American Experiment Podcast
Why are so many Minnesota high school graduates unable to read or do math at grade level? Does Tim Walz actually think he's going to be the next president of the United States? And why does he keep swearing so much?
These are the kinds of hard-hitting questions we get into every week on the American Experiment Podcast, where we unpack the week's biggest stories, interview Minnesota's movers and shakers, and "stop the tape" on clips of our state's most ridiculous elected officials.
New episodes drop every Tuesday afternoon and are available on every major podcasting platform.
American Experiment Podcast
Episode 126 - Anti-Fraud Plan: Too Little Too Late
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Is Minnesota approaching doomsday like the DFL claims?!
Check out the American Experiment Podcast
Amy Klobuchar announced her anti-fraud plan, DFL senators are predicting doomsday scenarios if we end the “temporary” COVID rules expanding taxpayer-funded healthcare, and Keith Ellison is getting sued by the Department of Justice for trying to regulate greenhouse gas emissions. On the back half, we talk with retired judge Eric Lipman about his fight to reform Minnesota’s utility system (and get us ratepayers a better deal).
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Welcome back to the American Experiment Podcast. Catherine, what do we have on the DACA today? Well, Amy Klobuchar has announced her anti-fraud plan. We'll look into it. Then Minnesota legislators predict a doomsday after Medicaid cuts. And Keith Ellison is sued by the Trump Department. We're not surprised. On the back half, we're talking to Eric Littman of Utility Reform Now. Let's dive in.
SPEAKER_01If this is your first time joining us, welcome. Things are pretty crazy here in Minnesota, and we try to bring you a more sane perspective and take on things. As always, I'm Grace Keating here with Catherine Johnson.
SPEAKER_00Yeah, and today we have, of course, another question of the day for our listeners. You will hear later in this show that our Minnesota legislators have a lot of doomsday predictions for what's going to happen in Minnesota when we make some necessary cuts to Medicaid spending. They say there's gonna be people dying on the streets. It's gonna be a horror show out here in Minnesota. What do you guys think? Is our Medicaid cuts gonna lead to doomsday scenarios? Drop a comment on our YouTube. What do you think is going to happen if we just tighten up our budget a little bit around here?
SPEAKER_01Now, for this week's episode, there was so much breaking news in the fraud space, in the healthcare Medicaid space, that rather than just focusing on, you know, three main stories, we're kind of doing more of a topics, a topics approach, I would say. An omnibus, if you will. Oh, nice, nice. Yeah, they get the legislature got away with that for decades. Uh so we'll get away with it for one episode. Now, our first uh kind of I mean round robin, our first uh our news roundup is in the fraud sector.
SPEAKER_00Yeah, so lots of fraud news uh this week, as always, of course, but I think the highlight was probably that candidate for governor Amy Klobuchar announced her plan for combating fraud, um, were she elected as governor? Um, she launched her campaign for governor back in late January, but since then, you know, we've been through February, March, April. I don't think she's really done much. Um, she hasn't really hit the campaign trail. She's done kind of a basement situation following in Joe Biden's footsteps. And so she had her first ever press conference to announce her agenda on May 3rd. Okay. Um, and it was on a Sunday.
SPEAKER_01She does not want people, she wants people to know she's running, but she doesn't want to risk saying anything controversial or anything that could be used in any kind of ad against her. She's I think she's thinking if she just keeps quiet, maybe that name recognition will push her over the finish line, which is insane in my opinion.
SPEAKER_00Yeah, it is pretty crazy. Um, but she might not be wrong, you know, we'll see. I mean, the agenda is very interesting. She leaves out some key things like education. There's nothing even talking about education in there. I don't think there's anything about healthcare. I mean, it's about five pages and it's uh mostly dedicated to fraud. There are also large swaths of it that are talking about like IT upgrades at the legislature and for citizens. I mean, that's a good thing, but I just am more concerned about school choice or things, you know.
SPEAKER_01You know, like half our kids can't read or do math at grade level. Like sexual. That's just me.
SPEAKER_00So yeah, um, my thought as well. But when it comes to fraud, she had a lot of proposals, and many of them overlap with ideas raised by walls and legislators, including Republicans who want more in-person and unannounced site visits, for example, and an independent inspector general to investigate fraud in state programs. The inspector general idea, as all of our listeners know, would have been passed into law last year if just for a single House Democrat would have voted for it. Failed on party lines. They only needed one. Um, but no one would vote for it. Not a single Democrat. Now, Amy Klobuchar thinks that she could get it done. I'm not sure.
SPEAKER_01Which is so silly because they've had power. They had trifecta last cycle. They had trifecta last cycle. If they wanted to implement these reforms, they could have done so already. It's not like we knew the fraud was happening. It's not like we learned about it this year.
SPEAKER_00And they're the only people holding this build up, bill up now, as it's as it is. More unannounced in-person audits of providers should have been the rule all along, obviously. And they could literally be done today. There's no new legislation that they need. Democrats could do this starting today. Not to mention, all of this sounds pretty good. A lot of the things that she's suggesting are things we've seen before. Like I said, they've been presented by Republicans and Democrats. And I I look at all reform and think sounds great, let's try it all. But good luck to any Democrat who wants to get these reforms past the finish line because the public unions that represent most of the employees in government who would need to carry out these actions, by and large, donate to Democrats. So, for example, one of the things on her fraud agenda is she wants to create a clear process that rewards people who report credible instances of fraud and incentivizes the responsible management of taxpayer dollars. Sounds good. Fantastic idea. I love that. I like it. But as many of you know, the public sector unions will never let this happen because you can't even have an employee of the month in these departments because it favors one employee over another. It's impossible to reward good work. So is she really going to fight them on this? Is she really going to push back and say, I want to reward employees, you know, who are doing good work fighting fraud when it's the public sector unions who are most likely, I haven't seen it yet, but historically speaking, have always donated a significant amount to democratic campaigns. I just don't know if I believe it. Yeah.
