose Thelen, for being with us on the show today and sharing your story. Now, definitely stay tuned for the second half of the show because if you haven’t understood exactly how private equity firms operate up until this point in the season, you will shortly. But first, I’m going to pass it to Reggie Rucker, who is making a big shift in his life, moving from the court to the water. Reggie, you know I support you and I’m a little worried we are going to lose our huge basketball fan listenership.
Reggie Rucker: So, folks, what Luke is referring to is I don’t know how to swim. I’m just going to put that out there. But I’m finally following through on a years long commitment to learn. Just had my first lesson this week. It went okay. Wish me luck. I’m still going to be on the basketball court. I’m not giving up on hoops. Just expanding my horizons. As I say that, that’s exactly what we hope Building Local Power does for you. Helps introduce you to new issues, new voices and stories, a new way to think about your community, our society, and your role in it. Just like Rose Thelen learned early on from her father that when she saw something that wasn’t right, she should do something about it, we all have that power. We can all do something.
Right now, one something you can do is share this episode of Building Local Power with someone you’re close to or pick another of your favorite episodes and share that one, because when you share these stories and help expand the way people think about how we build communities and local economies that are fair and inclusive that provide opportunity for everyone to thrive, we can start to change hearts, we can start to change minds, and those are the necessary ingredients to making real sustainable change out in the world. So, go ahead right now, pause this episode, send that share, then come back for our interview with Tyson Slocum, who’s going to break down how private equity firms are seeing green and keeping coal alive and what can be done to prevent these entities from propping up this dying industry for the sake of their investors while everyone else pays the price. Stick around.
Luke Gannon: Tyson Slocum is the director of Public Citizen’s Energy Program, covering the regulation of petroleum natural gas and power markets. We are so excited to have him on the show today to talk about private equity in the energy sector. So, private equity firms have been acquiring and sustaining coal plants, despite the decline of the coal industry. 50 years ago, there were approximately 530 coal-fired power plants, and as of 2021, there were around 235 operating in the US. So, if it’s a dying industry that is harmful to individuals and communities, why are these private equity firms getting involved? What is their motive, Tyson?
Tyson Slocum: Well, I think what private equity excels at is buying distressed assets on the cheap and fleecing them for as much money as they can. I think first, we need to understand some fundamental differences between the financial structure of what a private equity firm is vs. a traditional corporation. So, traditional corporations, like Apple, Microsoft, Google, whatever, they are primarily finding financing through the public markets. You and I can buy stock in those companies and as a result, these public corporations are accountable to their shareholders. As a result, they are heavily regulated by a federal agency called the United States Securities and Exchange Commission, which requires these companies to post detailed financial reports explaining exactly what is driving their operations. They have to file special filings if there’s some sort of material change in their operations. So, something significant happens, they have to immediately disclose it to their shareholders.
There’s actually a large amount of transparency over the operations of publicly traded corporations. Obviously, even publicly traded corporations can wreak havoc and introduce harm into our community. So, I’m not trying to say that publicly traded companies always do good things. But at least there is a level of transparency so that researchers and public interest folks can open up those companies’ books and figure out what this company’s up to. Private equity is totally different. Private equity raises its capital not from the public markets, but from the private markets, from extremely wealthy individuals, from institutional investors, like pensions or university endowments or things like that, or from what’s known as sovereign wealth funds. So, these are government run funds by other countries outside of the United States. While some private equity firms have cashed in and allowed some limited public investors into those companies, those public investors only have a tiny window into the operations, and the majority of private equity continues to be private.
So, the Securities and Exchange Commission does not require private equity firms to provide the level of detail or transparency because the assumption is, well, these institutional investors, these super rich billionaires and these endowments and pensions, they are run by savvy, accomplished investors that don’t need the government to handhold them and to protect them. They can do their own due diligence, and so have at it. So, as a result, private equity funds are a little more insulated from scrutiny, which benefits them in a number of different ways. As you probably know, there is a aggressive move by investors, by households, by other people that own stock to say, “Listen, I care about the climate crisis. I care about human rights issues. I want to make sure that companies that I am buying stock in or that my pension plan or my 401K retirement plan is invested in companies that are adhering to these kinds of ideals of addressing climate change or protecting human rights.”
