Otis Singleton
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, serving more than 42 million members in 47 states. Electric cooperatives were created to bring electricity to rural areas that were ignored by power companies due to a lack of economic incentive. Today, electric cooperatives are focused on serving their communities and providing reliable energy at affordable rates. They are governed by an elected board of directors and run on a cost-of-service basis, with any leftover profits invested in infrastructure or returned to members.
| Characteristics | Values |
|---|---|
| Definition | "Involving mutual assistance in working toward a common goal." |
| Ownership | Owned by its members or customers |
| Type of organization | Private, nonprofit |
| Purpose | To deliver electrical power to the members living in its service area |
| Alternative to | Commercial utility companies |
| Governance | Governed by an elected board of directors |
| Number of cooperatives | Over 960 electric cooperatives in the US |
| Number of members | 42 million members in 47 states |
| Emissions | Co-ops reduced sulphur dioxide emissions by 83% from 2005 to 2022 |
| Co-ops reduced nitrogen oxide emissions by 68% from 2005 to 2022 | |
| Co-ops reduced carbon dioxide emissions by 14% from 2005 to 2022 | |
| Funding | Over 60 cooperatives in 30 states have been selected for funding negotiations for more than $1 billion in federal funding |
| Customer service | Members are nominated to positions and voted on annually by the entire membership |
| Members have equal status and influence, participate in policymaking, and work together to improve sustainability and the good of their community |
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What You'll Learn
Electric cooperatives are not-for-profit and owned by members
Electric cooperatives are not-for-profit organisations owned and operated by their members or customers. They are fundamentally different from commercial utility companies, which are for-profit enterprises owned by investors. Electric cooperatives are built by and belong to the communities they serve. They are led by members from the community and are thus uniquely suited to meet local needs.
The cooperative model was ratified by the federal government to ensure that rural Americans could access electricity in their homes and businesses at reasonable rates. Electric cooperatives are an outcome of Franklin D. Roosevelt's New Deal. In the early 1900s, utility companies believed that building power lines into rural areas would not be profitable. Consequently, most of America was left without electricity. The Rural Electrification Act of 1935 brought the Rural Electrification Administration (REA) into existence. In 1937, the REA drafted the Electric Cooperative Corporation Act, enabling states to form and operate not-for-profit, consumer-owned electric cooperatives.
Electric cooperatives are dedicated to providing electricity to rural areas, which commercial companies often avoid due to higher profitability in urban areas. Cooperatives are service-oriented and focus on delivering electricity at stable rates. They are also committed to reinvesting revenue into their service area communities through infrastructure development. Electric cooperatives are governed by an elected board of directors, and members are encouraged to participate in policymaking and share their ideas and concerns. Members have equal status and work together for the good of the community.
Electric cooperatives are tax-exempt and run on a cost-of-service basis. Members are required to "invest" in the cooperative by paying an initial registration fee and then continuously contribute through electricity payments. Leftover profits are invested in infrastructure development or paid out as dividends to members. Cooperatives also aim to meet member expectations by reducing emissions and switching to natural gas and renewables.
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They are focused on the community rather than sales objectives
Electric cooperatives are focused on the community rather than sales objectives. They are not-for-profit organisations owned by their members or customers, who are given a voice in the cooperative through democratic member control. Members are nominated to positions and voted on annually by the entire membership, and they have equal status and influence, as well as the opportunity to participate in policymaking.
Cooperatives are built by and belong to the communities they serve. They are led by members from the community and are uniquely suited to meet local needs. For example, cooperatives serve more consumers in South Carolina than any other utility, delivering power to almost 2 million citizens. They serve homes, businesses, and industries, mostly in suburbs, small towns, and rural areas.
Cooperatives are among the largest taxpayers in the state, and they support their communities through volunteer organisations that award academic scholarships and help families in need. They also reinvest profits into infrastructure or distribute them to members in the form of capital credits.
Cooperatives are focused on providing the best service at the lowest possible cost, and they work to improve sustainability and the good of their community. They are also committed to reducing emissions through a combination of emission-reduction measures and switching to natural gas and renewables. For instance, cooperatives have nearly doubled their renewable capacity since 2016 and have announced plans to add more than 5.3 gigawatts of renewable capacity through 2027.
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Co-ops are democratically controlled by members
Electric cooperatives are owned and democratically controlled by their members, who are also the customers of the cooperative. This is in contrast to investor-owned utilities, which are owned by shareholders primarily interested in seeing a return on their investment. Electric cooperatives are built by and belong to the communities they serve, and are led by members of those communities.
Each member of an electric cooperative has an equal say in the organisation, and the opportunity to participate in its operation through democratic member control. Members are nominated to positions and voted on annually by the entire membership. They have equal status and influence, and they participate in policymaking and work together to improve sustainability and the good of their community.