SPEAKER_01What's that thing that Keith Ellison said in the December 2021 meeting with fraudsters? Money is freedom. Money is powers. Yeah, right. I mean, that's that's the that's what's happening in Minnesota. And you don't just see it with public sector unions generally, but especially I mean, look at the teachers' union. It is truly, it is like cartel levels of control that they hold over the DFL here in Minnesota. So even if there were some DFL legislators who say wanted school choice and thought it was a great policy, the teachers' union is so against it and so against any meaningful reform that they really can't come out and support it because they're being funded, their campaigns are being run by the union.
SPEAKER_00Exactly. And key key example of this is during um COVID, when people in the administration said you should go out and do site checks on these places that are requesting millions and millions of dollars of free food money. It was the public sector unions who said, no, our employees are not gonna do that. They don't want to contract COVID. So that's a great example of when the unions just said, nope, not gonna happen. We aren't gonna do that. We don't want to get COVID. We're not gonna do site checks. So what's stopping them from doing that with future fraud proposals? Yeah, exactly. I don't know. Okay, next on our omnibus. Meanwhile, in Minneapolis, the city announced yesterday the awarding of$1 million in grants for recovery of local businesses after Operation Metro Surge. Of course, none of the money went to actual businesses. Oh, of course not. It went to nonprofits. Did we get any of this money? I was invited. We're never on the list. Uh, mostly neighborhood associations. But one grantee is a nonprofit named the New American Development Center, who received$18,000 from the city. During the COVID period, the New American Development Center operated an independent free food distribution site under that same program once utilized by Feeding Our Future and overseen by the Department of Education. NADC billed the food program,$7.8 million, of which the Department of Education determined that$1.1 million was overbilled. Oh my gosh, a one-seventh of their program was overbilling. Yeah, and Carol Evin reports that the NADC, this nonprofit, is in the process of paying that money back. They haven't even given all that money back yet. And they've been given more money by the city of Minneapolis. And Carol 11 also pointed out that the state legislature, while it was all Democrat controlled, gave the same nonprofit an additional 1 million in grant money to the same organization. So they keep throwing money on top of money, on top of money into these fraudulent nonprofits without anyone checking to see, like, are they committing fraud?
SPEAKER_01I mean, they just don't care. They just do not care how taxpayer funds are used. They don't care about the overbilling, they don't care about other forms of fraud, because as long as the money is going out the door to entities that they see as good, that's all they care about. I mean, there's no better way of illustr illustrating this than an organization that is misusing the funds you've given them and you continue to give them more money. It is so disrespectful to the taxpayer. In a city like Minneapolis, where people pay such high taxes, too.
SPEAKER_00Yeah, exactly. Um, it's it's all absurd. I mean, I will say there is a little bit of better news, okay? You may have seen that the FBI rated 22 businesses at the end of April. One of those businesses is owned by Kasim Bissouri. Bissouri was the first Somali American city council member in St. Paul. He was actually appointed to the council by then mayor uh Melvin Carter and the council to finish out the final year of an unexpired term representing Ward 6. State records show that he owned uh this organization called A Plus, and it was founded in 2018 with Bissouri as the main contact person. State payments records show that A Plus has received more than$118,000 in the past couple of years. Corporate records show a number of other active businesses listed under his name as well, including Access Care Minnesota, Bissouri Brothers, and White Star Property Management. In the past, Bissouri has actually condemned Trump's comments, broadly painting Somali Americans as engaged in fraud. He told the Minnesota Star Tribune in November that Somalis follow the rules and regulations that are set by the state and have become thriving business people through honest work.
SPEAKER_01Well, I mean, some have. I mean, some, I think broad statement like that, sir. I don't know if you're gonna, I don't know if that's gonna fly.
SPEAKER_00But now his company has been raided by the FBI. So neither him nor his company, A, has been charged with any crime, but getting raided by the FBI is not the most positive sign. So again, former city council member actually has a potentially fraudulent business. We will keep our eyes on that one and let you know if charges are filed.
SPEAKER_01That's hysterical. He's like, hey, hey, not all of us, not all of us are fraudulent. I am, allegedly, I am, but you know, not all of us.
SPEAKER_00But not all of us, my point still stands. Okay, and finally, finally, guess who's back?
SPEAKER_01Who?
SPEAKER_00Guess who's back? Amy Bach. Okay, so the U.S. Department of Justice has accused Amy Bach and her adult sons of sending confidential court material to the Minnesota Star Tribune and other media outlets.
SPEAKER_01Isn't she in jail right now? This is the feeding our future mastermind. This is like the woman who was directing all of this. She's in jail, right?
SPEAKER_00Yes, she is. She's I even wrote down here, yes, she's being held at the Sherburn County Jail since her conviction as she awaits sentencing, which is actually, I think, at the end of this month, it's coming up. I'll have to have a party. Yeah, but apparently she's been kind of bored because uh prosecutors are accusing Bach, her her two adult sons, and perhaps her attorney of being behind a series of leaks to media members of hundreds of confidential written interview reports of FBI interviews conducted with witnesses in the scandal. She would have obtained such material through mandatory disclosures of evidence gathered by the prosecution during the course of the case. That's not for public consumption. Prosecutors say that her purpose for leaking these documents can best be described as a public relations campaign to seek to minimize her starring role in pilfering the federal child nutrition program while casting the real blame for the rampant fraud on the Walls administration, state administrators, and uncharged individuals. Prosecutors say that in one email, it included the sentence Ellison's office intentionally set Bach slash feeding her future up to be a scapegoat. So that's her narrative, apparently. She's going with the I'm a scapegoat narrative. And they also state that Bach said on the telephone that her criminal defense attorney and the editor of the Star Tribune were making plans as to when to publish the article to garner the most strategic advantage.
