The Co-op on Yelp? Yikes!

If you’re ever inclined to feel complacent about our Co-op and its place in the local food economy, just head for the consumer rating site Yelp.com and check out the reviews of the Co-op Food Stores in Hanover and Lebanon.  (For some reason they have no reviews of the Co-op Food Store in White River Junction.)  One greets with slack-jawed astonishment the extent to which the Co-op can be misunderstood and misconstrued.

For example, there is this review of the Hanover store from July 11, 2016:

“This store was recently remodeled to be more of a chain-style quickie-mart. It now has more processed and pre-made food, but no longer has a full selection of groceries.

“It's still a fake coop, and you don't actually own your shares.

“I can't recommend this place to anyone but the desperate or car-less. Prices are like double what they are at normal stores and coops. Quality and selection is horrible. Veggies/fruits are old and rotten inside for the most part. Meats are gross - the supposed "natural" and "eco" type meats are horrible, worse than midwestern feedlot stuff. Regular grocery stock is old and sometimes well past the sell-by date. Pre-made food is fair-to-bad.

“They do sketchy things like using rainbow trout ("steelhead") instead of salmon in their sushi.

“Like other reviews say, If you have a car, it's best to go one town over and stock up at Hannaford, and then stop by the "big Coop" at Centerra on your way back if necessary.”

Where to begin?  I don’t see how even the most casual visitor to the Hanover Co-op Food store could conflate its product selection with that of a convenience store chain.  There is, admittedly, a growing emphasis on grab ‘n’ go items at all grocery stores and the Co-op, for good or ill, does not pretend to be immune to this trend.  But you can still shop for old-fashioned groceries at this store – everything you need is there, from peanut butter and jelly to wagon wheel pasta to fresh brussels sprouts to Marmite.  (Though why anyone would willingly subject themselves to Marmite I do not understand.)

Fake co-op?  Don’t actually own your own shares?  A howling falsehood, plain and simple.  The rest of the characterizations fall squarely into the realm of what in some circles is known as “veggie libel.”  Clearly the Co-op has to act decisively to dispel the myth that its prices are out of line with the competition’s.

Here’s a 2014 review of the Lebanon Co-op Food store:

“Just FYI, the "Coop" isn't a real coop, it's just a regular chain grocery store with a club-card discount program.

“You have to buy "shares" for the club-card, but you don't really own the shares. The Coop can repossess your shares without paying you. For example, they can force you to buy more shares, or else they will repossess your current shares without any compensation. You can see this and more on their online "bylaws." It's predatory, in my opinion.

“Quality is just awful. It's declined significantly over the last several years. The meat, fish, and produce are terrible quality for the most part. Worse than chain stores. The "organic" and "natural" meats used to be ok, but now they are worse than the cheap feedlot stuff at other stores. The produce and sometimes the fish are just plain old and sick. And laughably expensive.

“Basically, the Coop is a fake Walmart version of real co-ops. Worst example of "greenwashing" I've ever seen. Clearly, the executives at the Coop chain are aware that we're all stuck up here with no other choices. The suppliers/distrubuters they use are so disgusting it makes me wonder what kind of corporate racket is going on with this place. Someone is raking it in. Wonder why this "Coop" refuses to disclose their executive pay? To me, it seems like their business plan is based on taking advantage of customers, since we're evidently all country-bumpkins, helpless elderly, naive college kids, or downscale leaf-peeping tourists.

“Buyer beware! Do your due diligence. Check those "use by" dates. Check the fruits and veggies for rot as soon as you get home. Don't be scared to return rotten and spoiled items.”

Do you get the idea that this review was written by the same person who wrote the review of the Hanover store?  They both use the term “feedlot” and repeat the patently false claim that Co-op members don’t really own their shares.  The Co-op cannot “repossess your shares.”  No store, whether calling itself a co-op or not, could survive by doing the kind of stuff described in either of these reviews.

Finally, there is this review from 2015:

“I adore the Co-op.  I almost gave it 4 stars just because the prices are so high that I can't afford to do all of my grocery shopping here, but I couldn't bring myself to take a star away.  Honestly, I'm okay with paying higher prices for the items I get from the Co-op, since it's all high quality, and so much of it goes back to local farmers, businesses, and the community.  As I said, I can't afford to do all of my grocery shopping here, but when I need a high quality ingredient or two to be the stars of a meal I'm making, this is my go-to place.  I also like that it's right down the street from my office, so I don't have to drive all the way into West Leb to get a couple of ingredients.

