Wiktor Wise
Electric cooperatives, or co-ops, are private, nonprofit organizations owned and controlled by their members or customers. They are an alternative to commercial utility companies and are governed by an elected board of directors. Electric co-ops emerged in the early 1900s when utility companies believed that providing power lines to rural areas would not be profitable. Electric co-ops are focused on serving their members and communities rather than sales objectives. They are committed to reducing their carbon footprints and increasing their use of alternative and clean energy solutions.
| Characteristics | Values |
|---|---|
| Definition | "Involving mutual assistance in working toward a common goal." |
| Type of organisation | Private, nonprofit organisation |
| Ownership | Owned by its members or customers |
| Purpose | To deliver electrical power to the members living in its service area |
| Alternative | Commercial utility companies |
| Governance | Governed by an elected board of directors |
| Number of cooperatives | 960+ |
| Number of members | 42 million+ |
| States covered | 47 |
| Emission reduction | 83% reduction in sulphur dioxide emissions from 2005 to 2022 |
| 68% reduction in nitrogen oxide emissions from 2005 to 2022 | |
| 14% reduction in carbon dioxide emissions from 2005 to 2022 | |
| Customer satisfaction | 7 out of the top 10 spots in the 2023 J.D. Power Electric Utility Residential Customer Satisfaction Study |
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What You'll Learn
- Electric cooperatives are not-for-profit, owned and controlled by their members
- They are an alternative to commercial utility companies, governed by an elected board
- Electric co-ops emerged to serve rural areas that investor-owned utilities ignored
- Co-ops are leading the way in cutting carbon emissions and adopting clean energy
- They are community-focused, with members having a say in operational matters
Electric cooperatives are not-for-profit, owned and controlled by their members
Electric cooperatives, or co-ops, are non-profit, private organisations owned and controlled by their members or customers. They are an alternative to commercial utility companies and are governed by an elected board of directors. Each customer is a member and owner of the business, and all members have equal individual authority. Members are nominated to positions and voted on annually by the entire membership. They have equal status and influence, participate in policymaking, and work together to improve sustainability and the good of their community.
Co-ops are service-based and community-focused, rather than profit-based or sales-driven. They are built by and belong to the communities they serve and are led by members from the community. This means they are uniquely suited to meet local needs. For example, electric co-ops are focused on keeping rates affordable for their members, especially in rural areas where there is a low population density.
Electric cooperatives were created by the New Deal in the mid-1930s to bring electric power to rural areas, where investor-owned utility companies had previously refused to provide service due to insufficient revenue. The first rural electric cooperative was Boone Electric, established in 1936 in Missouri. Today, there are more than 900 electric cooperatives across the United States, American Samoa, and Washington, D.C.
There are two types of electric cooperatives: distribution cooperatives and generation and transmission (G&T) cooperatives. Distribution cooperatives purchase electric power at wholesale prices and deliver it directly to the consumer. G&T cooperatives are formed by distribution cooperatives to pool purchasing power for wholesale electricity. They provide wholesale power to their member-owners either by purchasing it or by generating electricity themselves.
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They are an alternative to commercial utility companies, governed by an elected board
Electric cooperatives are a type of utility cooperative that emerged to meet the needs that for-profit power companies were not filling. They are an alternative to commercial utility companies and are governed by an elected board of directors. Unlike investor-owned utilities, which are for-profit enterprises, electric cooperatives function as non-profits and run on a cost-of-service basis only.
Electric cooperatives are owned and controlled by the people who use their services, with each customer being a member and owner of the business. This means that all members have equal individual authority and influence, and participate in policymaking. Members are nominated to positions and voted on annually by the entire membership. Electric cooperatives are focused on the community rather than sales objectives, and they strive to bring the best service at the lowest possible cost.
The two types of electric cooperatives are distribution cooperatives and generation and transmission (G&T) cooperatives. G&T cooperatives provide wholesale power to distribution cooperatives through their own electric generation facilities or by purchasing power on behalf of the distribution members. Many electric cooperatives have formed their own G&T cooperatives to supply their member-owners with electricity.
Electric cooperatives are leading the way in cutting their carbon footprints and reducing emissions through a combination of emission-reduction measures and switching to natural gas and renewables. They are also actively working to expand their renewable capacity. Electric cooperatives scored higher in customer satisfaction than any investor-owned utility, according to a 2022 survey by J.D. Power.
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Electric co-ops emerged to serve rural areas that investor-owned utilities ignored
Electric cooperatives, or co-ops, are private, nonprofit organisations owned and operated by their members or customers. They are an alternative to commercial utility companies and are governed by an elected board of directors. Unlike investor-owned utilities (IOUs), which are for-profit enterprises, electric co-ops function as nonprofits and run on a cost-of-service basis.
In the early 20th century, power companies found little to no economic advantage in providing electricity to rural areas. The cost of running power lines and maintenance to these areas was high, and as a result, much of the land was without electricity. In the mid-1930s, during the Great Depression, nine out of ten rural homes were without electric service.
