Wiktor Wise
Electric cooperatives are non-profit, community-owned organizations that provide electricity to their members. They are prevalent in rural areas of the United States, the Philippines, Uganda, and other parts of the world. The history of electric cooperatives is closely tied to politics, particularly in the context of rural electrification. In the United States, the Rural Electrification Administration (REA), established by President Roosevelt in 1935, played a pivotal role in bringing electricity to rural communities that were previously overlooked by investor-owned utilities. Electric cooperatives in the Philippines are overseen by the government's National Electrification Administration (NEA). Uganda has also adopted a cooperative model to accelerate rural electrification, although it maintains a top-down governance structure with the government as the key decision-maker. Electric cooperatives often advocate for smarter energy policies and leverage infrastructure funds to support their communities. They are governed by democratic processes, with members having a say in policy-making and board elections.
| Characteristics | Values |
|---|---|
| Political involvement | The National Rural Electric Cooperative Association (NRECA) was formed to provide a unified voice for cooperatives and to represent their interests in Washington, DC. |
| Political influence | Electric cooperatives have influenced policy and infrastructure funding, such as through the Infrastructure Investment and Jobs Act and the Inflation Reduction Act. |
| Government relations | Cooperatives engage in lobbying activities and government relations to advocate for their interests. |
| Rural electrification | Cooperatives were established to provide electricity to rural areas that were previously underserved by commercial utility companies. |
| Community development | Cooperatives are community-focused and work to improve the sustainability and well-being of their local communities. |
| Democratic processes | Cooperatives follow democratic principles, allowing members to vote in board elections, participate in policymaking, and share their ideas and concerns. |
| Ownership structure | Members are considered owners and have equal authority, unlike investor-owned utilities where authority is based on share ownership. |
| Profit distribution | Cooperatives reinvest profits into infrastructure or return them to members in the form of patronage capital or capital credits. |
| Emission reduction | Cooperatives have reduced emissions by transitioning to natural gas and renewables, such as reducing sulphur dioxide emissions by 83% from 2005 to 2022. |
| Renewable energy | Cooperatives are incorporating renewable energy sources, such as wind and solar, to complement traditional generation methods. |
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What You'll Learn
Political lobbying
Electric cooperatives are private, non-profit companies that aim to provide electricity to their customers or members. Each customer is considered a member and owner of the business, and they have equal individual authority. Electric cooperatives are community-focused and work to improve the sustainability and well-being of their local and surrounding communities.
In the United States, electric cooperatives were formed to bring electricity to rural areas, which were often ignored by commercial utility companies due to higher profits in cities. The first major political action that led to the formation of electric cooperatives in the US was the passage of the Tennessee Valley Authority (TVA) Act in May 1933. This was followed by President Roosevelt signing Executive Order No. 7037 in 1935, which established the Rural Electrification Administration (REA). The REA provided federal assistance to accomplish rural electrification, and electric cooperatives were formed with the help of loans from the REA to build transmission lines and provide electricity to rural communities.
To represent their interests at the federal level, electric cooperatives in the US formed the National Rural Electric Cooperative Association (NRECA) in 1942. The NRECA engages in political lobbying and represents over 900 consumer-owned, non-profit electric cooperatives in the country. It carries out federal government relations activities, including lobbying, and provides a unified voice for cooperatives in Washington, DC.
In other countries, such as Uganda, electric cooperatives have also played a significant role in rural electrification. Uganda adopted a top-down governance model where the government is the key decision-maker in rural electrification, with cooperatives distributing electricity and connecting consumers to the grid.
Overall, political lobbying by electric cooperatives, through organizations like the NRECA, has been crucial in shaping policies and securing funding for rural electrification and the development of cooperative-led energy infrastructure.
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Government funding
Electric cooperatives, or co-ops, are non-profit, member-owned utilities that provide electricity to their consumer-owners. Co-ops have a unique relationship with the government, which has significantly influenced their development and operations.
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Rural electrification
In the 1930s, nine out of ten rural homes in the United States were without electric service. Families relied on kerosene lanterns, wood stoves, and washboards for light, cooking, and cleaning. The unavailability of electricity in these areas meant that their economies were entirely dependent on agriculture, and factories and businesses tended to locate in cities where electric power was easily accessible. Power companies ignored rural areas, citing high development costs and low profit margins. Consequently, even when they could purchase electricity, rural consumers paid far higher prices than urban consumers.
The first official action of the US federal government to address this issue came with the passage of the Tennessee Valley Authority (TVA) Act in May 1933. This act authorized the TVA Board to construct transmission lines to serve "farms and small villages that are not otherwise supplied with electricity at reasonable rates." However, it soon became clear that investor-owned utilities were not interested in using federal loan funds to serve sparsely populated rural areas.
The idea of providing federal assistance to accomplish rural electrification gained momentum when President Roosevelt took office in 1933. On May 11, 1935, Roosevelt signed Executive Order No. 7037, establishing the Rural Electrification Administration (REA). The Rural Electrification Act was passed a year later, and the lending program that became the REA began. The REA administered low-interest and long-term loan programs for rural electrification, and also provided technical, managerial, and educational assistance. The REA soon realized that electric cooperatives would be the entities to make rural electrification a reality. In 1937, the REA drafted the Electric Cooperative Corporation Act, a model law that states could adopt to enable the formation and operation of not-for-profit, consumer-owned electric cooperatives.