SPEAKER_01So that's like pretty high-level collusion between the Star Tribune and this woman who's sitting in a jail waiting to be sentenced for her role in the fraud scheme.
SPEAKER_00Yeah.
SPEAKER_01Witness tampering, I think maybe you could call it. It's a little uh it's a little iffy. Well, yeah, and then the leaking of materials on its own. I mean, that that has to be a crime, right? Leaking confidential materials that are part of a court case. If the attorney's involved for sure, he has to get disbarred, right?
SPEAKER_00Yeah, well, so they're they're looking for sanctions against Bach and to prohibit jailhouse conversations between her and her two sons. But it didn't seem like the last hearing they had on this was very productive. So we'll see what happens. Her sentencing, like I said, is actually coming up. But it sounds like Bach really believes the Star Tribune reporter is writing an article that will favorably color her role in the fraud.
SPEAKER_01It's like what? It's so rare, too, to see a government entity like the Department of Justice use colorful language. Like, what did they say? A PR, a press, a public relations campaign is what they called this. That's that's pretty. I feel like typically they just sort of report the facts and they, you know, they don't make any judgments because you know it's a it's a legal proceeding, but public relations campaign is pretty damning.
SPEAKER_00Pretty damning. And I will say for the the Star Tributin, for their part, stated we cannot comment on stories we may or may not be working on or on our reporting process. Any assertion that our editor has coordinated with box counsel is simply untrue. So they're denying that element and they refuse to comment on whether or not there's a story taking place. Well, I can't wait to find out.
SPEAKER_01I will be on the edge of my seat. We will have to update you guys on how this situation, how this story develops. Holy cow. Our second little news roundup omnibus session, if you will, for today's episode uh centers on Minnesota's loss of Medicaid funding from the government and how some of our legislators want us to deal with that. So before we get into this, Bill Walsh had a really excellent Capital Watch newsletter go out over the weekend. If you're not subscribed, you should be. Uh, you can do so at americanexperiment.org. And he prefaced his whole conversation of this debate with a series of facts on Medicaid and welfare spending in Minnesota and nationally. So I'm gonna do the same because I think it's really helpful and very important context when we're talking about any kind of healthcare funding in Minnesota. Here are the quick facts. First, Medicaid is the federal program administered by states to provide healthcare to the poor. Medicare is for the elderly. There are 1.2 million people on Medicaid in Minnesota, representing one out of every five Minnesotans is on Medicaid. Wow. Medicaid is the program also producing the most fraud in our state. Minnesota is the second most generous state in the nation, spending$46,000 on public welfare per person in poverty in 2023. Second most generous.
SPEAKER_00Just really quick, if those people in poverty had the$46,000, they wouldn't be in poverty. So I just would like to quickly point out checks. Quickly point out that the government is once again like the least efficient organization in the world. Like, what in the world?
SPEAKER_01For the next two budget cycles, Minnesota is gonna take in$2 billion less than we will spend. So we are facing some serious structural deficit issues. Most of our budget deficit is caused by growth in human services spending, especially Medicaid. The federal government is$39 trillion in debt, so should probably work on cutting some of that spending as well. The one big beautiful bill requires states to rein in Medicaid and SNAP spending by adding work requirements and more frequent eligibility checks, removing coverage to able-bodied Medicaid recipients temporarily added during COVID. So these are people who could be outworking, have health insurance on their own. They were added to Medicaid, supposedly temporary during COVID, and they should be removed now because they can be out working and shouldn't be benefiting off.
SPEAKER_00Well, this is so recent. That they added the group of people that are now being removed to Medicaid.
SPEAKER_01And it was meant to be temporary from the beginning. And we still have COVID era policies in place. And then the last thing the One Big Beautiful bill is doing is stopping coverage for illegal immigrants on Medicaid. Now, Minnesotans, based on our polling and Thinking Minnesota poll and our Thinking Minnesota magazine, overwhelmingly support the reforms to Medicaid spending that are laid out in the One Big Beautiful bill. Okay, so keep all of that in mind as we go through this discussion. Now, obviously, instead of using these federal Medicaid reforms that are laid out in the One Big Beautiful bill as kind of a framework to slow down Minnesota's spending in this area and this massive growth that we're seeing in state spending over the last decades, Democrats in the Minnesota Senate this week passed a bill that spends$700 million to backfill the lost revenue from the feds. So, what might their reasoning be? Why is it so important that we fill in this funding that I would say the federal government is rightly pulling back? Most Minnesotans, based on our polling, would agree. It was temporary from the beginning. It was temporary. Temporary COVID going to people who don't need it. They can work, or they're illegal immigrants. Yep. Shouldn't be benefiting from the system anyway. Yep, they're able-bodied, or they're not Americans. We're gonna kind of roll through a few of the senators' opinions on why this funding is so crucial. Let's roll it.
SPEAKER_03Work reporting requirements don't work. The Trump administration and Republicans in Congress are forcing states to adopt these work reporting requirements so they can kick enough people off Medicaid to justify the tax cuts they gave to billionaires.
SPEAKER_02The single purpose of this is to kick people off of their health insurance. Except to corporations and super rich donors, the only people who stand to gain from this deal. If we don't spend this money, but we comply with the requirements of HR1, our healthcare system will collapse. The programs would collapse. People in Minnesota will die.