So, this movement is actually working. There is more pressure on publicly traded companies to demonstrate that, you know what? Burning coal is one of the worst things that you can do, not just for the people living around a coal-fired power plant, but in terms of cooking up the Earth’s climate and causing climate change. We need our publicly traded energy companies to disinvest from coal. So, whereas you’ve got that ability to pressure publicly traded companies through really sophisticated campaigns by great organizations around the country that deserve a lot of credit, what happens is those investments aren’t going away. They’re simply changing hands to companies like private equity firms that aren’t as susceptible to that public pressure campaign from investors because some of their investors don’t care about climate change. All they want is as much financial return as possible, or the owners of that fund, pensioners with a firefighters union in California, aren’t completely aware of all of the investments that their pension is making on their behalf, sometimes by design. So, as a result, there’s no pressure there.
So, what we’re seeing is private equity has always been dancing around in the energy system. But really in the last decade, I’ve seen a significant shift in private equity absolutely not just gaining a big foothold in energy markets, but dominating certain aspects of ownership and control over energy infrastructure, particularly with fossil fuel infrastructure. Now, to be fair, private equity is chasing returns in the renewable space as well, and especially with really generous federal subsidies through the Inflation Reduction Act, which was passed by Congress last year, there is enormous amounts of money from public markets, private markets going into renewables, and that’s great. But private equity has been, at the same time, expanding its investments in fossil fuel infrastructure, in part because it is sheltered from that public scrutiny. But the second component here about private equity, which is also important, is, again, a publicly traded company has to really manage its debt levels very well because if a publicly traded company takes on too much debt, that puts up red flags and becomes a serious liability and will put a drag on its share price.
A private equity firm convinces its institutional holders buying with debt is the way to go because we can borrow that money for super cheap and we don’t even need to pay it all back. Right? We’re going to operate these assets on borrowed money, and then once we’re done with the assets, we’ll declare bankruptcy and let the creditors fight it out in bankruptcy court. We don’t care about the creditors at that point. All we care is squeezing the equity and the value and the profits out of that distressed asset, whether it’s a coal-fired power plant or whatever, giving that value to us, the private equity managers, and to our institutional investors, which are known as limited partners because they’re providing the capital, but they don’t have a say in how the thing is run.
The private equity firm instead is the general partner, which runs all of the day-to-day activity and makes all the investment decisions. So, that’s what happens here is you’ve got distressed assets that publicly traded companies are selling for pennies on the dollar. The private equity firms are snapping them up and extending their operational life cycle because they’re able to manage these assets without the public scrutiny with a significant debt load that allows them to operate this facility longer than it most likely would’ve operated if it was still owned by the traditional utility or a publicly traded company.
Reggie Rucker: Thank you for that, Tyson. You explained that so incredibly well. So, what I want to move to now is can you point to a specific example or a couple of examples of how this structure in this private equities or involvement in the energy sector and buying up coal power plants, can you point to some examples that people can latch onto and map the concept you just laid out onto a real world instance?
Tyson Slocum: Yeah. Yeah. A couple of them. So, one thing is there’s a big you utility in New Jersey called PSE&G that was getting a lot of pressure from investors and from policymakers in its home state of New Jersey that it needed to commit to a decarbonization plan and get to net-zero. The problem was is that PSE&G owned this very large fleet of fossil fuel power plants. Most of them were natural gas, not coal. I can get into coal in a minute. So, in 2022, they sold every single one of their fossil fuel units and they issued a press release saying, “This is part of our commitment to net-zero. We’re going to focus on decarbonization and renewable energy.” But they sold those fossil fuel power plants. They didn’t close them, and they sold them to a major player in energy markets called ArcLight Capital Partners, which is a private equity firm.
So, the net balance hasn’t changed. Those fossil fuel power plants are still emitting toxic carbon dioxide and other harmful pollutants and the utility gets to say to its local elected officials and to its investors, “We are decarbonizing.” But those power plants are now being operated by a private equity firm that is largely immune from those pressures. So, that’s a transaction that just happened last year. There was a private equity takeover of a very large coal-fired power plant in Ohio called the Gavin Power Station and it was taken over by a consortium that included Blackstone, which is a very large private equity firm, and ArcLight. Gavin was not being dispatched very frequently because it was an older coal-fired power plant. So, it’s very expensive to run, and it was being outcompeted by cheaper alternatives, including renewable energy. So, as a result, it was very expensive to continue to maintain and they were only dispatching it about 5% of the time. So, most of the time, it was sitting idle. But when it was running, it was creating a large amount of pollution.