“I waited a while to become a member, just because $50 seemed like a lot to me.  Then, I realized I only had to pay the $50 once to become a member for life, and then it didn't seem so bad.  On the 15th & 16th of every month, they give a 10% member discount, and members also receive all kinds of discounts from other local businesses and services.  My personal favorite perk is the cooking class discount for their Culinary Learning Institute.  My favorite classes are taught by Eli, who has never cooked something I didn't like... even when he uses ingredients I don't particularly love, like mushrooms.  The guy is a magician with food!  They regularly invite microbreweries in to do food and beer pairing classes, and students are able to interact and ask questions about the food and beer.

“Another couple of highlights for me:

“The cheese section!  Cheeses from near and far!  I could spend an entire paycheck and gain 50 pounds all in one shot here.  Cheeses from France, Italy, Switzerland... and honestly, some of the best cheeses (in my cheese-loving opinion) are from local farms right next door in Vermont.

“The beer section!  All kinds of great microbrews, and one of the top selections in the Upper Valley.  Matt runs this department, and he does a fantastic job with keeping the selection diverse and ever-changing.  I'm always finding fantastic new beers I've never tried!  Matt also does a great job helping Eli with the food and beer pairing classes.

“Produce!  Most of it's organic, a lot of it's local, it's all fresh, and yes, it's expensive... but when I needed some really great, fresh, and tender Vidalia onions to be the star of the French onion soup I was making, this was where I went for the onions, baguettes, and some really fantastic Gruyere cheese.  I guarantee my French onion soup came out way better than it would have if I'd just gone to Price Chopper for the ingredients.

“The rest of it is really great too, but those are my highlights.”

What’s the moral of the story?  The Co-op has to get real with its members about its prices.  I suspect that a thorough inquiry would reveal that the Co-op is sometimes more expensive than its competition, sometimes isn’t, and is overall a cost-effective source of groceries in the long run.  I will never forget being at a board meeting several years ago at which a member of the management team handed out a detailed comparison of the Co-op’s prices with those of one of the supermarket chains with a major presence in our area.  The Co-op was actually cheaper overall.  When I asked why the Co-op wasn’t publicizing this the answer I got was that the Co-op feared inciting and then losing a price war with the investor-owned chains.  I said:  Why would lower grocery prices for all, throughout the Upper Valley, be a bad thing?  He looked at me like I was crazy.

 

Tough Talk about Policy Governance

Mention Policy Governance around the Co-op these days and you’re likely to get an irritated look.

The framework for conducting Board oversight, invented by Atlanta-based governance consultant John Carver, has been in official use at the Co-op since the late 1990s.  Policy Governance can be difficult to understand, is frequently tiresome to practice (endless monitoring reports!), and it is often misapplied in a manner calculated to reduce boards to affable and toothless advisory bodies.

Nevertheless, Policy Governance is well worth keeping.  Here is why.

John Carver’s big pitch is to focus boards on what really matters.  Rather than telling Boards that “operations” is off-limits – such claims are the prime source of model misapplication – Carver’s insight is that Boards should be outwardly focused, on what he refers to as “ends.”

This is what Carver says at page 81 of the third edition of his major treatise on Policy Governance, Boards that Make a Difference:

“The organization lives within the larger context of the world and, hence, affects it. That the organization exists makes a difference to this larger world, and the difference it makes can be characterized

in two ways: (1) the world is richer, happier, and less in pain because of the care, knowledge, cure, beauty, order, peace, or support produced; and (2) the world is poorer, more depleted, and more in pain

because of the talent, capital, and space consumed. These two impacts on the world, corresponding to benefit and cost, should be the chief interest, even obsession, of the governing board. The board should ask itself, ‘What good shall we accomplish, for which people or needs, and at what cost?’ It is important that boards view organizational results in terms of cost, benefits, and beneficiaries.”

This means little until you consider what most Boards occupy themselves with.  Rather than looking outward at whether the world is truly richer, happier and less in pain because of the organization the Board is governing, most Boards focus inwardly.  Carver warns of “the captivating allure of organizational events and issues,” adding: “Typically, a high percentage of board time is spent on internal matters. Even when the subject matter is related to services or programs, the focus tends to be on personnel, financial, logistical, or other organizational aspects of programming.” (Boards that Make a Difference, p. 80).

Policy Governance doesn’t counsel Boards to ignore these things – under the model, they become the focus of the Board’s “executive limitations” policies that are the subject of so much monitoring time.  Instead, the model nudges Boards to take care to reserve time and energy to ponder global impacts.