SPEAKER_01Stop it. Stop it, dude. She is she is like on the verge of tears, I feel like here. She is so this is Senator Lindsay Port, she is very emotionally invested in what she is saying. Senator, this is where we were a few years ago. Just a few years ago, we did not have this extra funding. The all these extra people were not on Medicaid, and we were doing fine. People were not dying in the streets, the healthcare system was not collapsing. So I promise you, those things are not gonna happen if we just pull back some of the spending. Yeah, I'm seriously baffled.
SPEAKER_00Like, is she working with a different set of facts? Like, I really don't understand. It's like they really do just care about the growth of government being bigger and bigger and controlling as many people's lives as they possibly can. It's like that's their only one goal. I mean, we should, as conservatives, uh, but all Americans should be in favor of helping people temporarily to get back on their feet, not getting them stuck in a cycle of government dependence. That doesn't help anyone. And that's exactly what things like work requirements do. They help people get back on their feet because they have to re-enter the workforce. It's not beneficial for anyone to have a group of people stuck dependent on the government for their entire lives. We need these things to be temporary again. But for some reason, the Democrats are just obsessed with creating these doomsday scenarios that will never come true, of course. Um, but to try and keep people under government control indefinitely.
SPEAKER_01And you do wonder at a certain point, should there be consequences for her saying things like this? Because she's going on a press conference in front of Minnesotans and saying that if this thing passes that Republicans want, people are gonna be dying in the street. And it's completely unfounded. But if I heard that and I was an uninformed Minnesotan and I didn't know what was going on, I would be so scared. Yeah. It's so manipulative, and it's it gets to the point, I think, of calling it dangerous. Um, the timing of this whole thing was pretty funny. And you know, it's worth noting that, you know, the Minnesota House is tied. This bill, like most bills introduced this session, is probably not going anywhere. Fingers crossed. Um, but the timing was pretty funny because just two days or a day or two after they filmed this press conference, Dr. Oz over at the Centers for Medicare and Medicaid Services, CMS, which by the way is also where American Experiment Policy Fellow, former policy fellow Peter Nelson is. Shout out. Shout out, Peter Nelson. Dr. Oz announced he was withholding another$91 million in Medicaid funding to Minnesota over payments that, quote, didn't look right. Now, this follows an earlier deferral of uh approximately$259 million. So they keep seeing these things that just don't look right in the system, and that's why Minnesota is losing so much of this federal funding.
SPEAKER_00So you're telling me if those Democrats really wanted to get this funding from the federal government, they would say, we need to stop fraud. Yeah. We need to clean up these programs. Yes, we need to clean up these programs, we need to stop the fraud that's going on. And they're not doing that. Instead, they're putting on press conferences where they're in tears trying to appeal to people emotionally to get more money from the Minnesota taxpayer who's already paying an insane amount of money to their state government.
SPEAKER_01Yeah, it's um it's it's pretty insane. Uh Matt Dean had a really good article at AmericanExperiment.org kind of going through this 91 million that's getting withheld. So of that 91 million, roughly 14 to 15 million may relate to claims involving individuals who don't have satisfactory immigration status. Well, the other 76 million ties to 14 high risk service categories that are highly vulnerable to fraud. This was Dr. Oz's statement. I had to share this. I love this. At CMS, our responsibility is clear. The federal government covers more than half of Medicaid payments, right? Because it's state funding and federal fund, federal funding, but the federal covers more than half. Which means we have both the duty and authority to make sure these funds are used properly. And this is this is what I keep going back to. If we had a different administration in the White House, would any of this be getting uncovered right now? Would we just keep throwing money into the a black pit like we have been in Minnesota? Yeah. It's really frustrating. It is. Uh so it's worth noting, illegal immigrants are barred from receiving Medicaid. But Minnesota has tried very, very hard to work around that. Uh so for example, the state's very controversial plan to extend healthcare cost coverage to undocumented immigrants that was supposed to be funded exclusively by state money. But the healthcare access fund, which is like such a fun, it's such a government name for a fund, the healthcare access fund, so benign, from which all of that money comes from is notorious apparently for mixing state and federal money. So it's very likely that federal funds were used in this health care for illegal immigrants program.
SPEAKER_00Yeah.
SPEAKER_01Which is why, of course, people like Dr. Oz over at CMS care and have the authority then to withhold these Medicaid payments. Now, the estimated cost of providing care to these, you know, 20,000 illegal illegal immigrants who were applying for that care under this program for one year, the cost for one year was 104 million dollars. These are people who are here illegally who are not paying into the system. 104 million dollars. And these illegal immigrants were eligible, even if they had previously lied to the federal government, state and federal government about their immigration status in order to get Medicaid. So they've committed fraud to get welfare when they weren't supposed to. And our state government is like, it's fine. It's legal now, so you're good.
SPEAKER_00It's so frustrating. And meanwhile, there's the vast majority of Minnesotans are somewhere in the middle, like struggling too seriously. Meet ends meet as prices go up and up and up, including on things like healthcare. And the people they're focused on on the left are illegal immigrants or the the rich who are getting tax breaks as they wrongfully claim from President Trump. Like, can you focus on the vast majority of Minnesotans who need your help bringing these prices down to make life more affordable? Because right now, what you're doing and just giving everyone free crap is not helping.
SPEAKER_01Because it's not free. It's payer funded. And the other people in the system who are paying their sh fair share are paying for all the other people's healthcare costs. Exactly what they're doing. And they're still struggling on their own. And when affordability and cost of living is so top of mind for people this year, this election year, I am gonna be shocked if they keep getting away with things like this. But of course, if they can keep just keep doing press conferences and saying that people are gonna die in the streets, maybe they've got a chance.
SPEAKER_00So let us know in the YouTube comments do you think people will die in the streets? What do you think is going to happen if we tighten the purstrings a little bit around here in the state of Minnesota?