However, things began to change with President Roosevelt's "New Deal" to help America recover from the Depression. In 1935, Roosevelt established the Rural Electrification Administration (REA) and passed the Rural Electrification Act a year later, which initiated a lending program for electric cooperatives. As a result, farmer-based electric cooperatives were able to apply for loans and eventually made rural electrification a reality. The REA also drafted the Electric Cooperative Corporation Act, enabling states to form and operate not-for-profit, consumer-owned electric cooperatives.
Today, electric cooperatives are energy providers and engines of economic development, serving 42 million people, including 92% of persistent poverty counties. They power over 22 million businesses, homes, schools and farms in 48 states and have proven to be very cost-effective. Electric co-ops are focused on the community rather than sales objectives and work to improve sustainability and the good of their communities.
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Co-ops are leading the way in cutting carbon emissions and adopting clean energy
Electric cooperatives (co-ops) are private, nonprofit organizations owned and governed by their members or customers. They are an alternative to commercial utility companies. Each customer is a member and owner of the business, and they have equal individual authority. Electric co-ops are focused on the community rather than sales objectives.
Co-ops have been leading the way in cutting carbon emissions and adopting clean energy. They have shown what a responsible approach to meeting tomorrow’s energy needs can look like. For example, co-ops in the United States lowered their carbon emissions by 23% between 2005 and 2020, the equivalent of taking nearly 9 million cars off the road. They have also invested in energy innovation to help meet future needs.
Co-ops are reducing emissions through a combination of emission-reduction measures and switching to natural gas and renewables. For instance, co-ops reduced sulphur dioxide emissions by 83% from 2005 to 2022, nitrogen oxide emissions by 68%, and carbon dioxide emissions by 14%. Since 2016, they have nearly doubled their renewable capacity from 8.2 gigawatts to nearly 15.8 gigawatts. Co-ops added over 1.3 gigawatts of new renewable capacity in 2023. Electric co-op wind farms and solar arrays generate enough electricity to power more than 3.5 million homes.
Co-ops are well-positioned to lead efforts to reduce carbon dioxide and adopt clean energy. As of early 2024, over 60 cooperatives in 30 states have been selected to move forward with funding negotiations for more than $1 billion in federal funding for clean energy technologies, including solar, hydroelectric, and battery storage. Electric cooperatives are built by and belong to the communities they serve, and they are uniquely suited to meet local needs.
In the UK, the Carbon Co-op is a leading supporter of British community-owned low-carbon energy schemes, directly supporting more than 50 such projects across the country. The Carbon Co-op retrofits homes to meet 2050 emissions standards and involves citizens in meaningful, collective action to realize the low-carbon energy transition.
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They are community-focused, with members having a say in operational matters
Electric cooperatives are community-focused organisations that are owned and controlled by their members or customers. Each customer is a member and owner of the business, and they have equal individual authority. Members are nominated to positions and voted on annually by the entire membership. They have equal status and influence, and they participate in policymaking.
Electric cooperatives are an alternative to commercial utility companies and are governed by an elected board of directors. Unlike investor-owned utilities, which are for-profit enterprises, cooperatives function as nonprofits and run on a cost-of-service basis. Leftover profits in a cooperative are invested in infrastructure or paid out as dividends to members.
Cooperative groups have several advantages over investor-owned power suppliers. Customers who buy into an electric cooperative gain collective ownership in the organisation and are eligible to share in any profits the group generates. These are generally distributed as capital credits to reduce the cost of the member-customer's power.
Electric cooperatives emerged to meet the needs that for-profit power companies were not filling. They are able to focus on their primary mission of serving members rather than chasing returns on investment for shareholders. As a result, cooperatives can use their resources for valuable service-related improvements and consumer education.
Electric cooperatives are leading the way in cutting their carbon footprints. From 2005 to 2021, these companies reduced carbon dioxide emissions by 17%, sulphur dioxide by 82%, and nitrogen oxide by 68%. They are also incorporating renewable energy sources to complement their always-available generation. Since 2016, cooperatives have nearly doubled their renewable capacity from 8.2 gigawatts to nearly 15.8 gigawatts.
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Frequently asked questions
An electric cooperative, or coop electric company, is a private, nonprofit organization owned and controlled by its members or customers. Its main purpose is to deliver electrical power to its members. Electric cooperatives are an alternative to commercial utility companies.
Unlike investor-owned utilities, which are for-profit enterprises, a cooperative functions as a nonprofit and runs on a cost-of-service basis. Leftover profits in a co-op are invested in infrastructure or paid out as dividends to members. Each customer is a member and owner of the business and has an equal say in operational matters like rate increases, infrastructure investment, and budget surplus.
Joining a local electric cooperative is as simple as connecting to its grid and signing up for electric service. There are currently more than 800 distribution cooperatives and over 60 generation and transmission cooperatives in the United States, serving approximately 42 million members in 47 states.