Step 1 is to attempt to define what those global impacts should be.  In this regard, the Hanover Consumer Cooperative has performed admirably.  The “global ends” policies with which the Co-op begins its policy register are the best in the business.  (Full disclosure:  I helped write them, so I am not objective.)  You can read them here (at page 4) and evaluate them for yourself.

Step 2 is for the Board to assess the extent to which the Board is achieving the ends defined in the ends policies.  This is the hardest work of all.  It is hard work for the general manager, who is tasked with producing evidence for the Board of how the organization is doing.  It is hard work for the Board, which must evaluate the evidence and decide whether it is adequate – and, if not, ponder whether the policy must change or whether management must change.  Discernment and difficult conversations are essential elements.

At the Hanover Co-op, Step 2 occurs annually at the March Board meeting, just in time to report the results at the Annual Meeting in April.  So, we can look to the record of the Board’s March meeting to get a sense of how the Co-op and its Board are doing.  Is the Co-op truly achieving its global ends?  Is the Board holding management, and itself, accountable for such achievement?

At its meeting of March 22, 2017, the Board voted to accept the report of General Manager Ed Fox as having demonstrated compliance with the Global Ends policies.  His report came in the form of a 2016 ends “scorecard” that can be read here.

The first of the Co-op’s Global Ends policies specifies that because of the Co-op, “the Upper Valley will have a retail source of food that is affordable, healthy, grown and/or processed locally to the fullest extent possible.”

The scorecard noted that nearly 19 percent of the Co-op’s food store sales in 2016 involved products that were locally grown or produced.  This seems like a laudably high percentage, although from the report there is no way for the Board to tell whether 19 percent is truly “the fullest extent possible.”

With respect to affordability, the scorecard report states that the Co-op’s “Food for All program makes healthy food more accessible to everyone in our communities, regardless of socioeconomic status, by providing a discount on purchases for qualifying applicants.”  According to the scorecard, 145 people participated in the program last year.

This brings to mind what Carver writes at page 85 of Boards That Make a Difference:

“An organization can become so permeated by the belief that well-intended or reasonable actions (rather than results) are the reason for existence that no one realizes something is awry. A striking example is the allegiance given to services and programs as if they were results. Services and programs are often treated as if they have value in themselves; however, they are only packages of prescribed activities. In Policy Governance, services and programs are always and only means. The ends concept prevents righteous busyness from becoming just as meaningful as results, or perhaps even more so.”

It is good that 145 people were able to get a need-based discount at the Co-op.  But we have no way of knowing whether this made shopping at the Co-op truly affordable for them, nor do we know anything about whether the Co-op was truly affordable for everyone else.  Should more people qualify for the program?  Should it be promoted more aggressively?  Should there be a greater emphasis on lowering prices for all – and, if so, at what cost to the achievements of other objectives specified in the ends policies?

As to the reference to “healthy” food in the first ends policy, the scorecard mentions only that 84 Co-op employees are “ServeSafe” certified, that 103 employees participated in food safety training last year, and that there was a total of 356 food safety training hours.  This is exactly what Carver means by “righteous busyness.”  One can assume that those 356 training hours were well-spent, but we have no way of knowing whether the result was healthier food for sale at the Co-op.  Left begging is the question of whether by “healthy” the Board meant more than just “safe” but also intends the Co-op to sell food that makes members and shoppers less prone to obesity, adult-onset-diabetes, heart disease, cancer, etc.

The point here is not to criticize either the Board or, especially, a general manager who is brand new and just learning about what it really means to work with the Policy Governance model.  Rather, the point is to illustrate how challenging all of this is, and how potentially valuable.  For example: The Co-op has a reputation for being more expensive than its competition and there is reason to worry it is losing market share to the investor-owned supermarkets.  So, the reference in the Global Ends policies to the Co-op being an “affordable” food retailer presents a prime opportunity for the Board and management to confront this problem and determine the extent to which it is perception and the extent to which it is reality.  In so doing, the Co-op could demonstrate to the community that it is serious about affordability as a priority – or the Board could change the policy and implicitly conclude that serving the price-conscious is too big a challenge in light of the organization’s other objectives.  That would be a difficult conversation – but difficult conversations are exactly the sort of conversations a Board should be having on a regular basis.

There are similar questions and concerns to be raised with the remainder of the scorecard but I will focus on only one more of them here.

The second item in the Co-op’s Global Ends policies recites that because of the Co-op “there will be economic value returned to the community via charitable contributions, outreach projects, patronage refunds to members and other avenues.”  To demonstrate compliance with this policy, the scorecard refers to the Co-op’s “Pennies for Change” program, which began last summer and generated $138,599 over its first six months of existence.