SPEAKER_01Now, because we spent a little bit longer on our first two topics, these omnibus topics, if you will, we thought we would just give you a very quick update on a story that just broke a few hours ago. So the federal government has just sued the state of Minnesota, Attorney General Keith Ellison, over his attempts to regulate greenhouse gas emissions, which he was doing that. I mean, this started back in 2020. This has been going on for a while. He was suing ExxonMobil, Coke Industries, and the American Petroleum Institute for supposedly climate deception, saying that they deceived and defrauded Minnesotans about the real causes of climate change. And he used that justification to regulate essentially what kinds of global emissions they could put out into the atmosphere, even though that is very clearly the purview of the federal government. And so this has been unfolding for a while. Again, the story just broke this new lawsuit. So it's early still. But I, I mean, I've actually been following this for several years now. And to me, it seems pretty cut and dry that this is the federal government's arena. It's been going on for way too long. And I'd be shocked. I'd be shocked if the courts ended up siding in Ellison's favor.
SPEAKER_00Yeah, that's really interesting. I feel like so much too. I mean, Keith Ellison has spent so much time suing the Trump administration. I'll be very interested to see um how this lawsuit plays out. I just feel like he could spend a little more time, I don't know, not doing illegal things on his part. And then, like, what what do the people of Minnesota need? They don't need you to just sue Trump endlessly. Like, what are you actually doing to help us? The answer is really nothing that I've seen.
SPEAKER_01Yeah. I would be okay if our state attorney general was not fighting climate change on my behalf.
SPEAKER_00I'd be okay, you know? Yeah, deceptive claims about I don't even know what that means. So I'm interested to see more. Um, sounds a little absurd, and obviously, yeah, not his purview.
SPEAKER_01Now we are gonna sit down with retired judge Eric Littman, who is now taking up arms, taking up arms. That's that sounds a little extreme. No, he's fighting the Public Utilities Commission here in Minnesota and all the utilities on behalf of ratepayers and consumers. Stick with us. American Experiment is supported by thousands of individuals like you. To join the movement, go to www.americanexperiment.org and click the yellow donate button. From all of us here, thank you. Today we are so happy to welcome to the show retired administrative law judge Eric Littman, who is now fighting on behalf of consumers against the Minnesota Public Utilities Commission. Welcome to the show, Judge Littman.
SPEAKER_04Thank you so much, Grace and Catherine. I love the new set. It's a great new look and uh very comfy chairs.
SPEAKER_00Thank you. You came matching well too. You fit right in with our aesthetic. It's almost like we told you about it.
SPEAKER_04Red, white, and blue.
SPEAKER_01Exactly. Well, start by walking us through your professional background and how you be came to be so passionate about utility reform, which Minnesota desperately needs.
SPEAKER_04Yeah, I think I think that we do need reform. Um I've I've always uh been somebody who's been interested in public service um, you know, since uh since high school. Ever since I could uh get myself to places, uh, I've been driving to a government building for work. And so um, and you know, uh a polypsci major. Uh here in Minnesota, um, I was Deputy Secretary of State, I was a member of uh of the State House, I worked in Governor Plenty's office. And then, as you said, for the last 19 years, I was an administrative law judge with what is now the court of administrative hearings, where uh all the suits are against the government. And so uh in some way I've been on one or another of the separation of powers boundaries, trying to keep the other branches in their lanes. As a legislator, I was trying to keep the executive and the judicial branch, you know, in their respective lanes. And as I switched branches, you know, the same question recurred, but it was just different actors that uh I was trying to keep in line, at least my efforts.
SPEAKER_00And so now you're you've started utility reform. Now tell us a little bit more about your goal with that group.
SPEAKER_04Yeah, I think that the process for setting utility rates, uh, electricity rates or natural gas, the uh the money that we pay to our utility providers, uh, the process for setting those rates is unduly expensive and in fact burdensome uh to the poorest ratepayers. Um the charges that the government charges in order to set those rates, and they charge them back to the ratepayer, are done on either a per kilowatt or a per therm basis. So uh if you are uh if you tend to be poor, uh they tend to live in spaces and apartments and houses that are less energy efficient than their more well-to-do neighbors. And so uh this process of assessing the expenses of government, in fact, are applied to the poor in uh Minnesota's harshest and most regressive tax. Because if you live in a drafty apartment and you're paying more to uh to heat your home in February, and that's an important thing in Minnesota in February, um, you're you tend to be paying uh more of the government expenses for your rates uh than your more well-to-do neighbor uh that has uh uh an efficient home. And I think that that's immoral, uh, so much so that I didn't want to participate uh in that process anymore. And I wanted to go outside and onto the other side of the bench and try to advocate uh for change, both in the legislature uh and in uh proceedings before uh the commission.
SPEAKER_01Now, this this initiative, uh Utility Reform Now, it's it's relatively new. It's relatively early on. It's been what you 12 weeks that you've been running with it. Reflecting on how you made the decision to start this, it sounds like it was more of a gradual process over time. But was there one deciding moment that you said someone needs to do this and I'm gonna be the guy to do it?
SPEAKER_04Uh absolutely. So uh it was a gradual process for me because I was uh on the bench presiding in these cases. They there are there are lawsuits over what the rates should be, and I was the judge presiding. And back in 2017, I was complaining uh that uh the expenses of the process were$200,000 in the case that I was presiding in that had to do with Otter Tail Power. They they have uh you know a service territory that's basically western uh Minnesota, you know, on the borders of the Dakotas. Um that seemed, you know, it's almost a quaint idea because uh in the current Excel natural gas case that's now pending and that I'm participating in on the other side of the bench, um, the proposed charges for the process alone, not a single therm of energy, is going to be three and a half million dollars.
SPEAKER_01And then the taxpayer pays, or the taxpayer.
SPEAKER_04Well, the ratepayer pays all of that.
unknownWow.