So, this private equity consortium takes it and they’re like, “We’re going to figure out a way to maximize returns for this unit,” and they lobbied and pushed for a market design change, along with some other power producers, it wasn’t just Blackstone and ArcLight, but others who said, “Listen, the regional market where this coal-fired power plant is in is called PJM. We’ve got a problem. All of these renewables are coming online and they’re so cheap to operate that they are artificially depressing wholesale prices, making it more difficult and expensive for us to successfully bid into the market with our more expensive coal-fired power plant.” So, what they convinced the regional market to do, and eventually federal regulators at the Federal Energy Regulatory Commission to do, was to create what was known as a minimum offer price rule, otherwise known as a MOPR, where in this huge electricity market, the largest electricity market in the world, covering 13 states, stretching from Illinois and Ohio to Washington DC, that certain renewable resources had to bid in at an artificially high level in order to allow less competitive coal-fired power plants to clear the auction.
This so-called capacity market was bringing in $9 billion a year in auction revenue and coal-fired power plants like Gavin were scooping up tons of that capacity payment because a coal-fired power plant, even if it’s only operating 5% of the time, its nameplate capacity is like 1,500 megawatts, which is enough to power all of Manhattan. So, you’ve got this situation where a very large facility was able to gobble up significant financial resources through this market design tweak and they were able to cash out that money. So, there was some great reporting on this a year or two ago where it was documented that they were taking those payments and not reinvesting into renewables. They were taking those payments and immediately paying themselves and their limited partner investors big fat dividends. Right? This is the private equity model. Take as much value in equity out of your acquisition. Do not reinvest it back into that asset.
Instead, you take that equity and that value out and cash it in for yourself and for your investors, and you keep doing that until you squeeze all financial opportunity out of that asset. Then you declare bankruptcy, turn it over to the bankruptcy court, and then of course, the next phase is you don’t assume any long-term liabilities for the cleanup of that facility. Let’s say the local community wants to repurpose it. You can’t. It’s got contamination of arsenic and all this other legacy from coal. So, the private equity industry invent this model, but they are the best at exploiting it and capitalizing on it. So, a similar situation up in New England in New Hampshire with the Merrimack coal-fired power station, which had been owned by a traditional utility, a publicly traded company who sold it in 2017 to a private equity fund called Atlas that has been exploiting similar types of outrageous capacity payments in the New England power market to deliver big fat dividend checks for itself for the operation of that coal-fired power plant.
Luke Gannon: Thank you, Tyson. I have a follow-up on that first example that you named. So, the utility in New Jersey, PSE&G, and correct me if I’m wrong, they owned some natural gas power plants and they had the option to either sell them or shut them down. I’m wondering, in this last example that you named with the Merrimack station too, what are their incentives through the government or whether at any level of the government, if there are incentives to shut them down, or are they receiving a much fatter check, as you said, by selling them?
Tyson Slocum: So, yeah. Unfortunately, there aren’t explicit incentives or prohibitions on managing these fossil fuel assets, and that’s something that’s actually a very interesting point to explore. The government has been doing a lot of things. A facility like a coal-fired power plant is regulated under the Clean Air Act and the Clean Water Act and we had efforts by the Obama administration that were then sort of unwound by the Trump administration. We’ve got some reestablished pretty decent environmental standards for coal-fired power plants. But all that does is increase costs for a coal-fired power plant to continue to comply with these new environmental standards. None of the environmental standards impose a zero emission standard on these coal-fired power plants. It’s all about trying to modify its pollution on the local community and on the planet. So, we had kicked around internally here at Public Citizen years ago the idea of a federal program to just buy out every single coal coal-fired power plant in the United States, and buying it out means take on the salaries and retirement benefits for the workers. Right?
It’s not necessarily the buyout for the owners. Right? We’ll do fair market value, and we crunched the numbers on it and it wasn’t that expensive relative to the costs that coal-fired power plants have. But there wasn’t a lot of appetite in Congress to allocate that kind of federal expenditure for that. So, instead, we leave it up to the market to decide, and that’s part of what the Inflation Reduction Act is trying to do is to tilt the balance of where market is going to be directing its capital investment. Right? So, the Inflation Reduction Act provides such generous financial incentives to invest in clean energy that there’s a lot of capital moving into clean energy. But just because there is an incentive to invest in clean energy, there remains an incentive, especially for private equity firms, to buy existing coal-fired assets for relatively cheaply, and they’re not even using their own equity. Right? They are borrowing typically a hundred percent of the cash they need to acquire these.