Notably, the scorecard is silent about the fact that the Co-op operated at a loss in 2016 and thus there was no patronage refund.  There is no reference to outreach projects or “other avenues” for returning value to the community.  And as for Pennies for Change:  While a program that asks customers at the checkout to round their grocery bill up to the nearest dollar, with a charitable contribution of between 1 and 99 cents, is a fine thing, in the end it involves shoppers making donations and not the Co-op.

Please don’t misunderstand:  Pennies for Change is fabulous.  I participate enthusiastically as a part of my personal checkout ritual.  But the existence of Pennies for Change proves very little with respect to whether the Co-op is producing the results specified in the ends statement about returning economic value to the community.

“The only justifiable reason for organizational existence is the production of worthwhile results,” admonishes Carver (p. 79). “Worthwhile results always relate to the satisfaction of human needs. Whose needs, which needs, and what constitutes satisfaction are the unending, subjective quandaries confronting a board. Resolving the important, even existential value quandaries inherent in these questions is the very heart of leadership in governance.”

It is difficult work, no doubt about it.  Here it involves taking the risk of discouraging fledgling general manager by thanking him for his ends report and then telling him to come back with more evidence that speaks directly to achievement, or non-achievement, of Board-approved ends. Perhaps it also involves taking a hard look at the ends policies themselves – they’ve been in place a long time – and thinking about whether we need a new and better statement of exactly what the Co-op is striving to accomplish. 

Q&A about my candidacy for the Board of the Hanover Consumer Cooperative Society

What is your vision for our Co-op?

My dream is a cooperative that is the first place its members look when they need help making their everyday lives better and when they need inspiration in challenging times.

The secret to future success of our cooperative lies in the oft-neglected fifth Cooperative Principle – that of Education, Training and Information. What distinguishes a cooperative – particularly a consumer cooperative – from its investor-owned competition?  Supermarket chains thrive by withholding information and insight from customers whereas a cooperative succeeds by striving to assure that member-owners have all the information and insight they need. Trust is the key to the Co-op’s survival and success; building our ever-growing stockpile of member trust involves striving constantly to provide members with information and insight.

Food should always be the mainstay of what the Co-op provides; it is, after all, both essential and such a source of delight. But the Co-op should boldly seek ways to bring the benefits of cooperation to other sectors of the local economy that are currently not serving consumers well. For example, consumers in the Upper Valley ought to look to cooperatives to provide them with energy-related services (competitive energy supply, energy efficiency services, solar panels, etc.), IT services, funerals, automobiles and any number of other things that consumers are currently at the mercy of suppliers when acquiring. I am not necessarily saying the Co-op should diversify; much can be achieved by seeding off-shoot co-ops. Much can also be achieved through alliances between consumer co-ops and credit unions, two co-op sectors in our area that continue to ignore each other to their mutual disadvantage and peril.

 

What is the Co-op doing well, and what needs improvement?

Our Co-op has had a remarkable year under the Board that took office last May. The Board successfully recruited and launched the administration of a new general manager who brings a renewed sense of confidence and openness and enthusiasm to the challenge of running the organization. At the same time, the Board has successfully re-set its culture so that a climate of trust and respect prevails even as some of the issues that caused so much difficulty in 2014, 2015 and early 2016 continue to require attention. These are achievements of which the Board should be very proud.

At the same time, serious challenges loom. In 2016, the Co-op finished the year in the red for the first time anyone can remember.  At the December Board meeting, management attributed this to unrealistic expectations for the Hanover store remodel which, in turn, produced an unsustainable budget.  That seems reasonable, but it is also possible that what we have here is an ongoing trend of losing market share.  In January and February of 2017, sales continued to lag behind budget projections.  That's worrisome.

In these circumstances, the Board must reach for a new level of discernment with respect to how hard to press management vs. how much trust to place in the management team’s enviable degree of operational expertise. The Co-op must undermine the persistent myth that it is too expensive to be everyone’s “go-to” place for groceries; it can and should do that by making its grocery merchandising efforts more transparent and comprehensible.

Several years ago, the Board's governance consultant told me that ours is an “introverted” Co-op. Under new leadership, our Co-op should become proudly extroverted – eager to distinguish itself from its competitors.

 

How would serving on the Board fit into the rest of your life?