SPEAKER_04And I think the other uh horrible piece about that is uh Excel Energy has been coming in, you know, mostly at the department and the commission's request. They they'd like them to come in fairly frequently uh on a two-year basis. We won't be done paying for the three and a half million dollars in charges before they're in for the next case, you know, sending up the bill again. And so it's a process that I think is uh uh is not self-aware enough. And so again, I'm doing what I can, appearing on shows like this, testifying in front of the legislature, participating in uh commission proceedings to call attention to uh the thing that uh folks weren't saying out loud. I'm saying the quiet part out loud.
SPEAKER_00What so the okay, so let's start here. The Minnesota Public Utilities Commission, they set the rates, right?
SPEAKER_04Yes.
SPEAKER_00And they do that because of why?
SPEAKER_04Because uh Excel Energy, for example, uh is is a monopoly. It has an exclusive on the territory, you know, to serve natural gas. And that is something that both benefits the ratepayer um, you know, and uh, you know, Excel. Obviously, without uh active competition, that's a benefit for the company. That seems obvious, but also it benefits uh the ratepayer because um having only one set of pipes running down the street means that we're not overbuilding. You know, if we had true competition, you would pay for uh the pipes that serve your house and uh the pipes of the competing company that don't serve your house. And that would be uh that would be overbuilding. We don't have you know multiple sets of transmission wires, we don't have multiple uh pipelines and gas mains. Uh the trade-off is that we don't want to give a company that has a service story service territory and a monopoly uh an opportunity to gouge ordinary ratepayers. So there I think there has to be some oversight. The question is, how do we do that oversight? Can we do that in an in a more efficient way than spending three and a half million dollars in order to uh decide whether a table of 48 numbers, that's the the grid that they send you in your circular, this is what we're proposing rates will be. Uh, to spend$3.5 million to decide whether a single table of numbers is appropriate. I think that there are many, many better and more affordable ways. And it's important. 6% of the uh proposed increase in the uh natural gas case for Excel is just the government process. And so uh again, if you're a poor person struggling with uh an 8% increase, and that's what they've proposed. Uh how, you know, my my raise wasn't 8% last year. How am I going to afford uh these kinds of rates? Um, I I think it's uh an important question, not only for government oversight, but also uh, you know, for morality. Uh we shouldn't beleaguer uh the poor, and we certainly shouldn't beleaguer the poor with service charges from the people that we hire in government.
SPEAKER_00Well, and are you saying that those are expensive? The work that the Utility Commission does is expensive because of litigation, primarily. Is that why?
SPEAKER_04U Absolutely. The analogy that I make is I'm a state pensioner now. I retired from state service. And uh as a state pensioner, I'm I'm served by two different state agencies, one very well and one very poorly. The one where I'm served very well is the state board of investment. They have all of the pension funds that they're they're managing. They're a similar size agency, similar budget agency to the PUC, and yet uh they have 20 times the regulatory reach because they don't use lawyers. The portfolio at the SBI is$160 billion. If you took all of the rate-regulated utilities, that's$7.5 billion. And so with the same money and with uh the same budget and resources, um uh you have two different outcomes. Why? Because one uses lawyers in order to make decisions, and the other uses market-based metrics. They turn on CNBC to see what the market is doing. They get a subscription to the Wall Street Journal, they ask things about the uh the alpha or beta risk in a particular investment. And I've worked in both places. Uh I was the Deputy Secretary of State for Mary Kiffmeyer, and they have a committee because she was a member of the State Board of Investment, uh committee of deputies, and so I was intimately involved in all sorts of meetings, you know, making decisions about how the uh pension funds were invested. I've also been uh an administrative law judge presiding in the cases. I've seen both sides, and they're very different outcomes and very different results. Why? Because one uses lawyers and the other uses familiar market metrics.
SPEAKER_01This is uh an area of Minnesota, I guess, governance that I am so unfamiliar with. And I'm absolutely shocked by what you're telling me. So it sounds like the way right now that rates are set is you know, a group like Excel, a company like Excel will propose a list of rates and rate increases, and then they have to fight it out in court over whether or not they're actually going to be implemented. This is insane.
SPEAKER_04Well, and and it's also very expensive. Uh, there are 18 lawyers that have filed an appearance uh, you know, in the most recent case. Uh of the 10 uh recent rate cases, uh, I say uh the the question, or at least the phrasing that I used was, uh, are you paying for one uh one dozen lawyers or two dozen lawyers today? So the range of the last 10 cases has been between 13 lawyers and 24, all of whom have uh billable hour rates that are spinning like windmills, most of whom hope to charge the ratepayer for their work. Um I do think it's insane. I think we can get to a decision about what is just and reasonable as far as a rate to protect us from, you know, uh monopoly power. And that's a legitimate exercise. The question is uh, do we need between 10 months and two years worth of litigation uh in order to decide that question? And again, an expense of three and a half million dollars.
SPEAKER_01It's almost like can't we have these conversations before you send out the suggested rate table, the rate sheet?
SPEAKER_04Absolutely. And that's a a deep problem, which um um among the things that frustrates me is that the Department of Commerce and the Minnesota Public Utilities Commission doesn't state uh beforehand what it thinks the rate should be. It says, well, we can't decide based upon your application what the rate should be. So we're gonna have a trial that goes for 10 months to two years.
SPEAKER_01It's all reactive.