So, when you’ve got that kind of business model, you’re going to continue to have what I call just flipping fossil assets where we’re going to continue to see the ownership of fossil assets flip from publicly traded companies to private equity, and I just tweeted about this not too long ago. We’re starting to see private equity flip to private equity. There’s a huge natural gas power plant in California that just last month sold from one private equity firm to another private equity firm. So, that’s sort of the new paradigm that we’re in.
Reggie Rucker: That’s so interesting. So, you actually make me want to tug on a couple of threads here, but I’m going to try to do this in a way that makes as much sense as possible. So, you mentioned the way the governments are getting involved, different governments are getting involved, creating artificial markets, sort of artificially elevating the price that these private equity firms can get by operating coal plants. So, that’s the obvious maybe worst case scenario of the way the government is getting involved. Then you mentioned this Inflation Reduction Act where they’re trying to provide incentives to the market to get private equity involved on the renewable side, which is a little better, but maybe we don’t even want these types of models involved in the renewable space because of the way they operate. So, maybe you want to touch on that part of it.
But then you have a number of different ways in which government can be involved. You mentioned the buyout part of it. Is there an ideal way that we haven’t touched on yet here, and aside from the government, what can lo local communities do? What can individuals and residents and communities that want to see a transition to locally owned clean energy projects, how can they be involved to either motivate their local government or operate around the government to make progress in the way that we’d like to see?
Tyson Slocum: Yeah. Great question. So, first, private equity involvement in the economy is bigger than just the energy space. Private equity really made a bad name for itself beginning in the ’80s when they were buying a lot of viable companies that were going through rocky periods. A lot of these private equity firms would buy these older established public companies, take them private, and then just chop them up into bids, layoff workers, and that was sort of the model is you buy a struggling public company that still has lots of value, you acquire it all with debt, and then you chop up the company and separate out all of its valuable parts, sell off the valuable parts individually, recover all of your investment, pay out your dividends, and lay off workers. Then the stuff that you don’t want anymore, you just declare bankruptcy and just get rid of it.
This was sort of the model that where private equity really made a name for itself, and lately, private equity’s been in the headlines because they’ve been taken over nursing homes and immediately slashing costs, cutting service, and people are literally dying now, and you can do a Google search of private equity nursing homes and find this. So, there is a push to say, listen, this isn’t just about private equity buying coal-fired power plants. It’s not just about private equity buying nursing homes. This is about a problem of massive pools of what is essentially unregulated capital and we need to start regulating these private equity firms in a much more aggressive way to force them into the levels of disclosure that publicly traded companies have to ensure that there’s greater accountability. So, when we talk about private equity’s involvement in fossil fuels, we also need to look a little bigger and say we’ve got a private equity problem across the country and across industries, and we need to start reevaluating the light touch regulatory treatment that we currently give private equity firms. So, I think that’s going to be an important aspect going forward.
Reggie Rucker: Then Tyson, yeah, that’s great, and then I want to follow up with maybe some closing thoughts. This whole season, we’ve been telling stories of individuals and how they are facing the brunt of monopoly power specifically, and the ways in which you’ve talked about private equity firms and the lack of transparency and the lack of accountability, there’s really this nexus to monopoly power. Can you make that explicit connection between the ways in which these private equity firms either act as monopolists? Or you talked a couple examples of how they’re buying these monopoly utilities. But yeah. Can you make that explicit connection for us?
Tyson Slocum: Yeah. Here’s a great example. There was a community in Connecticut that got wind of a proposed natural gas power plant, a brand new one that was going to be built in their community, and nobody could figure out out who the owner was. They saw some of my work exposing private equity ownership, and so I was able to through some Federal Energy Regulatory filings where they had to detail some aspects of their ownership. The local community didn’t even know and weren’t able to tell who owned this facility because what the community wanted to do was to target the owners. Right? This is a very effective organizing tool for community members that want to take back their energy systems, that want to have more control over what gets built in their community. The first thing you do is, all right, who is the corporate owner and let’s have a public campaign on them.