Today, about 99% of the nation's farms have electric service, and most rural electrification is the product of locally owned rural electric cooperatives. These cooperatives serve 42 million people, including 92% of persistent poverty counties, and power over 22 million businesses, homes, schools, and farms in 48 states. They are built by and belong to the communities they serve, and they are led by members from the community. Electric cooperatives are also reducing emissions through a combination of emission-reduction measures and switching to natural gas and renewables.
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Energy policy
Electric cooperatives are private, non-profit companies that deliver electricity to their customers or members. They are member-owned and operated, and they follow democratic processes that allow members to vote in board elections and share their ideas and concerns. Cooperatives are community-focused and work to improve the sustainability and well-being of their local communities.
The history of electric cooperatives is deeply intertwined with politics, particularly in the context of rural electrification. In the United States, as late as the mid-1930s, nine out of ten rural homes lacked electric service, which hindered economic development in these areas. The election of President Roosevelt in 1933 marked a turning point, as he prioritized federal assistance for rural electrification. Roosevelt signed Executive Order No. 7037, establishing the Rural Electrification Administration (REA), and the Rural Electrification Act was passed in 1936. The REA provided loans to farmer-based cooperatives, recognizing that investor-owned utilities were not interested in serving sparsely populated rural areas. This led to the formation of not-for-profit, consumer-owned electric cooperatives, with the Electric Cooperative Corporation Act drafted in 1937 as a model law for states to enable their operation.
Today, electric cooperatives continue to play a vital role in energy policy, especially in rural areas. In the United States, cooperatives serve 42 million people, including 92% of persistent poverty counties, and power over 22 million businesses, homes, schools, and farms in 48 states. Cooperatives are committed to keeping rates affordable and have made significant strides in reducing emissions by transitioning to natural gas and renewables.
Electric cooperatives are also active in other parts of the world, such as the Philippines, Uganda, and Europe. In the Philippines, cooperatives serve the distribution sector, and rates are regulated by the Energy Regulatory Commission (ERC). In Uganda, the government has adopted a cooperative model to accelerate rural electrification, recognizing the importance of modern energy access for rural communities. In Europe, examples of energy cooperatives include Co-operative Energy in the United Kingdom and Enercoop in France.
Overall, electric cooperatives have been shaped by political decisions and, in turn, influence energy policies by advocating for smarter energy policies that prioritize reliability and affordability for their members and the communities they serve.
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Community ownership
Electric cooperatives are community-owned and operated, with each customer considered a member and owner of the business. This democratic structure gives members an equal say in the cooperative's operations and encourages them to share their thoughts and ideas. Cooperatives are built by and belong to the communities they serve, and they are led by members from these communities. This local leadership ensures that cooperatives are uniquely positioned to understand and meet local needs.
In the United States, electric cooperatives were formed to address the lack of electrification in rural areas during the 1930s. The federal government took steps to address this issue, with the passage of the Tennessee Valley Authority (TVA) Act in 1933, which aimed to provide electricity to "farms and small villages" that were previously unserved. This was followed by President Roosevelt's establishment of the Rural Electrification Administration (REA) in 1935, which provided federal assistance to rural electrification efforts. Electric cooperatives, as not-for-profit entities, were able to access federal loan funds and played a crucial role in bringing electricity to these underserved communities.
Today, electric cooperatives continue to serve millions of people in the United States, powering businesses, homes, schools, and farms. They return significant amounts of revenue to their members and play a vital role in community development. Cooperatives are also committed to reducing emissions and incorporating renewable energy sources, such as wind and solar power.
In other parts of the world, such as Uganda, electric cooperatives are also being leveraged to address energy poverty and accelerate rural electrification. These cooperatives face political and economic challenges but play a crucial role in enhancing modern energy access for rural communities.
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Frequently asked questions
An electric cooperative is a private, non-profit company that delivers electricity to its customers or members. Each customer is a member and owner of the business, and they have equal individual authority. Electric cooperatives are service-focused and dedicated to providing electricity to rural areas.
In the United States, electric cooperatives were created by the New Deal to bring electric power to rural areas. Investor-owned utilities were hesitant to provide service to these areas as they believed there would be insufficient revenue to justify the costs. President Roosevelt signed Executive Order No. 7037 in 1935, establishing the Rural Electrification Administration (REA). This led to the Rural Electrification Act and a lending program that provided funds for cooperatives to build lines and provide service on a non-profit basis.
Electric cooperatives are service-focused and community-oriented, aiming to improve the sustainability and well-being of their local and surrounding communities. They are also cost-effective, striving to provide the best service at the lowest possible cost. Cooperatives are democratic, allowing members to vote in board elections, participate in policymaking, and share their ideas and concerns. They also return revenues or margins to members in the form of capital credits.
Electric cooperatives have played a crucial role in accelerating rural electrification and enhancing modern energy access for rural communities globally. For example, in Uganda, electric cooperatives have helped distribute and connect consumers to the grid, purchasing electricity wholesale from the government and selling it to consumers. They also educate communities about the benefits of electricity.