SPEAKER_04It's it's all reactive. And again, I think if the uh the PUC was to lean in and say, hey, based upon uh uh utilities that look and uh and seem like Excel in other states, in in other comparable jurisdictions, we have X-rate. You know, we use a proxy group to compare uh, you know, Excel to similar size companies with similar service territories and similar kind of cost constraints. We can see prices and the rates that are uh awarded uh based upon uh the experience of those other utilities. They're widely reported, uh not only by the federal government, the energy information administration, reams of data about what's happening about utility rates. But there's also a popular magazine called Public Utilities Fortnightly, where you can open it up and just like you would read out of the Wall Street Journal how your stock or your mutual fund is doing, you can see what uh returns are are uh being developed and and received by particular utilities. It's not rocket science. It doesn't require three and a half million dollars, particularly from poor people.
SPEAKER_00Well, and it seems so difficult. I mean, I was thinking while you were talking, like what does the rate, what role does the rate payer have in this situation? Because I get my bill from a utility company and I've never contested it. I just pay it. I need my electricity, obviously. I need my gas. Indeed. Um, and so I guess that's part of my question. What is your plan to change? Like, what can we as ratepayers do about this problem?
SPEAKER_04Well, there's a couple of things. Run right now, uh, folks can there's there's still public hearings going on in the XL rate case. So if they're in the metro area, I know you have a uh a wide uh audience all across the nation, but for folks who are uh in Minnesota and in the metro area, they're likely an Excel customer. They can participate still in the public hearings that are going on. And also, I think um writing to uh the PUC and saying we're concerned not only about what uh the utility is doing, but also what government is doing. And I actually think that government should be modeling the kind of cost control behavior uh that they want from uh the utility. It's uh very much a do as I say, but not really as I do. Um I have an example in that respect. Uh the uh for many rate cases, they have disallowed the the dues of uh the utilities, if they're in natural gas, from being a member of the American Gas Association. It's a trade association. They uh they have conferences, they talk about best practices if you're running a natural gas utility, they train people, have all sorts of conferences. No, uh, we don't like the fact that you're involved in this trade association, apart from the lobbying expenses. That's not in dispute. But you can't even uh put in the dues for the general newsletter or their magazine uh because uh for whatever reason they don't like uh that association. But uh the public utilities commissioners will go to their own conferences, which are in fact subsidized as a platinum sponsorship by who? The American Gas Association. And so it's okay for the commissioners to get their training uh subsidized by the American Gas Association, but God forbid somebody who is actually in the natural gas business would uh be a member in good standing of the American Gas Association. It's insane.
SPEAKER_01Feels very elitist.
SPEAKER_04Well, I just think it's not very self-aware. And again, um, one of the things that is sort of groundbreaking about what uh utility reform now and our membership is doing is uh the ordinary adversarial process that would work in bringing out these things to light doesn't work in this context. None of the rate-regulated utilities are going to say the quiet parts out loud because they're deeply embarrassing to the government officials. And the government officials set how much money those companies receive. And so uh I'm the little boy standing from the crowd saying the emperor has no clothes. In fact, he's buck naked and it's really disturbing, and you should put something on. That's nothing that the rate-regulated utilities uh would say. And that's unfortunate. So uh I think we are, even only 12 weeks in, changing the Overton window on the conversation. We're focusing, and again, thanks to good offices like this one, which is putting us on the air, uh informing people uh about what is happening, supposedly on their behalf, but they're not receiving good service.
SPEAKER_01That's what's so shocking to me is I feel like I'm generally pretty well informed in what's going on in Minnesota. I work in a public policy think tank, and I have never heard, I have no, I had no idea any of this was going on. I feel like there is such a severe lack of transparency with how these rates are decided. Because even if it maybe this information is publicly available, but who is talking about this? What ratepayer, what average rate payer in Minnesota knows how their rates are being decided? No one.
SPEAKER_04Absolutely. And that's why I felt, you know, particularly called to be a part of this work because I was an insider, you know, doing rate cases for 19 years. Um, I can decode the documents, I know where the bodies are buried, and I can bring these pieces to light. Actually, I have another example of regulatory capture. It's it's you know, it's even worse than you described, Grace, because uh XL Energy, and something that I brought to light in in one of the recent public hearings in Stillwater, actually redacted uh the table of what the government was charging from a public document, you know, as if it were trade secret. And their excuse was, oh no, no, that's not relevant. Well, no, of course it's relevant. It's the the amount of money that the government is charging me as a ratepayer. You can't just take that out of uh the public record. So even if a ratepayer wanted to look at the documents and kind of understand what uh the government was doing or charging them, uh the company, I think, as a way to avoid uh embarrassing detail or detail that would embarrass the government, said, Oh no, no, we're gonna take those charges because they're, you know, tens of thousands of dollars for each each line, each of these employees charging. And I think it's a scandal.
SPEAKER_00So it sounds like collusion, doesn't it? Like between the government and a private company. Like wouldn't wouldn't especially the people on the left be super concerned about this? But it doesn't seem like I've ever heard this from them either.
SPEAKER_04Yeah, I and again, I think that uh for my uh friends on the progressive left, um, many of them are interested in in intervening in these cases and getting paid by the PUC themselves in a in a process called intervener compensation. So the groups on the left will say, hey, you know, we're we're here to advocate for the ratepayer, and we've done, you know, X and so work in this case. You should pay us money for our time. And uh and and in fact, the uh the government does, in fact, do that. Indeed, unlike, you know, I used to, before I was in government, I was a civil rights lawyer uh on the right side of the spectrum, admittedly. But um uh we used to have to win the case in order to get our fees paid. Uh the Citizens Utility Board doesn't have to win the case, they only have to uh you know make an argument.
SPEAKER_01We tried. We tried, so pay us. That's what they say.
SPEAKER_04That's exactly what happened to the tune of$40,000 in the last year.
SPEAKER_00And the ratepayer pays for everyone on all sides of the argument.