Well, with some private equity firms, the financial structures are so opaque, you can’t figure out who exactly owns and controls this thing. You don’t know who’s calling the shots. So, it is really essential that if there is a fossil fuel asset in a community, that the community has a right to know who the individual human owners are of that entity. Very often, their search ends with an anonymous LLC, a limited liability corporation, and the trail ends there and you can’t figure out who controls that LLC. So, I think when we talk about local control, it has to start with accountability and transparency over who owns these assets. One other thing, there’s a lot of talk right now about we need to build a lot of infrastructure to accommodate renewables. I agree to a certain extent that we need some additional transmission, but the answer is not to erode existing regulatory protections for communities.
Instead, it should be incumbent upon project developers to work harder to convince communities to welcome them in. So, if you want to build a transmission line through a community, you meet with that community in their neighborhood, you find out what their concerns are, you address those concerns, you find out what that community’s needs are, you finance those needs. So, in Washington DC and around the country, I think we’re having the wrong discussion about permitting reform. We should not be accommodating what project developers need. We should be accommodating, prioritizing what communities need, and the project developers, I would love more of them to be public and community owned. But for those that aren’t, they need to work a lot harder to build trust and to provide needed services to the communities that are being asked to host.
Luke Gannon: That was a perfect end. For our last question. We ask about a book that has impacted the way that you think about either it could be private equity in the energy sector or just a book that originally got you interested in this topic.
Tyson Slocum: Wow. I’m going to have to go way back on this one. So, I was hired at public citizen in 2000 to work on something called the California Electricity Crisis. This was Enron and all of that where the newly deregulated market was completely taken over by unscrupulous companies that intentionally turned the lights off, jacked up prices. It was awful. There was an economist who … So, it’s not a book, but he wrote a very influential paper that was given to me my first day of work. His name was Eugene Coyle, and he’s still alive, he lives in California, and the book was called Price Discrimination, Electronic Redlining and Price Fixing in Deregulated Electric Power.
That paper that I got from him, I had so many notes and highlights and it was dogeared because every page of it was relevant to what we were fighting with the corporate mishaps that were going on in California at the time. So, a shout-out to Eugene Coyle, who, before the crisis happened, wrote a book predicting exactly what would happen, which I’m sure didn’t satisfy him, but I would say that was very influential in my career to understand that deregulation is not a positive thing when it comes to communities, the environment, or public health.
Luke Gannon: Excellent. Wow. Thank you so much, Tyson. This was truly amazing. You explained everything just so clearly, so perfectly.
Tyson Slocum: I appreciate you guys putting a spotlight on this important issue, and again, I’m appreciative for all the work that the institute does, you guys.
Luke Gannon: Well, thank you so much, Tyson, for this thorough and engaging conversation and for joining us on the show today. It was a pleasure having you. Thank you to all of our listeners for tuning in to this episode of Building Local Power. You can find links to everything discussed today by going to ilsr.org and clicking on the show page for this episode. That is ilsr.org.
Reggie Rucker: If you like this podcast, please share it with your family, your friends, the random people that follow you on social media because you’re such a great follow, everyone. Really mean everyone. Remember, all of your reviews and your likes on your favorite streaming platform really does help with the fancy algorithms to get this podcast in front of more people, and your donations are essential to help us keep this podcast going and support the research and resources that we make available on our website for free. We truly welcome and appreciate it all. One last thing. If you want to send us an email, let us know what you think of the show, maybe send me some encouragement and tips on my swim lessons, you can do that at blp@ilsr.org. This show is produced by Luke Gannon and me, Reggie Rucker. This podcast is edited by Drew Birschbach and Luke Gannon. Our theme music for this season is composed by Andrew Frank. Thank you for listening to Building Local Power.

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Music Credit: Andrew Frank, ILSR’s Digital Communications Manager

Photo Credit: Andrew Frank, ILSR’s Digital Communications Manager

Podcast produced by Reggie Rucker and Luke Gannon

Podcast edited by Drew Birschbach and Luke Gannon

Copyright 2016 Licensed under a Creative Commons Attribution Noncommercial (3.0) license.

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Luke Gannon is the Research and Communications Associate for the Independent Business team.

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As Communications Director at the Institute for Local Self-Reliance, Reggie develops communications strategies and leads campaigns to build public support for ILSR local power initiatives. Contact Reggie with media inquiries.