In early 2016 Governor Hassan appointed me to head New Hampshire’s Office of the Consumer Advocate, which represents the interests of residential utility customers before the N.H. Public Utilities Commission, the Federal Energy Regulatory Commission and elsewhere.  For me it’s the culmination of a lifetime interest in empowering consumers as economic actors.  I regard serving on the Board of the Co-op is just another way of being a consumer advocate – a chance to walk my talk.

I have two kids and two step-kids, ranging in ages from 18 to 11.  They sometimes roll their eyes when I get going about co-ops and how great they are, but I’m proud to have a family in which food shopping and “going to the Co-op” mean exactly the same thing.  I am married to Hilary Hamilton, a speech-language pathologist at the Richmond Middle School who likes to take her students on jaunts to the Co-op Community Market.

 

You already served on the Board, from 2003 to 2013.  Isn’t it time to give new folks a chance?

Of course!  But a really effective Board has a healthy mix of newcomers and veterans.  And I believe I have more to accomplish at the Co-op.

We need to get this transparency thing right, not for its own sake but because members who do not understand their co-op won’t support it.  I am certain that if members and future members really knew how the food gets on the shelves, how pricing decisions are made, how the grocery industry really works, and how the organization collaborates with employees and local suppliers, there would be a new burst of cooperative zeal in our area.  On the other hand, transparency doesn’t mean making absolutely everything public.  Members who trust their co-op will accept that, I am sure.

We need to find equilibrium and sustainability.  What’s the right size for our Co-op, given the way people in our community live now?  Should we become a “multi-stakeholder” co-op, jointly owned by workers and customers? How can we make the cooperative sector a stronger and more visible part of the local economy? How can we get Governor Sununu, Governor Scott, and their respective state legislatures to make co-ops a prominent part of their economic development agendas, given that co-ops build rather than extract local wealth? These are questions I feel a calling to help answer.

Some people think mergers, and maybe even one big national co-op grocery chain overseen by a single board of directors, is our best ticket to longterm survival.  I disagree, and hope to join other members of the Board in engaging these questions at the regional and national levels.

 

You ran for the Board last year and didn’t win.  Why are you back again?

The 2016 election was a fairly contentious one with lots of candidates vying for only a few open seats.  Nevertheless, I enjoyed participating in all the discussions and meetings – it’s always a pleasure to talk about the Co-op with people who care about it -- and I came within 40 votes of winning.  I’m hoping my fellow Co-op members will admire my persistence and see it as a sign of how committed to the Co-op I am.

 

The Board uses the Policy Governance model to frame its work.  Should it continue doing so?

Yes, but we must reject the misconception that using Policy Governance means there is some realm, often referred to as “operations,” that is off-limits to the Board.  In reality, nothing is off limits and the Board’s responsibility for what happens at the Co-op is plenary.  At the same time, I like the way Policy Governance focuses the Board on what really matters and encourages the Board to maximize management’s discretion while holding it truly accountable for the results it delivers.

 

Do you have a message for the Co-op’s employees?

I do – we love you!  The Co-op won’t thrive unless you are happy and treated fairly.  The Board cannot right every workplace wrong – and, as with any job, working at the Co-op will always have its frustrations.  But if elected to the Board I will always be pleased to hear from employees, either individually or otherwise, and will not let any concern go unaddressed.  Ongoing dialogue with employees is critical because we have so much to learn from you.

 

 This year there are five candidates for five open seats on the Board.  Why should I vote?

It looks like all five of us will be winners, but some will be more victorious than others.  The top four vote-getters will be elected to three-year terms.  The last-place finisher will be elected to a one-year term (completing the term of a Board member who resigned a few months ago).  Good turn-out in the election sends a message to the world that democracy at our co-op is vibrant and thriving.  Plus, there are two important packages of bylaws amendments on the ballot.  The amendments related to so-called "B Shares" are especially important because they give the Co-op an important mechanism for building its assets and, with them, the wealth we share as a community.

 

You’re really excited about cooperatives – it almost seems like a religious fervor in you.  Are you crazy?

Nope.  Since the modern cooperative movement was born out of the Industrial Revolution in England almost 175 years ago, lots of “isms” and economic theories have come and gone while co-ops have been the quiet success story of the global economy.  Co-ops embodied “socially responsible investment” a century before the idea became trendy.  Cooperatives combine the practical with the visionary; I am hardly the first to notice that the Cooperative Values and Principles are really just an expression the “love principle” that lies at the heart of all spiritual traditions.  From 2007 to 2016, I served on the board of the Cooperative Fund of New England, a community development financial institution that loans money to cooperative ventures around the region.  I have seen, firsthand, what great things co-ops can do.