SPEAKER_04Absolutely. Absolutely. And, you know, I think um, you know, oh, we found that argument helpful. You know, so here's your check. Um, it's not a good situation. And it's not a good situation for efficiency. So I think we need to move from a litigation model into a more market-based model. We wouldn't need uh that kind of help, at least not$40,000 worth of that kind of help from uh from the Citizens Utility Board, if uh if we had a different system. That's what I'm uh urging folks.
SPEAKER_01I agree. I'm so fired up right now. The other thing that frustrates me about this whole system is the the PUC, the Public Utilities Commission, that's not an elected body. They're they're governor appointed, right? Indeed. So that's just another element of this whole process where we the ratepayer, we the voter, have no say in who's making these decisions. You know what it is? It's swampy. It's swampy. It's swampy. So who are the people on the PUC?
SPEAKER_04Um, well, they're they're uh oftentimes senior government officials. I uh served uh two of the members uh I served in the House of Representatives uh with. And so, you know, one is a former staff person, one is a former um uh sort of uh, you know, environmental compliance person with Center Point Energy. And uh I think the uh uh the last one is uh uh is someone from academia. And so, you know, these are uh you know, five folks. And and I think that uh generally um they could make the policy decision about whether that table of 48, you know, is the right direction. But I think that they need to start with a view about what the market should be before uh uh sending it to a trial or deciding whether a trial is needed. One of my frustrations is that um uh I don't think that there has been a case where uh an application for a rate increase uh was approved based upon the application. They all result in trials. Um, and sometimes those the that litigation settles, which is great. Then we we we save those cases, uh, we save those expenses, but that's uh far from a far gone conclusion. What is true as night follows day is that uh if they file an application for a rate increase, we're gonna get a 10-month trial.
SPEAKER_01Okay. Let's say over the last 10 years, how much money do you think has gone to these trials that could be avoided under a different system?
SPEAKER_04Um I think it's easily uh tens of millions of dollars.
unknownOh my gosh.
SPEAKER_01That we're paying for that. We the ratepayers are paying for that.
SPEAKER_04Absolutely.
SPEAKER_01That is astonishing.
SPEAKER_04And like I say, in this most regressive tax.
SPEAKER_01Which hurts poorer households, lower income households who don't have energy efficient homes. Is that right?
SPEAKER_04Uh absolutely.
SPEAKER_01It's so frustrating. And it's frustrating too because I think that the government, so often at least, the government's response to that would be well, let's just make every household in Minnesota more energy efficient, rather than saying let's just review remove that requirement, because that's completely unfeasible.
SPEAKER_04Trevor Burrus, Jr.: I I think you can do both, and we can chew gum and and uh and walk at the same time. I think you know, energy efficiency is great, uh, and that we have a lot of uh uh good programs that help people, you know, uh make uh strides in that way. Um but again, I think that the people who are working for us that we hire and whose salaries we pay uh are obliged to do a much better, more efficient job themselves and to model the kind of behavior uh that they want from private industry, not say, um, you know, do as I say and not as I do.
SPEAKER_00Yeah, and and we at American Experiment have seen the PUC do things like, you know, kind of steamroll its own energy priorities, like it shut down the Shirko coal power plant. Uh, they've approved some legally very questionable solar facilities. Um, has that been your experience too? They've like steamrolled the citizen input and kind of had their own agenda regardless of if it's good for the ratepayer or not.
SPEAKER_04Yeah, I I I I would certainly agree that they've not been nearly as sensitive to ratepayer interests as they uh as they should be or as they proclaim. Um I, you know, I think that um there's lots of evidence to the idea that they're uh not finding uh the most cost-effective uh solutions on uh on a wide range of issues. For me, I've been focusing on uh on the rate piece. Yeah. Um I would defer to Mr. Glon uh of the Center of the American Experiment for all matters about uh uh solar or uh or the energy grid, he's a brilliant resource, and the center is lucky uh to have him.
SPEAKER_01True. Now we're bumping up against our time here. Are there any final elements that you think our listeners should know about this situation?
SPEAKER_04Yeah, I guess I'd like to make a a request that if you're concerned about the amounts uh the government is charging you uh that you consider uh in addition to supporting the Center of the American Experiment, going to utilityreformnow.com and give us your email address. I think it's the easiest activism that citizens can do. Um if they give us their email address and subscribe, it's a signal that they're one of the ratepayers that's concerned about this. But I'll never email them more than four times a year. I'll never give their email address to anybody else, and I'll never, ever, ever ask them for money. And so um again, I think it's easy for folks to uh to stand shoulder to shoulder with us, but it won't be burdensome because um they won't get a lot of spam or or fundraising appeals. But it's just a way for us to say, yes, we we do in fact uh represent a growing number uh of folks who are concerned about what government is doing to your utility mail.
SPEAKER_00Yeah, this is so important. Seriously, say the website one more time. Where do people go?
SPEAKER_04Utilityreformnow.com. And there's also great information about what we're doing and and uh how we're participating that I think would be of interest to any ratepayer uh that's concerned about this problem.
SPEAKER_01I'm gonna go plug in my email right after we wrap this. Excellent.
SPEAKER_04So grateful, Grace and Catherine.
SPEAKER_01Thank you so much for your time today. Thank you guys so much to making it all the way to the end of this week's episode of the American Experiment Podcast.
SPEAKER_00We are so thankful for you all. Make sure you send this to a friend. Like we talked about earlier. There is so much misinformation um being put out there in Minnesota, and we want to make sure people get the truth. So send this to a friend, like it, and subscribe on YouTube. And remember, drop a comment, answer our question in the bottom. What's gonna happen? Is there a doomsday coming in Minnesota? And as always, we love reading your comments.
SPEAKER_01Let us know what you think of the new space, of the new studio. We are gonna keep adding to it and improving over the next few weeks, but we would love to hear what you think of it. And as always, stay sane, stay safe out there. We will see you next week.