The democratic nature of electric cooperatives means that members often have a say in operational matters such as rate increases, infrastructure investment, or how to spend a budget surplus. While such a surplus would be profits that go to shareholders in the case of a privately-owned utility, a cooperative might opt to distribute a surplus as credits spread across all members. Electric cooperatives are not-for-profit organisations, and they return margins back to the membership in the form of capital credits.
The first cooperative was the Rochdale Society of Equitable Pioneers, established in 1844 by a group of 30 tradesmen in Rochdale, England. This group developed the Rochdale Principles, which are now known as the Seven Cooperative Operating Principles. Cooperatives around the world use these seven basic principles to fundamentally run their establishments. Electric cooperatives in the United States were created by Franklin D. Roosevelt's New Deal in the early 1900s to bring electric power to rural areas, which were ignored by power companies due to a lack of economic advantage.
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They are built by and belong to the communities they serve
Electric cooperatives are built by and belong to the communities they serve. This means that they are led by members of the community and are designed to meet local needs. Electric cooperatives are not-for-profit organisations owned by their members or customers. They are focused on the community rather than sales objectives. Members are not just customers but owners, with an equal say in the cooperative's operations and a responsibility to participate in policymaking.
The first cooperative was the Rochdale Society of Equitable Pioneers, established in 1844 by 30 tradesmen in Rochdale, England. They developed the Rochdale Principles, which are now seven basic principles that cooperatives around the world use to fundamentally run their establishments. Electric cooperatives, in particular, are a product of Franklin D. Roosevelt's New Deal in the early 1900s. At the time, utility companies believed that building power lines into rural areas of America would not be profitable, so cooperatives were formed to bring electric power to these ignored areas.
Today, electric cooperatives serve millions of members across the United States. They are an alternative to commercial utility companies and are governed by an elected board of directors. Electric cooperatives are focused on providing the best service at the lowest possible cost. They are also committed to reducing emissions and incorporating renewable energy sources.
Electric cooperatives are unique in that they are built and governed by the communities they serve. This ensures that the needs of the community are always put first and that members have a say in how the cooperative is run. Electric cooperatives are a powerful example of how mutual assistance and a common goal can come together to create something that benefits an entire community.
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Electric co-ops are reducing emissions and switching to renewables
Electric cooperatives, or co-ops, are not-for-profit organizations owned and democratically controlled by their members—the people who purchase power from the cooperative. They are distinct from investor-owned utilities in that they are not driven by the need to maximize profits for shareholders. Instead, co-ops are focused on providing exceptional member service and encouraging member participation through capital credits and democratic control.
Co-ops have been around for over a century and a half, with the first cooperative established in 1844. Today, over 960 electric cooperatives serve 42 million members in 47 states, with Texas alone having 64 distribution co-ops and 11 generation and transmission co-ops.
Electric co-ops are meeting member expectations by reducing emissions through a combination of emission-reduction measures and switching to natural gas and renewables. From 2005 to 2022, co-ops achieved significant reductions in sulphur dioxide emissions (83%), nitrogen oxide emissions (68%), and carbon dioxide emissions (14%). They have also been actively incorporating renewables to complement their always-available generation. Since 2016, co-ops have nearly doubled their renewable capacity from 8.2 gigawatts to nearly 15.8 gigawatts, with over 1.3 gigawatts of new renewable capacity added in 2023.
Looking ahead, co-ops have announced plans for more than 5.3 gigawatts of renewable capacity additions through 2027, leveraging new infrastructure funds from programs like the Infrastructure Investment and Jobs Act and the Inflation Reduction Act. As of early 2024, over 60 cooperatives in 30 states have been selected for funding negotiations totaling more than $1 billion in federal funding, with a focus on clean energy technologies, including solar, hydroelectric, and battery storage.
The transition to renewables is further supported by reports advocating for a Green New Deal, which call for mechanisms to help electric co-ops switch to clean energy. This includes addressing financial commitments to coal power stations and providing debt relief for investments in renewable energy.
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Frequently asked questions
A cooperative electric company, or electric cooperative, is a private, nonprofit organization owned by its members or customers. Its main purpose is to deliver electricity to its members.
Unlike investor-owned utilities, cooperatives are not-for-profit and run on a cost-of-service basis. Leftover profits are invested in infrastructure or paid out as dividends to members. Each member has an equal say in the cooperative and can participate in policymaking.
Joining a local electric cooperative is usually as simple as connecting to its grid and signing up for electric service.
There are over 960 electric cooperatives in the United States, serving 42 million members in 47 states.
Cooperatives were created in the early 1900s to bring electric power to rural areas, which were often ignored by power companies due to a lack of economic incentive.