 

If all of this verbiage leaves a voter wanting to find out even more about your ideas for the Co-op, how can she or he reach you?

I’ve set up a special Facebook page for this purpose -- https://www.facebook.com/kreis4coop -- or you can write me directly at donald@kreis.coop.  And please do not forget to vote before the evening of April 30, at mycoopvote.com.  You can also vote at any of the stores or by using the ballot that was mailed to members.

The Co-op in 2017: A beacon of hope

As a new year dawns on a troubled nation, I am pinning my fondest hopes on my favorite institution:  the Hanover Consumer Cooperative Society.

You see a grocery store (or, more accurately, four of them – two in Hanover, one in Lebanon, and one in White River Junction).  I see the practical embodiment of all the great virtues – aspirations that transcend even the most fervent partisanship . . . or the crap I sometimes buy at the Co-op.  (I have a weakness for Diet Cherry Coke.)

According to the International Cooperative Alliance, co-ops are “based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity. In the tradition of their founders, co-operative members believe in the ethical values of honesty, openness, social responsibility and caring for others.”  That such lofty ideals can be successfully brought to bear on so prosaic but essential an activity as supplying people with food – this gives me hope and reassurance even in the face of concerns that we are turning our national government over to reckless fools with authoritarian impulses, racist inclinations and misogynistic tendencies.

Such hope might seem misplaced in light of what the Hanover Co-op announced last week.

The Co-op’s new general manager, Ed Fox, announced on December 19 that the cooperative will finish 2016 “in the red.”  According to Fox’s announcement on the Co-op’s web site, “that can sound scary, I know. ‘In the red’ is often used in a way that can need clarification. It simply means income has fallen behind expenses. It’s time to get back on track.”

Fox and his CFO, Paul Guidone, offered further perspective and details two days later at the monthly meeting of the Co-op’s Board of Directors.  They projected a loss of more than $300,000 for the fiscal year, on sales of roughly $71 million, once the Co-op has paid its state taxes.  No one could remember the last time the Co-op ended the year in the red; Fox said he asked his recently retired predecessor, Terry Appleby, who confirmed there had been no such results dating back to his arrival in 1992.

Naturally, the Board asked Fox and Guidone to explain why the Co-op is losing money this year.  Both blamed overly optimistic sales forecasts with which the Co-op began 21016 – and Guidone went as far as using the phrase “arbitrary and capricious” to describe sales projections that proved to be a whopping $2.6 million too big.

Why, then, am I looking to the Co-op as a source of optimism and inspiration for 2017?  I have seven reasons.

1.      New and inspiring leadership.  Ed Fox had to some somber things to say to the Board at the December meeting --  but the look on his face and the tone of his voice confirmed that he is a CEO who is not afraid of, and might even enjoy, the difficult conversations a general manager must sometimes have with his board.  His relaxed and confident bearing is calculated to inspire trust.

2.      New and vastly improved Board culture.  A year ago – indeed, two years ago as well – the Board was riven by discord, obsessed with secrecy, and angry over controversial personnel decisions.  Now the Board faces even greater challenges than improving the workplace culture, but Board members are collaborative, focused, mutually respectful and yet still diverse in their perspectives.  In his rookie year as leader, Board President Tony Roisman deserves a lot of credit for his fairness, his decisiveness, and his diplomacy.

3.      Credible claims that 2016 was an anomaly.  Guidone explained that the irrational exuberance that guided the 2016 sales forecasts grew out of business-as-usual thinking with respect to the sales “bounce” the flagship Hanover store could expect in the wake of the $5 million store renovation of the previous year.  According to Guidone, the “bounce” projection overlooked the growing degree of cutthroat competition in the grocery business from aggressive supermarket chains and online retailing.  Nobody is counting on “bounce” for 2017.

4.      Signs of creativity, flexibility and responsiveness in the way the Co-op reacts, at the operations level, to sales fluctuations.  If your sales are $2.6 million less than you expected but you only lost $300k, you know how to cut trim expenses and redeploy resources when you have to.  There were no layoffs in 2016, remarkably and laudably.

5.      Fresh faces on the management team.  It’s not just new faces like Paul Guidone, who seems energetic and forthright, but also ‘old’ faces who seem newly influential.  It was great to see Cathy Maloney, manager of the thriving White River Junction store, invited by her boss to attend a Board meeting.  As the holdover manager from the store’s prior existence as a dismal outpost in a failing supermarket chain, Maloney is cooperative success personified because she’s proven what a store manager can do when freed to operate according to the cooperative values mentioned above.  One hopes she will continue to be visible and influential in the highest circles of the Co-op.

6.       A 2017 business plan, presented at the December Board meeting, that acknowledges the centrality of member trust to the future success of the cooperative.  “Member loyalty and affinity is largely a result of frequent positive engagement,” the report notes.  “As members are given more information and choices, engagement is the primary channel to ensure that our Co-op is ‘top of mind’ when a purchase, decision and action needs to occur.”  Of the seven Cooperative Principles, the most chronically underappreciated throughout the movement is No. 5:  Education, Training and Information.  This is the only way to beat the supermarket chains, which know how to sell organic food but must manipulate and fool customers as they strive to maximize return on shareholder investment.

7.      The certainty that when times get tough – as they may in 2017 and beyond – people turn to cooperatives for help and progress.  We are fortunate to have one that has been the thriving heart of our community for 80 years.

There are always things to worry about, of course.  Guidone’s use of the phrase “arbitrary and capricious” in relation to the budget forecast of the prior administration is noteworthy in that regard.  At the Board meeting, he sought to walk back any implied criticism of his predecessors, but what I heard was not a critique but a (possibly unconscious) challenge to the Board.  “Arbitrary and capricious” is actually a legal term that refers to when it is appropriate for an appellate court to overturn the decision of an administrative agencylike the EPA or a state utility regulator.  So calling the 2016 budget forecast arbitrary and capricious was, perhaps, a roundabout way of suggesting that the Board – as an appellate tribunal of sorts – must figure out how to scrutinize management’s plans thoughtfully and rigorously.  It is not an easy task, given the need to avoid micromanagement, and I cannot claim to be any wiser than the Board is on such questions.

Finally, the last paragraph of Fox’s 2017 business plan is a troubling one.  It reads:  “One idea that should be considered is the merging of cooperative organizations.  British consumer cooperatives have been merging since the 19th century and represent one of the largest chains in Britain.  While the negatives of mergers, like the loss of local control, are obvious, there are also advantages that may make sense at some point, especially on a regional level.”

One of my New Year’s resolutions will be to convince Ed Fox that he should forget about merging the Hanover Consumer Cooperative Society with other co-ops.  There are certainly those in the food co-op movement at the national level who think that One Big Cooperative Grocery Chain is the best way to assure the survival of consumer co-ops.  They are wrong.  Federation opportunities are worthy of consideration, but what builds member devotion to food co-ops is the certainty that they are locally controlled and locally responsive.  A big national co-op grocery chain would look and act like every other grocery chain.  I am sure that is not the future of the Hanover Consumer Cooperative Society, which is another reason I have such high hopes for the Co-op in 2017.

 

 

 

 

 

 

 

 

 

                                                             

ISO New England to NH: It's never our fault, ever

Everything that is wrong with ISO New England was on prominent display at the October 27 meeting of the Legislature’s Electric Restructuring Oversight Committee.

Three executives from the regional transmission organization, which operates the six-state electricity grid, were asked to explain why New England’s transmission costs are by far the highest in the country and why the wholesale electricity markets operated by ISO New England don’t work. And at every turn, the explanation came down to this: Not our fault.

If you don’t like the fact that the bulk power transmission system is overbuilt, blame NERC. The North American Electric Reliability Corporation sets the standards.

If you don’t like the byzantine manner in which transmission projects are planned – a system that never seems to let anyone but the legacy utilities build anything – blame the FERC. It’s the Federal Energy Regulatory Commission that approved the process.

If you don’t like the fact that transmission rates are not just outrageously high but are also set pursuant to a “black box” system that is so incomprehensible that even the FERC has concluded the public cannot meaningfully scrutinize it, blame the utilities. They still own the system; ISO New England just runs it.

If you don’t like the fact that transmission projects are commissioned based on price estimates that are consistently subject to massive cost overruns, all of which get recovered in rates, well . . . there really isn’t a good explanation for that. We’re just stuck with it.

And if you are concerned about what ISO New England is doing generally, there are plenty of opportunities, according to the three executives, for “stakeholder involvement.” Of course “stakeholder involvement” consists of attending endless committee meetings in windowless ballrooms at which the people in authority present their Power Point slides, listen with apparent patience, and then go back to doing precisely what they had intended to do in the first place.

A good rule of thumb when it comes to the electric industry: When they say “stakeholder input” its time to ask about “public participation.” The two aren’t equivalent.

Appearing at yesterday’s hearing were Stephen Rourke, who serves as ISO New England’s vice president for system planning along with director of transmission planning Brent Oberlin and director of external affairs Eric Johnson. Rourke did most of the talking. He didn’t say anything quoteworthy. Indeed, the news arising out of the appearance is all about what wasn’t said and who wasn’t there.

Notably absent was the CEO of ISO New England, Gordon van Welie. He did not appear to defend the inflammatory comment he made at a public appearance in New Hampshire earlier this month – that the region’s electricity grid is in a “precarious” state. Roarke and his colleagues did nothing to dispel the impression van Welie left that there’s danger of the lights going out in New England during harsh winter weather, possibly even as soon as this winter.

In fact, ISO New England’s leaders do not really think the lights will go out. They always stop short of making such a claim. Speaking at a closed-door meeting of the New England Power Pool (NEPOOL) earlier this month, van Welie made clear what really worries him: that wholesale electric markets are on the brink of failure because of massive requirements adopted by the southern New England states, particularly Massachusetts, for the procurement of renewable energy. The underlying concern is that these requirements drive down wholesale market prices so there isn’t enough money on the table to keep baseload resources – i.e., the nuclear plants originally developed by utilities, and the combined cycle natural gas plants that have proliferated since restructuring – in business. The FERC and ISO New England have therefore nudged the stakeholders (through their officially designated forum, NEPOOL) to do something, the result being the so-called IMAPP (“integrating markets and public policy”) forum NEPOOL’s leadership has convened. To date, IMAPP has been mostly a vehicle for big generation companies to float their ideas for what would be at least the third major round of market “fixes” since the arrival of restructuring in the late 1990s.

A fair question is: At what point do we conclude that this constant need for fixes suggests that the basic premise of restructuring – that competition can deliver safe and reliable electric service at the lowest possible cost and with the fewest possible externalities – is simply flawed?

Prior to restructuring, New Hampshire had least-cost integrated resource planning. Each utility, in its vertically integrated form, had to come before the PUC periodically to demonstrate it was investing in generation, transmission and distribution according to an overall strategy that was truly least-cost to consumers.

The least-cost integrated resource planning process is still on the books and the utilities still go through the motions, but the reality is that nobody is in a position to determine anymore that the grid is being managed, built and rebuilt in a least-cost manner. ISO New England has its byzantine process for determining what transmission upgrades and replacements happen, the ISO likewise oversees a forward capacity market that is supposed to (but never really has) guaranteed the existence of adequate generation, the ISO has chronically underestimated the extent to which distributed generation and energy efficiency and demand-side management will reduce the need for more infrastructure on the utility side of the meter, while states are pursuing their individual climate change strategies through renewable portfolio standards as well as the Regional Greenhouse Gas Initiative and renewable procurement requirements. And, here in New Hampshire, our utilities resist efforts to reinvent the LCIRP process to orient it toward grid modernization because, frankly, that will tend to undermine their hegemony at the local level in favor of third-party providers and customers themselves.

None of that came up in the presentation by the ISO New England executives.

At a high level, ISO New England is a familiar phenomenon to anyone who has read the Pulitzer-Prize winning book The Power Broker by Rober t Caro. Gordon van Welie is to New England as Robert Moses, the subject of Caro’s book, was once to metropolitan New York. Moses was the imperious head of the Triborough Bridge and Tunnel Authority which, like ISO New England, had a dedicated revenue stream (tolls) and almost total insulation from public accountability despite the authority over infrastructure that is vital to the public welfare. Moses was notorious for doing stuff like ruining thriving neighborhoods in the Bronx by plowing an expressway straight through the middle of them.

The equivalent of those expressways is the gas pipelines that ISO New England is subtly but unashamedly promoting as vital to the future of New England in light of the region’s increased reliance on natural gas for generation. The idea, notwithstanding restructuring and deregulation, is to force electric customers to pay for these pipelines and thus secure to unregulated gas generators a fuel supply that comes with a guarantee the generators refuse to pay for themselves. To date, ISO New England and other industry titans have been thwarted; the plan has been declared illegal in Massachusetts (by the Supreme Judicial Court), ruled illegal in New Hampshire (by the PUC) and abandoned in Connecticut (by the Public Utility Regulatory Authority, blaming the rulings in Massachusetts and New Hampshire).

The common thread in all of these troubles is ISO New England, ostensibly independent and nonprofit but in practical terms accountable to nobody. As their presentation made clear on October 27, when issues arise it is always somebody else’s fault. But regardless of who’s responsible, or who admits to responsibility, it’s always the ratepayers who get the bill.